Theoretical Justifications and Concerns Presented by Key Changes to the United States Patent System Attributable to the Leahy-Smith American Invents Act

By: Connor Shelton

(First Draft)

            Many describe the Leahy-Smith America Invents Act, the biggest major development in U.S. patent law was the Patent Act of 1952.[1] However, I disagree and would instead propose that the Leahy-Smith America Invents Act was instead the most major development in U.S. patent laws since their inception. The Patent Act of 1952 was largely a codification of existing case law. President Barack Obama signed the Leahy-Smith America Invents Act into law on September 16, 2011.[2] The Leahy-Smith America Invents Act (hereafter “the AIA”) has largely been characterized as the United States’ attempt to address many of the ongoing problems that have plagued the patent system, along with attempting to align the U.S. patent law with those of much of the rest of the world.

            Congress’ authority to create and regulate patent law is rooted in in Article 1 sec. 8 cl. 8 of the U.S. Constitution. As such, all patent and copyright laws in the United States exist due to congressional authorization. With this authority, Congress may also repeal or substantially change U.S. patent laws in the manner they see fit. Congress alone possesses this authority, therefore state laws regarding patents will generally be preempted.

The AIA implemented changes to the U.S. patent system in four different phases. The first of which can be classified as immediate changes because these changes became effective on September 16, 2011, the moment president Obama signed the AIA into law. Ten days after the AIA was signed into law on September 26, 2011, the second phase of changes to the patent system resulted. The third phase became effective one year after the AIA was signed into law (September 16, 2012), and the fourth phase occurred eighteen months after the AIA was signed into law (March 16, 2013). For organizational purposes, the changes attributable to the AIA will be chronologically grouped below based on the date that they were scheduled to become effective.

Phase One: Immediate Changes Effective on September 16, 2011

I.          Patents Related to Taxes and Human Organisms

Prior to the passage of the AIA, certain classifications were considered to consist of unpatentable subject matter. Common examples of unpatentable subject matter were laws of nature, abstract ideas, and natural phenomena.[3] The AIA included two new categories of unpatentable subject matter. The first being, tax related patent involving, “Any strategy for reducing, avoiding, or deferring tax liability, whether known or unknown.”[4] The AIA specifically mandates that these tax related patents will automatically be considered part of the prior art. [5] The second category has resulted in statutorily barring any patent claim directly related to a human organism from receiving patent protection.[6] This portion of the AIA represents a strong reminder that the patent system only exists at congressional discretion, and at any time Congress can chose to eliminate patent protection to any field that it desires.

Theoretical justifications and concerns regarding a change such as this one are best analyzed under the same theoretical arguments and justifications of the U.S. patent system as a whole. The U.S. patent system imposes costs on society in exchange for the prospective benefit of increased ingenuity. These costs on society arise from the limited rights granted to the inventor, and the increased ingenuity results from the incentives that these limited rights create. In short, the U.S. patent system is an attempt to provide a balancing of costs and benefits in a manner where the benefits outweigh the costs. Furthermore, by turning ideas into property individuals are able to coordinate the development of those ideas. This control provides a means to efficiently coordinate the progression of the idea, and helps to eliminate economic waste. Through the passage of the AIA, Congress has sought to streamline the U.S. patent system and increase the incentives that it offers.

    Opponents to the patent system often argue that many innovations would occur even in the absence of the system, and thus granting limited exclusive rights to new innovations harms society as a whole.  This being said however, some types of costly innovation would never have been developed had the incentives granted by the intellectual property system not been present. By increasing these incentives through the AIA, Congress has sought to entice more innovations to be created and seek patent protection. Congress has justified this approach under the premise that the aggregation of the benefit provided by these types of innovation far outweighs the social costs of granting limited exclusive rights to the innovations.

Proponents of the U.S. patent system often argue that in the absence of patent protection, individuals could choose to not invest resources into innovations that their competitors could easily take advantage of prior to the original investor being able to recoup his investment. These proponents often view the “first mover” advantage as insufficient or ignore the advantage completely. The “first mover” theory relies on the premise that the first person to enter a particular field will have an underlying advantage over his or her competitors because they have had time to acquire certain expertise in that field that the competitors will only be able to acquire after the “first mover” has introduced his innovations to the public. The incentive obtained from being the “first mover” helps to drives much of the free economy. Typically, the benefits of being the first mover outweigh the benefits offered by the patent system, innovations in that field will not normally seek patent protection. The existence of an intellectual property system is not guaranteed by U.S. Constitution. The Framers granted Congress the power “to promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”[7] However, the U.S. Constitution makes clear that Congress shall have exclusive authority to determine the scope and existence U.S. patent laws. Proponents of the U.S. patent system often argue the existence of a patent system is necessary to promote fairness. They also point out the fact that the inventor’s limited monopoly does not harm the public because without incentives to disclose, the new innovation may have never become part of the public domain.

