We have previously reported on progress of the US patent reform bills, HR 1249 and S 23, which have been making their way through the US judicial system. At the start of this month HR 1249 went before the Senate and was passed with an overwhelming majority of 89-9. Though there was a push for some last minute changes to the legislation, these were defeated amid fears that they would slow or halt altogether the progress of the bill. Now it has cleared this hurdle, it is expected to be signed into law by President Obama in the near future.
HR 1249, known as the “America Invents Act”, represents the first major changes to patent legislation in the US for fifty years. Some provisions of the bill will take effect almost immediately after the bill is signed into law, while others come into force in between 12 and 18 months. The main changes being introduced are as follows:
Best Mode: Currently, there is a requirement for the “best mode” of carrying out an invention to be disclosed in the patent application. Failure to do so can result in the patent being declared invalid. Under the new law, though the best mode should still be disclosed, failure to do so can no longer be the basis for a claim of invalidity. This change will take effect immediately.
Fee Provisions: Changes are being introduced to the way the USPTO is funded, allowing it to have greater access to money raised through fees. It is hoped that this will allow the USPTO to hire new examiners and update technology, in order to address the current backlog of some 700,000 patent applications.
Virtual Marking and False Marking: Under the new law it will be possible to virtually mark patented products. Provided that the website displaying the product also indicates the patent number, this can be used to claim damages in infringement proceedings.
In addition, the rules surrounding false marking will be relaxed. Currently, any third party can sue if a product is falsely marked as “patented”. Changes mean that only the Federal Government or a competitor who has suffered damages can sue, and they are not able to do so if the product was protected by a patent which has expired. These changes will take effect immediately.
Micro Entity Status: Currently, companies and individuals who qualify as “small entities” are entitled to a 50% reduction in official fees. The new bill introduces an additional “micro entity” status. Those qualifying will be entitled to a 75% reduction in official fees. In order to qualify as a micro entity, the applicant must first qualify under the small entity guidelines. In addition, no inventor on the patent application can have an annual income more than three times the US median household income (currently approximately USD50,000), nor must they assign or license the invention to someone who does. In addition, they must not have been named as an inventor on more than four US patents.
Applicant: Under the current system, a US patent application must be filed in the name of the inventor. The changes mean that it will now be possible to file a patent application in the name of an assignee, an employer, or any other person entitled to the invention.
First to file: Currently a “first-to-invent” filing system, the changes are set to move the US patent system to “first-to-file”, bringing it into line with the rest of the world. This will eradicate costly interference proceedings, and should make international applications more straightforward for US applicants. This provision is set to come into force for applications filed more than 18 months after the bill is signed into law.
Pre-issuance submissions: The bill also introduces the equivalent of European “third party observations” to the US patent system. An interested third party will be able to file observations on a patent application at any time between publication and grant, and they will be considered by the examiner.
Post grant procedures: Another new provision is the introduction of new post grant review procedures. Under the new law, it will be possible to challenge the validity of a patent during the nine months following grant. If a patent is challenged, the USPTO will review the case. The aim of this new procedure is to reduce the amount of lengthy and expensive patent litigation in the US courts.
We shall be monitoring the implementation of these changes and their impact on our clients. If you have any concern about how the changes may affect your current or future US patent applications, then please get in touch and we will be happy to discuss it with you.
23 September 2011