Summary of new patent bill (America Invents Act)

From my friend Charles Cella at the excellent patent firm GTC Law Group. (email from them published with permission)

REVISIONS TO UNITED STATES PATENT LAW
As you may be aware, the Senate passed the America Invents Act (AIA) on September 8, 2011. This act will create sweeping changes in US patent law once signed by President Obama, who has stated his intention to sign this bill.

The AIA will create significant changes to the law, and we wanted to take a moment to inform you of some of its most important provisions.

First to File System:

The United States will move to a first-to-file system instead of a first-to-invent system. This will put the US in closer alignment with rest of the world in determining priority of invention based on the earliest date a patent application was filed with a patent office. There is a limited one-year grace period related to public disclosures made by the inventor.

Further, the long-standing procedure to prove a prior invention, i.e., interference proceedings, will be replaced with “derivation proceedings” to determine whether an inventor of a first-filed patent application derived the claimed subject matter without authorization from an inventor named in a laterfiled application.

Post Grant Review:

There will be a nine-month window for challenging a patent on any ground. Review may be granted upon a showing that it is more likely than not that at least one of the challenged claims is unpatentable. After the window of post-grant review has passed, patents may be challenged on the basis of patents or printed publications only. Under a new transitional post-grant review process that applies to certain business-method patents, only parties who have been sued for infringement or otherwise charged with infringement (the recipient of a cease-and-desist letter, for example), may petition for review.

Patent Related Provisions:

Patents will not be granted to any strategy for reducing, avoiding, or deferring tax liability, or to claims covering human organisms. There will also be a 15% surcharge added to all patent-related fees and patent-maintenance fees, beginning 10 days after the date of the new law’s enactment.

Prioritized Examination:

The USPTO will be authorized to proceed with a program for a fee-based prioritized examination, which may be a useful tool for clients who are interested in an expedited examination for particular patent applications. This will cover applications for original utility or plant patents, and will take effect ten days after the date of the enactment of this Act. Initially, only 10,000 applications will be accepted in any fiscal year. Accordingly, space in this program may be limited, and it may be best to apply for this program earlier in the fiscal year.

My (non-expert) analysis: seems to me this doesn’t fix any of the very serious problems in our current patent system. First-to-file seems to reward companies with the resources to file many patents. The post grant review seems to imply you should to monitor every patent issued and challenge them within 9 months. I don’t see how any organization without massive resources could do this.

Anonymous

I agree. If anything, it makes it worse especially for software patents. Every software product is a derivation and thus, a violation. Companies with massive resources like Intellectual Ventures stand to benefit more from the asymmetry of information.

http://www.cdixon.org chris dixon

Yeah I expect they’ll set up a more people at the patent office reviewing new filings and issued patents.

http://www.webjoe.com webjoe

This seems to me (from a non-lawyer perspective) a race to FFAQL – File First, Ask Questions Later. This will create a torrent of bad/frivolous/vague/shitty patent filings in the race to pop first in the queue at all costs.

http://www.cdixon.org chris dixon

yeah that’s what I worry about.
http://www.cdixon.org chris dixon

yeah that’s what I worry about.

Ryan Jenkins

Yeah, I’m no lawyer but this still seems to be _extremely_ lopsided in favor of large corporations.

The one change I’d like to see is that a patent owner shouldn’t be able to sue unless they’re actually using the patent. We’ve got too many companies that exist solely to hoard patents, collect licensing fees, and sue other companies but that don’t actually produce anything of value. They’re just litigation machines. Should be a “Use it or lose it” system.

Pete Griffiths

How would you deal with a company like ARM?

http://www.cdixon.org chris dixon

ARM – good counterexample, although what they invented was at least truly innovative and not obvious like most software patents.

Pete Griffiths

Chris – my point of course is that they are an example of a class of companies who develop technology and whose distribution model is licensing. And the problem is that any legislation that hits NPEs (Non-Practicing Agencies) would hit such companies. It’s a tricky problem.

And on the point of ‘obvious’ that too is trickier than it may seem to be. As I know you know the ‘obvious’ in the relevant law as opposed to common parlance, is ‘obvious to one ordinarily skilled in the art’ and furthermore for the patent to be invalide it has to be obvious at the time – not years later when the patent has been awarded the product has hit the market and its impact has permeated the popular consciousness. The number of times I have seen online debates about how obvious something IS as opposed to how obvious it WAS…

http://www.cdixon.org chris dixon

ARM – good counterexample, although what they invented was at least truly innovative and not obvious like most software patents.

http://giffconstable.com giffc

Agreed. It doesn’t fix anything in software. We need business process patents to be nullified. It is lunatic. And per the above, what does “printed publications” even mean in the era of the net?

