Client Advisory FAQ - AIA Patent Reform - 2011


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Client Advisory FAQ - AIA Patent Reform - 2011

  1. 1. MEMORANDUMTO: Clients and EntrepreneursFROM: Morris, Manning & Martin, LLPRE: Frequently Asked Questions (FAQs) about Patent Reform – The Leahy-Smith America Invents Act of 2011 (“AIA”)DATE: December 2011___________________________________________________________________This Frequently Asked Question (FAQ) memorandum addresses typical questions regardingthe new Leahy-Smith America Invents Act of 2011 (enacted September 16, 2011), and itspotential impact on patent application filing, patent enforcement, and patent litigation. Thisdocument is authored by the Intellectual Property Group of Morris, Manning & Martin, LLP( Please note that there are additional questions that will be relevant inthis area and you should consult an IP attorney at MMM (contact information listed at theend of this memorandum) with any other questions.1. What is the main impact of the AIA?Answer: The main impact of the America Invents Act (“AIA”) is expected to be anincreased urgency to file patent applications, due to the fact that the U.S. patent system willnow grant patents to the first inventor to file a patent application (“first to file”) instead of tothe “first to invent.”2. What should I be doing now as a result of the AIA?Answer: There are many potential effects of the AIA, but the most important effect onpatent applications is “file early, file often.” Because the AIA radically changes the priorityrules associated with patent filings, it is now more important than ever to file patentapplications as soon as possible. Also, because it is now potentially easier to challengeissued patents (and submit prior art in pending applications), it is also important to monitorthe patent filings of your competitors.3. Will the AIA improve the quality of U.S. patents?Answer: It is not known at this time if the AIA will improve the quality of patents. Patentquality is an elusive characteristic – what makes for a “quality” patent? There are noobjective measures as to the quality of a patent. The AIA is, however, supposed to improvepatent quality because of increased scrutiny of patent applications at the U.S. Patent and
  2. 2. FAQs – Effects of Patent Reform Act (“AIA”)2011Page 2Trademark Office (USPTO) and new procedures for challenging patents outside of thecourts.4. Will the AIA affect the patent lawsuits that are brought by patent “trolls” and non-practicing entities (NPEs)?Answer: It is not likely that the AIA will appreciably affect the incentives for NPEs (alsoknown as patent “trolls”) to bring lawsuits to enforce patents, at least for the immediatefuture. The AIA includes a new joinder provision requiring that accused infringers in thesame lawsuit must be tied together by “the same accused product or process.” It is possiblethat, in the longer term (more than 5 years out), the likelihood of success of lawsuits by NPEswill decline due to a decreased number of patents that are issued. However, it will be anumber of years before the effects of the AIA on patent litigation will be fully felt andrealized.5. Will the AIA make it any easier or less expensive to challenge patents outside ofcourts?Answer: Possibly. The AIA includes a number of reforms that are designed to provide newand improved methods to challenge possibly invalid patents outside of the court system. TheAIA provides for new procedures in the USPTO for (a) Post-grant review, (b) PreissuanceSubmissions, and (c) Supplemental Examination. These new procedures will add to theUSPTO bureaucracy, but are supposedly designed to help challenge suspect patents morequickly and inexpensively.6. Will the AIA cut back on the large damages awards that have been awarded inmany recent patent lawsuits?Answer: No. The AIA includes no provisions that affect patent damages or awards. Anumber of lobbyists had urged Congress to include patent damages limitations so thatcompanies could more readily manage their exposure to patent infringement claims.However, for some reasons not completely understood, Congress failed to include the patentdamages limitations provisions that some companies felt were needed.7. What is the biggest change to the U.S. patent system from the AIA?Answer: Clearly, the biggest change to the U.S. patent system is the change from “first toinvent” to “first to file.” The change required a complete revision to the definition of priorart. The revised definition greatly expands the nature of information and activities that barthe grant of a valid patent to a patent applicant.
