The Global Impact of the America Invents Act

On September 16, 2011, U.S. President Barack Obama signed into law (P.L. 112-29) the Leahy-Smith America Invents Act. The new law was presented to the President after six years of tireless efforts by Congress, the Administration, and stakeholders to craft a bill that makes the most significant reforms to the nation’s patent system in at least 60 years. Albert Tramposch, Director of International and Governmental Affairs at the United States Patent and Trademark Office (USPTO), discusses the implications of this milestone in the history of the U.S. patent system.

U.S. President Barack Obama signs the America Invents
Act, September 16, 2011 (Photo: White House).

The America Invents Act creates an innovation-friendly, collaboration-friendly and inventor-friendly patent system that will reduce costs, level the playing field for businesses small and large, and spur economic growth. The new law enables a better-resourced USPTO to grant patent rights with greater speed, predictability, clarity, and quality. We believe it also represents the optimal harmonized patent system that international negotiations have aimed for over the last 25 years.

Over the decades, patent law harmonization negotiations have contemplated a system with two major elements: (1) first-to-file and (2) a 12-month grace period (e.g., the draft Patent Law Treaty of 1991). On March 16, 2013, the U.S. will transition to a first-to-file (FTF) system to provide the transparency that banks, venture capitalists, and other investors need to invest in new businesses while establishing the stability that companies need to bring new products to globalized markets. Congress recognized the significance of a transition to first-to-file and stated in section 3(p) of the America Invents Act:

“It is the sense of the Congress that converting the United States patent system from ‘first to invent’ to a system of ‘first inventor to file’ will improve the United States patent system and promote harmonization of the United States patent system with the patent systems commonly used in nearly all other countries throughout the world with whom the United States conducts trade and thereby promote greater international uniformity and certainty in the procedures used for securing the exclusive rights of inventors to their discoveries.”

Along with a transition to a first-to-file system, the America Invents Act also provides for an improved grace period, which will help secure investment. Under the current system, an inventor who discloses an invention to a potential buyer or investor without entering into a confidentiality agreement risks losing patent rights. The new provisions allow the inventor to engage in critical negotiations with potential buyers or investors without fear of losing their right to a patent.

Provisional U.S. applications will continue to be available. Since 1995, inventors who wish to preserve their rights in their invention while evaluating its potential can do so by submitting a provisional application and paying a nominal fee (currently US$250 or US$125 for small entities), thereby establishing an internationally recognized priority date. The inventor may, within a 12-month period, convert that provisional application into a full U.S. application if the invention is worth pursuing.

The America Invents Act further harmonizes U.S. law by broadening the definition of prior art, eliminating the Hilmer doctrine and virtually eliminating the best mode requirement1. The reform provides that prior art under U.S. law includes non-printed disclosures, including oral disclosures, made available to the public anywhere in the world. New provisions also provide an incentive for early disclosure (i.e., one year or less before the effective filing date) by insulating inventors who disclose their inventions against third party disclosures, if the inventor’s disclosure precedes that of a third party. The elimination of the Hilmer doctrine ensures that patents and published applications filed in the U.S. are prior art as of the earliest effective filing date to which they are entitled to claim a right of priority. Additionally, the earliest effective filing date is no longer limited to only U.S. filings; it can now also originate from a foreign filing. The new U.S. law also eliminates the best mode requirement as a defense in infringement actions in court and USPTO post-grant review. As is true with all U.S. laws, these provisions will be subject to judicial interpretation.

The new law aligns U.S. prior user rights with the prevailing international norms by expanding the doctrine to certain inventions without subject matter limitation. As the U.S. transitions to an FTF system, the need for expanded prior user rights increases. The America Invents Act provides a prior use defense to an action for infringement if the accused infringer commercially used the subject matter one year before the effective filing date and the disclosure was made within the grace period.

Procedural reforms will improve quality by allowing third parties to submit information related to pending applications, thereby increasing the likelihood that examiners have access to the best available prior art before deciding to allow a patent on the claimed invention. Additionally, the establishment of various post-patent issuance proceedings will provide a cost-effective, administrative check on the quality of an issued patent for a limited period after its grant. These procedures will serve as an efficient and timely alternative to protracted litigation.

The law supports small businesses and independent inventors by creating a pro bono program in conjunction with intellectual property law associations. The law also requires the USPTO to maintain a Patent Ombudsman Program to provide patent filing services to qualifying small businesses and independent inventors. Additionally, to help foster innovation by independent inventors and universities, various fees are reduced for micro-entities2. Transitioning to an FTF system will also support small businesses in attracting the investments they need to startup their operations and bring new products to market.

With adoption of the America Invents Act, the U.S. will implement the optimal 21st century harmonized patent system that international negotiations have contemplated for the last 25 years. As innovators seek to tap into global markets, it is imperative that the international patent system provide a consistent, cost-effective means to obtain reliable patent rights in multiple jurisdictions. The America Invents Act is a leap forward towards harmonization and an important step in achieving a standardized global patent system that spurs job creation and market growth through innovative products and services.

The USPTO encourages the global user community to engage in this effort by visiting its implementation website and commenting on the proposed rule makings.

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1  35 U.S.C. 112 requires that the specification “set forth the best mode contemplated by the inventor of carrying out his invention.”
2 Pursuant to section 10 of the Act, micro-entities qualify for a 75% discount on fees set or adjusted under the fee setting authority if, inter alia, the applicant: (1) qualifies as a small entity; (2) has not been named on more than four previously filed applications; (3) meets the stipulated income restrictions; and (4) meets the stipulated assignment limitations.