Sunday, 13 November 2011

Harmony with the rest of the world? The America Invents Act

Author: Toshiko Takenaka, Professor of Law and Director, CASRIP, University of Washington

The America Invents Act, 16 September 2011

Journal of Intellectual Property Law & Practice (2011) doi: 10.1093/jiplp/jpr175, first published online: November 11, 2011

President Obama has now signed the America Invents Act (AIA) into law, following a process which began when Congress and US industry first sought to overhaul the US patent system in 2004 and which draws US practice closer to the patent laws of the rest of the world than has previously been the case.

Legal context

During discussions to review patent infringement remedies, US industry was increasingly divided in their views with respect to a grant of injunction and adequate damages to compensate infringement. With the development of case law to resolve the different views (see eBay Inc. v MercExchange, LLC, 126 S. Ct. 1837, 164 L. Ed. 2d 641, USPQ2d 1577 (US 2006), Lucent Techs. v Gateway, Inc., 580 F.3d 1301, 92 USPQ2d 1555 (Fed. Cir. 2009), the industry was finally able to reach an agreement for all controversial issues in patent reform and convince Congress to pass a reform bill (see HR 1249 (AIA), 112th Congress: 2011–2012 (here)). However, the terms of America Invents Act represent a lot of compromises between competing interests of different sectors of US industry, including large multinational firms, universities, and non-profit research labs and independent inventors, which will lead to a lot of uncertainty for US courts and the US Patent and Trademark Office (USPTO) as to how to interpret these terms.

Facts and analysis

Here are the most important aspects that will affect interests of European patent owners for their patent procurement and enforcement in the USA.

First-inventor-to-file (FITF)

The patent community worldwide has been excited by the news that the USA has finally adopted the first-inventor-to-file (FITF) system (AIA, section 3) that US lawyers describe as a first-to-file system to join the rest of the world for patent harmonization. However, there is still a big question mark as to whether the USA gives priority between two independent and identical inventions based on the date of filing. Many view the novelty and priority under the AIA as the first to publish in which the first to invent is established only through a disclosure.

Prior art (AIA, section 3)

New section 102(a) is comparable to EPC Article 54 in defining an invention which is part of the state of art before the effective filing date. It not only lists a broad definition of such invention, an invention which is available to the public as provided in EPC Article 54(2), but also examples of such inventions, an invention being patented, described in a printed publication, in public use or on sale. These examples are copied from the current patent statute and are associated with the peculiar interpretation of these examples based on the first-to-invent policy. For example, ‘public use’ includes an inventor's own secret but commercial use (Metallizing Eng'g Co. v Kenyon Bearing & Auto Parts Co., 153 F.2d 516, 517–8 (2d Cir. 1946)) excludes experimental public use (City of Elizabeth v American Nicholson Pavement Co., 97 US 126, 134–5 (1877)). Because US courts usually retain an interpretation of the term through its case law, unless the interpretation is expressly repealed by Congress, it is likely that US courts would interpret the definition of the state of art under the AIA differently to that of the EPC, Article 54. Despite this ambiguity, the AIA has removed the geographical limitation with respect to public use and sale and has thus harmonized with the EPC and Japanese Patent Act (JPA) in adopting worldwide novelty.

A new section 102(a) also provides a prior right which is comparable to the prior art under EPC Article 54(3), an invention described in a patent or patent application pending at the USPTO, to constitute the state of art if the patent application is filed before the effective filing date of the claimed invention under examination as long as the application is published after 18 months from the effective filing date or upon an issuance of patent (some US patents are not subject to 18-month publication, according to 35 USC 122(b)(2)(B)). Because the effective date is defined to include a foreign priority date under the Paris Convention and the PCT filing date, the AIA expressly repeals the Hilmer doctrine (from In re Hilmer, 359 F.2d 859, C.C.P.A. 1966) and gives the patent a defeating effect as of the priority date. Thus, the AIA's prior right provision is in line with the EPC as well as the JPA in giving the patent a defeating effect as of the priority date. However, it differs from the EPC and JPA by making the prior right reference available for not only novelty but also non-obviousness. Unlike the EPC, a prior right reference does not apply to applications which name the same inventor(s) or are owned by the same person or subject to an obligation of assignment to the same person to avoid the self-collision problem. This approach is in line with the JPA.

Grace period (AIA, section 3)

Contrary to the perception of US lawyers that FITF is a first to file, FITF is in fact a revised version of a first to invent. The definitions and underlying policy of disclosures excluded from the state of art make clear that the AIA still follows a first-to-invent system, although the period that the inventor can rely on the first to invent is limited to the 12 months from the filing date and the evidence to establish the first to invent is limited to a disclosure.

