Five Changes to Patent Law Every C-Level Decision Maker Should Consider

On September 16, 2012, the Leahy-Smith America Invents Act (AIA) was signed into law, ushering in a wave of reforms to the current U.S. patent system. It is important to understand how changes to both patent prosecution and litigation may affect business operations going forward.

1. The U.S. has changed from “First to Invent” to “First Inventor to File” patent system.

The U.S. currently follows a “First to Invent” system in which rights to an invention belong to the first person to conceive of the idea and diligently reduce it to practice. Even if somebody else subsequently came up with the same idea and filed a patent application prior to the first inventor, the first inventor still is still entitled to invention rights. However, the U.S. will apply a new “First Inventor to File” system to patent applications filed on or after March 16, 2013. Under the new system, rights belong to the first person not only to conceive of an invention and diligently reduce it to practice, but also to file a corresponding application with the Patent Office.

The new system encourages inventors to disclose their inventions to the public sooner, lest they lose out in a ‘race to the patent office.’ Companies may be wise to consider patenting earlier in the development phase rather than waiting for production when feasible.

2. The new patent statute redefined what is considered “prior” art, heightening the need to file patent applications quicker.

The AIA expands the definition of prior art to include public use, sales, publications, and other disclosures available to the public worldwide, not just in the U.S., as of the filing date. Further changes expand the prior art definition to include foreign offers for sale and public uses. Notably, publications by the inventor made within one year of filing are excluded as prior art.

The change to a ‘First Inventor to File’ system dramatically increases the urgency to get patent applications on file. The expanded definition of what is considered invalidating prior art puts an onus on patentees to file their applications as soon as possible. It also provides broader defenses to companies accused of infringement.

3. Companies are empowered to make third-party submissions to the Patent Office to fend off potentially meritless patent applications.

In the past, third parties were limited to sending a “have you seen” letter to a patent applicant, hoping to trigger the applicant’s duty to disclose the enclosed materials to the Patent Office for consideration. Under the AIA, third parties are now permitted to submit materials and a concise explanation of how they affect the patent application directly to the Examiner. Submissions may address issues beyond novelty and obviousness including definiteness, enablement, and new matter. The mechanism is relatively inexpensive as well, as the first 3 references submitted are free, and submission of up to 10 references costs just $180.

The catch is third-party submissions must be made in a narrow window – before the first office action is mailed, or no later than 6 months after publication of the application.

Third-party submissions provide a potentially powerful yet inexpensive way to participate in the prosecution of a competitor’s patent application, but to have maximum value, it is important to be vigilant in developing procedures to timely monitor to act within the limited window of opportunity to make submissions.

4. New procedures are provided to challenge business method patents.

The AIA provides a new type of review procedure called a “transitional proceeding” (phases out in 8 years unless reenacted or renewed) to review finance-related business method patents. The procedure is available only for patents that claim “a method or corresponding apparatus for performing data processing or other operations used in the practice, administration or management of a financial product or service, except that the term does not include patents for technological inventions.” A review can be instituted at any time during the life of the patent, and is not limited to within 9 months of issuance like the Post-Grant Review procedure. The effect of this procedure likely turns on court interpretation of “financial product or service” and “technological inventions.”

Transitional proceedings make it easier for financial institutions to challenge the validity of method patents asserted against them in litigation by lowering the standard of review required to raise the issue. Further, petitioners may use non-published evidence, not just patents and printed publications, to support their positions.

5. The AIA places new limitations on multiple defendant lawsuits.

The AIA provides narrow rules intending to limit the number of defendants that can be joined in one lawsuit. While there is no per se numerical cap, defendants must be involved in some common infringing conduct to be joined together. This differs from the current practice of joining tens or hundreds of disjointed defendants in one suit on flimsy jurisdictional grounds.

The changes are intended to deter frivolous lawsuits filed against multiple defendants by plaintiffs seeking to extract cost-of-defense settlements by effectively raising the costs of litigation on patentees. After this provision went into effect, patentees began mass filing single-defendant lawsuits. Courts in the Eastern District of Texas began entering orders directing the parties to work together toward common Markman hearings despite different lawsuits with different defendants.

