Stop me if you've heard this before: There’s a Patent Reform Act of 2011

The new legislation is intended to accomplish three primary goals: transition to a first-to-file system; improve patent quality; and provide more certainty in litigation.

March 7, 2011
Stephen Albainy-Jenei
Sens. Patrick Leahy, Orrin Hatch and Chuck Grassley haveintroduced the Patent Reform Act of 2011, which is now called the "AmericaInvents Act of 2011." The provisions and language of the bill look a lot likeitems in the long-pending legislation that were part of a compromise that wasannounced last Congress.
 
 
Sen. Leahy said the new legislation is intended toaccomplish three primary goals: (1) transition to a first-to-file system; (2)improve patent quality; and (3) provide more certainty in litigation.
 
First-to-file system
 
Similar to previous patent reform bills, the Patent ReformAct of 2011 proposes to change the U.S. patent system from a first-to-invent toa first-to file system in an effort to harmonize the U.S. patent system withthose of other countries. The new first-to-file system will award patents tothe earliest-filed application for a claimed invention, as well as provideinventors with a one-year grace period to file an application after publicdisclosure of the claimed invention by the inventors.
 
Patent damages
 
The Act is intended to provide more certainty in damagescalculations and enhanced damages. Specifically, the Act includes a rigorous gatekeeping role for thecourt, pursuant to which judges will assess the legal basis for the specificdamages theories and jury instructions sought by the parties.
 
In addition, the Act improves the law of willfulness andenhanced damages. It codifies the case law that holds that a defendant may onlybe found to have willfully infringed a patent if the plaintiff demonstrates byclear and convincing evidence that the infringer acted with objectiverecklessness and the objectively defined risk was either known or so obviousthat it should have been known b y the infringer.
 
 
False marking
 
 
Similar to last year's compromise legislation, the PatentReform Act of 2011 also proposes to impose more restrictive requirements on whohas standing to bring a claim for false marking under 35 U.S.C. §292. Under theproposed legislation, false marking cases will only be allowed if filed bypersons who have actually been harmed by the alleged misconduct. False markingcases would also include a statute of limitations that limits the time to filesuch cases to 10 years after the alleged misconduct, or one year after theplaintiff in this action became aware of the alleged misconduct. 
 
Post-grant review procedures
 
The Patent Reform Act of 2011 also includes a revised "interpartes review" procedure and a new"post-grant review" procedure. The inter partes review procedure includes proposed proceduralchanges that are intended to shorten the review time for most reviews to 12months and are conducted by administrative patent judges. The challenge will beheard by a panel of three administrative patent judges, and its decision isappealable directly to the Federal Circuit.
 
The new post-grant review procedure allows petitioners tochallenge the validity of issued claims on any ground of patentability. The Actincludes a "reasonably could have raised" estoppel standard, preventing achallenger from raising in court only an argument that reasonably could havebeen raised during an inter partesreview that the challenger instituted.
 
Additional provisions
 
 
Similar to the versions proposed in past years, the PatentReform Act of 2011 also proposes changes directed to the following:
  • Allowing third parties to submit and explain prior art, and other pertinent information concerning claim construction, for consideration by the patent examinerRemoval of residency restrictions on Federal Circuit judges
  • Elimination of failure to disclose best mode as an infringement defense
  • Creation of a "supplemental examination" procedure to cure potential inequitable conduct
  • Fee-setting authority granted to the U.S. Patent and Trademark Office (USPTO)
In addition, the Act contains a specific provisionprecluding the issuance of any patent claims containing subject matter directedto tax strategies.
 
 
So, is it good for American inventors or bad? It depends onwhose interest is at stake. Some have argued that it is unfavorable to smallbusinesses, start-up entrepreneurs, independent inventors and those companies'employees in the United States.
 
There is a fear that a change to the "first inventor tofile" with a change to the filing grace period will disadvantage smallcompanies and independent inventors in favor of larger firms that can arrangeall of their investment, testing, manufacturing and marketing internally.However, there is evidence that individual inventors assertinvention-date-based novelty rights relatively less often and less successfullythan large, publicly traded companies. Therefore, small entities may not knowwhat's best for themselves. 
 
The Act is still being argued, and amendments are beingproposed, so don't count out any surprises.
 
 
Stephen Albainy-Jenei is a patent attorney at Frost BrownTodd LLC, serving up chat at PatentBaristas.com. Write albainy-Jenei withcomments or questions at Stephen@patentbaristas.com. 
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