By choosing to specifically bar the areas of tax related patents and those relating to human organisms, Congress has chosen to exercise their constitutional authority to restrict and narrow the patent system as they see fit. In justifying limiting factors such as this one, Congress often point to the fact that the public good far outweighs the adverse effects of barring a specific category.

II.        Inter Partes Reexamination

In order to increase the quality of arguments presented during the preexisting inter partes reexamination procedure, the AIA changed the initial burden that the petitioning party much show in order to have the patent considered for inter partes reexamination. Immediately after the AIA became law on September 16, 2011, all parties that filed a petition for inter partes reexamination thereafter were required to show “a reasonable likelihood that they will prevail in challenging at least one of the patented claims.”[8] This reasonable likelihood requirement replaces the previous standard requiring a showing of a “substantial new question of patentability as to one of the patented claims.”[9] Therefore, the AIA places a greater initial burden on the challenging party to invalidate one of the patented claims. By increasing this initial burden Congress has chosen to further protect and insulate patent holders from costly litigation. This change was likely made in response to the increase in litigation due to the multiple interpretations that can be derived from the patented claims. Inter partes reexamination was completely eliminated as an option for review for all requests filed on or after September 16, 2012, but the new system that replaces Inter partes reexamination retains this heightened initial burden.[10]

III.       Best method

In every patent application, the applicant must indicate the best mode for which the invention will be used.[11] The purpose of the best mode requirement is to aid the public in determining how and in what way a particular innovation should be used when it becomes part of the public domain. Prior to the passage of the AIA, it was very common to allege patent invalidity in a patent related law suits based on the fact that the best mode indicated in the patent was not actually the best mode that the patented innovation could be used for.[12] This allegation creates numerous hindsight problems due to the fact that as marketplaces change and evolve due to other innovations, so does the best mode for which a patent can be used. The AIA put an end to litigation that would allege patent invalidity based on a violation of 35 U.S.C. § 112 (“the best mode requirement”) for all proceedings filed on or after September 16, 2011.[13] Despite the elimination of this defense to infringement in patent litigation cases, failure to comply with the best mode requirement is still a basis for denial of a patent application by the United States Patent and Trademark Office (hereafter “the USPTO”).[14] Making the best mode determination only relevant at the period in which the patent application is being considered eliminates the hind sight problems that can arise in later litigation. The AIA’s change to the best mode requirement eliminates some of the litigation costs associated with a patent infringement/invalidity civil action. It should be noted however, that by eliminating this defense to infringement, Congress likely did not intend to eliminate its relevance in determining if the patent applicant is guilty of inequitable conduct by knowingly concealing the patent’s best mode.[15] Therefore, if it can be shown that the patent applicant deliberately did not disclose the best method of the patented invention, then the entire patent can still be found to be invalid based on inequitable conduct when dealing with the USPTO.[16]

The best mode requirement was originally created as a result of the theory that a patent is nothing more than a bargaining tool used by the public to entice the inventor to disclose his invention. The AIA’s amendment to the best mode requirement seems consistent with this basic theory. The best mode of every innovation has to be disclosed in every patent application in order for the patent to be sufficiently enabled, and to sufficiently inform the public as to the best mode the inventor believed the invention could be used to accomplish. However, if bad faith can be shown and the inventor intentionally concealed a material portion of the best mode that an invention can be used (i.e. inequitable conduct), then the inventor should be punished and stripped on their patent rights.

IV.       Limitations on Joinder

            In passing the AIA, Congress chose to eliminate the plaintiff’s right to join multiple defendants in a single action involving the same patent if each infringement is part of a different transaction and occurrence.[17] This limitation can be waived by the defendants,[18] but the defendants will not typically have reason to do so. This rule will result in fewer defendants in each case, thus decreasing the complexity and likelihood of confusing the jury. However, this rule will also result in more case having to be filed in order for a patent owner to fully protect his or her limited monopoly. Forcing the plaintiff to show proper joinder, [19] rather than allowing the plaintiff to sue all of the infringing defendants in one action drastically increases the plaintiff’s costs of litigation. Since defendants will not typically consent to waive this requirement, their cost of litigation will also increase because they will not be able to take advantage of sharing some of the costs of litigation. This system will also create a strong possibility of inconsistent court rulings, since multiple cases have to be filed on the same patent. The possibility of inconsistent court rulings may result in various different claim constructions, each of which could make the patent broader or narrower in scope.

            This provision in the AIA seems inconsistent with the overall aims of the AIA. The AIA as a whole shows a distinct congressional desire to decrease the overall costs of litigation and streamline the system so that consistent and effective rulings can be issued without undue burden or delay. A limitation on the ability to join multiple defendants, on the other hand, drastically increases the plaintiff’s overall costs of protecting his or her patented monopoly. This creates distinct problems when the costs to enforce the patent holder’s exclusive rights and prevent infringement are higher than the amount that the patent holder will recover by bringing suit. This new provision also severely harms the patent holder in cases of mass minor infringement when it may never be financially efficient for a patent holder to bring suit. Furthermore, under this new system the patent holder may not be able to afford the upfront costs of bringing multiple cases litigating the same patent. Besides financial harm, the distinct possibility of inconsistent rulings from the multiple federal districts will inevitably harm plaintiffs and defendants.

