Patent Reform Act of 2011

On February 3, the Senate Judiciary Committee unanimously voted to report the Patent Reform Act of 2011 (S.23), adopting two amendments (from Sens. Leahy, Hatch, and Grassley and from Sens. Feinstein and Kyl) to the bill. The bill proposes several changes to key provisions in the patent statutes, including the establishment of a first-to-file system.

The bill would take the U.S. patent system from its current first-to-invent system, unusual among national patent systems, to a more globally-prevalent first-to-file system. In doing so, the bill necessarily rewrites and reorganizes 35 U.S.C. §§ 102 and 103 regarding novelty and nonobviousness, respectively. The numerous anticipation criteria in the current § 102(a)-(g) would yield to simplified criteria in proposed § 102(a)(1)-(2). In this proposed provision, paragraph (1) describes anticipation by public disclosure before the effective filing date and paragraph (2) describes anticipation by patent applications, or patents resulting from them, filed by someone else, with earlier effective filing dates. The proposed § 102 keeps the yearlong grace period for disclosures coming from the inventor. It also includes similar common ownership and joint research provisions to those currently in § 103(c), altering the provisions to include joint research provisions as of the effective filing date and not as of the date of invention.

If enacted, the bill also provides for government studies to take place before the §§ 102 and 103-relevant provisions take effect. The Small Business Administration and the PTO would evaluate the effects of the first-to-file system as proposed, especially as it related to small businesses. The PTO would also evaluate the first-to-file system in relation to other countries’ patent laws and with respect to the rights of prior users. Congress would receive the results of these studies in reports before the relevant provisions become operational.

Because inventive work prior to filing an application would have very limited bearing on priority if this bill passes, the current interference proceedings would become largely vestigial. The proposed bill therefore overhauls 35 U.S.C. § 135, establishing “derivation” proceedings in place of interference proceedings. If two patent owners file for the same invention, and if the earlier-filing owner derived the invention from the later-filing owner, then these derivation proceedings would give the later-filing owner the opportunity to prevail over the earlier-filing owner. While derivation proceedings differ from interference proceedings, the bill summarily substitutes derivation for interference in some provisions.

Additionally, because it would replace interference proceedings with derivation proceedings, the bill would rename the Board of Patent Appeals and Interferences as the Patent Trial and Appeal Board.

If the Patent Reform Act of 2011 becomes law with these first-to-file provisions fairly intact, the new system would encourage applicants to file quickly. Resulting haste might decrease the quality of the initial applications, making the examination and prosecution process more difficult. However, perhaps more significantly, this proposed first-to-file system would nearly eliminate priority disputes based on times of conception or reduction to practice. Derivation proceedings would still be available, but would address a much more limited set of circumstances than interference proceedings, due to the requirement that the initiating party show that the other party derived the invention from the initiating party. Thus, the bill’s first-to-file system would eliminate almost all priority disputes, which can impose significant cost and inconvenience.

The proposed first-to-file system might also disadvantage smaller companies, individual inventors, or other parties that may not routinely file patent applications. Inexperience in U.S. patent application filing could cost the applicant valuable time, giving a more experienced applicant the chance to file first even without inventing first. However, the bill as proposed seems to address this concern at least partially by mandating investigations into such potential disadvantages before the relevant provisions would take effect.