First to File Patent Reform Act Signed September 16, 2011

Today, September 16, 2011, President Obama signed the "America Invents" Act into law. Among other things, this will change the United States from a "first to invent" patent system to a "first to file" patent system.

Changes to the definition of prior art and new post-grant review proceedings will not take effect for 18 months (March 16, 2011). The first-to-file provisions and changes to the grace period go into effect then. The one year grace period has been substantially eliminated except that certain disclosures made by the inventor will not be considered to be prior art if they were made a year or less before the patent application filing date. Of course, such disclosures may well result in a loss of ability to file valid foreign applications so inventors should plan to maintain secrecy until a patent application is filed, and should not rely on having a one year grace period in which to attempt to market their invention.

Some other changes take effect immediately. Other changes take effect in a year. Others take effect at other times.

A section-by-section summary is as follows:

Under Section 4, a person to whom an inventor has assigned (or is under an obligation to assign) an invention can make an application for patent. Assignees will now be able to sign Declarations where inventors refuse to sign, are deceased, or cannot be found. These provisions take effect in one year.

Section 5 changes the prior commercial use defense for business method patents. Section 5 is effective now, on the date of enactment.

Section 6 provides a variety of post-grant review procedures including inter-partes review and post-grant review petitions. A petition for a post-grant review may not be filed more than 9 months after the date of the grant of the patent or of the issuance of a reissue patent. A petition for inter partes review must be filed after the later of either--(1) the date that is 9 months after the grant of a patent or issuance of a reissue of a patent; or (2) if a post-grant review is instituted under chapter 32, the date of the termination of such post-grant review. These provisions take effect in one year.

Section 7 sets for the composition and duties of the Patent Trial and Appeal Board.

Section 8 allows any third party to submit for consideration and inclusion in the record of a patent application, any patent, published patent application, or other printed publication of potential relevance to the examination of the application, if such submission is made in writing before a certain deadline. These provisions take effect in one year.

Section 10 authorizes the Director, for a seven-year period and subject to conditions, to set or adjust fees charged by the USPTO under specified federal patent and trademark laws. Section 10 also specifies that fees for filing, searching, examining, issuing, appealing, and maintaining patent applications and patents shall be reduced by 50 percent with respect to small entities, and shall be reduced by 75 percent with respect to any "micro entity."

A micro entity is defined as an applicant who makes a certification that the applicant--
(1) qualifies as a small entity, as defined in regulations issued by the Director;
(2) has not been named as an inventor on more than 4 previously filed patent applications, other than applications filed in another country, provisional applications under section 111(b), or international applications filed under the treaty defined in section 351(a) for which the basic national fee under section 41(a) was not paid;
(3) did not, in the calendar year preceding the calendar year in which the applicable fee is being paid, have a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding 3 times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census; and
(4) has not assigned, granted, or conveyed, and is not under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the application concerned to an entity that, in the calendar year preceding the calendar year in which the applicable fee is being paid, had a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding 3 times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census.
Section 10 also requires an additional fee of $400 for each application for an original patent, except for a design, plant, or provisional application, that is not filed by electronic means. Section 10 takes effect on enactment.

Section 11 sets forth new government fees. Section 11 also establishes a fee of $4800 for prioritized examination, and establishes a 15% surcharge for specified fees to be credited to the U.S. Patent and Trademark Appropriation Account, remain available until expended, and used only for specified expenses relating to patent applications. Section 11 takes effect on enactment (September 16, 2011).

Section 12 provides for supplemental examination. A patent owner may request supplemental examination of a patent in the Office to consider, reconsider, or correct information believed to be relevant to the patent, in accordance with such requirements as the Director may establish. Within 3 months after the date a request for supplemental examination meeting the requirements of this section is received, the Director shall conduct the supplemental examination and shall conclude such examination by issuing a certificate indicating whether the information presented in the request raises a substantial new question of patentability. Section 12 takes effect in one year.

Section 13 decreases the percentage of certain invention-related royalties and income that must be paid to the federal government and increases the percentage that must be given to small business firms when a nonprofit organization has a funding agreement with the government for the operation of a government-owned, contractor-operated facility. Section 13 takes effect on enactment.