The deep pockets are dominating the policy making. I would like to see VCs invest in a special interest group to seriously tackle this. Dreaming?

http://www.cdixon.org chris dixon

I’ve seen some VCs starting to organize.
http://www.cdixon.org chris dixon

I’ve seen some VCs starting to organize.

Anonymous

First to file is bull**** – that will only benefit companies and people with resources – the real inventors who may be struggling and have other worries on their minds will be left even further in the ****ter.

http://www.cdixon.org chris dixon

Yeah, my guess as to the effect as well.
http://www.cdixon.org chris dixon

Yeah, my guess as to the effect as well.

http://www.facebook.com/profile.php?id=13734566 Rory Buszka

How bizarre that this law seems to favor large corporations, since they can afford not only large legal departments staffed with patent lawyers, but can also afford also large campaign donations and expensive lobbyists! This is another example of how your government no longer represents your best interests, but the interests of a privileged few. How can we call this new law anything but conspicuous government corruption? The current administration seems to be the most corrupt ever.

http://www.cdixon.org chris dixon

I assume a website is a publication and is prior art, but I’m not a lawyer.
http://www.cdixon.org chris dixon

I assume a website is a publication and is prior art, but I’m not a lawyer.
http://pivotpointsolutions.net/ andy_mcf

Paradoxically, large companies may be less able/inclined to offer disruptive solutions to the marketplace. Then the race to file patents becomes even more destructive to society.
B R

Why cant patents be handled more like other ”Intellectual Property”?
Copyrights and Trademarks have been issued with MINIMAL up front (filing) costs.
Then only after there is a challenge to susequent copying/misuse does one need to have to deal with the costs of legal defense.
Since the nature of functionality and interactive components, patent claims can become more complicated than a work of literature, music, art, etc.
But why can’t these complicating details can be dealt with later somehow?
But what should count is that original, official filing precedent to establish who came first, etc.

http://pulse.yahoo.com/_34VQ3NDNOFFUF6R7ALXY6O33S4 Cal

I was under the impression that first-to-file had always been how the American patent worked. That’s why Alexander Graham Bell is recognized as the inventor of the telephone and not Elisha Gray, despite nobody really knowing for sure which of them invented it first.
http://analytikainc.com/blog/ John R. Sedivy

Strange. I recall reading some time ago that this change was proposed to help entrepreneurs and small business. I concur with you and the other commenters that this really makes things much more difficult for those without a legal team at their disposal. Even with a great firm, at a minimum it’s going to be expensive.

First to file appears to be a greater centralization of power. I actually liked the concept of an inventor’s notebook as a backup – document your ideas and have a disinterested third party witness and notarize – some ideas take years to come to fruition and may not be acted upon until their relevance surfaces or a new opportunity presents itself. Are entrepreneurs supposed to patent each new idea for fear they may lose their right to do so should it become relevant? Sure there was some nervousness that someone would show up out of nowhere with a notebook after working in a garage for years in obscurity to challenge a patent filing but in my opinion the risk was worth the benefit.

The prioritized examinations are another reason for concern. What if an entrepreneur/inventor doesn’t make the list due to lack of allocated space (10,000 slots) or available funds at the time? Not good for new companies who likely have not achieved recurring revenue or positive cashflow prior to de-risking a product.

Lastly concerning the statement – “The United States will move to a first-to-file system instead of a
first-to-invent system. This will put the US in closer alignment with
rest of the world in determining priority of invention based on the
earliest date a patent application was filed with a patent office.”

Just because everyone else is doing it doesn’t make it right. Despite the global recession, the U.S. continues to be the envy of world in terms of innovation, one must wonder if this legislation will strengthen or hinder our innovation.

Thanks for sharing this summary, it’s a great overview of the changes to the current patent system.
Anonymous

Financial companies successfully lobbied Chuck Schumer to insert a post-grant review procedure for business method patents that had become a pain-in-the-ass to established interests (see Sec 18 of the legislation). It is a little embarrassing that we have not been able to do the same for web applications. There’s been a lot of talk about the problem, but we missed a big opportunity to fix it here.
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http://technbiz.blogspot.com paramendra

Back to the drawing board.
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http://rocrastination.com/ Ro Gupta

This particular movement seems to be going sideways if not backwards. Looks like they’re playing small ball and in the end fixing nothing or making some things worse.

I think the whole definition and purpose of patents needs to be revisited. More thoughts here: http://www.rocrastination.com/thoughts/2011/3/27/proposal-new-conditions-for-patentability.html where incidentally I linked to a Thomas Jefferson quote you had blogged a while back.
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yes! really! we must thinking about it!
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Thanks for sharing such useful information. I think this is really a very nice post. Thanks for the great content!

Chris Dixon