  3. 3. FAQs – Effects of Patent Reform Act (“AIA”)2011Page 38. Did the AIA change the basic requirements for obtaining a patent?Answer: No. The primary requirements for patentability of (a) patentable subject matter, (b)novelty, (c) nonobviousness, (d) a complete and enabling written description, and (e)description of the best mode of practicing the invention – did not fundamentally change.There are changes that affect the best mode requirement, but those changes are not expectedto have a major impact. A patent application under the AIA must still satisfy these basicrequirements. The novelty and nonobviousness requirements relate to “prior art,” whosedefinition has been significantly altered.9. What is the definition of “prior art” under the AIA?Answer: The definition of prior art is fundamentally different under the AIA than underprevious laws. Prior art provides the evidentiary baseline for judging whether an invention isnovel and nonobvious, and thus entitled to be patented. In particular, the one-year “graceperiod” has been eliminated for many types of prior art (see subsequent questions for moredetails). This is a profound change. Prior art is now defined as other patents, printedpublications, on sale events, and public use events that predate a patent applicant’s effectivefiling date. Many more types of information, both in the U.S. and in other countries, is nowavailable to cite against a patent application as evidence that a patent should not be granted(or is invalid).10. Did the AIA make any changes to the definition of patentable subject matter?Answer: No. The primary categories of patentable subject matter are still (a) machines, (b)manufactures (articles), (c) composition of matter, and (d) processes or methods. Nosignificant subject matter-related cases were overruled, such as the 2010 Bilski v. Kapposdecision, which affected business method and computer software patents.11. Does the AIA eliminate business method patents?Answer: No. There are no substantive provisions in the AIA that affect the way that theUSPTO receives or processes so-called “business method patents.” However, the AIAincludes a new 8-year program to address the validity of business method patents, using anew procedure for challenging such patents at the USPTO. There is still much complexity indetermining what exactly is a “business method” patent.
  4. 4. FAQs – Effects of Patent Reform Act (“AIA”)2011Page 412. Did the AIA affect the availability or desirability of filing a “provisional” patentapplication?Answer: No. Provisional patent applications (PPAs) are still available under the AIA. Therequirements for a useful PPA remain the same. Patent applicants must still file a completewritten description of any invention that is to be claimed, although there is no requirement toinclude any claims in a PPA. PPAs still present significant risks that a patent applicant willnot devote sufficient attention and work to providing a complete written description, so thatthe benefits of a PPA may not be available.13. What is the impact of the AIA on the “best mode” requirement?Answer: Under current laws, a patent applicant is required to describe in the patentapplication the “best mode” for making and practicing the invention. The AIA abolishes thebest mode requirement as a defense to patent infringement, but it requires that the best modestill be described in patent applications. Specifically, the AIA amends the laws to eliminatethe best mode requirement as “a basis on which any claim of a patent may be canceled orheld invalid or otherwise unenforceable.” The overall impact of this seemingly conflictingprovision is not entirely clear.14. Will the USPTO be able to improve its operations and efficiency and speed ofprocessing patent applications?Answer: Probably, yes. The AIA included a provision that allows the USPTO to receiveincreased funding for its operations, of about $300 million per year at current rates ofactivity. However, Congress failed to grant the USPTO the right to retain all of the patentfees that it receives to fund its operations, as many experts urged. Congress thus did notcompletely end fee diversion – (a) the USPTO is appropriated funds to some extent byCongress each year, (b) the USPTO can charge fees at increased rates, (c) collections inexcess of the appropriation are collected in a reserve fund, and (d) Congress could – perhaps– allocate additional amounts of the reserve fund for USPTO operations.15. What was the reason for changing from a “first to invent” system of grantingpatents to “first to file”?Answer: The reasons and policies for making this change are not clear. Since 1995,Congress has attempted to make changes to the U.S. patent system so as to make our systemconsistent with the patent systems of many other countries. This is called patentharmonization. This was primarily to promote a concept that patent applicants would receivethe same treatment in the patent systems of all the different countries that were elected for
