The United States Transitions to a ‘First-Inventor-To-File’ Patent System

The United States has long had a “first-to-invent” patent system in which the date of invention could trump the date of filing a patent application in determining patent rights.  However, that is set to change due to the America Invents Act (AIA), a sweeping patent reform bill signed into law by President Obama in September 2011.

For patent applications with an effective filing date of March 16, 2013 or later, the United States shifts to what is often – and only partially accurately – called a “first-inventor-to-file” or “first-to-file” system. The reality is more complex than those designations imply, as patent rights in the United States under the first-to-file system will depend on the interplay between the dates of filing and of any pre-filing disclosures of the invention.

As I explained in an article in Fast Company last year:

Consider, for example, the case of an employee at Company A, who conceives an invention in May, works diligently to reduce it to practice, and files the corresponding patent application in August. Suppose, further, that an employee at Company B independently conceives the same invention in June and files for a patent in July.

Who gets the patent? Under the pre-AIA first-to-invent rules, Company A can get the patent because its employee invented first. However, under the new first-to-file system, things will be more complicated.

If Company A does not make any public disclosures regarding the invention before the August filing, Company B can get the patent by virtue of its earlier filing date. This is exactly what would be expected given the term “first-to-file.”

On the other hand, suppose that Company A describes the invention in detail (or in more formal terms, provides a disclosure) at a trade show, before a disclosure or a filing by the second company. In this case, Company A can get the patent even though it filed after Company B.

Pre-filing disclosures, however, have a very important downside that wasn’t changed by the AIA: They can eliminate the ability to obtain rights in the many international jurisdictions that do not recognize a “grace period” for disclosures made in advance of filing a patent application. What has changed is that under first-to-file silence can be more costly than before with respect to U.S. patent rights.

Under first-to-file, an inventor who does not take prompt action to protect his or her invention faces a higher risk that a later inventor will end up holding the associated U.S. patent rights. In part for this reason, the U.S. Patent and Trademark Office is likely to see increased numbers of provisional applications, which if done properly can be a cost-effective way to obtain an early priority date for a patent application.

Much ink has been spilled debating the merits of the move to a first-to-file system. It is often suggested, for example, that it will favor larger companies with more financial resources. However, as I explained in this Forbes article, that isn’t necessarily true. Larger companies may have more money, but they also have more people creating inventions. Smaller companies can be more agile in identifying which innovations are worth patenting, and then acting quickly to take steps to protect them.

While first-to-file has gotten significant attention, the AIA contains many other provisions [PDF] as well, most of which have already taken effect. Companies, universities, individual inventors, and other patent-seeking entities should update their procedures and training accordingly. A good patent attorney or patent agent can play a vital role in helping inventors navigate first-to-file and the other changes provided under the AIA.