The new section 102(b) is comparable to EPC Article 55 in defining a disclosure of an invention which is removed from the state of art. The grace period, to take advantage of this exception to remove disclosed inventions, is 12 months and thus twice as long as the grace period under the EPC and JPA. The scope of inventions removed from the state of art is much broader than that of the EPC. Section 102(b) removes two classes of disclosed inventions from the state of art. The first class includes inventions which are disclosed by an inventor, joint inventor, or a third party who obtained the invention directly or indirectly from the inventor. Removing this class of disclosures is familiar within the first-to-file world because these disclosures are also excluded from the state of art under Article 9 of the Draft Substantive Patent Law Treaty (World Intellectual Property Organization, Draft of Substantive Patent Law Treaty, Article 9 (here).

The second class of inventions is most controversial because of the complexity and ambiguity in defining the class. The definition reads: ‘the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor, a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor’ (§ 102(b)(1)(b)). US lawyers and academics read the definition to remove from the state of art any disclosure of an invention after the first disclosure which falls into the first class as long as the inventor files an application within the 12-month grace period regardless of such disclosure made by another inventor who independently developed the same invention. In other words, the definition of second class should read to give priority based on the date of disclosure. This view is foreign to the first-to-file world, where a disclosure gives rise only to a patent-defeating effect. However, US lawyers who are trained in the first-to-invent world view the disclosure as evidence of invention which gives rise to priority for obtaining a patent as well as the patent-defeating effect. This interpretation is supported by some discussions in Congress where a sponsor of the AIA bill emphasized the protection of an inventor by giving the priority based on his or her disclosure (22 June 2011, H4420-4452 (here)).

The first-to-file trained lawyers would read the definition in line with the grace period provisions under the non-prejudicial disclosure under EPC Article 55, JPA Article 30, or Article 9 of the Draft Substantive Patent Law Treaty. For them, these provisions should read to remove from the state of art only certain types of disclosures by the inventor or derived from the inventor. This is because the grace period is an exception to the first to file and covers only minimum acts of inventors. In contrast, under the AIA, the grace period is an exception to the first to invent in barring inventors from obtaining a patent after 12 months from the filing date. That the AIA follows a first-to-invent system is further confirmed in that the subject matter resulting from both classes of disclosures is prevented from constituting a prior right. Non-prejudicial disclosures are not exempted from the first-to-file principle under either the EPC or the JPA.

Accordingly, ‘disclosure’ plays an important role in establishing the priority. However, the AIA does not include any definition of disclosure. Although the ‘disclosure’ should at least exclude a confidential sale and secret use, a non-confidential commercial offer of an invention or a public use of an invention may constitute a disclosure. The AIA does not suggest what degree of public access is necessary in order to rise to disclosure for establishing a priority. Because the FITF provisions will apply to applications with effective filing dates after 16 March 2013, we have to wait for a long time to determine how the US courts will interpret ‘disclosure’.

Derivation procedure (AIA, section 3)

Interference proceedings that determine priority based on the first to invent are restructured as derivation proceedings. The new proceedings will determine whether an invention of an application or a disclosure during the grace period is derived from the applicant. There is no proceeding to determine priority based on disclosures during examination if competing applications claim early disclosures during the grace period to establish the priority. Once a patent is granted, a first to disclosure may use the new post-grant review for challenging the priority.

Prior user rights (AIA, section 5)

The AIA will expand the scope of inventions to which a defence of infringement based on a prior use of an invention applies. Currently, a defence based on prior use is available only with respect to a method of doing or conducting business (see 35 USC §273). Under the AIA, the defence will be available for a process, a machine, manufacture, or composition of matter used in a manufacturing or other commercial process regardless of the field of technology. A substantial commercial use of the invention must be made at least one year before the earlier of either the effective filing date or the first disclosure of the invention claimed in the patent against which a defence is asserted. However, this defence is not available if the patent against which this defence is asserted was owned or to be subject to an obligation of assignment to universities at the time of invention. This defence will apply to any patent issued after 16 September 2011.

Multiple proceedings for challenging validity (AIA, section 6)

The AIA makes the US patent system complex and unique in offering multiple options for challenging patent validity at the USPTO in addition to invalidity challenge options at US courts. The AIA will provide three inter partes proceedings:
  • post-grant review;
  • inter partes review; and
  • a special post-grant review for business methods.
The post-grant review and the special post-grant review are new inter partes proceedings in contrast to the current inter partes reexamination which will be renamed as the inter partes review with some important revisions. The ex parte reexamination will remain as it is with a very minor change and interference proceedings. A comparison of the four proceedings is provided in the table below [If your screen shows only a partial version of the table, click it and you should be able to read it in its entirety].

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