  5. 5. FAQs – Effects of Patent Reform Act (“AIA”)2011Page 5international patenting efforts. It is far from clear that this change provides any benefits toU.S. patent applicants, as the patent systems in most countries are less well developed andconsistent than the U.S. patent system.16. What happened to the “grace period” under the old U.S. Patent Act?Answer: The Patent Act of 1952 provided a grace period for filing a patent application.This grace period was provided to the inventor to provide additional time for the inventor toassess the value of the invention and workability of the technology before requiringsignificant investment in the patent process. Specifically, this grace period provided theinventor with a one-year time period from any public disclosure, offer for sale, or descriptionin a publication of the invention. Some aspects of the grace period remain under the AIA(see next question), but they are more limited in scope.17. What is the “modified grace period” under the AIA?Answer: Under the AIA, a one-year grace period still applies for certain public disclosuresof the subject invention, so long as those disclosures were made by the inventor, or bysomeone to whom the inventor disclosed the invention. Thus, disclosures by an inventor’scompetitors or others working on similar inventions could bar the inventor’s ability to obtaina patent, even though the inventor actually invented the technology first.18. When do the provisions of the AIA go into effect?Answer: The AIA includes numerous provisions that are slated to go into effect at variouspoints from the date of the AIA’s enactment (September 16, 2011) until the last provisiongoes into effect on March 16, 2013. For example, provisions such as the false markingchanges, new “best mode” requirements, prior user defense, and a 15% fee increase acrossthe board went into effect as soon as the AIA was signed into law. Other provisions such asthe new post-grant review procedures, the ability to file on behalf of an assignee (instead ofindividual inventors), modifications to the inter-partes review proceedings, third partysubmissions, and other provisions go into effect one year after the enactment of the AIA (i.e.,on September 16, 2012). The “first to file” provisions, changes to the prior art rules, andother significant provisions go into effect 18 months after the enactment of the AIA (i.e., onMarch 16, 2013).19. What is the “prior commercial user” defense now available under the AIA?Answer: Prior “commercial use” of a patented method is recognized as a defense againstinfringement under current law if certain conditions are met, and the AIA expands thisdefense to include any “process, or consisting of a machine, manufacture, or composition of
  6. 6. FAQs – Effects of Patent Reform Act (“AIA”)2011Page 6matter used in a manufacturing or other commercial process.” In order to rely on thisdefense, the accused infringer must have, “acting in good faith, commercially used thesubject matter in the United States, either in connection with an internal commercial use oran actual arm’s length sale or other arm’s length commercial transfer of a useful end result ofsuch commercial use.” Other provisions apply as well.20. Will it be easier to challenge a patent under the AIA once it has issued?Answer: Possibly. The AIA replaces the current “reexamination” process with a new “post-grant review” process that provides more grounds and opportunity for a patent to bechallenged within a limited time from its issuance. The new post-grant review process isinitiated by a petition to the USPTO that must be filed within nine months after the date ofpatent grant or issuance of a reissue patent. The petition does not need to satisfy the familiar“substantial new question of patentability requirement,” but rather must show that it is “morelikely than not that at least 1 of the claims challenged in the petition is unpatentable. Thereare other aspects of this provision that expand the grounds for challenging an issued patent.21. Will it be possible to challenge a pending patent application?Answer: No, a third party cannot challenge a pending patent application. However, theAIA does expand the window and content available for third party submissions ofinformation prior to issuance. These third party submissions will be considered by theUSPTO in granting a patent. Specifically, third parties can now submit “prior art” to theUSPTO before the earlier of either a notice of allowance of the pending application or thelater of 1) 6 months after publication of the patent application or 2) the date of the firstrejection during examination. When submitting prior art, the third party must provide adescription of the relevance of each document along with a fee.22. What is “false marking” and how was it affected by the AIA?Answer: Generally, “false marking” relates to the concept of marking a product, machine,or other invention as “patented” (or providing a patent number) when in fact the product wasnever patented. Recently, some cases made it easier to sue for false marking offenses, evenin circumstances in which a product was initially validly marked, but then the productcontinued to be marked as patented even after the underlying patent had expired. The AIAhas essentially put an end to these (sometimes frivolous and unfounded) lawsuits, by makingit more difficult to sue for false marking.
