Tech Transfer News: America Invents Act

America Invents Act: Changes to the USA Patent Filing System

It has been just over two years since President Obama signed the America Invents Act (“AIA”) into law on September 16, 2011¹. The AIA introduced some fundamental changes to the United States’ patent system, most notably of which was the shift from a “first-to-invent” to a “first-inventor-to-file” patent system. In a “first-to-invent” patent system, patents are granted to the first person to invent the claimed invention. Prior to the enactment of the AIA, the U.S. was one of the only countries that followed this system. Almost every other country in the world follows a “first-inventor-to-file” patent system², which grants a patent to the first entity to file a patent application claiming the invention.³ One of the goals of the AIA was to resolve this discrepancy.⁴ Under the AIA, if any or all of the claims for a claimed invention have an effective filing date on or after March 16, 2013, the patent application will be subject to the “first-inventor-to-file” patent system.⁵

The AIA enacted a host of procedural and substantive changes to the US patent system. This article presents some of the benefits and concerns that may be of particular interest for technology transfer offices (“TTO(s)”), especially those in the United States.

Fewer Administrative Hurdles

The University/Research Institution May File on Behalf of Its Inventor(s)

In a “first-inventor-to-file” system, there is inevitably an underlying sense of urgency. Prior to the AIA, in order for a TTO to pursue patent rights without the inventor, the TTO would have to show that the inventor refused to cooperate or could not be reached after “diligent effort”; and that the TTO’s pursuit of patent rights would prevent “irreparable damage.”⁶ Moreover, any patents that issued would still be in the inventor’s name.⁷

Fortunately, the AIA expanded the list of eligible patent applicants to include persons/entities: “to whom the inventor has assigned or is under an obligation to assign the invention;” “who otherwise show [ ] sufficient proprietary interest in the matter;” and who can prove “that such action is appropriate to preserve the rights of the parties.”⁸ Given that most researchers are contractually bound to assign any inventions made in the course of their employment to their respective institutions, TTOs are readily able to file for patent protection upon receiving an invention disclosure from their researchers. Moreover, any patents that issue will be in the “real party in interest’s” name or the University/Research Institution assignee.⁹

Easier Oath and Declaration Process

Prior to the AIA, a separate oath or declaration (“O/D”) naming the entire inventive entity had to be signed by each inventor and had to be submitted with the patent application or within a prescribed time period after filing. Similar to above, O/Ds could be made on behalf of the inventors only in special cases. The O/Ds had to include, amongst other things, statements that the named inventor(s) were the first and original inventor(s) and that the inventor(s) had reviewed and understood the claims within the application.¹⁰

As of September 16, 2012, the procedural requirements for O/Ds have become more flexible:

• O/Ds can now be included as part of an assignment document so long as it is conspicuous that the application reflects both an assignment and an O/D. TTOs should note, however, that the filing of such patent applications would not record the assignment;
• The O/D no longer needs to include statements regarding citizenship, “first” inventor issues, priority information, the entire inventive entity, the inventor(s)’ review of the application, the duty to disclose relevant information to the PTO and false statements, though other language should remain; and
• Individual inventors may submit signed O/Ds separately and individually so long as an Application Data Sheet naming the entire inventive entity is filed.

O/Ds may be made prior to the creation of a patent application or up to the time of allowance (an inventor even has up to 3 months to file the oath or declaration after receiving a Notice of Allowability).¹¹ TTOs may prefer to opt for a “sooner than later” policy as Patent Cooperation Treaty (“PCT”) applications can be adversely affected by delays in filing (e.g., patent term adjustment consequences as a result of a delayed PCT filing date which requires an executed oath or declaration to be filed).

The Importance of Notebooks

Lab Notebooks Protect True Inventors from Faster Filing Persons

In a “first-to-invent” system, laboratory notebooks were vital. The date of the claimed invention was determined as the date the inventor conceived the invention. Any claims to the invention filed by another party could be antedated by a well-kept and detailed laboratory notebook.¹²

“First-inventor-to-file” systems do not recognize a “conceived invention” date. However, this does not necessarily mean researchers can throw away their notebooks. The USPTO will not grant a patent to someone claiming the invention of another. Laboratory notebooks remain as important as ever to establish evidence of the claimed invention in AIA’s new “derivation proceedings.”¹³ Sufficiently detailed and understandable lab notes will allow those who filed too late to show that the earlier patent applicant merely derived the invention from the true inventor.

Lab Notebooks Support a Defense to Infringement Based on “Commercial Use”

In addition to establishing an invention’s true inventor, laboratory notebooks can aide in cases of patent infringement. Since 1813, research institutions sued for patent infringement have often raised a common law (or court created) defense exempting their otherwise infringing use from the suing party’s patent rights. So long as use is “merely for [scientific] experiments, or for the purpose of ascertaining the sufficiency of the machine to produce its described effects,” the research institution is free to continue to use the patented item.¹⁴ Over time, the research exemption has faced some narrowing,¹⁵ but the Supreme Court has recently held that “preclinical studies [are] protected under § 271(e)(1) as long as there is a reasonable basis for believing that the experiments will produce the types of information that are relevant to” a New Drug Application or an Investigational New Drug designation.¹⁶ Although such information might never be filed with the U.S. Food and Drug Administration, universities can arguably raise a Merck-type defense as much of their research is preclinical and would produce the “relevant” information.

