With the passage of the America Invents Act by the House of Representatives on June 23 and of similar legislation by the Senate in March, the United States is on the verge of implementing the most sweeping patent reform in decades. American companies of all stripes now face the challenge of reexamining how to most effectively pursue patent protection on their inventions. However, the challenge is particularly acute for technology companies that operate in a world of increasingly fast innovation and ever-shorter product life cycles.
One of the most significant components of the new legislation concerns what is widely described as a move from a first-to-invent system to a first-to-file system. At first blush, the term “first-to-file” can conjure up images of a hapless inventor who, having conceived an invention in March but waited until August to file the corresponding patent application, loses out in the U.S. Patent and Trademark Office (PTO) to a competitor who arrived independently at the same invention in June and filed for patent protection in July. And indeed, the newly approved Section 102 of Title 35 of the United States Code will make such a scenario possible. As amended, that section will now provide that a person may not necessarily meet the “novelty” conditions for patentability and be entitled to a patent if
[T]he claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.
In other words, an inventor may win the race to create the invention but lose the race to file the corresponding patent application, and in doing so lose the right to patent the invention.
The new Section 102 then goes on to provide an important exception in the form of a grace period, stating that “a disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention” if “the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor” or “the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.”
This allows an inventor or others who obtained information from the inventor to make disclosures regarding the invention in advance of filing a patent application, as long as the application is filed within one year after the first disclosure. A grace period in one form or another has been a feature of the U.S. patent landscape since the 19th century, and allows an inventor time that can be used, for example, to examine the commercial practicability of the invention, to engage in discussions with potential partners and customers, and to secure the resources necessary to draft a patent application.
Importantly, the inclusion of both first-to-file language and a grace period in the new patent law creates what could in some fact patterns amount to a hybrid between first-to-invent and first-to-file. For example, in the case of two inventors who independently disclose the same invention immediately following its conception, both current law and the new law can favor the earlier discloser, who is by definition the earlier inventor if the disclosure is truly immediate. However, in the absence of disclosure in advance of a patent filing, current law favors the earlier inventor, while the new law will favor the earlier filer.
As a result, under the new law inventors and the companies that employ them must think much more carefully about how to actively manage pre-filing disclosures. Put simply, silence can be costly. To the extent that a company remains quiet about an invention while it is contemplating whether or not to obtain patent protection, it stands exposed to the possibility of losing the right to do so as a result of filings made by a competitor. A company wishing to avoid this risk faces an additional challenge in that the America Invents Act does not specifically define what constitutes a level of “disclosure” sufficient to preserve patentability.
The new patent law is also notable in removing the explicit carve-out available under current patent law for an invention that is “in public use or on sale in this country.” Thus, an inventor who provides a sufficiently detailed disclosure in May, offers a product containing the invention for sale in June, and files for a patent in July faces the prospect that the sale could be interpreted to fall outside the definition of “disclosure”, and could therefore be invalidating prior art to the inventor’s own patent application.
In light of the new patent law, there are several specific steps that technology and other companies can take.
Companies can be more careful when producing pre-filing disclosures for venues such as conferences and trade shows with the understanding that under the new law those disclosures may play a much larger role than in the past in preserving patentability of the associated IP. In addition, precisely because those disclosures will be produced with a stronger view towards IP protection, they will likely be subject to a higher degree of IP-related analysis by competitors.
Some companies may find themselves targeted by disclosures by competitors engineered specifically to foreclose patent opportunities. To reduce their vulnerability to such attacks, companies can engage in preemptive “defensive” disclosures – but in doing so need to be mindful of the impacts of these disclosures on their own patent filing deadlines.
In addition, employees engaged in IP creation can be made aware that there is an increased need to actively and timely pursue steps aimed at securing patent protection on new inventions. Internal company systems for documenting, reporting, and rewarding innovations can be modified to better match the new law. In particular, the issue of rights to an invention prior to a filing date will be depend more on the history of relevant disclosures and less on nonpublic, internal company documents such as laboratory notebooks.
