US Senate Passes Landmark Patent Reform Legislation

A bipartisan United States Senate has passed the America Invents Act of 2011 by a vote of 89-9. The legislation is now poised to become law and includes a major overhaul that will result in the most substantial changes to United States patent law in more than half a century. President Obama is expected to sign the legislation as early as next week.

The legislation, which passed the House of Representatives as H.R. 1249 and is also known as the Leahy-Smith America Invents Act, has been promoted as improving job growth, encouraging American innovation, and increasing the efficiency of the United States Patent & Trademark Office (USPTO). However, none of this is certain, and it has not been made clear how any of these objectives will be achieved. A closer look at the statute indicates that it may only serve special interests instead of promoting the progress of science and useful arts as required by the U.S. constitution.

Provisions of the new law include a transitional program that allows the USPTO to review the validity of patents covering financial services methods. No such program exists today and requires completely new procedures that are intended for specific types of patents only. Also included in the new law is a provision extending the deadline for filing for patent term extensions that is intended to benefit one specific drug patent – and could result in hundreds of millions of dollars in further sales. The new law further includes a substantial expansion of the amount of prior art that may be used to invalidate a patent, making it harder to get patents and easier to invalidate them in litigation.

Regardless, patent applicants should immediately take note of timing provisions when considering filing strategies under the new law. That’s because certain provisions are intended to take effect immediately upon enactment, while others will take effect much later. For example, the implementation of new rules that make the United States a first-to-file jurisdiction with absolute novelty will not take effect until 18 months following enactment of the legislation, which will be in March 2013. Patent applicants who file their patent applications before then will get the benefit of the prior art provisions under current U.S. patent law. Conversely, the new law will take immediate effect with regard to the USPTO’s expanded authority to sets its own fees. Patent applicants should therefore consider that U.S. filing fees may substantially increase – although in practice any increases will likely take some time to be decided on and implemented.