First to File

04 Apr First to File

President Obama signed the Leahy-Smith America Invents Act (AIA)-the most significant change to U.S. patent law in almost 60 years – on Friday, September 16, 2011. Some provisions of the law, such as the increased patent office fees took immediate effect (on September 26, 2011), while remaining provisions will become effective on different dates in 2012 and 2013, such as post-grant opposition procedures and the rules of novelty and nonobviousness, and first inventor to file provisions.

The USPTO began publishing notices of proposed rulemaking in January, 2012 relating to provisions that will take effect on or after September 16, 2012. The notices will include rules that will implement changes for the inventor declarations, the post-grant review procedures – such as new post-grant review, inter partes proceedings, supplemental examination – the derivation proceeding, and a number of other items. The USPTO has planned a series of cross-country roadshows to discuss the proposed rules implementing various provisions of the AIA. The proposed rules to be covered include: (i) the OED statute of limitations, (ii) inventor’s oath and declaration, (iii) third party submission of prior art in a patent application, (iv) citation of prior art in a patent file, (v) supplemental examination, (vi) post-grant review, (vii) inter partes review, (viii) the transitional program for covered business methods, and (ix) derivation. The proposed rules for (i) to (iv) published in the Federal Register on January 5 and 6, 2012, and the proposed rules for (v) to (ix) are expected to publish in the Federal Register in mid- to late January 2012. The final rules are expected to be published in July, 2012. Please visit for more information: http://www.uspto.gov/aia_implementation/index.jsp

A few changes are summarized below.

Changes Already in Effect

Defense to Infringement Based on Prior Commercial Use: Effective from 9/16/2011, the Act expands the defense to infringement based on prior commercial use to affiliates and to all areas of technology with no restriction to business method patents. To use the defense, a party must show a reduction to practice and commercial use at least one year before the effective filing date of the subject patent. The Act prohibits deeming a patent invalid on novelty or non-obvious subject matter grounds solely because such prior commercial use defenses are raised or established.

False Marking and Virtual Marking: Effective from September 16, 2011, the new law delivered a one-two punch to false marking cases. The Act prohibits anyone other than the United States from suing for applicable penalty under the false marking statute, and allows only a person who has suffered a competitive injury to file a civil action under the false marking statute for recovery of damages adequate to compensate for the injury. Previously the suits had qui tam provisions meaning plaintiffs would split the proceeds with Uncle Sam. Further, expired patent labels don’t constitute false marking. This portion of the Act applies to all cases that are pending on, or commenced on or after September 16, 2011, the date of the enactment of this Act.

Patent holders can now “virtually” mark their products by fixing “patent” or “pat.” together with a publicly accessible internet address. This change applies to any case existing on or filed after the date of enactment of the Act.

Human Organisms: Effective from September 16, 2011, the Act prohibits issuance of any patents with claims directed to or encompassing a human organism.

Best Mode: Effective from September 16, 2011, the Act eliminates the failure to disclose the best mode as a basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable. However, the best mode requirement remains as an examination issue.

Micro Entity: Effective from September 16, 2011, the Act adds a class of “micro” entities to the current large and small entity classification (§ 123). Micro entities must meet additional requirements to those for small entity status, such as not being named as the inventor on more than four applications (§ 123(a)(2)), not having a gross income exceeding three times the reported median household income (§ 123(a)(3)), and not having assigned or agreed to assign the invention to an entity having a gross income exceeding three times the reported median household income (§ 123(a)(4)). Alternatively, inventors employed by and under agreement to assign inventive rights to institutions of higher education qualify as micro entities (§ 123(d)). Micro entity status entitles the applicant to a 75% reduction of applicable fees effective immediately, and will likely help spur filings from individual inventors and small businesses for which the costs of procuring patent protection are particularly prohibitive. But the discount is not available per the AIA until the USPTO sets or adjusts fees for “filing, searching, examining, issuing, appealing, and maintaining patent applications and patents” using the fee setting authority provided for in Section 10 of the AIA.