  7. 7. FAQs – Effects of Patent Reform Act (“AIA”)2011Page 723. Is it now easier under the AIA to “mark” my products as patented?Answer: Yes. The AIA introduces “virtual marking” as a way to satisfy the public noticemarking requirement. Virtual marks are statements on products or product packaging thatdirect the reader to a publicly accessible website, where the patent numbers relevant to theproduct are listed. Parties are exempt from liability for false marking after a patent expires ifthe product or package uses a virtual mark.24. Can a company now file a patent application in its own name instead of namingindividual inventors?Answer: Yes. If an inventor or inventors have assigned their rights in an invention to anassignee, then the assignee will now be able to file the patent application in its name only.This new provision should make it easier in some respects for companies to file patentapplications on behalf of its employees.25. What is the “transitional program for covered business methods”?Answer: The AIA includes a new bureaucratic process designed to help challenge businessmethod patents, but it does not cover “technological” inventions (whatever those might be).This process is similar to the new post-grant review procedures, discussed above. It may notbe clear for some time what is a “technological” invention in the area of business methodspatent.26. Will I receive any reduction in USPTO fees under the AIA?Answer: Possibly. Under the current laws, “small entities” (generally businesses with lessthan 500 employees, or universities, individuals, etc.) are entitled to a 50% reduction in fees.The AIA defines a new category of applicants called “micro entities” that receive a 75%reduction in filing fees, extension fees, maintenance fees, and the like. These micro entitiesgenerally include small entities that do not exceed some threshold requirements in terms ofnumber of patent applications filed, gross income, and other factors.27. Will the AIA speed up the patent examination process?Answer: Yes, in some limited circumstances. The AIA allows for “prioritized examination”for a certain limited number of applicants that meet certain requirements. To qualify forprioritized examination, the applicant must pay greatly-increased filing fees ($4,800), thereare limits on the total number of claims that can be submitted, the application must becomplete as of the time of filing (i.e., all declaration and supporting documents must be
  8. 8. FAQs – Effects of Patent Reform Act (“AIA”)2011Page 8present at the time of filing), and other requirements must be met. Final disposition of theapplication should occur within twelve (12) months of filing.28. Did the AIA change the standard for “willful infringement”?Answer: No. The AIA has codified the recent standard set forth in the In re Seagateopinion. Under Seagate (and now the AIA), a party cannot be held liable for willfullyinfringing a patent (and thus be subject to triple damages) simply because the party failed toobtain a legal opinion of non-infringement once the party became aware of the possibleinfringement. It is worth noting, however, that although a party cannot be held liable forwillful infringement, failure to seek an opinion of non-infringement can impact the overalldamage award in a lawsuit.29. Did the AIA affect the way that patents are examined and granted by the USPTO?Answer: Not immediately, but eventually. The USPTO should have more resources(money) available under the AIA, and will likely hire more examiners, and will establishsatellite offices, etc. But, the law included no substantive provisions on how the USPTOshould conduct its business from a substantive perspective. A number of new regulations forpatent processing and handling will be issued in the upcoming months to implement variousAIA provisions. These new regulations will inevitably change some aspects of the patentprocess. *****For more information regarding any of the above-listed questions, or any others relating topatents or intellectual property, please contact one of the following attorneys in the MMM IPGroup: John R. Harris - 404-504-7720 - Tim T. Xia – 404-495-3678 - Chris Raimund – 202-216-4816 - Daniel E. Sineway - 404-364-7421 -