The America Invents Act — Moving the US Toward the International Standard

The America Invents Act, a law that will take effect in March 2013, is one of the significant overhauls of the US patent system in generations. The centerpiece of the law is changing the US patent system from a “first-to-invent” to a “first-to-file” regime. This is more along the lines of most other countries’ patent systems, which require “absolute novelty” — an inventor must file his or her patent application before making any public disclosure or commercial exploitation of the invention, otherwise, patent rights are lost.

Under the current US regime, the person who successfully claims that he or she invented first gets the patent rights, even if another person files his or her patent application first. The downside of this system is that when two persons are claiming first invention, the Patent Office must undertake a time-consuming and costly investigation of the matter to settle the issue (known as an interference proceeding). Under the new regime in 2013, the first person to file his or her patent application is, by default, the applicant who receives patent rights, eliminating any costly need to make a determination between two competing claims of first invention (although the Patent Office will still need to determine if one claim is simply a derivation of the other and that both inventors are indeed original inventors).

Unlike other countries, under the America Invents Act the US still retains the one-year window after publication of the invention to file the patent application. The effect of this is that disclosure grants a one-year grace period where any subsequent disclosure of or application filing for the invention by another true inventor cannot be used as prior art against the first-to-disclose inventor, despite the new first-to-file system. Of course, as always, the downside to disclosure is that it generally cuts off patent rights in most other countries.

The benefit of the new patent application regime under the America Invents Act for startups is that it should reduce the time and costs of applications, especially since interference proceedings are no longer needed. However, the first-to-file system means that startups may need to move more quickly than in the past to file for patent rights in order to ensure that their application receives priority; however, startups generally prefer take time to refine the product, establish that there is a market for the product, and securing financing for the company before moving forward on a patent application. While startups can buy a one-year grace period by publicizing the product before any other applications are filed, such an act cuts off patent rights in other countries. Therefore, it remains to be seen in practice whether the new patent application regime helps or hurts startups.