Publications: Obama Signs Patent Reform Act

On September 16th, President Obama signed the America Invents Act into law. The Act represents Congress’ first comprehensive patent reform in more than 50 years. In doing so, Congress addressed perceived flaws in the law, changes in the global economy, undesirable or unfair litigation practices, and harmonization of U.S. patent practice with the majority of the industrialized world. Many provisions of the Act take effect on September 16, 2012, and apply to any patent issued on or after that effective date.

Highlights of the Act 

• Establishes a first-inventor-to-file system
• Allows persons other than the inventor to file patent applications
• Introduces changes to patent litigation practice
• Establishes a practice for attacking the validity of issued patents

First-Inventor-to-File System

The Act establishes a first-inventor-to-file system of awarding patents. Patents will be granted to the first inventor to file a patent application on a given invention. Formerly, patents were awarded to the first to invent a given invention, regardless when an application was filed. The new Act emphasizes the importance of an inventor filing his/her patent application as soon as practicable. This change will take effect on March 16, 2013.

Changes Regarding Patent Application Filing Entity

The Act allows a person to whom an inventor has assigned (or is under an obligation to assign) an invention to make an application for patent. Prior to the Act, patent applications had to be filed in the name of the inventor(s). Only in special circumstances could a patent application be filed without the consent of the inventor. The practical result of this change is to facilitate businesses filing patent applications when an inventor is under an obligation to assign or has assigned his/her invention to the business.

Strengthens Attorney/Client Privilege

The Act promotes seeking legal advice by strengthening the privilege attached to attorney/client communications--specifically, opinions of counsel related to infringement, validity, and/or enforceability of a patent. An accused infringer’s failure to present such advice to the court or jury may not be used to infer and prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent.

Eliminates Best Mode Defense (Effective Immediately)

The Act prohibits using a failure to disclose the “best mode” as a basis on which a patent may be canceled or held invalid or otherwise unenforceable. Prior to the Act, the validity of a patent in which the inventors failed to disclose the best mode for practicing their invention could be attacked. The new law removes the best mode requirement as a defense to infringement. The best mode requirement, however, is retained as a condition of patentability. This change takes place immediately.

Eliminates Joining Multiple Accused Infringers

The Act prohibits patent owners from joining accused infringers in one action based solely on allegations that they each have infringed the patent or patents in suit. Under the Act, accused infringers may be joined in one action only if (1) any right to relief is asserted against the parties jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences relating to the alleged infringement; and (2) questions of fact common to all accused infringers will arise in the action.

Establishes Virtual Patent Marking

The Act changes several provisions related to marking. The Act allows patent holders to provide constructive notice to infringers via “virtual marking.” Patent owners may provide such notice by placing the word “patent” or the abbreviation “pat.” together with an address of a posting on the Internet, accessible to the public without charge for accessing the address, that associates the patented article with the number of the patent.

Weakens False Marking Lawsuits

The Act changes the law with respect to so-called “false marking” lawsuits. Under the new Act, only a person who has suffered a competitive injury as a result of a false marking violation may file a civil action for recovery of damages adequate to compensate for the injury. Prior to the Act, any person was allowed to sue for a penalty of up to $500 for every such offense. Furthermore, any product marked with a patent number that covered the product but has expired is expressly not a violation of the false marking law. These amendments to the false marking law apply to all cases, without exception, that are pending on or commenced after September 16, 2011.

Establishes a Practice for Attacking the Validity of Patents

The Act allows a party to request cancellation of one or more claims of a patent as unpatentable by filing a petition with the U.S. Patent and Trademark Office (USPTO). The USPTO may institute: (1) a post-grant review on any ground that could be raised under specified provisions relating to invalidity of the patent or any claim; and (2) an adversarial review where a third party may participate by attacking the issued patent on specified novelty and nonobvious subject matter grounds based on prior art consisting of patents and printed publications. A post-grant review petition must be filed within nine months after the date of the grant of the patent or issuance of a reissue patent. A petition for adversarial review must be filed after the later of (1) nine months after the grant or reissue, or (2) the date of termination of a post-grant review.