Transfer Pricing Associates

U.S. Passed New Patent Law

post Tuesday September 27, 2011

Tags: u.s. patent law; technology entrepreneur

pass law


September 16, 2011, U.S. passed the Leahy-Smith America Invents Act. Although this bill is passed by a large bipartisan majority, 89-9, the pass of this new act is being criticized for undermining the developments of technology entrepreneurs. It is considered that there are two major problems of this new act for the entrepreneurs:

1.        The change from first-to-invent (FTI) to first-to-file (FTF)

2.        The introduction of another version of post-grant review.

The supporters of this bill argued that all the other developed countries have adopted the first-to-file principle for their patent law, and by adopting the same FTF principle, it will help to move to a globally uniform patent system. On the other hand, many people argued that the FTF principle in general is not working in today’s world. In order to turn the ideas into patent, the inventor will have to go through certain steps to file the patent such as discussing the ideas with other people, getting funds for research, and more than likely, with their limited resource, a small business owner, a start-up company or inventors can expose to the risks of their ideas being registered by other people first. The majority of the supporter of this bill is big companies with international presence; however, domestically speaking, this change will undermine the developments of U.S. technology startups. Pharmaceutical companies are the main benefiter of FTF. They can achieve faster “reduction to practice,” which is the time between conception and development of a new drug and registered the patent.

Another problem associated with FTE is the elimination of “grace period” for offering an invention for sale or making a public use of it. Before this change, “grace period” is applied for one year for people from any of the following:  1) describing their invention in a printed publication; 2) making a public use of the invention; or 3) offering the invention for sale. Now the grace period is only applied from the disclosure of the invention. Senator Feinstein said there are two problems with the elimination: “First, disclosure is not defined in the bill.  This will generate litigation, while the courts flesh out that term's meaning.  This uncertainty will in turn chill investment, as venture capitalists will be reluctant to invest until they are confident that the inventor will be able to patent on their own invention.  Secondly, because of this lack of definition, some patent lawyers interpret "disclosure" to mean a disclosure that is sufficiently detailed to enable a person of ordinary skill in the particular art to make the invented item.  In practical terms, this means a patent application or a printed publication.”

Post Grant Review is considered to be another issue of the new at. Although the advocate stated that they will make sure the post grant review will complete in one year, the applicants may still have to wait more than 4 years due to Ex Parte Reexamination as under current law, an entirely new Post-Grant Review (PGR), and Inter Parties Review (IPR).

The change of the new act will still need to be measured. It is interesting to see how the new act will affect U.S. technology startups. 

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