Phase Two: Changes Effective 10 Days After Passage on September 26, 2011

I.          The Prioritized Patent Application

            The life of the patent monopoly is typically 20 years from the date of filing.[20] This means that the speed in which the application is granted is directly proportional to the length of the patent monopoly. However, if the patent office takes longer than three years from the date of application to grant the patent through no fault of the patent applicant, then the patent applicant can apply for an extension granting them the difference between the time that it took the patent to be granted and the three year “maximum.”[21] The AIA has created a new type of examination typically referred to as prioritized examination.[22] All non-provisional utility or plant patent applications filed on or after September 26, 2011, can request for the application to receive priority examination.[23] The granting of priority examination requires the applicant to pay an additional fee of $4,800.[24] It should be noted however, that while $4,800 was mandated in the AIA, the USPTO has reduced the additional fee to $4,000 based on their fee setting authority granted by § 10 of the AIA.[25] Applications that receive prioritized examination will typically be granted within 12 months of the application receiving the priority status.[26] This is very advantageous for those that can afford to pay the extra fee because they will effectively be granted the equivalent to almost a two year extension on the limited monopoly that they will receive on their patented invention.[27]

Prior to the passage of the AIA, essentially all applications were reviewed in the order that they were received. In terms of equity and fairness, the pre-AIA system seems more appropriate than the new system that the AIA developed. Under the new system, those that can afford to pay extra will receive an even greater incentive than those that do not have the funds. This greater incentive will cause more and more applicants to seek out priority status in exchange for the extra fee. As this occurs, more of the USPTO’s resources will be shifted to handling the patents that receive priority status, thus decreasing the resources that were in place to handle the non-priority patents. These non-priority patents, while technically guaranteed a 17 year patent monopoly, will be denied any extra benefits that they would have normally received under the old system.[28] This could be the equivalent to the loss of a year or even a year and a half of the patent monopoly. By decreasing the overall incentive granted to smaller inventors, Congress may cause a decrease in the amount of innovations that these inventors produce.

As a counter argument, one might argue that the prioritized patent application system results in an overall increase in benefits and only causes a minor harm to innovation. This argument is premised on the stipulation that a patent application which will lead to a very profitable patent will cause inventors to gladly pay extra to guarantee a slightly longer monopoly, while weaker innovations, without the same marketability, will not be affected by decreasing the patent monopoly by a year or so. Therefore, the opportunity to obtain a longer patent monopoly will provide a greater incentive for companies to invest in the research and development of innovations that would not have otherwise occurred, while weaker innovations created without significant investment will continue to occur despite the slightly lower incentive.

II.        Increases in Fees

            A mere ten days after the enactment of the AIA, the newly passed law provided for a drastic increase in fees to be paid on all applications filed on or after September 26, 2011, and authorized the director of the USPTO to set or adjust all patent and trademark fees charged under Title 35 of the U.S. Code and the Trademark Act of 1946.[29] The direct AIA mandate caused nearly all types of patent fees to increase by 15 percent on any application filed on or after September 26, 2011.[30] The AIA further contained provisions that would charge applicants a supplemental fee based on the number of additional claims they presented in the patent application.[31] Prior to this new fee structure it was common to draft a voluminous amount of independent claims in every application because if granted the claim would further secure the patent monopoly by increasing the amount of overall protection the patent would provide. These types of claims were desirable because the broader the scope of protection, the more desirable the patent will be for litigation purposes. With the new supplemental fee,[32] the USPTO has moved to discourage overbroad claim construction, and forced many patent applicants to wisely choose which claims they wish to pursue.

Some may argue that by increasing application and examination fees, Congress and the USPTO have indirectly hindered some of the incentives that the patent system offers. However, Congress would likely argue increased fees will better serve the purposes of the patent system. This reasoning rests on the premise that only the innovations which did not deserve the limited monopoly in the first place will be deterred by increasing the fees incurred in obtaining a patent. This theory rests on the premise that if the proposed patented innovation would not be able recoup the fees incurred throughout the entire patent monopoly, then the benefit to society offered by that innovation is likely so insubstantial that it did not deserve patent protection in the first place.

Phase Three: Changes Effective 1 Year After Passage on September 16, 2012

I.          Modification of the Oath / Declaration Requirement

            Prior to the passage of the AIA, it was very hard for an assignee to prosecute a patent application unless he could obtain a written declaration from the inventor that was signed and met the requirements of the USPTO. Under the previous system, if the inventor refused to sign this oath or affirmation, the assignee was left with little options other than costly litigation to obtain the required declaration from the inventor.[33] The AIA now allows assignees to bypass this declaration requirement if it cannot be obtained from the original inventor through reasonable efforts.[34] The true purpose behind this change was to help eliminate some of the inefficiencies that the patent system occasionally presents. By choosing to favor flexible requirements rather than adhering to the previously enacted ridged ones, Congress has decreased some of the possible costs that can arise when prosecuting a patent, and increased the efficiency of the patent system as a whole. Now patent applications are not stonewalled from continuing prosecution until the signature of the inventor can be obtained. Thus patent applications can be processed more quickly and efficiently.