Inter Partes Reexamination: Effective from September 16, 2011, the Act changes the standard for initiating inter partes reexamination from “a new substantial question of patentability (SNQ)” to “a reasonable likelihood that the petitioner will prevail” with respect to at least one challenged claim. On September 16, 2012, the USPTO will stop accepting inter partes reexamination requests and instead move to the new inter partes review procedure to be conducted before the new Patent Trial and Appeal Board rather than before an examiner. Ex Parte reexaminations may still be filed.

Fee Increase: The Act provides the Director of the USPTO immediately with the authority to set and adjust the fees collected by the Office, but automatically terminates the fee setting authority seven years from the enactment. The Act modifies the way in which fees are collected by the Patent Office are allocated, presumably allowing the Office to keep more of the fees collected for operation of the Office.

The enactment of the legislation places a 15 percent surcharge on certain patent fees effective September 26, 2011. For a full list of fee changes, please go to http://www.uspto.gov/aia_implementation/15_Percent_Surcharge_Fee_Changes.pdf

The fee due is the fee in effect on the date the document is timely filed.

For nearly 20 years, nearly $1 billion of user fees had been diverted and misappropriated by Congress from the monies appropriated to the United States Patent and Trademark Office (USPTO). This has led to a huge backlog of patent applications waiting to be examined. While the Senate’s original legislation gave the undiverted use of those funds to the USPTO, the House objected and it set up a separate account for the funds. If the USPTO needs the money, it has to come back to Congress to get it according to H.R. 1249, leaving the door open to an opportunity for Congress to continue the diversion of fees.

Prioritized Examination: Effective from September 26, 2011, an applicant can pay an additional $4800 ($2400 for a small entity) to file a request (Track I Petition) for prioritized examination of a nonprovisional application for an original utility or plant patent. Only applies to nonprovisional applications (including continuing applications) filed via EFS-Web after September 26 that are complete and which are accompanied by request for prioritized examination. Filing an RCE, extension of time, suspension of action, or amendment exceeding claims to 4 independent claims or 30 total claims terminates prioritized examination.

The required petition is very simple, and as of January 3, 2012, 1,694 Track I petitions have been submitted to the USPTO. On average it is taking 40.8 days to move Track I cases from receipt of petition to completion of pre-examination processing (which includes deciding on the petition). The longest it has taken is 95 days. On average only 10 of those 40.8 days are consumed in handling the Track I petitions, and 40.8 days in pre-exam for Track I compared to the USPTO normal (Track II) pre-exam processing time of 69.6 days.

Prioritized Examination after RCE: Effective from December 19, 2011, prioritized examination may be requested in an application where an RCE has been filed.

“Prioritized examination” under section 11 of AIA for a fee should not be confused with “priority examination” under section 25 discussed below.

Future Changes

Priority Examination: Effective from September 16, 2012, a procedure for priority examination for technologies important to U.S. competitiveness (Sec. 25; § 2(b)(2)) is avalable. Priority examination under section 25 is for products, processes, or technologies that are important to the national economy or national competitiveness without recovering the aggregate extra cost of providing such prioritization. This is in addition to the existing opportunity for “advancement of examination” under 37 CFR 1.102 through a “petition to make special” (MPEP 708.02).

Inventors/Applicants: Effective from September 16, 2012, applications may be filed in the name of assignee (or a person/business to which an inventor has an obligation to assign). This provision eliminates the need to deal with inventors who are unable or unwilling to sign an oath or declaration required for prosecuting a patent application. Each inventor is still required to submit an oath or declaration. The Act details the statement that each inventor must make. An inventor’s statement can now be made in an assignment document. Also, a new declaration is not required in a continuation application, although a copy of the original may be required.

Pre-grant Review: Effective from September 16, 2012, a third party may submit any publication of potential relevance to a patent application before the earlier of a notice of allowance or the later of (1) six months after the date of first publication of the application or (2) the date of the first rejection of any claim. This new provision allows anyone to challenge another’s filings, by bringing forward prior art during prosecution, which is a more cost effective approach to limit a competitor’s patent rights compared to litigation or reexamination proceedings. Provision will apply to all applications filed before, on, or after effective date.

