U.S. Senate Passes Major Patent Law Reform Bill

March 2011

As many of you know who have been following the patent law reform debate, patent law reform has been a long time coming. (For our earlier article on patent law reform, please go here.) Earlier this month, the U.S. Senate passed Senate Bill No. 23, which would take the country to a first-to-file patent system and implement other changes to patent law to bring U.S. law into conformity with the rest of the world. As of the posting of this article, S. 23 has been sent to the House of Representatives.

The most significant aspect of S. 23 is that it would establish a first-to-file patent system, which means that the first inventor to file a patent application will be awarded the patent (assuming the invention is patentable) and not necessarily the first person to invent the invention. Under our current system, if Inventor A invents an invention on January 1 but does not get around to filing a patent application until August 1, and Inventor B invents the same invention (independently of Inventor A) on April 1 of the same year and files a patent application on April 2, Inventor A would ultimately prevail because he was the first to invent. In a first-to-file system, however, Inventor B would prevail because he was the first inventor to file.

There has been much debate over whether the first-to-file system would inordinately penalize small companies and individual inventors. Having represented small companies and individual inventors for much of my career, I do not happen to share the view that first-to-file will necessarily adversely impact this constituency more than others. In fact, in my experience, it is often the smaller companies and individual inventors who are able to move more quickly--both in terms of coming up with the funds to pursue a patent application and also in terms of being able to get it done.

S. 23 would also maintain the current one-year grace period for inventors who publicly disclose (or offer for sale, use, etc.) their invention prior to filing. In other words, if an inventor publishes an article describing her invention on February 1, she has until February 1 of the following year to get her patent application on file; if she waits longer than that, her invention will be considered to be in the public domain (and it is too late to file). In this respect, the United States is not necessarily in line with the majority of other countries in that most (but not all) countries do not have a one-year grace period.

Under S. 23, interference proceedings (which were used primarily to decide which inventor had invented first) would be replaced with derivation proceedings, which allow a second-to-file inventor to challenge a first-to-file inventor on the grounds that the earlier invention was actually derived from the second-to-file inventor. Under current law, you may not file a patent application for an invention if you actually derived the invention from someone else; in other words, you must be (or believe yourself to be) the first inventor of the invention at issue. This aspect of the law will remain unchanged.

Under S. 23, patent applications could be filed in the name of the assignee (owner) of the patent rights, which would bring the U.S. into conformity with other countries on this particular point. Under current U.S. law, all patent applications must be filed in the name of the individual inventors. Under the new bill, patent applications could be filed in the name of the company for whom those inventors work. This aspect of the new bill will greatly facilitate the gathering of signatures and expedite the filing process.

The bill would also allow virtual patent markings--in other words, to be in compliance with patent marking requirements, the patent holder may provide a web page on which the patented article is associated with its patent number. Under current law, patent markings must be physically affixed to the product wherever possible. For more information on patent markings, see our articles here and here.

Another significant aspect of S. 23 is that it would allow a person to seek cancellation of one or more patent claims by filing a petition for post-grant review within nine months after issuance of the patent. In contrast to current ex parte reexamination procedures, the grounds for review include anything that would invalidate a patent (for example, public use, sale or disclosure not in the form of a printed publication, lack of enablement, etc.). Post-grant review will not be undertaken by the patent office unless the petitioner can show that it is more likely than not that at least one of the challenged claims is unpatentable or the petition raises a novel or unsettled legal question important to other patents or patent applications.

Finally, S. 23 incorporates an amendment introduced by Senator Max Baucus (D-Mont.). Senator Baucus's amendment would exclude from patentability strategies for reducing, avoiding or deferring tax liability on the grounds that such "inventions" are not novel and/or are obvious.


Amicable photo of Toni

Antoinette M. Tease, P.L.L.C.