II.        Third Parties Submission of Prior Art

            The AIA also address a long standing problem which was contrary to the general purposes of the patent system. Prior to the enactment of the AIA, the USPTO had a strict policy that barred third parties from submitting prior art to them, in relation to pending patents.[35] Previously, when a pending patent was published (a standard policy implemented by the USPTO) eighteen months after the filing date,[36] a member of the public was barred from submitting evidence of prior art to the USPTO to prove that the published patent was not entitled to patent protection.[37] Pre-AIA patent law thus, allowed for some patents to erroneously receive patent protection due to an oversight by the USPTO. This oversight would result in economic waste to any individual that then had to undergo costly litigation to prove the patent’s invalidity. The AIA, fixed this inconsistency by allowing anyone to submit prior art for up to six months after a pending patent was published, so long as, the patent had not yet been granted.[38]

            This change shows a distinct shift toward a desire to decrease costly future litigation by allowing the public to submit prior art to the USPTO, thus aiding them in making a more informed and reasoned decision. However, the creation of the priority examination procedure seems inconsistent with this general premise. Under existing law, patents are only published 18 months after the patent’s filing date, unless the applicant consents to earlier publication. [39] Patents that receive priority status will typically be granted within 18 months of the filing date.[40] Therefore, the public will not be given ample time to review/dispute a pending application for a priority status patent. This strips the public of their newly created right to aid the USPTO in preventing future litigation.

III.       Supplemental Examination

            Under the AIA, a patent owner may now request for a supplemental examination of a patent to determine if any new information that has recently come to light will affect the validity of the patent.[41] Supplemental examination is governed by 35 U.S.C. § 257, which indicates that a “patent owner may request supplemental examination of a patent [from the USPTO] to consider, reconsider, or correct information believed to be relevant to the patent.”[42] Supplemental examination requests are available to any issued patent has, so long as, the request for supplemental examination was made on or after September 16, 2012.[43] Currently, the USPTO fees for conducting a supplemental examination can be as high as $16,500 for a large entity and $8,250 for a small entity.[44]

            Aside from the costly fees, conducting a supplemental examination will only provide sufficient incentives in a limited number of cases. Prior to the formation of supplemental examination by the AIA, it was normally in the patent holder’s best interests to license their patented innovation to others at rates below that of litigation, if patent holder felt that there was a genuine question as to their patent’s validity. By doing so, patent holders would ensure monetary returns on their patented innovation, that they would not otherwise be entitled to if their patent was found to be invalid. However, if a patent holder was unsuccessful in affirming the validity of their patent through supplemental examination, then they would no longer be entitled to the monetary returns they were receiving on their patent through licensing.[45] Supplemental examination helps to insulate patent holders from very costly litigation, by allowing the patent holder to confirm their patent’s validity when new information comes to light. In a small set of circumstances the benefits of supplemental examination far outweighs the risk of negative results. These circumstances relate to instances in which the patent holder discovers that their patent may have been obtained through some sort of inequitable conduct because successful supplemental examination will cure these cases.[46] Proof of inequitable conduct in relation to any single claim renders the entire patent unenforceable,[47]and can even render other related patents and applications in the same technology family unenforceable.[48] Therefore, inequitable conduct in relation to one single patent claim can jeopardize and invalidate most if not all of a company’s patent portfolio.[49] Successful supplemental examination eliminates the punitive effects of inequitable conduct and limits the patent’s invalidity to the affected patented claims. It should be noted, however, that this rule does not protect an individual that has committed direct fraud on the USPTO.[50]

            Congressional intent behind the creation of supplemental examination was likely to eliminate some of the punitive effects of inequitable conduct. However, due to the fact that supplemental examination is not available to patent holders that have already been or are being sued regarding the new information to be submitted, Congress did not eliminate the effects of inequitable conduct altogether. Therefore, the punitive effects of inequitable conduct will still be available if a third party submits the new information regarding inequitable conduct to the patent holder’s attention prior to the patent holder voluntarily bringing it to the attention of the USPTO through supplemental examination.

The creation of supplemental examination may have also been an attempt to decrease the amount of claims for invalidity based on inequitable conduct. From 2000 to 2008, the number of cases pleading patent invalidity based on inequitable conduct in the district courts rose from 4% to 40%.[51] The ever increasing threat that an entire patent portfolio could be held invalid due to inequitable conduct likely dis-incentivized investment in certain fields which resulted in a lack of innovation within those fields. Supplemental examination puts an end to this uncertainty, and allows investment and innovation to flourish.

