Obama Signs Patent Reform Bill

September 16, 2011

After passing through the final stages of Congressional approval last week, the Leahy-Smith America Invents Act was signed into law by President Obama today. This bill represents the most comprehensive overhaul of the patent system in almost 60 years and is the culmination of over a decade of legislative activity.  The following is a summary of some of the Act’s provisions of most interest to early stage medical device companies and their investors.

Unlike every other country in the world today, the United States has been awarding patents to the first inventor to conceive an invention, provided that the inventor did not abandon, suppress or conceal the invention.  Under the America Invents Act, as of March 2013 (18 months after enactment), the United States will join the rest of the world by awarding patents to the earliest patent application filer, provided the earliest filer is actually an inventor and did not derive the invention from the real inventor.

In addition, new definitions of prior art will narrow the existing one year grace period for filing to pre-filing activities by the actual inventors.  Any pre-filing public activity, such as a sale or a public disclosure, by anyone other than the inventor can be used as prior art against the patent application, even if that pre-filing public activity occurred less than one year prior to the application filing date.  These new definitions will also become effective in March 2013.  It will clearly be more important than ever to get patent applications on file as soon as possible.

The America Invents Act also creates several new PTO proceedings.  Anyone who believes a patent has been awarded to a third party who derived or learned of the invention from him or her can bring a derivation proceeding to correct inventorship in the patent.  The Act also creates a new post-grant review proceeding in which any third party can challenge a newly granted patent by submitting validity evidence to the PTO.  Patents challenged in this post-grant proceeding can be narrowed or cancelled by the PTO.  Derivation proceedings must be filed within one year of the patent’s grant, and a request for post-grant review must be filed within nine months of the patent’s grant or is subject to higher evidentiary standards.  Diligent monitoring of newly-granted patents will therefore be more important than ever. These new proceedings will replace existing inter partes reexaminations but will not replace ex parte reexaminations.

In addition, in an effort to address long patent pendency times, the Act also provides for prioritized examination upon payment of a $4800 fee ($2400 for small entities).  Prioritized applications can contain no more than 30 claims, of which no more than four claims are independent.  The PTO will publish the process and eligibility criteria for such requests, and they will initially take only 10,000 prioritization requests.

The Act allows the PTO greater control over spending of the fees it collects, but Congress will still maintain oversight of PTO spending.  Other changes include a 15% increase of certain PTO fees, and the removal of an invalidity defense for failure by the patentee to disclose the “best mode” of the invention.

There are many other provisions of the America Invents Act, many of which apply to patent litigation and details of the patent prosecution process.  The PTO will now need to enact rules to implement the new statute.  Ongoing developments from the America Invents Act will be reported in subsequent Medtech Briefs.

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