Perspectives on the New U.S. Patent Law

Since President Barack Obama signed into law the Leahy-Smith America Invents Act on Sept. 16, 2011, the jury is out on the impact of the changes. The differences of opinion are wide, according to a review of patent experts.

President Obama signs the Leahy-Smith America Invents Act.

Many in the patent field are convinced the impact of change won’t be clear for many years. Much will depend upon how the details are implemented and interpreted in the courts. There is also some discussion whether the new provisions will increase the number of jobs as intended by increasing the number of approved patents.

David Wisz, chair of the Intellectual Property Law Section of the State Bar of Michigan and patent attorney at Carlson Gaskey and Olds, in Birmingham, Mich., comments that references to increased jobs are merely “political puffery” and the new law is unlikely to increase the number of employment opportunities. Here’s a look at provisions of the new patent law.

First to File System (FTF)
In its attempt to make the U.S. patent system more efficient, the U.S. moves to a first-to-file system from a first-to-invent system. This brings the U.S. patent process in line with most other industrialized nations including Canada.

Patent attorney, Michael Stewart.

“Under this system the first person to file the patent rather than the first to invent something, gets to own the patent.” says Michael Stewart, patent attorney and a founding member of Rader, Fishman & Grauer, PLLC, in Bloomfield Hills, Mich. “This shifts the patenting strategy to filing sooner rather than later to make sure patent rights aren’t lost. This provision doesn’t go into effect until early 2013 providing time for adjustments.”

“This provision tends to benefit large companies because they have more resources, which makes it less of a problem to be first than individuals and small companies ” continues Stewart. “There’s also a wrinkle to this provision because an individual or company may publish their invention, which then gives them a year to file their patent application.”

According to Stewart, the danger with publically disclosing an invention is lack of protection from patent infringement in other countries. The intent, however, is to encourage inventors to let others know about a new system or technology so that other products that work with this new technology can be developed.”

Patent Litigation and Post Grant Review
The law now provides a new post patent review system at the U.S. Patent and Trademark Office (USPTO) that enables anyone, including patent litigation defendants, to challenge the patent. The proceeding is supposed to be a more cost effective way to handle patent disputes.

“These provisions are likely to result in more litigation taking place at the patent offices as opposed to the courts,” explains Stewart. “Over time this may reduce the overall cost for litigants, but this way of dealing with litigation will require additional Patent Office resources, which will cost.”

The new law also attempts to reduce the amount of litigation that surrounded claims for false marking.

“False marking claims are legal actions taken against someone who claims they have patent protection for a product by marking it with a patent number,” explains David Wisz, chair of the Intellectual Property Law Section of the State Bar of Michigan, and patent attorney at Carlson Gaskey and Olds, in Birmingham, Mich.

Patent attorney, David Wisz.

The previous law read that any private citizen could sue for false marking and retain half of the penalty. Over the past few years, the false marking statute become very popular with many plaintiffs, including private patent attorneys and claims of false marking were brought by individuals against some of the largest companies in the U.S. The previous false marking statue also permitted the plaintiff to retain half of the penalty.

The law does apply, however, to a person who falsely marks an unpatented product as being patented and the intent was to deceive the public. It was not meant to punish companies with huge penalties who forgot to change the patent numbers that had expired for a product.

“The law, which went into affect immediately, narrows the groups of persons who can bring this claim in an attempt to prevent the recent trend of making it a business to file these suits,” says Wisz. “The new law requires plaintiffs to show that the company’s intention marking its products was to deceive the public making it more difficult for a false marking plaintiff to bring its lawsuit.”

Patent Fees
A 15 percent increase was added to all USPTO patent filing and maintenance fees.

Patent attorney, Beverly Bunting.

“This can be expensive, particularly for individual inventors and small companies,” says Beverly Bunting, patent attorney with Butzel Long in Bloomfield Hills. “The intent of the increase was to allow the USPTO to keep most patent fees to improve the office instead of Congress taking the money for other government expenditures. There is much speculation that this old practice will somehow continue.”

“To encourage individuals and small businesses to create patents, a provision creates a “micro entities” category in which fees for universities, small entities and non-profits are charged 75 percent less for filing a patent,” says Bunting. “Previously small businesses paid half of the total patent fee. -¦ large universities will benefit greatly from these reduced rates.”

Prioritized Examination
Getting approval for a patent took time, averaging four years,” explains Wisz. “For $4,800 dollars an inventor can have an accelerated examination and receive patent approval within a year. This is great news for businesses filing patents in technology because of the accelerated rate of obsolescence in technology.”

“This provision also helps small companies get their patent application through more quickly matching the efforts of a larger company with more resources,” adds Stewart. “However, there is a limited number of accelerated reviews a company can apply for in a year,” adds Stewart.

At the University of Michigan in Ann Arbor, the patent law changes may be a benefit. Kenneth Nisbet, executive director of U-M Tech Transfer, says the new provisions will help university scientists. “These transactional advantages should enhance the University of Michigan’s capacity to contribute to the economic vitality of our region and our nation,” he says.

The one point Michiganders unanimously accept as positive is that the first regional satellite location of the U.S. Patent and Trademark Office will be in Detroit.

But it is clear, experts say, that the real impact of this bill won’t be obvious for many years and depends upon how the law is implemented and interpreted by the courts.