IV.       Post Grant Review

            During the first nine months after the patent’s issuance, a challenging third party can request post grant review of the patented claims.[52] After this nine month period has lapsed, a party can request inter partes review of the patented claims.[53] Aside from the time frame in which each type of review can be requested, the most significant difference between post grant review and inter partes review are the grounds on which invalidity can be based. Post grant review will allow for the existence of virtually any claim that can invalidate a patent (i.e. § 101, § 102, § 103, § 112).[54]

            The post grant review procedure offers nearly all the same advantages of litigation, except it is slightly more favorable to the petitioning/infringing party. The first of these advantages include minimal discovery,[55] which causes the post grant review procedure to be much cheaper than tradition patent litigation. Secondly, there is no presumption of the patent’s validity in post grant review[56] like there is in District Court.[57] As such the petitioning party will only be required to prove invalidity by a preponderance of the evidence rather than having to satisfy a clear and convincing evidence standard.[58] A Patent Trials and Appeals Board Judge will be the trier of fact in a post grant review proceeding, which is advantageous over the lay jury because the judge will be able to form a better understanding of the subject matter.[59] Finally, the post grant review procedure is much faster than District Court litigation. Estoppel is the only major hindrance that the petitioning party may be faced with.[60] Under estoppel principles, any claims for invalidity that were raised during post grant review or could have reasonably been raised will be statutorily barred as an assertion that the petitioning party can make at trial.[61] However, this is no different than if the petitioning party chose forego post grant review and was unsuccessful in the District Court.[62]

            The creation of the post grant review procedure by the AIA shows yet another attempt by Congress to allow parties another avenue of review that is faster and more affordable than traditional civil litigation. The nine month time limit placed on post grant review can likely be attributed to Congress’ desire to allow the public a reasonable opportunity to dispute patent after their issuance. If no party comes forward to dispute the patented claims within the nine month time period, then Congress and the courts can presume that the patent was not issued in error.

V.        Inter Partes Review

            The AIA mandated that a new system of review called Inter partes review would replace inter partes reexamination as of September 16, 2012.[63] Inter partes review is only available after the nine month period for post grant review has ended.[64] The grounds that can be raised for invalidity of a patent during Inter partes review are much narrower than the grounds that can be raised for invalidity during post grant review.[65] During Inter partes review, claims of invalidity must be limited to either a lack of novelty or presence of obviousness when viewed in light of the prior art (i.e. claims are limited to 35 U.S.C. § § 102, 103). Furthermore, during Inter partes review, prior art is limited to prior patents and printed publications.[66] The advantages of Inter partes review are very similar to that of post grant review (i.e. the burden of proof is lower and the patent will not be presumed to be valid like it will be in District Court).[67] If the petitioning party losses its claims made in Inter partes review, then the petitioning party will be statutorily estopped from raising any grounds that were raised or reasonably could have been raised during Inter partes review in District Court litigation.[68]

            Congress designed the inter partes review procedure to reduce to the amount of time the USPTO spends reviewing validity, [69] to minimize any repetitive efforts between the USPTO and district court litigation,[70] and (3) to limited discovery which decreases costs and increases speeds of determining validity.[71] By providing a cost effective alternative to litigation, Congress has again moved toward a more streamline system that increases the overall incentives offered by the U.S. patent system.[72]

VI.       Covered Business Method Patents

            Prior to the passage of the AIA the United States Supreme Court indicated that business methods patents would be eligible for patent protection so long as they met the requirements for a process patent under the current rules.[73] The allowance of the business method patent not only caused a new wave of patent applications to flood the USPTO, but also increased the number of patent related court cases. In order to fix this problem the AIA created a transitional program to deal with all covered business method patents.[74] In doing so, the AIA vested authority in the Director of the USPTO to create regulations for establishing and implementing the transitional program.[75] This transitional program applies to all covered business method patent no matter the filing or issuance date, and will last from September 16, 2012 until September 16, 2020.[76] The transitional program is essentially a type of review procedure that can be applied for after the nine month period for post grant review has lapsed.[77] If the covered business method qualifies for the transitional program, then any pending litigation in District Court will be stayed.[78] The transitional program is essentially a type of inter partes review procedure for covered business method patents.

The transitional program offers the party being sued for infringing a covered business patent various advantages over the normal Inter partes review process. First, the prior art that will be considered is much broader than that which will be considered during Inter partes review.[79] Second, if the petitioning party loses its transitional review proceedings then they will only be estopped from asserting the claims that were actually made during the proceeding.[80] Inter partes review on the on the other hand will bar the petitioning party from asserting the claims that were actually made or reasonably could have been made during the proceeding.[81] Finally, the grounds upon which the petitioning party can assert invalidity are broader than those present in Inter partes review.[82] The USPTO specifically determined that a business method patent for a “technological invention” is not a covered business method patent, and thus will not qualify for the transitional program.[83] Congress also created a statutory defense to some companies that could be faced with litigation involving covered business method patents. In doing so Congress granted an affirmative defense to all businesses acting in good faith so long as they were engaged in the patented activity for at least one year prior to the effective filing date.[84]

Due to the influx of business method patent litigation and the possibility of inconsistent rulings among the federal districts, Congress must have determined this transitional program was required for at least limited time period in order to establish consistent and uniform case law in the field. Furthermore, without the enactment of this statutory defense, businesses that were employing the patented technique(s) for years, as a trade secret, may have been forced out of business by litigation involving their right to employ the now patented business method. On one hand, it seems only fair that a business should be allowed to continue using their trade secreted method because they had created and employed the method far prior to any patent on that method. However, as a counter argument, a business that did not seek patent protection bore the risk of having the method usurped from them. By creating this statutory defense Congress has incentivized companies to forgo public disclosure and not seek patent protection thus artificially extending the limited monopoly.

