On Sept. 8, 2011 Congress passed a patent reform bill named the “Leahy-Smith America Invents Act.” President Obama signed the act into law on Sept. 16, 2011. The most relevant aspect of the act for startups is the switch from a “first-to-invent” to a “first-to-file” system.

That is, new US patent applications filed after March 16, 2013 will fall under the new First-to-File regime created by the America Invents Act of 2011.  Those applications will no longer be able to claim invention-date priority, will have much more limited pre-filing grace period, will be subject to prior user rights and broad post-grant review, and can be invalidated by public uses and sales of similar inventions in foreign countries.  Moreover, absent a derivation problem, secret prior invention or reduction to practice by a third party will no longer be relevant to patentability. 

USA: new First-to-File law- all US/foreign acts invalidates & ends:conception priority, grace period, & trade secret rights

The United States has long been the sole nation with a first-to-invent system, which ensures — in theory — that the first person to invent something receives the patent protection for that invention. The rest of the world has long employed a first-to-file system, in which patent rights are awarded to the first person to file an application for the invention, regardless of the date of invention. The America Invents Act will harmonize U.S. patent laws with international standards.

Here are three things startups should do, given the new patent reform.

1. Make Rapid Decisions on Whether or Not to File Patent Applications

Once a team member identifies an inventive feature, decisions on whether or not to file a patent application will need to be made quickly in a first-to-file system. More frequent communication with your patent lawyer is key. Rather than hold monthly or quarterly meetings with your patent lawyer to discuss new inventions and the status of pending applications, plan to notify your lawyer of new inventions earlier and more often to avoid being beaten to the patent office.

The new first-to-file system will require aggressive and proactive action by innovators to avoid losing there intellectual property rights to others who get a patent filed first.  You should accordingly consult patent attorneys and adjust your processes to account for these drastic changes.

2. Encourage Your Employees to Quickly Report the Inventive Aspects of New Product Features

Emphasize to your teams the importance of quickly reporting inventive aspects of new product features. Rather than leave the process to chance, work with your patent lawyer to have a clear protocol in place to identify inventive features and to prepare a description of the invention that will allow business managers to decide whether a patent makes sense. This will enable the lawyer to quickly prepare the application.

3. Have the Rights to File Patent Applications on Behalf of Your Employees

Add language to employee agreements that give your company the right to file patent applications on behalf of the inventor. Prior to the Act, the Patent Office required a declaration from an inventor stating under oath that he or she was indeed the first person (to his or her knowledge) to conceive of the invention. While this declaration was of key importance to the first-to-invent system, the Act recognizes the realities of the modern workforce, where inventors migrate frequently between employers, and provides companies with the ability to submit a substitute statement. This statement functions in lieu of an executed inventor declaration. In it, the employer states that it has the legal authority to seek the patent without the inventor’s declaration because the inventor is deceased, legally incapacitated, unable to be found after a reasonable search, or refuses to assign his or her patent rights to the employer in violation of a valid contract to do so.

Startups should review existing employee agreements and revise them if necessary so that they can use these substitute statements to avoid delays when locating a former employee or when obtaining his or her consent proves difficult.

1. Prior art is now keyed to the effective filing date of the application in-question and – except for grace period and derivation purposes – dates of conception and reduction to practice are no longer relevant.
2. The fact that someone else invented your idea first (or something similar to it) except in the limited case of a derivation proceeding. Rather, what matters in the general case is whether that other party created prior art. (Prior commercial users will have limited prior user rights.)
3. On sale and public use activities are no longer limited to activities within the US. Rather, those elements can be proven with prior art arising from any region area of the world.
4. The USPTO has interpreted "on sale" activity of 102(a)(1) to be limited to public sales or public offers for sale. That will be challenged in court, though the challenge will likely take several years. That shift is a change from our prior understanding of on sale activity.
5. Under the 102(b) grace period, the law indicates that pre-filing disclosures "of the claimed invention" by the patent applicant will not serve as prior art against the inventor own later-filed patent as long as the application is filed within one year. Despite that "claimed invention" language, the USPTO has stated that the safe-harbor will work to disqualify all inventor-disclosed subject matter, even if the disclosure only suggests portions of the invention or motivations behind the invention. Of course, care should be taken with a publish-early strategy because that publication will likely negate the possibility of non-US patent rights covering the subject matter disclosed.
6. A prior filed US patent application will continue to serve as prior art once it is either published or patented and will have a prior art date of its earliest priority filing date that includes the relevant disclosure. Foreign applications will only count as prior art as of their publication date unless versions of those applications are filed in the US. Thus, an ordinary published Japanese patent application will be considered prior art in the US as of its publication date. However, if a US application is filed that claims priority to that Japanese application then the US application (once it publishes) will be considered prior art as of the date that the Japanese application was filed.
7. Large companies who file many patent applications receive additional relief from their own prior art under 102(b)(2)(C) and 102(c). Basically, a company's prior filed patent application will not count as prior art (for any reason) against the company's later-filed application so long as the prior application has not published or issued by the filing-date of the later application. Further, if the later-filed application was developed as part of a joint research agreement then the law will negate the prior art status of prior filed applications of any of the parties to the joint research agreement (so long as the prior applications were unpublished as of the filing-date of the later-application).