Post Grant Review (PGR): Effective from September 16, 2012, within nine months after grant or reissue of a patent, a petitioner may request to cancel one or more claims of the patent on any ground except the best mode requirement. The standard of review is “more likely than not that at least one of the claims challenged is unpatentable.” After a written decision, petitioners may not assert issues that they “raised or reasonably could have raised.” Some features of PGR are given below:

While the regulations will be in place from September 16, 2012, PGR is applicable to business method patents (from September 16, 2012) and all patents subject to the first-inventor-to-file system (from March 16, 2013)

Grounds include § 112: “any ground that could be raised under Paragraphs 2 or 3 of section 282(b) (§ 321(b)) (§282(b)(2) Invalidity of the patent or any claim in suit on any ground specified in part II of 35 USC as a condition for patentability, (3) Invalidity of the patent or any claim in suit for failure to comply with any requirement of 35 USC §§112 or 251)

Standard: “more likely than not that at least one of the claims challenged is unpatentable” (§ 324(a))

PGR to be filed within 9 months after patent grant (§ 321(c))

No review, if PGR request is filed after challenger files a civil action challenging validity of the patent (§ 325(a))

Automatic stay of civil action if the challenger files a civil action after PGR request (§ 325(a)(2))

No stay of consideration of motion for preliminary injunction if infringement action is filed within 3 months of patent grant, even if PGR has been filed (§ 325(b))

Patent owner may file 1 motion to amend the patent (§ 326(d)) during a PGR

Can be terminated by settlement prior to decision on merits (§ 327)

Estoppel: after a written decision, petitioners may not assert issues that they “raised or reasonably could have raised”

Inter Partes Review: Effective from September 16, 2012, third parties will be able to challenge a patent, after 9 months from grant of a patent or after a PGR, through an inter partes review to be conducted by Patent Trial and Appeal Board and completed within one year, after the nine month window closes for post grant review. Basis for requesting an inter partes review is limited to prior art patents and printed publications and only novelty and obviousness maybe raised. Changes the standard for initiating inter partes reexamination (and inter partes review) from “a new substantial question of patentability (SNQ)” to “a reasonable likelihood that the petitioner will prevail” with respect to at least one challenged claim. On September 16, 2012, the USPTO will stop accepting inter partes reexamination requests and instead move to the new inter partes review procedure to be conducted before the new Patent Trial and Appeal Board rather than before an examiner.

Business Method Patents and Post-grant Review: Effective from September 16, 2012, an eight year transitional post-grant review proceeding will be established for reviewing the validity of covered business method patents, as defined in the Act. A Petitioner for review of a business method patent must have been sued for, or charged with, infringement of the patent before filing a petition for a transitional proceeding. The petition is limited to prior art that is described in new § 102(a). If a party chooses to invoke its rights under this provision, it would be precluded from asserting an invalidity defense based on the same prior art during a civil trial. A business method is defined as “a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.” The transitional post-grant review proceeding applies to business method patents issued before, on, or after September 16, 2012.

Supplemental Examination: Effective from September 16, 2012, supplemental examination proceedings will also be implemented. Supplemental examination is intended to allow patent owners to clean the record of situations that could give rise to a claim of “inequitable conduct.” If the PTO determines that the new or corrected information raises a substantial new question of patentability, it may order an ex parte reexamination. Under new Subsection (c) of §257, a patent cannot be held unenforceable on the basis of conduct relating to information considered, reconsidered or corrected during the supplemental examination. The United States Patent and Trademark Office announced the proposed rules for supplemental examinations at the end of January.

The request must be filed by the patent owner.

Limited to ten items of information.

Multiple supplemental examination requests may be filed at one time.

$5,180 for the initial request for supplemental examination plus $16,120 for the ex parte re-examination fee. (§ 1.20(k)) Both must be paid at the time of initial request, and the $16,120 will be refunded if no re-examination is ordered in the supplemental examination certificate. (§ 1.26(c)) In addition, there are substantial fees associated with documents over 20 pages, as well as with petitions filed in connection with the proceeding.

For more information, please visit: http://www.uspto.gov/aia_implementation/77fr3666.pdf.