Phase Four: Changes Effective 18 months After Passage on March 16, 2013

I.          First to Invent v. First to File

            All patent applications filed after March 16, 2013 are now governed by the first to file system, rather than the previous first to invent system.[85] Through this change, the United States joined the generally accepted practices that are practiced by the large majority of the other countries around the world.[86]  Since this new system on applies to applications filed on or after March 16, 2013, for approximately the next 20 years the United States will have a dual patent system that is dependent on the relevant date in which the application was filed.[87] The date in which the application was filed will have a substantial effect on who will be considered rightfully entitled to the patented innovation. The date of filing will also determine the relevant date in which something will be considered prior art and what types of information will be considered prior art.

            The most important result from changing the U.S. patent system from a “first to invent” system into a “first to file system” involves changing the party rightfully entitled to receive a patented monopoly on the innovation. All applications filed before March 16, 2013, will protect the first person to invent the innovation by granting that person a patented monopoly so long as they engaged in reasonable efforts to obtain a patent on the innovation.[88] Therefore, when reviewing application filed prior to March 16, 2013, the first person to file for the patented innovation will not necessarily be the individual that will be receive the patent monopoly.[89] All applications filed on or after March 16, 2013 will grant the patent monopoly to the first inventor to file for an application, regardless of whether or not they were the first persons that invented the innovation.[90]

            The U.S. patent system is generally premised on the desire to promote prompt public disclosure of an innovation. Previously, public disclosure was considered prompt if the original inventor made the disclosure within a reasonable time after the innovation was created. Therefore, the previous system contained a distinct desired to ensure the original inventor was protected. However, protecting the original inventor can indirectly cause a public harm. In order to minimize this harm, the AIA sought increase the speed that inventors would seek patent protection and disclose their innovations. By strongly increasing the inventor’s incentive to file, the AIA is ensuring that the inventor will not attempt to artificially extending the patent monopoly by keeping the innovation to themselves for a reasonable period of time.

To dispute patents governed by the first to invent system, parties had to rely upon interference proceedings to determine which party was the first inventor. However, if the patent is governed by the first to file system, a party must rely on a new type of proceeding created known as the derivation proceeding that is used to determine and ensure that the first party to file for patent protection is a true inventor.[91] Therefore, a derivation proceeding is not used to ensure that the first inventor to file was also the first to invent, but rather just to ensure that the first person to file was someone who actually invented the innovation.[92] A petition to obtain a derivation proceeding normally must be filed within one year of the publication of the patent[93] (Publication normally occurs 18 months after the filing date if the patent has not yet been issued).[94] If a party chooses not to proceed under a derivation proceeding, they still may seeking to prove that the patent applicant was not in fact an inventor of the innovation through a civil derivation action.[95] Civil derivation actions are typically on used if it has been longer than one year from the date of publication, and thus a determination proceeding cannot be filed. A civil derivation action can be filed up to one year from the date of issuance of the patent rather than one year from the date of publication of the patent.[96]

Another important change associated with the transition from the first to invent system to the first to file system is the relevant date and location used to determine what types of public knowledge will be considered prior art. Previously the date of invention was used to determine what prior art would affect the innovation’s eligibility for patent protection.[97] The date of invention is now completely irrelevant in this determination for applications filed on or after March 16, 2013, and the AIA now requires that all prior art be viewed in light of the date in which the application was filed.[98] This eliminates the swearing back problem that plagued the patent system prior to the passage of the AIA.[99] Pre-AIA patent law allowed inventors to sign an affidavit alleging when they invented the innovation (i.e. the date of invention). The problem was this allowed inventors to defraud the patent office simply by indicating that the date of invention was prior to a particular piece of prior art that would have barred the patent office from issuing the patent.[100] When the date of invention is prior to the relevant “prior art” that art will not be considered because only prior art that occurred prior to the date of invention will be considered.[101] Therefore, inventors could lie to the patent office in order to get around potentially damning prior art. By changing the determinative date from the date of invention to the date of filing, the AIA eliminates any ambiguity in which public information relevant in the application process and will thus be considered prior art.

