Enacted in September 2011, the Leahy-Smith America Invents Act (AIA) moves the US patent system from a ‘first-to-invent’ system to a ‘first-to-file’ one. It also makes a number of other significant changes to patent litigation, suggests alternatives to district court litigation (eg, patent re-examinations and post-grant review), and amends patent prosecution procedures in the United States Patent and Trademark Office (USPTO). Most of these changes are not immediately effective, but have staggered implementation dates ranging up to March 16, 2013 – and some parts of the old patent system will still apply to patents with claims that are entitled to priority before those effective dates.
As a result, both the old and new US systems will be jointly relevant for at least the next 20 years.
Here is our assessment of four essential points from the AIA, and how they compare to similar provisions in Europe.
1. New first-to-file system
The Act’s most significant reform provision substantially broadens the scope of prior art that may be used to invalidate a patent, i) by eliminating a patent owner’s ability under the old system to avoid some prior art by showing an earlier date of invention; ii) by expanding prior art to include certain activities outside the United States – eg, public use, or offer for sale anywhere in the world (not just in the US, as under the old system); and iii) providing a catch-all for prior art ‘otherwise available to the public’ prior to the effective filing date of the patent.
However, the new system does maintain some aspect of the unique US grace period that gave an inventor one year to file a patent after the invention had been either sold, used in public, or disclosed in a publication. A new, modified grace period still excludes as prior art disclosures by the inventor less than a year before the patent filing date. Unlike the old system, though, the new grace period does not automatically exclude prior art disclosures by someone else. Rather, disclosures by others during the one-year grace period are excluded only if they occurred after the inventor publicly disclosed the invention. That encourages inventors to publicly disclose their inventions before others do.
The move to a first-to-file system harmonises US practice with that of Europe and the rest of the world – albeit slowly, and only partially. The EPO and national patent offices of Europe have always taken an absolute view on novelty, regarding the state of the art as comprising anything made available to the public, whether by i) written or oral description; ii) use; or iii) any other way, anywhere, before the priority date. There is a substantial body of caselaw that has grown up in Europe to help clarify the issue of novelty to users of the patent system. Similarly, US caselaw has further elucidated how novelty should be regarded. However, that US caselaw was decided within a patent system permeated with a first-to-invent mindset. It will be interesting and instructive to see which cases the USPTO and courts will consider as good law under the new Act – and how they will go on to further define novelty under a first-to-file system.
Within the patent systems of Europe there are not the old, generous – or newer, and less generous – grace-period provisions of the US. The European Patent Convention (EPC) has two, narrowly drawn provisions. One of them disregards earlier disclosures if they flow from an abuse – such as a third party disclosing the invention in a breach of confidence. The other allows the display of inventions at officially recognised, international exhibitions without compromising novelty. In both circumstances, any patent application must have been filed at the EPO within six months of these disclosures.
2. Expanded prior-user rights defence
Under the AIA, the new US patent system greatly expands the existing – but rarely used – non-infringement defence based upon prior-user rights. The old version of the defence was limited to business-method patents. Now, it is expanded to apply to any process (or any machine implementing that process) that a defendant has ‘commercially used … in the United States’ a year before the patent’s effective filing date. That provides a personal, non-infringement defence for the individual prior user who does not invalidate the patent. The provision applies to all processes (or machines implementing them) that are i) commercially used in the US, and ii) involve a ‘commercial transfer of a useful end result of such commercial use.’ The full scope of this provision is yet to be tested – for example: will it apply to a web server running a program (ie, a commercial use of a ‘process’) to deliver content to a consumer (ie, ‘a useful end result of such commercial use’)?
The corresponding provision in continental Europe looks substantially broader – although when actually tested, it has proven to be less broad than those relying on it may have hoped. For example, in the UK, any person who does something which would be an infringement of the patent before its priority date has the right to continue that act. There is no time limitation, other than this act must have started before the priority date. Further, making effective and serious preparations to conduct an infringing act before the priority date also grants one prior-user rights.
Neither provision, though, operates as a general licence under the patent. So, for example, manufacture before the priority date of an infringing product would only imply a right to sell the product manufactured if effective and serious preparations to sell that product – or actual sales – had already been made. In practice, that is quite a strict, factual test, and any preparations would have to be very advanced – almost to the point of no return. As with the US, the UK right is territorial: activities conducted outside the UK would not give rise to a prior-user right within the UK.
3. Advice of counsel and adverse inferences
The new US law codifies an ‘advice of counsel’ provision that seeks to shield defendants from the drawing of any adverse inference in a patent infringement suit, if they had not obtained – or decided not to disclose – an opinion of counsel as to whether they infringed the patent. Under the previous system, that adverse inference would have led to a finding of induced infringement, or wilful infringement. But, by eliminating the adverse inference, it is hoped that this provision will facilitate more openness and efficiency in consulting with patent counsel about alleged infringement.
This change has no direct parallel in Europe because Europe does not have aggravated damages for wilful infringement, or the broad US discovery-disclosure obligations that gave rise to the issue behind this change. However, the effect of the change may serve to align the practice of advisers in the two continents more closely – and permit more candid, coordinated, advice of counsel in related matters that span both continents.
4. Inter partes and post-grant review
The new US law modifies the existing inter partes re-examination procedure, and also adds an additional post-grant review procedure, intended to provide a better alternative to district court litigation. One key change is that the USPTO may allow some limited discovery – eg, depositions of persons submitting affidavits – that may allow the USPTO to vet certain validity challenges with some of the same discovery tools that are available in US district court litigation.
Further, the inter partes or post-grant review will be conducted directly by a panel of three administrative law judges within the USPTO, and can be appealed directly to the Federal Circuit from there – rather than the much longer, prior practice of initial examiner review followed by an internal appeal to administrative judges before appeal to the Federal Circuit. In addition, the inter partes and post-grant review must be completed within a year (with a possible six-months extension), rather than the previous, unlimited, multi-year process.
Within Europe, a third party may challenge the European Patent Office (EPO) grant of a patent within nine months of the mention of grant. The decision of the opposition division can itself be appealed; after that, there is no recourse to any higher court (other than separate, national proceedings against the granted EPO patent that may occur in separate European countries).
Following the filing of a European opposition, the procedure involves a series of written exchanges between the parties, without disclosure, culminating in an oral hearing, without cross examination. Both parties are given considerable time to reply to each written submission – typically four to six months. For that reason, oppositions are rarely concluded in under two years – or considerably longer if there is an appeal, despite the relative simplicity of the proceedings. Given the EPO opposition experience, it will be interesting to see if the USPTO can conduct its post-grant review in under a year. Many European attorneys see the one-year target as highly desirable – but possibly optimistic.
Richard Willoughby is a partner at Rouse UK, Jason Rutt is UK head of patents at Rouse UK, and David W Long is an attorney at law, based at the Washington, DC office of Dow Lohnes