The America Invents Act is Better for Small Business

The America Invents Act goes into effect over the next 18 months, with certain provisions such as fee setting to be determined under the regulatory authority of the Director of the USPTO, David Kappos.

During the patent reform debate, concern for small business and inventors fueled an atmosphere of hot rhetoric. But the America Invents Act distinctly improves U.S. patent law for small businesses by eliminating some trouble spots, and bringing more certainty, simplicity and economy to the patent process, all of which allow greater patent participation by small businesses.

Grace Period for First Inventor To File

Effective March 17, 2013, the U.S. patent system awards a patent to the first inventor to file an application — aligning with the rest of the world, according to the original U.S. patent system. But the first inventor to file also receives a U.S. one-year grace period until filing, from the date he or she makes an invention public. This means that an inventor can effectively stop-the-clock on prior art by making a public disclosure, use or sale of the invention. For small businesses, this grace period creates valuable time to seek financing, customers and sourcing, without sacrificing patent rights.

Fast Track Examination

Startups often succeed based on their strategic investment in a single area of expertise. However, obtaining an issued patent typically takes 3 to 4 years. The America Invents Act creates a 12-month patent examination fast-track upon payment of an additional fee. Small businesses can particularly benefit from the fast-track process, by quickly ramping up the size of their patent portfolio. The fast-track examination is available to any filer for an additional $4800 fee — but small entities pay only $2400.

Other Qualifying Fee Reductions

Using the eFILER system, after November 15, 2011, original applications for utility patents avoid a $400 surcharge by filing electronically. Effective the same date, a “micro-entity status” provides qualifying inventors, including institutions of higher education, a 75% discount on most USPTO fees compared to the 50% discount already available for small entities.

Objections to Pending Applications

Under the new law, non-parties may anonomously submit potential prior art and comments on the pending applications of other inventors. The new rules govern the timing of the objections, but no longer must the objecting non-party wait for a final decision by the patent office. The prior rules typically involved legal representation that many small businesses could not afford.

Expanded Prior User Rights

Many businesses, particularly small businesses, rely on trade secret protection of their valuable innovations, instead of more expensive patent protection. Under the first-inventor-to-file system, the right to continuing use of these trade secrets is preserved so long as the business can demonstrate commercial use at least one year before the effective filing date or public disclosure, of an asserted patent. Before the new act, prior user rights applied only to processes. Expanded prior-user rights now apply to any process or instrumentality (machine, manufacture, or composition of matter) used in a process.

Opinions of Counsel

Willful infringement of a patent creates the potential for treble damages. In the past, companies tried to avoid this threat by obtaining an opinion of counsel. However, an opinion of counsel is expensive, putting small businesses at an economic disadvantage. Effective September 16, 2012, the failure of an accused infringer to obtain an opinion of counsel or to produce such opinion during litigation cannot be used to prove willful infringement or inducement of infringement. The threat of treble damages for failure to obtain opinion of counsel is now gone.

There are other simplified provisions of the act, including best mode and inventor oaths, which along with those mentioned above, eliminate burdens on all businesses. In particular these changes help small business whose limited economic resources make it difficult to always engage qualified patent counsel. As such, the universe of inventors who can now benefit from patent protection has widened. Although the patent system is imperfect, this latest reform has made U.S. patent protection less burdensome and more accessible to small businesses.

David Kappos Photo: US Mission Geneva