Diamond Post

 Business & Commercial Newsletter 

Congress Passes Landmark
Overhaul of Patent System

Over the past several years our colleagues here at Gallivan, White & Boyd, P.A. have been carefully following the continuing "tort reform" happening across the country.  However, another type of legal reform - patent reform - recently became law and will affect many of our clients involved in intellectual property and technology-related businesses.  Last month, President Obama signed a landmark patent reform bill known as the "America Invents Act," which many are calling the most significant overhaul of the American patent system since Harry Truman was president.  The new law contains many changes, including moving the United States from a "first to invent" system to a "first inventor to file" system, changing the way patents are challenged in the Patent Office, and addressing many controversial issues that have arisen in patent law and litigation.

The most significant change created by the new law is to move the United States from a system granting patents to the "first to invent" to the "first inventor to file."  The United States had been somewhat different than most other nations in that it granted patents to the first inventor of an invention, even if he or she was not the first person to file a patent application.  That approach led to disputes both in the Patent Office and in court over who was really the first inventor of a particular invention, who "reduced to practice" the invention first, and other issues.  With the new law, the United States will switch to a "first inventor to file" system, similar (though not identical) to what is used in many foreign countries.  As the term suggests, a "first inventor to file" system grants a patent to the first inventor to file an application that otherwise meets the requirements for patentability, even if that inventor may not have actually been the first to invent. 

As a result, rather than handling disputes about who is the first to invent, the Patent Office will now handle "derivation" disputes about whether the alleged first inventor to file arrived at the invention independently or "derived" it from someone else.  Under the new law, the Patent Office will also handle other matters differently, allowing third parties to offer certain submissions before a patent is granted, providing a process to challenge patents after they are granted, and modifying the present system that allows for re-examination of issued patents.

Other notable changes to the law reflect growing concerns about possible abuses of the patent system.  For example, the new law specifically prevents patents on inventions for strategies used in reducing, avoiding, or deferring tax liability.  The new law also significantly curtails the recent volume of "false marking" litigation that had been active in the courts, where plaintiffs were seeking to hold inventors liable for products marked with a patent number that had expired. 

As with any change, there are a number of proponents and detractors.  Those in favor of the new law claim it will bring the United States in line with other countries, promote more certainty and less cost in the process, and create jobs.  Those against the new law claim, among other arguments, that it favors wealthier, larger companies that have the resources to file first and that the changes will be counterproductive.  Some even argue that portions of the new law are unconstitutional.  Regardless, the new law is here, at least for now, and as it phases in over the next several months, we will begin to see how these issues play out.  If you have questions about the new law or intellectual property matters in general, please do not hesitate to contact us.

Tom Vanderbloemen is a partner in GWB's Greenville office and is a registered patent attorney.  He focuses his intellectual property practice on litigation of disputes concerning patents, trademarks, copyrights, and trade secrets, and can be reached at TVanderbloemen@GWBlawfirm.com or 864-271-5428.