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Stop me if you've heard this before: There’s a Patent Reform Act of 2011
March 2011
by Stephen Albainy-Jenei  |  Email the author
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Sens. Patrick Leahy, Orrin Hatch and Chuck Grassley have introduced the Patent Reform Act of 2011, which is now called the "America Invents Act of 2011." The provisions and language of the bill look a lot like items in the long-pending legislation that were part of a compromise that was announced last Congress.  
 
Sen. Leahy said the new legislation is intended to accomplish 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 Reform Act of 2011 proposes to change the U.S. patent system from a first-to-invent to a first-to file system in an effort to harmonize the U.S. patent system with those of other countries. The new first-to-file system will award patents to the earliest-filed application for a claimed invention, as well as provide inventors with a one-year grace period to file an application after public disclosure of the claimed invention by the inventors.
 
Patent damages
 
The Act is intended to provide more certainty in damages calculations and enhanced damages.  Specifically, the Act includes a rigorous gatekeeping role for the court, pursuant to which judges will assess the legal basis for the specific damages theories and jury instructions sought by the parties.
 
In addition, the Act improves the law of willfulness and enhanced damages. It codifies the case law that holds that a defendant may only be found to have willfully infringed a patent if the plaintiff demonstrates by clear and convincing evidence that the infringer acted with objective recklessness and the objectively defined risk was either known or so obvious that it should have been known b y the infringer.  
 
False marking  
 
Similar to last year's compromise legislation, the Patent Reform Act of 2011 also proposes to impose more restrictive requirements on who has standing to bring a claim for false marking under 35 U.S.C. §292. Under the proposed legislation, false marking cases will only be allowed if filed by persons who have actually been harmed by the alleged misconduct. False marking cases would also include a statute of limitations that limits the time to file such cases to 10 years after the alleged misconduct, or one year after the plaintiff in this action became aware of the alleged misconduct. 
 
Post-grant review procedures
 
The Patent Reform Act of 2011 also includes a revised "inter partes review" procedure and a new "post-grant review" procedure. The inter partes review procedure includes proposed procedural changes that are intended to shorten the review time for most reviews to 12 months and are conducted by administrative patent judges. The challenge will be heard by a panel of three administrative patent judges, and its decision is appealable directly to the Federal Circuit.
 
The new post-grant review procedure allows petitioners to challenge the validity of issued claims on any ground of patentability. The Act includes a "reasonably could have raised" estoppel standard, preventing a challenger from raising in court only an argument that reasonably could have been raised during an inter partes review that the challenger instituted.
 
Additional provisions  
 
Similar to the versions proposed in past years, the Patent Reform 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 examiner Removal 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 provision precluding the issuance of any patent claims containing subject matter directed to tax strategies.  
 
So, is it good for American inventors or bad? It depends on whose interest is at stake. Some have argued that it is unfavorable to small businesses, start-up entrepreneurs, independent inventors and those companies' employees in the United States.
 
There is a fear that a change to the "first inventor to file" with a change to the filing grace period will disadvantage small companies and independent inventors in favor of larger firms that can arrange all of their investment, testing, manufacturing and marketing internally. However, there is evidence that individual inventors assert invention-date-based novelty rights relatively less often and less successfully than large, publicly traded companies. Therefore, small entities may not know what's best for themselves.  
 
The Act is still being argued, and amendments are being proposed, so don't count out any surprises.  
 
Stephen Albainy-Jenei is a patent attorney at Frost Brown Todd LLC, serving up chat at PatentBaristas.com. Write albainy-Jenei with comments or questions at Stephen@patentbaristas.com. 

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