By changing the determinative date of prior art, Congress has eliminate much of the uncertainty behind the patent application system. Through interference proceedings, the filing inventor could lose the prospective patent rights they thought they were entitled to, as well as an funding that was promised to them by investors. The new system therefore, helps to stimulate investor confidence in an innovation after the patent application is filed. This will spur innovation and development by increasing the funds available to further market and develop an innovation post filing. The AIA shows a strong desire by congress to help decrease the complexity of the U.S. patent system. This change is consistent with this desire because it eliminates some of the intricacies and uncertainties that riddled the previous system.

Lastly the AIA changed the types of information that could be considered prior art. Previously, prior art was defined as, “the invention that was known or used by others in this country or described in a printed publication in this or a foreign country that in existence before the invention thereof by the applicant for patent.”[102] There is no such geographic limitation under the AIA.[103] The AIA, amended the definition of prior art to be considered any type of information, anywhere in the world, so long as the information is publicly available before the effective filing date of the patent application.[104] Disclosures made by the inventor will be given a one year grace period to allow the inventor reasonable time to file his or her patent application.[105] However, public disclosure will likely bar much of the rights the inventor will have in filing a patent in a foreign country because foreign countries do not have a similar one year grace period allowing for public disclosure.[106] While prior art has been expanded by eliminating the geographic restrictions in the determination of prior art, a United States patent will only protect inventors rights within the United States.[107] Therefore, if an inventor wants global patent protection, then the inventor will have to file a patent in each individual country that patent protection is desired.[108]

This change in the AIA shows a distinct desire by Congress to make the U.S. patent system encompass a greater world view. The patent system is designed so that only deserving innovations receive the protections of a patent monopoly. By expanding the definition of what can be considered prior art, the AIA narrowed what will be defined as deserving.


[1] D. Christopher Ohly, The America Invents Act of 2011, 23 No. 6 Intell. Prop. & Tech. L.J. 3, 3 (2011).

[2] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 1, 125 Stat. 284, (2011)


[3] 35 U.S.C. 101. See also Bilski v. Kappos, 130 S.Ct. 3218, 3225, 177 L.Ed.2d 792 (2010)

[4] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 14, 125 Stat. 284, 327(2011)

[5] Id.

[6] Leahy-Smith America Invents Act, Pub. L. No. 112-29 § 33(a), 125 Stat. 284, 340(2011)

[7] U.S. Const. Art. I, § 8 cl. 8

[8] 35 U.S.C.A. § 314(a). See also Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 6, 125 Stat. 284, 300 (2011)

[9] 35 U.S.C.A. § 303(a). See also In re Swanson, 540 F.3d 1368, 1380-81 (Fed. Cir. 2008)

[10] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 6, 125 Stat. 284, 300(2011). See also 35 U.S.C.A. § 314(a).

[11] 35 U.S.C. § 112

[12] Consol. Aluminum Corp. v. Foseco Int'l Ltd., 910 F.2d 804, 807 (Fed. Cir. 1990)

[13] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 15, 125 Stat. 284, 328 (2011)

[14] 35 U.S.C § 282(a)(3)(A)

[15] Donald S. Chisum, Best Mode Concealment and Inequitable Conduct in Patent Procurement: A Nutshell, A Review of Recent Federal Circuit Cases and A Plea for Modest Reform, 13 Santa Clara Computer & High Tech. L.J. 277, 281 (1997)

[16] Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 877 (Fed.Cir.1988)

[17] 35 U.S.C. § 299(b)

[18] 35 U.S.C. § 299(c)

[19] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 19, 125 Stat. 284, 332-33 (2011)

[20] 35 U.S.C. § 154(a)(2)

[21] 35 U.S.C. § 154(b)(1)(B)

[22] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 11(h), 125 Stat. 284, 324-26 (2011)

[23] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 11(h)(4)(A), 125 Stat. 284, 325 (2011)

[24] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 11(h)(1)(A)(i), 125 Stat. 284, 324 (2011)

[25]  37 C.F.R. § 1.17(c)

[26] See

[27] IP and Antitrust: An Analysis of Antitrust Principles Applied to Intellectual Property Law. § 11.2 Walker Process Claims. 2012 WL 5831485.

[28] 35 U.S.C. § 154

[29] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 10(a)(1), 125 Stat. 284, 316 (2011)

[30] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 11(i)(1)(A), 125 Stat. 284, 325 (2011)

[31] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 11(a)(2), 125 Stat. 284, 321 (2011)

[32] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 11(a)(2)(A)(i), 125 Stat. 284, 321 (2011)

[33] 35 U.S.C.A. § 115

[34] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 4, 125 Stat. 284, 294 (2011)

[35] 35 U.S.C. § 122(c)

[36] 35 U.S.C. § 122(b)

[37] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 8, 125 Stat. 284, 315-16 (2011)

[38] Manual of Patent Examining Procedures (MPEP) § 1134.01

[39] 35 U.S.C. § 122(b)

[40] See

[41] 35 U.S.C. § 257(a)

[42] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 12, 125 Stat. 284, 327(2011)

[43] 35 U.S.C. § 257(c). See also Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 12, 125 Stat. 284, 327 (2011)

[44] Setting and Adjusting Patent Fees--Final Rule, 78 Fed. Reg. 4,212, 4,232 (Jan. 18, 2013). See also