Willful Infringement: Effective from September 16, 2012, the Act codifies current case law regarding no inference of willful infringement when an alleged infringer does not obtain an opinion of counsel. Codifying the Federal Circuit’s en banc decision in Seagate, the Act provides that failure of a party to obtain an opinion of counsel when charged with infringement may not be used to prove willful infringement. However, the Act goes beyond the Federal Circuit jurisprudence by also providing that failure to obtain an opinion of counsel cannot be used to prove active inducement to infringe.

Satellite Offices: The PTO will establish three or more satellite offices within three years of the enactment of the Act. At least one satellite office will be in Detroit, Michigan. The U.S. Patent and Trademark Office announced that it had entered into a five-year lease agreement on a 31,000 square foot space at 300 River Place Drive in Detroit, where the Elijah J. McCoy USPTO will be located. According to the announcement, the Office intends to open the Detroit satellite office no later than July 2012. The Office asks prospective employees to send e-mail inquiries to detroithiring@uspto.gov for more information.

First to File: The first inventor to file, the most significant change, will only be effective from March 16, 2013. Under the new law, whoever files a patent application on a claimed subject matter first will be entitled to a patent over another inventor who later files an application on the same claimed subject matter, regardless of who first invented the claimed subject matter. Prior art will encompass any publication (including patents and published patent applications), public use, on sale or otherwise available to the public before the effective filing date of the claimed invention. A one-year grace period is being maintained to file an application after a disclosure of the invention by the inventor.

Adopting the first inventor to file system means that inventors will no longer be able to swear behind references to avoid certain invalidity challenges. Furthermore, interference proceedings will be replaced with derivation proceedings in the USPTO for first inventor to file applications and patents.

Scope of Prior Art: Effective from March 16, 2013, the sections 35 U.S.C. § 102 and 35 USC § 103 are affected by the first inventor to file system, which defines “effective filing date” as either the filing date of the earliest application to which the current application can claim a priority benefit, or the actual date of filing of the application.

Section 102 is changed to expand the scope and content of the prior art. Printed publications, public use and the on sale bar are still defined as prior art under the new § 102. In addition, § 102 is amended to include art “otherwise available to the public” before the effective filing date of the patent application. Prior art under § 102 also includes U.S. patent application publications of others having an effective filing date before the effective filing date of the patent application under prosecution.

Section 102(a)(2) provides that another inventor’s issued patent or published application that was effectively filed before the filing date of the application in question but issued or published thereafter now constitutes prior art. Under § 102(a)(2), a foreign filing date may be used both as a priority date for an applicant’s U.S. patent as well as a prior art date for defeating subsequent applications, thus overruling the In re Hilmer decision. (In the past, one could rely on a foreign filing date to establish an effective filing date under § 119 (i.e., the foreign filing date could be used for a patent-granting purpose and § 102(e) (through its interpretation in In re Hilmer), the effective filing date based on the foreign filing date could not be used to predate a subsequent application for prior art purposes (i.e., the foreign filing date could not be used for a patent-defeating purpose)).

While the methodology for determining obviousness remains unchanged, the scope and content of the prior art available for use in the obviousness analysis have been expanded. All prior art having an effective filing date before the pending application is within the realm of prior art for determining obviousness.

Derivation Proceedings: Effective from March 16, 2013, the Act provides for derivation actions and proceedings that allow a first inventor with a later filing date to present evidence that an applicant with an earlier filing date derived the claimed invention from the first inventor. For situations involving two issued patents, the first inventor may bring a civil action against the earlier applicant (§ 291), and for situations involving two applications or involving an application and an issued patent, the first inventor may initiate a proceeding at the PTO (§ 135). However, a civil action may only be filed up to one year after the issuance of the first patent, and a proceeding initiated at the PTO may only be brought up to one year after the publication of the later filed application. With the focus now shifting to the filing date, a derivation action appears to be the only avenue for an inventor that lost the race to the Patent Office to receive priority.

For more frequently asked questions on AIA implementation please refer to http://www.uspto.gov/aia_implementation/faq.jsp

The revised USPTO fee schedule is available at: http://www.uspto.gov/about/offices/cfo/finance/fees.jsp.