The AIA created another statutory defense for non-profit research institutions under § 273. Universities may assert a “prior commercial use” defense with respect to “subject matter consisting of a process, or consisting of a machine, manufacture, or composition of matter used in a manufacturing or other commercial process” patents so long as such use was at least 1 year before the patent was filed or the invention was disclosed to the public. TTOs should note that the label “commercial use” is applicable to this section only and “only for continued and noncommercial use by and in the laboratory or other nonprofit.”¹⁷

Given all the above, TTOs should ensure that their researchers continue to maintain accurate, detailed, and thorough records of their experiments and activities.

Micro Entity Status Under the AIA

Universities Do Not Qualify for Micro Entity Status But Their Employees Might

A university/institute of higher education or qualifying nonprofit organization can claim “small entity” status to receive a 50% reduction in certain USPTO associated fees if it has not given, or is not obligated to give, rights in the invention to any entity that does not qualify as a person, small business or non-profit organization. With some fees reaching upwards of $12,000, claiming small entity status can save a university from significant expenditures.

In addition to the “small entity” status, the AIA established a new “micro entity” status, which allows qualified applicants to receive a 75% reduction in certain USPTO associated fees. This status is available only to “small entity” applicants. Unfortunately, most universities/institutes of higher education filing as patent applicants are unable to take advantage of this new status, because they are either barred by the maximum income constraint or fail to meet the criteria below, wherein a university/institute of higher education patent applicant would have to show:

1. that its employer is an institution of higher education (as defined by the Higher Education Act of 1965) in the U.S. or U.S. territories OR
2. that it assigned, granted, or conveyed, or is under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the particular application to such an institution of higher education.¹⁸

Because university/institute of higher education applicants are not employees of an institution of higher education, do not obtain the majority of their income from such an institution, and are under no obligation to transfer ownership rights to such an institution, they are ineligible for micro entity status.¹⁹ However, employees of a university/institute of higher education are likely to qualify for micro entity status. TTOs should consult with their counsel to determine how, if at all, the university/institute of higher education might benefit from this approach.

Public Disclosure as a “Poor Man’s Provisional Application”

Since 1994, provisional applications have been a cost-effective way of securing a filing date for a claimed invention without the formal requirements of a utility filing. Once filed, an applicant has 12 months to meet the formal, patent filing requirements in a utility application. Anything developed in the interim period will not count as prior art against the invention.²⁰

The AIA created a second low-cost (in some cases, free) means of establishing a filing date by creating what some have referred to as a “Poor Man’s Provisional Application.” If an inventor discloses an invention publicly prior to filing it with the USPTO, the patent applicant is given a 12 month grace period to file a nonprovisional application from the date of the disclosure. Accordingly, a simple public disclosure would allow for a patent applicant to cheaply secure the date in time, thereby, preempting any potential third party prior art/claims. However, there are a few reasons to avoid this practice:

• Not all countries have a similar grace period. Some patent systems require absolute novelty such that any disclosure without a formal patent filing forfeits patent rights; and
• Even in the U.S., there is some debate whether the grace period extends beyond anticipatory subject matter (102) to cover obvious variants (103).²¹ A provisional application would protect against both 102 prior art and 103 obvious variants.

Best practices dictate that TTOs continue educating their researchers to file invention disclosures with the TTO prior to any publications, public talks or other disclosures.

Engage and Educate!

The AIA has significantly changed the U.S. patent system. While many of the best practices employed by TTOs prior to the AIA should continue, TTOs should engage and educate their researchers earlier in the process now more than ever. An educated researcher promotes protection of potentially valuable intellectual property, quality patent filings, and more interactions and engagements with the TTO.

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The material contained in this newsletter is for informational purposes only and is not intended to be legal advice. It is understood that each case is fact-specific, and that the appropriate solution in any case will vary. Transmission of this material is not intended to create and receipt does not establish an attorney-client relationship. While the material is intended to be accurate, errors or omissions may be contained herein, for which any liability is disclaimed. Legal advice of any nature should be sought from your legal counsel.

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1. Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284 (2011) (codified as amended in scattered sections of 35 U.S.C.). 35 U.S.C. § 102 (2011) (as amended).
2. Vito J. DeBari, International Harmonization of Patent Law: A Proposed Solution to the United States’ First-to-File Debate, 16 FORDHAM INT’L. L.J. 686, 689 (1992).
3. Press Release, United States Patent and Trademark Office, USPTO Publishes Final Rules and Guidelines Governing First-Inventor-to-File (Feb.13, 2013) (last visited September 12, 2013).
4. 125 Stat. 288.
5. 35 U.S.C. § 118 (2006).
6. Id
7. Leahy-Smith America Invents Act, sec. 4, § 118.
8. Id.
9. 35 U.S.C. § 115 (1982).
10. Leahy-Smith America Invents Act, sec. 4 § 115.
11. Hybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367 (Fed. Cir. 1986).
12. Leahy-Smith America Invents Act, sec. 3, § 135.
13. Whittemore v. Cutter, 29 Fed. Cas. 1120 (C.C.D. Mass. 1813).
14. See Madey v. Duke University, 307 F.3d 1351 (2002) (holding that infringing research at Duke was not exempted because research programs were used to entice students to attend Duke and thus were part of Duke’s legitimate business).
15. Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193 (2005).
16. 35 U.S.C. § 273 (2011).
17. 35 U.S.C. § 123 (2011).
18. United States Patent and Trademark Office, Fees (last visited September 12, 2013).
19. United States Patent and Trademark Office, Fees (last visited September 12, 2013).
20. Top 5 Dangers for the AIA Unwary, BPLA NEWSLETTER (Boston Patent Law Assoc., Boston, M.A.), Spring 2013.