11 September 2011

US Patent Reform Passes, Simplifying Life for Foreign Applicants

Although Patentology is currently taking a well-earned vacation, we cannot allow the enactment of the US patent reform legislation to pass without comment.

We have reported previously on the concerted effort this year by proponents of patent reform within the current US congress to bring about changes that had failed to gain sufficient support over a number of years (see Could the US Really Move to 'First-to-File'?).  It would be fair to say that the reforms do not enjoy universal support in the US, with many practitioners and other interested parties holding the opinion that the revised laws will benefit large corporations at the expense of individual inventors and small companies.

Whether or not this is so, on 8 September 2011 the US Senate passed the so-called America Invents Act, in the form previously passed by the House of Representatives (HR 1249), ensuring that it will become law once signed by President Obama.  This is expected to occur within days.

And whatever the impact for US-based applicants, the reforms will certainly make life simpler for many foreign applicants (even if ‘harmonisation’ is a dirty word to many in the US).

To readers who require a more in-depth review of the various changes about to take place in US patent law and practice, we commend a comprehensive article by our associate Gary Federochko of the US firm Banner & Witcoff.  Here we will just briefly comment on the changed most pertinent to foreign applicants for US patents.


From the perspective on non-US applicants, the most significant reform must surely be the move from ‘first-to-invent’ to ‘first-inventor-to-file’.  Under the amended laws, the US will move into line with the rest of the world in awarding a patent for a contested invention to the first party to file an application at the patent office, rather than to the party that is able to show the earliest date of invention.  This change does away with rare, but costly and complex, interference proceedings.

Some appear to believe that the new US law is somehow different from the law elsewhere – hence the use of the term ‘first-inventor-to-file’, rather than simply ‘first-to-file’.  The ‘exception’ to the ‘firs-to-file’ rule will be when the first filer is not the true inventor, but instead has learned of (i.e. ‘derived’) the invention from the inventor, who then files a later application.

As a result, the amended laws include provision for ‘derivation proceedings’ to resolve disputes of this kind, which it seems may be as rare, complex and costly as current interference proceedings!

It should be noted, however, that the patent laws of many countries recognise that a patent should not be granted to a person who is not the inventor, and the new US laws are therefore not so unique.  For example, section 32 and section 36 of the Australian Patents Act 1990 provide for the Commissioner of Patents to resolve disputes over inventorship and ownership of patent applications.

The move to first-to-file thus simplifies matters for foreign applicants, such as those from Australia and New Zealand, who are already familiar with the relevant concepts and requirements.  It will no longer be necessary to keep in mind a completely different set of considerations for the US.


The revised laws retain a 12-month grace period, albeit of different scope to the traditional US grace period.  Previously, an inventor could overcome any prior disclosure or use of an invention (either by themselves, or by another person) up to a year before the filing date of a patent application, so long as the actual date of invention was before the disclosure in question.

Under the new law, an inventor will still be permitted up to 12 months following a disclosure within which to file a patent application, however this will now apply only to disclosures either by the inventor, or by someone else who learned of the invention from the inventor.  A completely independent disclosure, such as by another inventor of the same invention, can no longer be overcome by a later-filing applicant.  This is a major consequence of the change to first-to-file – the ability to show prior invention is no longer of consequence.

Those familiar with the grace period provided under the Australian patent law and regulations will be comfortable with these US provisions which – as described so far – are very similar.  There is, however, one significant (and, to our knowledge, unique) difference in the new US grace period provisions which offers some additional protection.

Under the revised US laws, if two inventors disclose an invention, and the first to disclose is also the first (or only) one to file a patent application, then   the earlier disclosure provides a ‘defence’ against the later disclosure by the other inventor being applied as prior art.  In other words, there is a potential benefit in early disclosure of an invention, as a form of protection against independent disclosures by others.  However, it is still necessary to be the first inventor to file.

This additional grace provision could be useful for universities and other research institutions, in cases where a decision to publish may have been made prior to recognising the desirability of also filing for patent protection.

Many foreign applicants will be unconcerned with grace period provisions, since most jurisdictions are not so generous and require an application to be filed before any disclosure takes place.  However, for those (such as Australian applicants) accustomed to the benefits and pitfalls of a grace period within a first-to-file system, the new US scheme provides a slightly higher level of protection in the case of a prior disclosure.


