The 2011 Leahy-Smith America Invents Act is scheduled to be signed into law today (9/16/2011) by President Obama. My initial take on it is that my large clients will find some things to like in the changes while my small to mid-size clients will find the changes largely tilt the odds against them. Overall I am not a fan of the changes, and according to a recent survey by patent blog Patently-O, I am in good company. Here is a rundown of some of the provisions of the new law that stand out to me.
First-to-file: For my smaller clients, switching to first-to-file will mean that more of them find themselves shut out of the system by their pre-filing activities. I recognize that there is an exception for your own activity, but it is not strong enough. Many startups do not learn about patent law or consult a patent attorney until well after they have already put up a website, presented at a conference, or engaged in business activities that could trigger the on-sale bar. My larger clients will more easily adapt and find it to be business as usual. They already have good filing practices in place and this may simply mean that we file earlier in the process (e.g., after the first developer spec is written rather than after the first prototype).
Patent Quality: For those that want to see higher quality patents, I hardly see how forcing inventors into a rush to the Patent Office rather than letting them perfect the invention before filing is going to lead to anything other than more hastily written patent specifications. There will be a need to file earlier and do more “guessing” about how the invention should work rather than waiting (as you can today) to complete all of your experimentation before filing.
Fee Diversion: Congress continues to raid the fees of the Patent Office. While the Patent Office could easily be a self-supporting agency getting better and better (particular with the great IT improvement plans Director Kappos had in mind that are now shelved due to budget cuts), instead it is becoming a cash cow for Congress to milk. Fees are going to go up 15%, and the Patent Office is going to keep less of them. The Patent Office has asked repeatedly to keep all of its fees, and in this law that is definitively denied.
Fast Track: A new accelerated examination program that allows inventors to pay $4,500 to get their patent to the front of the line may mean that startups wait longer than ever for a patent. Big companies have the resources to fill the fast queue, and others will be at the back of the line. While large companies have their patent and will be at the courthouse ready to sue with it, the startup and small inventor will not even have received any correspondence from the Patent Office yet. It is hard to see how that will be good for small business.
Best Mode: The changes basically eliminate the “best mode” requirement. The bargain that a patent strikes is that you get a 20 year monopoly but in return you explain to the world exactly how your invention works so that after 20 years the public benefits by knowing how to use your invention for free. Best mode is the doctrine that basically said that if there are multiple ways to perform part of your invention, you cannot hide the one that works the best even though you disclose the others. You had to put on paper the best way you know how to implement the invention. Now inventors may be able to hide that best way, disclose inferior ways of implementing the invention, and the public loses. Consider it a way of keeping a trade secret even though you filed a patent. In the past you had to choose either a patent or trade secret.
Dis-joinder: On the litigation side, the changes bar those suing for infringement from naming multiple defendants in a single lawsuit when the only common ground is infringing the same patent. Patent cases start out with what is called a Markman hearing during which a judge determines how the words of a patent's claims will be interpreted for the trial. In many cases, each side has a good idea whether it will win or not based on the outcome of this hearing. Thus, many cases settle after this stage before any factual arguments have been made about a particular defendant's infringement. Given this, it seems inefficient to force separate lawsuits for each defendant. Again, small companies will be hurt the most. While patent trolls and big companies have ample resources to pursue 10 separate defendants in 10 separate cases, small companies may have to choose one golden target and try that case first. If they lose that one, they may not have the resources to pursue other defendants even if their cause is just.
Earmarks: The bill also contains some provisions that are questionable. For example, one large law firm missed a filing date and has been in a malpractice suit worth over $200M. They have reportedly engaged in a heavy lobbying campaign and the reform act changes the patent laws to “forgive” the error (click here for more details). A late attempt to add an amendment removing this provision by Sen. Jeff Sessions, R-Ala., failed.
During my time as a patent attorney, most changes to patent law have unfortunately made the complexity of filing and prosecuting patent applications go up. This in turn makes attorneys charge more and makes the Patent Office's fees increase. So while Congress is likely patting itself on the back for these changes, I find little in the new law to get excited about.