Analyzing The America Invents Act
The America Invents Act (pdf) (AIA), which was signed into law by President Obama on Friday, September 16, 2011, represents the first major legislative adjustment to the U.S. patent system in decades (see previous coverage). Many changes are included in the 37 sections of this bill, and they will not all take effect at the same time. The most controversial details, found primarily in § 3 of the AIA, continue to be analyzed and debated extensively elsewhere, but there are several elements that may be of particular interest to GLR readers.
First-to-file (§ 3): The most significant change is from a “first-to-invent” system to a “first-to-file” system. Until now, it has been possible for
inventor A to challenge the application of inventor B, who filed an earlier application for the same invention, based on evidence that inventor A had actually invented first.
Under current law, such disputes are resolved in Patent Office proceedings called interferences, which are decided under complex rules that take into account who first conceived of the invention, who first reduced it to practice, and whether the competing parties were continuously diligent in their respective efforts to reduce to practice. The interference proceeding will be eliminated by the AIA legislation, and the entity that presently conducts those proceedings, the Board of Patent Appeals and Interferences, will be renamed the Patent Trial and Appeal Board (§ 7). Assuming all other requirements are met, the first inventor to file an application on the invention will be granted the patent. This provision “harmonizes” the United States patent system with those in other countries and will take effect 18 months from the enactment date.
“Prior commercial use” as a defense to infringement (§ 5): An accused infringer will have a valid defense if they can prove their own good faith commercial use of the infringing device or method at least one year before the earlier of either (a) the effective filing date of the patent or (b) the date the subject matter of the patent was publicly disclosed by the inventor. This section is effective on the date of enactment and applies to any patent issued on or after that date.
False patent marking actions (§ 16): Only the United States or “a person who has suffered a competitive injury as a result” of false marking (e.g., marking a product with an expired patent) may bring a suit on that basis. So-called qui tam actions (also known as whistleblower suits) based on false marking will be eliminated. Only the United States may recover statutory damages, and a person suffering competitive injury may recover “damages adequate to compensate for the injury.” This provision is effective for cases pending on or commenced on or after the date of enactment.
Study on genetic testing for second opinions (§ 27): As Dan wrote in June, the Director of the United States Patent & Trademark Office will be required to conduct a study on “effective ways to provide independent, confirming genetic diagnostic test activity where gene patents and exclusive licensing for primary genetic diagnostic tests exist.” This provision is effective immediately on enactment, and a report and recommendations to the House of Representatives and the Senate are due nine months from the bill’s date of enactment. As Myriad, Prometheus and other litigation with implications for personalized medicine patents continue to wend their way through the legal system, the study presents the government – and particularly the Patent Office – with a timely opportunity to once again weigh in on the merits of gene patents, in particular their effect on diagnostic testing and medical care.
Some Additional provisions: For those interested in digging deeper into the AIA, here a few other changes the new legislation will bring about:
- Numerous adjustments to post-grant review and reexamination, intended to encourage these processes and thereby decrease patent litigation (§ 6);
- Adjustment to rules regarding third-party submissions before issuance (§ 8);
- Fee-setting authority for the USPTO and changes to fees (§§ 10-11), including the creation of a “micro entity” category of inventor (entitled to pay 25% of certain fees) as a subset of the small entity (entitled to pay 50% of certain fees);
- Prohibition on patents claiming tax “reducing, avoiding, or deferring” strategies (§ 14) and on patents on human organisms (§ 33); and
- Prohibition on joinder of defendants solely on the basis that each defendant is accused of infringing the same patent(s), which is intended to restrict the litigation activities of so-called non-practicing entities (or, as they are less politely known, “patent trolls”) (§ 19).
As a practical matter, many of the changes described above – including the switch to first-to-file – will take some time to be implemented by the Patent Office (see timeline below, which comes from the PTO’s website) and should not be expected to dramatically alter the number or nature of patent issuances or challenges in the short-term. As for the hotly contested (see here, here and here for a sampling of views) economic impact of the AIA, including its effect on small inventors, if that debate is ever settled (unlikely given the myriad confounding factors) it will be years in the future.
On § 27, “Study on genetic testing”, it’s interesting to note the language of the concluding paragraph. It reads (emphasis added),
(d) REPORT. – Not later than 9 months after the date of enactment of this Act, the Director shall report to the Committee on the Judiciary of the Senate and the Committee on the Judiciary of the House of Representatives on the findings of the study and provide recommendations for establishing the availability of such independent confirming genetic diagnostic test activity.
In other words, the report is to recommend ways to solve the problem of gene patents and exclusive licenses that block independent confirming genetic diagnostic tests.
Conceptually, this is different from a study that examines the impact of the current lack of second opinion testing. Such a study might — or might not — conclude that patents and licenses diminish care for patients. And it might or might not find that changes to patent and licensing procedures on this issue would have a net benefit to society.
As written, paragraph (d) seems to have answered these questions at the start. Presumably on the basis that they’ve already been addressed by the SACGHS report.
Paragraph (a) also supports your reading:
(a) IN GENERAL.—The Director shall conduct a study on effective ways to provide independent, confirming genetic diagnostic test activity where gene patents and exclusive licensing for primary
genetic diagnostic tests exist.
However, the details in paragraph (b) dictate that there will be additional impact studies.
Thanks for the comment.
I advised my client to push for Patent law changes when he was caught up, along with 1520+ other USA manufacturing firms, to push the new GOP majority in the House of Reps ( Darrell Issa & Boehner) to change the law. No way were the patent troll and theri IP attornies going to drop the cases listed at falsemarking.net or at http://www.grayonclaims.com/false-marking-case-information/
Thius has to help small and large business growth as these last remaining US manufacturers and sales operations were looking at huge legal fees and court costs. The potential fines would force plant closings as the Qui Tam perps were seeking trillions in fines for expired patent numbers on products and product literature.
Keep in mind, too, the context behind the study. It was a compromise negotiated by Rep. Wasserman Schultz, Rep. Smith and others and it is my understanding that it was authored entirely by Rep. Wasserman Schultz’s office. Whatever the language may suggest, I would be very surprised if either the PTO or Congress would consider themselves bound to any particular conclusion or course of action.
Section 27 of AIA is the manifestation of a long felt need to limit the scope of diagnostic gene patents so that it could not interfere with the patient’s right to seek second opinion. The social and policy issues can be better addressed by the legislature than the court. This would make a great impact on Myriad’s patents on BRCA1/BRCA2 gene. However, there is a great need to check the patent licensing practices so that they can promote the ultimate purpose of patent without blocking innovation. . Thanks for presenting some of the important features of the AiA in a lucid way.