Patent News | "Inventors: Take Heed Of The Revised U.S. Patent Law"

By:Eric Savitz
Category: Patent News

The America Invents Act, signed into law in September, will transition the patent application process from the first-to-invent system, to the new first-to-file system. With the increased emphasis on the speed of filing, and the opportunities for innovation, the stakes are high for those who fail to understand and take action.

According to the White House, the law was passed with good intentions – to aid in speeding up the unreasonably long waiting times for U.S. patents, and to level the global playing field for U.S. innovators by adopting a first to file system. However, for this to work, the government has to get the word out, and businesses need to get involved and help Washington implement the changes.

Commentary on the law has so far been focused on what the reform doesn’t do, or how it will favor high-volume patent filers and even “patent trolls,” over smaller businesses. The details of the reform, however, read differently. From discounted filing fees to a fast-track option for ‘growing businesses’, the law’s authors tried to address some basic needs of both large and small companies and individual inventors.

From our discussions with senior officials, the administration seems to be doing some things right:  arranging brainstorming/listening sessions with tech companies, and studying ways to increase both speed and quality within the patent examination process.  However, there is still much more to do in terms of communication and outreach.

Here’s what everyone should know:

Speed really matters

Under the new “first to file” system, the patent game has become a race. This is why the stakes are high for those that fail to pay attention. All inventors must now ensure that they are the first out of the starting gates when planning to file for a patent, or they’ll risk losing out to a competitor – large or small.

One expected outcome, therefore, from the shift to first to file, is an increase in the volume of provisional patent applications. A provisional patent application allows for a slimmed down anticipatory patent claim, that establishes “first to file,” without a formal patent claim, oath or declaration. It also allows the “Patent Pending” label to be applied to commercial descriptions of the invention for a year, pending filing of a non-provisional application.

It has been widely predicted that this reform will encourage more provisional patent filings. But, to make this work, the U.S. Patent and Trademark Office (USPTO)  has to make filing provisional patents easier.  A major step in the right direction is the Electronic Filing System-Web (EFS-Web), that offers businesses the ability to file patent applications at a substantially lower cost than paper filings. In fact, effective November 15, 2011, everyone who files on paper must pay an additional $400, reduced to $200 for small entity filers.

Cost reform means discounted fees for some

Encouraging for smaller businesses, the AIA creates a new category for so called “micro entities,” making them eligible for discounted fees. Qualifying businesses, with fewer than four previously filed patent applications and a gross income less than three times the median household income, are entitled to a 75% saving on the filing fee, the search fee, the examination fee, the issue fee, appeal fees, and maintenance fees. That’s moving fees in the right direction.

Fast-Track available

Getting a patent issued can be the difference between life and death for some businesses, and start-ups especially. For example, access to investors and capital can improve dramatically with a patent grant.  According to the USPTO’s own data, however, the average time from initial filing to issuance of a patent is just under three years (33 months).  Many entrepreneurs just don’t have enough capital to wait so long before knowing that their invention has the competitive advantage of patent protection.

So, now the good news:  there is a new fast-track processing option for growing companies. As of September 26, 2011, the USPTO now offers expedited patent application review, for a fee. All regulators have to do now is organize effectively so as to come good on this promise.

Small entity and independent inventors receive a 50 percent discount on the $4,800 fee for this new fast track option. Once the agency is able to set its own fees, micro-entities can also receive the 75 percent discount on this fee. If implemented well, this provision should enable “growing companies,” the opportunity to have important patents – defined by Washington as those “likely to create good jobs right away” -reviewed within 12 months. That’s quite an improvement, if it is well executed.

Where the fees go and improving quality

The contentious issue of fees and quality affect everyone involved in the patent system. Mallun Yen, VP of Corporate Development for RPX, says. “Providing appropriate funding is critical to giving USPTO Director (David Kappos) the tools needed to improve the speed and quality of patent examinations, including the new post-grant review procedures.” She’s right. Although annual appropriations will be necessary to approve PTO spending, the hope is that PTO fees will no longer be subject to diversion, and the USPTO will finally get the resources it needs.

What about the supposed tension between large and small business?

Patent attorney Steve Nielsen believes that the argument in Washington has been so focused on the battle between big business and small business that it has failed to see the big picture: “with more disclosures, society as a whole wins.” The simple fact is that this new law should greatly encourage and aid innovation. More filings should equal more disclosure of good ideas and, thus, more innovation.

Ultimately, the underpinning of the entire patent system is the recognition that innovation is the result of iteration.  With more ideas publicly disclosed, there will be more stuff for inventors to work with, leading to rapid commercialization and incremental improvements – all benefiting job creation and the economy.

But, until the patent office obtains guaranteed funding to hire more examiners and improve examiners’ training, it is hard to imagine how the goals of the AIA can actually be achieved.