Securing a Patent Is the First Step in Realizing a Return for Your IP Invention

Obtaining a patent is the first step in monetizing or selling your intellectual property patent for a profit on the open market. IP brokers are experts in assessing the value of and selling patents to U.S. based or global investors. Patents sales take place in industries such as computer and other technology, medical devises, communications including mobile technology, and other intellectual property assets to a range of inventors and entrepreneurs who are always looking for new and improved IP products.

A patent for your invention ensures you have “the right to exclude others from making, using, offering for sale, or selling” the invention in the United States or importing the invention into the United States,” according to the U.S. Patent and Trademark Office. Granted for new inventions, patents are also granted for improvements on existing patents, including the invention itself or the design of a new invention.

The U.S. Patent and Trade Office (USPTO) is the institution that awards patents. The process of obtaining a patent requires that you keep a detailed record of your invention including every step taken in creating the invention, including how you came up with the idea. Along with this description, diagrams of each step, including modifications and prototypes are most often required. Although USPTO mandate is to give assistance in helping you secure a patent, they strongly recommend you secure a patent attorney or other experienced professional to guide you through the patent process.

At the time of application, your invention cannot be for sale. You should also research the approximate value of your invention or have the professional you hired help you in this process. There are associated fees to get a patent so you will want to make sure that your invention is worth at least the cost of obtaining the patent. Small entity fees are much less than those that apply to those not meeting the definition. The official designation of “small entities” includes individuals, small businesses, and nonprofit organizations. Small businesses industry-specific, and based on the number of employees and annual receipts.

You will also need to complete a thorough patent search to make sure your invention is new. While this part of the process is time-consuming, it is a necessary step. You or your representative will need to search scientific and technical journals as well as a Patent and Trademark Depository Library. Not only should you search for U.S. patents, but depending on your invention and the degree of protection you are seeking, foreign patents may be applicable as well. You are likely to find similar patents and be able to prove how your patent is different or improves on earlier designs.

When it comes time to file an application, there are two primary options. You can file a provisional patent application or PPA that provides you with a patent pending status, essentially locking in the date of your application. This step involves a smaller upfront outlay of cash, however a regular patent application is required within one year.

An oath or declaration claiming that the inventor is the first to have invented the subject or product accompanies the application material. There are many other fees associated with the patent process, depending on whether you are seeking domestic and/or global protection, if you want to apply for an expedited process, and other options.

What follows your submission of application is an examination process that involves an USPTO examiner who will gather precise information about your invention to verify that it is indeed unique and to define the scope of the protection you are seeking. The entire patent issuance process generally takes 12 to 36 months, depending on the industry associated with your invention. Paying for a prioritized examination generally reduces that time to colder to the 12-month period. Once your invention is in the patent pending phase, you may begin the process of selling or monetizing your invention as it then that you have secured the rights to the invention.

Getting The Best Compromise Deal

Compromise agreements are made use of in an office to resolve workplace issues. It involves a compensation exchanging hands where the minimum payment is in the range of £10,000 and can up to around £25,000 or more. Compromise agreements are legal documents that are put together in the process of you being relieved of your job or after. It forms part of your employment rights. What it involves is a severance package. What is demanded in return is that the establishment is not held responsible in any manner for any grievance that you may have with it.

Agreements are largely being used by employers as a means of insulating themselves from any complaints in the future. One of the most common reasons for a compromise agreement coming into effect is to settle on existing claim. Another reason is to let go of an employee who is not performing to the best of his capabilities or to avoid being sued for firing a redundant employee. It is also a means of taking senior staff out of office without being subject to a law suit.

There may be several cases where there may be no issues between the employer or employee despite which a compromise agreement is brought into the picture. This is primarily to safeguard the interests of the company in the long run. Since most processes are not completely fool-proof, there are cases where ex-employees come back to file a case.

Employees may find it very difficult to comprehend the legal language used in these compromise agreements but they do follow a specific pattern. It should mention your severance package and should not have any overly tight demands in return. In such cases going through with an agreement can be deemed safe enough.

There are advantages to accepting a compromise in that you can be assured of payment on time and it is a good return. The payment is also free of any deductions or taxes and is a lump sum. In most cases you can also ask for a reference letter to be attached as well. Ensure that the clauses on not bad mouthing each other go both ways. You may otherwise find it difficult to find yourself another job.