As Patent Reform Looms, U.S. Gears Up To Adopt First-To-File, Absolute Novelty Patent System

On the eve of a Congressional vote that could see passage of the most comprehensive change to United States patent law in more than 50 years, patent lawyers and applicants around the world are preparing for revisions that will profoundly change U.S. patent practice. When it becomes law, the draft legislation will move the U.S. to a system in which patent ownership is awarded to the first inventor to file a patent application, and will introduce absolute novelty to bar any patent application where the invention has been disclosed before the application is filed.

Current U.S. law awards patent ownership to the first inventor to invent the concepts claimed in a patent. The change to a first-to-file system, which harmonizes U.S. patent law with the rest of the world’s countries, requires a complete overhaul of statutory provisions that will dramatically increase the amount of prior art available to bar inventions from patent protection. The resulting changes to Section 102 and Section 103 will almost certainly change the filing strategies of countless patent applicants.

The proposed law, known as H.R. 1249 and more commonly as the America Invents Act of 2011, has drawn considerable attention for its myriad of changes to U.S. patent practice. Among the many other changes are revisions to the way the US Patent & Trademark Office sets and collects fees, and the introduction of a completely new Patent Office procedure that operates as a post-grant proceeding for review of the validity of certain financial services patents that some believe is a “bank bailout” to help banks dealing with expensive patent litigation. But the primary focus, at least initially, will for patent applicants be the timing for when the new rules on patent ownership and prior art take effect.   

That’s because the new law provides that applicants will have a grace period of 18 months in which the old prior art rules will still apply. That means that patent applicants who file their patent applications before March or April 2013 will still get the benefit of the current and more favorable versions of Sections 102 and 103. The grace period will likely produce an avalanche of patent applications filed to beat the 18-month deadline, and raises the prospect of substantially increasing the workload of already-overworked U.S. patent examiners – exactly the opposite of one of the intended benefits of patent reform.  

There are also several important exceptions to the new prior art rules that inventors and patent applicants should be aware of. To act as an automatic bar to a patent application, a disclosure prior to the filing date must be by someone other than the applicant. Where the applicant discloses the invention prior to the filing date, he or she will still have one year to file a patent application. The new law will also make the absolute novelty concept global, so that a disclosure anywhere in the world is enough to deal a fatal blow to the ability to obtain patent rights.   

Intellectual property considerations already dominate c-level executives’ agendas, but this legislation will make decisions about investing in patent protection much more urgent. The substantive changes to U.S. patent law will require inventors and companies to act quickly and force decisions about patent application preparation and filing must faster than before, since sitting on ideas and delaying filing will now put potentially valuable business assets at substantial risk.