[45] 35 U.S.C.A § 257(b). See also Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 12, 125 Stat. 284, 325(2011)

[46] 35 U.S.C.A § 257(c)

[47] Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 877 (Fed.Cir.1988)

[48] Consol. Aluminum Corp. v. Foseco Int'l Ltd., 910 F.2d 804, 808–12 (Fed.Cir.1990)

[49] Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1289 (Fed. Cir. 2011)

[50] 35 U.S.C.A § 257(e)

[51] Christian E. Mammen, Controlling the “Plague”: Reforming the Doctrine of Inequitable Conduct, 24 Berkeley Tech. L.J. 1329, 1358-60 (2009)

[52] 35 U.S.C. § 321. See also Versata Dev. Corp. v. Rea, 2013 WL 4014649 (E.D. Va. Aug. 7, 2013)

[53] 35 U.S.C. § 311(b)

[54] 35 U.S.C.A § 324(a)

[55] 37 C.F.R. § 42.224

[56]  U.S.C. § 326(e)

[57] 35 U.S.C.A. § 282

[58] 35 U.S.C. § 326(e)

[59] 35 U.S.C.A. § 326(c)

[60] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 6, 125 Stat. 284, 308 (2011)

[61] 35 U.S.C. § 325(e)(1)

[62] U.S. Const. Art. IV, § 1

[63] 35 U.S.C. §§ 311–19

[64] 35 U.S.C § 311(c)(1)

[65] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 6, 125 Stat. 284, 300(2011)

[66] 35 U.S.C. 311(b). See also Universal Electronics, Inc. v. Universal Remote Control, Inc., 2013 WL 1876459 (C.D. Cal. May 2, 2013)

[67]  35 U.S.C. § 316(e)

[68] 35 U.S.C. § 315(e)(2)

[69] Changes to Implement Inter Partes Review Proceedings, Post–Grant Review Proceedings, and Transitional Program for Covered Business Method Patents, 77 Fed.Reg. 48,680, 48,725

[70] Id. 77 Fed.Reg. 48,680, 48,721

[71] Id. 77 Fed.Reg. 48,680, 48,719

[72] 37 C.F.R. §§ 42.100 et seq.

[73] State St. Bank & Trust Co. v. Signature Fin. Grp., Inc, 149 F.3d 1368 (Fed. Cir. 1998). Abrogated by In re Bilski, 545 F.3d 943 (Fed. Cir. 2008)

[74] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 18, 125 Stat. 284, 329 (2011)

[75] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 18, 125 Stat. 284, 329 (2011)

[76] 35 U.S.C.A. § 321(a)(3)(A)

[77] 35 U.S.C.A. § 321(a)(1)(B)

[78] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 18, 125 Stat. 284, 331 (2011)

[79] 37 C.F.R. § 42.301(b)

[80] 35 U.S.C. § 321(d)

[81] 35 U.S.C. § 315(e)(2)

[82] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 18, 125 Stat. 284, 330 (2011)

[83] 35 U.S.C. § 321(d)(1)

[84] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 5, 125 Stat. 284, 297(2011)

[85] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 3, 125 Stat. 284, 285-90 (2011)

[86] House report No. 112-98, 122th Cong., 1st Sess. Part 1, 40 (2011)

[87] 35 U.S.C. § 154(a)(2)

[88] 35 U.S.C. § 102(g). See also Apotex USA, Inc. v. Merck & Co., Inc., 254 F.3d 1031 (Fed. Cir. 2001)

[89] Paulik v. Rizkalla, 760 F.2d 1270, 226 USPQ 224 (Fed.Cir.1985).

[90] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 3, 125 Stat. 284, 285-90 (2011)

[91] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 2, 125 Stat. 284, 290-91 (2011)

[92] 35 U.S.C.A. § 135(a)(1)

[93] 35 U.S.C.A. § 135(a)(2)

[94] 35 U.S.C. § 122(b)

[95] 35 U.S.C. § 291

[96] 35 U.S.C. § § 135, 291

[97] Mahurkar v. C.R. Bard, Inc., 79 F.3d 1572, 1577 (Fed. Cir. 1996)

[98] Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 3(b)(1), 125 Stat. 284, 286 (2011)

[99] Ex Parte Asahi/America Inc., 1993 WL 1454860 (Bd. Pat. App. & Interf. Jan. 1, 1993)

[100] 37 C.F.R. § 1.131

[101] 35 U.S.C. § 102

[102] Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 13, 86 S. Ct. 684, 691, 15 L. Ed. 2d 545 (1966)

[103] 35 U.S.C. § 102(a)

[104] D. Christopher Ohly, The America Invents Act of 2011, 23 No. 6 Intell. Prop. & Tech. L.J. 3, 3 (2011)

[105] House report No. 112-98, 122th Cong., 1st Sess. Part 1, 41-43 (2011)

[106] See

[107] 35 U.S.C.A. § 271

[108] Id. See also (There is no world or international patent)