New Patent Laws (AIA) have been bad for independent inventors and start-ups
The America Invents Act (AIA) signed by President Obama in my opinion is not better for independent inventors. Here’s why.
Under the America Invents Act, the U.S. patent system switched from a first-to-invent rule to a first-to-file rule. Under the first to invent rule, the person who first conceives of the invention and diligently reduces the invention to practice either constructively or actually is awarded the patent. Actual reduction to practice means that the inventor made a working prototype. Constructive reduction to practice means that the inventor filed a patent application with the United States Patent and Trademark Office.
Prior to the America Invents Act, many inventors or start ups would rely on their first to invent status to initially market an idea without filing a patent application to see if there is a demand for the product. They would wait one year (i.e., one year grace period) which was allowed under the first to invent rule before filing a patent application. Many inventors would file a patent application only if there was proven market demand. This is efficient use of funds. Inventors and start ups were able to launch a number of business without significant legal expenses. Only if there was proven market demand would a start up pay legal expenses for the preparation and filing of a patent application.
Under the AIA, the law technically still retains the one year grace period for inventors. However, the one year grace period is not as effective and cannot be relied upon by inventors and start-ups. The AIA mandates that the first inventor to file is awarded the patent. The worst case scenario under the AIA occurs when the inventor discloses the invention without filing a patent application. The recipient (e.g., investor, buyer) turns around, makes a slight modification and files his/her own patent application. Since the inventor disclosed the invention without a patent application, the inventor is not the second person to file a patent application. The patent office would look at the filing dates of the two patent applications. The true inventor would lose. The recipient would would be awarded the patent. The one year grace period under the AIA (i.e., first to file system) is different from the old one year grace period in that the new one year grace period is effectively only against what the inventor him or herself does. The one year grace period under the AIA cannot be used to protect against others that file a patent application based on the information that you disclose.
The America Invents Act provides for a means (i.e., derivation proceeding) by which the inventor can argue that he / she should be awarded the patent but the proceeding is cost prohibitive for start ups and solo inventors. Under the old first to invention rule, the inventor could swear behind the first filed patent application at a reasonably low cost. He/she only needed to show proof of prior conception and reduction to practice. Under the America Invents Act, the one year grace period cannot be relied upon due to the cost of filing and proceeding with the derivation proceeding. Under the AIA, for the most part, unless you have significant funds, most inventors and start ups would not risk the funds to win at a derivation proceeding. As such, de jure, they may be the one who should be awarded the patent. However, de facto, they most likely will not. The AIA forces inventors and start ups to expend patent legal fees before they have any insight into the market demand for their product.
I invite you to contact me with your patent questions at (949) 433-0900 or [email protected] Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.