Changes to U.S. Patent law: what happens now?

On September 8, 2011, the U.S. House of Representatives passed the America Invents Act, which dramatically amends U.S. patent law.

Some of the most significant changes — such as the change of U.S. patent law to a “first to file” system, a new post-grant review (opposition) procedure, and changes that allow a company to file an application and/or sign an inventor declaration on behalf of an uncooperative employee-inventor — will take effect 12-18 months in the future.  However, other changes will take effect immediately.

The immediate changes include:

• Providing an option for “prioritized examination.”  For an additional $4,800 (or $2,400 for small entities), patent applicants may request prioritized examination.  Prioritized examination is limited to patent applications having no more than 4 independent claims and no more than 30 total claims.
• Banning “tax strategy” patents.  The Patent Act will now state that any strategy for reducing, avoiding, or deferring tax liability “shall be deemed insufficient to differentiate a claimed invention from the prior art.”  This change effectively eliminates patentability of tax planning strategies.
• Banning patents directed to human organisms.  The new law states that “no patent may issue on a claim directed to or encompassing a human organism.”  Some commenters have already noted that this clause may be ambiguous, as it does not define whether a claim is “directed to” a human organism, or whether it could cover methods or other claims that do not expressly include the human organism as a claim element.  This change will not affect patents that have already issued, but rather will only affect patent applications that are pending or filed after the new law takes effect.
• Significantly scaling back private “false marking” lawsuits.  Over the past two years, many individuals have brought private actions under the Patent Act’s false marking clause, which previously allowed anyone to sue the manufacturer or seller of a product that was marked with an incorrect or expired patent number.  The new law limits the private right of action to individuals who suffered a competitive injury as a result of false marking.
• Allowing “virtual patent marking” on a website.  Until now, to take advantage of the benefits of the patent marking clause a patentee was required to place a notice of the patent number on the product itself, or in some cases the product packaging.  Changes to 35 U.S.C. 287(a) now allow patent holders to substitute the patent number with a website address, if the website contains a list of patents covering the article.
• Expanding the prior user defense to patent infringement.  Previously, the Patent Act included a defense to infringement of “business method” patents to cover situations where the accused infringer used the invention more than one year prior to the filing date of the patent.  The new law expands the prior user defense to also cover internal commercial use of any invention, as well as arms-length sales or transfers of a useful end result of the commercial use.  The defense also covers certain nonprofit use, and pre-marketing regulatory review of certain drugs and medical devices.
• Eliminating the “best mode” defense to infringement.  The list of infringement defenses under 35 U.S.C. 282 will no longer allow a defendant to assert, as a defense to infringement, that the applicant failed to disclose the best mode.  However, the best mode requirement is not eliminated from the Patent Act, so a patent application must still describe the inventor’s best mode of practicing the invention.
• Raising the bar for inter partes reexaminations.  Previously, if the USPTO received a request for inter partes reexamination of a patent, the USPTO would initiate reexamination if the request raised a “substantial new question of patentability” (SNQ).  Under the new law, the SNQ standard is replaced with a new, more stringent requirement that there be a “reasonable likelihood that the requestor would prevail with respect to at least 1 of the claims challenged in the request.”
• Changing certain patent filing fees.  Many patent-related fees will increase by about 15%.  On the other hand, a new category of “micro entities” will be entitled to a 75% reduction in many patent-related fees.  Micro entities are essentially either (i) individual inventors who are named inventors on no more than five total patent applications and who meet certain maximum income levels, or (ii) certain employees of institutions of higher learning.
• Limiting the ability to sue multiple infringers in a single lawsuit.   Until now, it has been common for a patent holder to sue many defendants in a single lawsuit.  Often, the only connection between the defendants is that they sell similar products or services.  Under the new law, multiple defendants may be joined in a single patent lawsuit only if all defendants are accused of making, using or selling the same product or process.  A mere allegation that each defendant individually infringes will no longer be sufficient to join the defendants in a single suit.

For part 2 this blog post, describing what happens next under the America Invents Act, click here.