Companies can also reevaluate the extent and manner to which they use provisional patent applications to preserve IP rights. In addition to comparisons that might be made under the current patent law between the contents of a provisional application and the associated utility filing, under the new patent law there will be additional comparisons made among the provisional and utility applications and the disclosures made by or attributable to the inventors.
All companies – large and small – will benefit from considering the impact of the new law on IP budgets, both in terms of the amount and the timing of expenditures. Opponents of the move to first-to-file have sometimes stated that it favors large companies that have more financial resources to support rapid patent filings. In some respects, this is a valid concern. However, it is also worth noting that large companies have more employees engaged in research and development and produce greater numbers of potentially patentable innovations. The burden of more rapidly analyzing innovations can be significant for large companies.
Under the new law, providing a more extensive description of the technology associated with an invention is safer from the standpoint of protecting patentability, but also risks exposing trade secrets to competitors. While the tension between disclosure for patent purposes and preservation of trade secrets has always existed, under the new patent law companies will need to identify and resolve these questions over dramatically accelerated time scales – time scales that in the technology world can lead to complex interactions with product development cycles.
It is also important to recognize that the America Invents Act still leaves substantial differences between the patent laws in the United States and those in other countries.
For example, the European Patent Office (EPO) holds a starker view of “novelty” and employs a correspondingly stricter version of first-to-invent. In the EPO, “an invention shall be considered to be new if it does not form part of the state of the art”, and “[t]he state of the art shall be held to comprise everything made available to the public by means of a written or oral description, by use, or in any other way, before the date of filing of the European patent application.” Thus, unlike in the United States under both the current and new patent laws, in Europe an inventor’s own public disclosures in the year prior to a patent filing can be invalidating prior art. To the extent that for financial or other reasons a company needs to defer filing a U.S. patent application to a future date, in one sense the systems have actually moved farther apart due to what amounts to a newly incentivized option to buy some measure of protection in the U.S. by disclosing in advance of a filing at the cost of losing patentability in Europe. This requires careful consideration when contemplating disclosure plans.
It will take many years to develop a mature body of case law and legal scholarship regarding the full impact of the America Invents Act. What is clear today, however, is that the Act, if enacted into law, will usher in profound changes in how patents are prosecuted in the United States. Companies that retool their patent strategies to address these changes will be in a much stronger position to maximize the future value of their intellectual property portfolios.
 Title 35 is the portion of the United States Code addressing patents; Chapter 10 of Title 35 addresses patentability of inventions and contains Section 102, titled “Conditions for patentability; novelty” in the America Invents Act.
 112th Congress, 1st Session, H.R. 1249, available at http://www.gpo.gov/fdsys/pkg/BILLS-112hr1249eh/pdf/BILLS-112hr1249eh.pdf, retrieved June 26, 2011. The cited language is from Section 102(a)(2) and is identical in H.R. 1249 and in the corresponding Senate version of the America Invents Act, S. 23. Sections 151 and 122(b) of the United States Code referenced in the new Section 102 text pertain to the issue of a patent and publication of patent applications respectively.
 Ibid. The cited language is from Section 102(b)(1) and is identical in H.R. 1249 and in the corresponding Senate version of the America Invents Act, S. 23.
 See, for example, the Patent Act of 1870, Chapter 230, Section 24, providing that “any person who has invented or discovered any new and useful art, machine, manufacture, or composition of matter, or any new and useful improvement thereof, not known or used by others in this country, and not patented, or described in any printed publication in this or any foreign country, before his invention or discovery thereof, and not in public use or on sale for more than two years prior to his application, unless the same is proved to have been abandoned, may, upon payment of the duty required by law, and other due proceedings had, obtain a patent therefor.” http://ipmall.info/hosted_resources/lipa/patents/Patent_Act_of_1870.pdf, retrieved June 25, 2011.
 European Patent Convention, Article 54. See http://www.epo.org/law-practice/legal-texts/html/epc/2010/e/ar54.html, retrieved June 24, 2011