SEC Trends & Developments - Winter 2011 - From the Bar… Recent Patent Law Changes Affecting Businesses
Recently, the America Invents Act was signed into law. This Act makes a number of changes to the Patent Laws that technology companies should be aware of. Below are some of the most pertinent changes.
The U.S. will now be a First to File Country
U.S. patents have always been awarded to the person who was the first inventor, not to the person who first filed the patent application with the Patent Office. From time to time, applications would be filed where the claims of the applications conflicted with an earlier filed application or in some instances, a recently issued patent. When applications with conflicting claims were before the Patent Office, the Examiner would declare an “Interference” which was a specialized proceeding to determine which person was the first inventor. These proceedings could be very time consuming and expensive. Interference proceedings would look at when the invention was first conceived, when it was reduced to practice and was there diligence by the inventor.
Starting in March of 2013, patents will now be awarded to the first person to file the patent application in the Patent Office. Inventors will no longer be able to sit back, leisurely developing their invention and waiting to file their application. Under such an approach, an inventor runs the risk of losing his rights to the invention by failing to file his application before someone else.
In order to avoid a loss of rights to someone who beats the inventor to the filing of an application for the invention, an inventor should contemplate filing one or more provisional applications starting early on in the invention process. The provisional application can be an inexpensive means of getting a patent application on file quickly. As new developments or embodiments are added to the invention, additional provisional applications can be filed to cover the additional aspects.
Provisional patent applications last a year from the date of filing. Prior to the end of the year, the inventor must file a regular utility application to fully protect the invention. The first to invent rule will not have any effect on existing patents or patent applications filed before March 2013.
One of the complaints the Patent Office has received has been the delays in processing patent applications. Many companies object to the long period of time it takes to examine the applications. The total process can easily take 3 to 5 years from filing. The new statute gives an inventor the option of requesting expedited examination upon payment of a fee. The fee is currently $4,880 for large entities and ½ of that or $2,440 for small entities. The expedited process will provide a final office action or a Notice of Allowance within a year of filing.
Post Grant Oppositions
Up until now, third parties had limited ability to challenge a patent that the third party believed should not have been granted. While a third party would have a defense that the patent was invalid in a patent infringement action brought in the United States District Court, such proceedings were expensive and time consuming, and there was significant risk if the third party was wrong.
Two ways to challenge the issuance of a patent without having to bring a legal proceeding in the United States District Court for invalidity were available in the Patent Office. These proceedings were ex parte and inter partes reexamination proceedings. Many third parties did not like to bring these proceedings because they were concerned that their participation in the proceeding was limited.
In the new statute, third parties will be able to challenge the validity of a patent within 9 months of issuance in a Patent Office Post Grant Opposition proceeding. This is not unlike the opposition system that has been in effect for many years with respect to European patents and before them, in the German Patent Office. After the nine-month opposition proceeding period ends, third parties can still bring a new Inter Partes Review which is similar to the current Inter Partes Reexamination proceeding.
Reduction in Fees for Small Companies
As part of the new statute, there was a 15% increase in the government fees. To offset the increase in the fees for small companies and individual inventors, a new category of patent applicant has been created that will be entitled to reduced government fees. This category, called “micro entities,” reduces the fees by 75% of the large entity fees. In order to qualify for the reduced fees, there are several requirements that must be met. These are:
- Your income must be under $148,335.
- You have not filed more than 4 non-provisional applications.
- You have not assigned or licensed your invention to a large entity.
Unfortunately, the Patent Office has not been willing to implement the reduced fees yet, but will hopefully do so some time in the near future.
These are just some of the changes instituted by the new Patent statute.
From the Bar… is designed to present our readers with the views of counsel from outside EisnerAmper LLP
SEC Trends & Developments - Winter 2011 Issue
- SEC Tightens Listing Standards for Reverse Mergers
- PCAOB Adopts Risk Assessment
- From the Bar…Recent Patent Law Changes Affecting Businesses
- FASB's Recent Guidance Simplifies Testing Goodwill for Impairment
- SEC Provides Disclosure Guidance Relating to Cybersecurity Risk Disclosure
- Latest Comments from the Commission
- Accounting Standards Update
- Recent SEC Enforcement Actions