In countries other than the US, it is generally possible for the applicant for a patent to be someone other than the inventor, typically an employer, assignee, or other person (or company) entitled to ownership of the invention.

In the US, however, it has always been a requirement that the inventor(s) apply for a patent, although the application may then be immediately assigned to some other party.  Both of these steps (i.e. filing and assignment) require certain documentation to be signed by each inventor, which creates a problem in case an inventor is unavailable, or uncooperative.

This has perhaps been less of an issue for US-based companies, which tend to file a US application in the first instance, when inventors are typically still around and on good terms with their employers.  However, foreign companies may file a US application up to one year after filing a local application (if claiming convention priority), or up to 30 months later (if filing via the PCT system), and it is not unknown for inventors to move on, fall out of contact, or enter into a dispute with a current or former employer during this period.

Under the revised US law, it will be possible for a party which is able to demonstrate entitlement to ownership of an invention (e.g. by employment contract, assignment, or other form of transfer) to apply for a patent directly, as in other countries.

This will clearly make life easier for foreign entities, which are accustomed to having similar rights in other countries.  It will be interesting to see whether this form of filing becomes the norm in the US, as it is elsewhere.


A number of countries recognise that patent examiners do not have access to all of the information that may be required to assess the validity of a patent application.  Often there may be common knowledge in a particular industry, and/or documentation that is not readily searchable, which would be known to competitors but not accessible to examiners.

It is for this reason, i.e. as an additional mechanism for weeding out invalid claims, that the laws of a number of countries provide for some form of opposition proceedings.  In Australia, there is a pre-grant process, whereby a third party may initiate an opposition to the issue of a patent during a three-month period after allowance of claims by an examiner.  A patent cannot be granted until any such opposition proceedings are complete.

In some other jurisdictions, such as before the European Patent Office, a post-grant process is provided, in which an opposition may be filed during a fixed period following grant of a patent.  A post-grant process is more beneficial to patent applicants, because it cannot be used by a competitor as a mechanism to delay the grant of a patent.

New Zealand currently allows for both pre-grant and post-grant review proceedings before the Patent Office.

The revised US law provides for a post-grant review process, which may be initiated at any time within nine months of issue of a patent.  The US post-grant review differs from opposition proceedings in other countries in that there will be an initial ‘hurdle’ whereby the USPTO must be satisfied that there is a likelihood, on the balance of probabilities, that the review will result in at least one claim being shown to be invalid (i.e. requiring cancellation or amendment).

In other countries with opposition proceedings, it is generally the case that the patent office makes no initial assessment of the likely merit of an opposition, which is clearly more beneficial to the opponent.

The new post-grant review will differ from existing inter partes re-examination proceedings in that the ‘hurdle’ for acceptance of a review request will be lower, and all grounds of invalidity (other than failure to disclose the ‘best mode’) will be available as basis for a challenge.  Current inter partes re-examination can be based only upon prior art grounds (i.e. anticipation or obviousness).


In a ‘first-to-file’ system, it is possible for an applicant to obtain a patent for a process that is not actually new, but which is currently maintained as a trade secret by another party.  Since an unpublished technique is not available as prior art, a situation may arise in which a legitimate activity suddenly becomes an infringement of a valid patent, upon grant.

Many countries (including Australia) therefore provide broad prior user rights, in the form of a defence against a patent infringement claim in respect of any activities in which the alleged infringer was already engaged prior to the filing of a patent application.  Put simply, you will be allowed to keep doing anything that that you were already doing before another person filed a patent application.

The new US law provides for expanded prior user rights having a similar scope.


Supporters of patent reform within the US Congress, along with the President, have promoted the America Invents Act as providing for greater efficiencies and opportunities which will enhance innovation and job creation in the US.  We note that this is almost invariably the way that patent reform is sold to the electorate, in any country.

Clearly, many of the reforms will simplify access to the US patent system for foreign applicants.  US applicants will also benefit from these simplifications, although arguably to a lesser extent.

There are, however, other elements of the reforms, which we have not covered here, such as the new ‘micro-entity’ status, which are likely to be of greater benefit to US applicants, while being of little or no consequence to foreign applicants.

In the coming weeks, many of the changes will start to be implemented, and it will be interesting to observe the short- and long-term effects of these significant reforms.


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