Section 14 deems tax strategies to be within the prior art (unpatentable). Any strategy for reducing, avoiding, or deferring tax liability, whether known or unknown at the time of the invention or application for patent, shall be deemed insufficient to differentiate a claimed invention from the prior art. Section 14 takes effect on enactment (September 16, 2011).

Section 15 prohibits using a failure to disclose the best mode as a basis to invalidate patent claims. Section 15 takes effect on enactment (September 16, 2011).

Section 17 prevents using an accused infringer's failure to obtain the advice of counsel to prove that any infringement was willful or induced.

Section 18 requires the Director to establish an eight-year transitional post-grant review proceeding for reviewing the validity of covered business-method patents not later than one year after enactment.

Section 19 amends federal judicial code to state that no State court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to patents, plant variety protection, or copyrights. Section 19 grants the Federal Circuit exclusive jurisdiction of appeals relating to patents or plant variety protection. Section 19 applies to any civil action commenced on or after the date of the enactment of this Act (September 16, 2011).

Section 20 makes various minor technical amendments.

Section 21 authorizes the U.S. Patent and Trademark Office to pay subsistence and travel-related expenses of persons attending certain USPTO-conducted intellectual property programs who are not federal employees. It also authorizes the Director to fix a basic pay rate below a certain level for administrative patent and trademark judges. Section 21 is effective October 1, 2011.

Section 22 establishes in the Treasury a Patent and Trademark Fee Reserve Fund. If fee collections by the Patent and Trademark Office for a fiscal year exceed the amount appropriated to the Office for that fiscal year, fees collected in excess of the appropriated amount shall be deposited in the Patent and Trademark Fee Reserve Fund. The amendments made by this section shall take effect on October 1, 2011.

Section 23 states that the Director shall, not later than three years after enactment, establish at least three U.S. satellite offices for the U.S. Patent and Trademark Office.

Section 24 states that the satellite office of the United States Patent and Trademark Office to be located in Detroit, Michigan, shall be known and designated as the ‘Elijah J. McCoy United States Patent and Trademark Office’

Section 25 Authorizes the USPTO to establish regulations providing, at the request of the applicant, prioritized examination of applications for products, processes, or technologies important to the economy or national competitiveness without recovering the aggregate extra cost of providing such prioritization.

Section 26 requires the Director to make a study on the manner in which this Act and the amendments made by this Act are being implemented by the Office, and to make a report to Congress within four years after enactment.

Section 27 requires the Director to conduct a study on effective ways to provide independent, confirming genetic diagnostic test activity where gene patents and exclusive licensing for primary genetic diagnostic tests exist.

Section 28 requires the Director to establish and maintain in the Office a Patent Ombudsman Program. The duties of the Program’s staff shall include providing support and services relating to patent filings to small business concerns and independent inventors.

Section 29 requires the Director sto, not later than the end of the 6-month period beginning on the date of the enactment of this Act, establish methods for studying the diversity of patent applicants, including those applicants who are minorities, women, or veterans. The Director shall not use the results of such study to provide any preferential treatment to patent applicants.

Section 30 states that it is the sense of Congress that the patent system should promote industries to continue to develop new technologies that spur growth and create jobs across the country which includes protecting the rights of small businesses and inventors from predatory behavior that could result in the cutting off of innovation. Apparently, lobbying by large companies to push through patent reform is not considered predatory behavior.

Section 31 requires the Director to, in consultation with the Secretary of Commerce and the Administrator of the Small Business Administration, carry out a study
to determine how the Office, in coordination with other Federal departments and agencies, can best help small businesses with international patent protection.

Section 32 requires the Director to work with and support intellectual property law associations across the country in the establishment of pro bono programs designed to assist financially under-resourced independent inventors and small businesses.

Section 33 states that notwithstanding any other provision of law, no patent may issue on a claim directed to or encompassing a human organism.

Section 34 directs the Comptroller General to conduct a study of the consequences of litigation by non-practicing entities, or by patent assertion entities, related to patent claims.

Section 35 states that except as otherwise provided in this Act, the provisions of this Act shall take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act and shall apply to any patent issued on or after that effective date.

Section 37 sets forth a provision concerning calculation of the filing period for patent extension applications related to drug products and certain other items subject to regulation under the Federal Food, Drug, and Cosmetic Act.

Many changes will be subject to implementation rules drafted by the U.S. Patent and Trademark Office. These rules have not yet been written.