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Patent Reform Act of 2011

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The U.S. Senate recently passed the America Invents Act (AIA) by an overwhelming margin.  Though this is the fourth consecutive Congress in which comprehensive patent reform legislation has been introduced, the AIA appears to have significant traction and may end up being the first substantial Congressional overhaul of the U.S. patent system in nearly 60 years if approved by the U.S. House of Representatives.

On January 25, 2011, Senator Patrick Leahy (D-VT) introduced the Patent Reform Act of 2011 to the Senate Judiciary Committee.  As introduced, the Patent Reform Act of 2011 proposed numerous changes to the patent system.  Notable provisions included transitioning to a first-inventor-to-file system, establishing a post-grant review process, granting the United States Patent and Trademark Office (USPTO) the authority to set its own fees, and providing a formula for calculating damages.

After receiving approval by the Senate Judiciary Committee, the full Senate began debating the bill, which was renamed the AIA.  The version ultimately adopted by the Senate additionally includes a provision to end fee diversion from the USPTO.  Further, the final version of the AIA removes provisions from the Patent Reform Act of 2011 that would have allowed judges to oversee jury damage awards, raised the threshold to claim certain types of damages, and required transfer of certain cases to more convenient venues.  The Senate passed the AIA by a vote of 95-5 on March 8, 2011.  The remainder of this article highlights several important provisions of the AIA that could substantially affect practice before the USPTO.    

Enactment of the AIA would eliminate a major philosophical cornerstone of the U.S. patent system—that the first inventor is generally entitled to the patent rights, regardless of the timing of the filing of an application in relation to other applicants.  This is in stark contrast to the remainder of the world, which uses a “first-to-file” system in which priority of invention is established by the earliest effective filing date of a patent application disclosing the invention.  Though Senator Diane Feinstein (D-CA) proposed an amendment to the AIA that would have removed the first-to-file provisions (arguing that the transition would be “severely harmful to innovation and especially burdensome on small inventors, start-ups, and small businesses”), proponents of the first-to-file paradigm ultimately voted down the amendment by a vote of 87-13.  The proponents of the first-to-file system stressed the continuing availability of provisional applications, which would allow small entities to secure priority rights without expending significant resources.  

The AIA additionally includes provisions with the goal of increasing patent quality while expediting examination.  For example, the AIA would increase third party involvement through new processes such as pre-issuance third-party submissions and third-party requested post-grant review.  Further, the AIA would establish prioritized examination of patent applications “important to the national economy competitiveness,” such as those applications involving clean energy.  Additionally, in an effort to increase inventor outreach, enhance examiner recruitment and retention, decrease the backlog of unexamined applications, and improve the quality of patent examination, the AIA would authorize the USPTO Director to establish additional USPTO satellite offices in the next three years.

Enactment of the AIA could significantly impact U.S. patent law.  Although the bill has moved rapidly through the Senate, a parallel patent reform bill has yet to be introduced in the House.  Nutter attorneys will continue to monitor progress of this legislation and provide updates in future issues.   

This advisory was prepared by Nutter’s Intellectual Property practice.  For more information, please contact your Nutter attorney at 617-439-2000.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances.  Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.

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