Patent Reform: What Does First-To-File Mean To Me?

January 28, 2008

The Senate’s Committee on the Judiciary, has issued itsdraft report on the Patent Reform bill (S. 1145), to amend the patent laws currently in Title 35 of the United States Code.  If passed, this would represent the first comprehensive patent law reform by Congress since the Patent Act of 1952, P.L. 82-593.

These changes will have a dramatic impact (positive or negative depending on where you stand) on every patent applicant.  One major item is that the Patent Reform Act of 2007 would change the U.S. patent system to a first-to-file system for the first time.

Right of the First Inventor to File

Every industrialized nation other than the United States uses a patent priority system commonly referred to as “first-to-file.” In a first-to-file system, when more than one application claiming the same invention is filed, the priority of a right to a patent is based on the earlier-filed application. The United States, by contrast, currently uses a “first-to-invent” system, in which priority is established through a proceeding to determine which applicant actually invented the claimed invention first.

Unlike the objective date of filing, the date someone invents something is often uncertain, and, when disputed, typically requires corroborating evidence as part of an adjudication.

The Senate noted three significant differences between the two systems:

The first concerns the rare instance in which two different people file patent applications for the same invention. In a first-to-file system, the application with the earlier filing date prevails and will be awarded the patent, if one issues. In the first-to-invent system, a lengthy, complex and costly administrative proceeding (an interference proceeding) must be conducted to determine who actually invented first. Interference proceedings can take years to complete (even if there is no appeal to the United States Court of Appeals for the Federal Circuit), cost hundreds of thousands of dollars, and require extensive discovery.

The second difference involves prior art. … In the first-to-file system, prior art includes all art that exists prior to the filing date – again, an objective inquiry. In contrast, in a first-to-invent system, prior art is measured from the more amorphous date of invention.

Third … the United States’ first-to-invent system provides the inventor a grace period of one year, during which an inventor’s prior disclosure of the invention cannot be used as prior art against the inventor’s application.

Recognizing the problems of allowing others to derive another’s invention and race to the Patent Office to get it filed first, the proposed change is to a “first-inventor-to-file” system.  Under the bill, an applicant must still have independently invented the subject matter claimed in the application.  This is different from many other countries, which have a literal “first-to-file” system that allows anyone to file as long as they are first. 

Section 2 of the Patent Reform Act of 2007 would provide the following changes:

(1) Section 2 moves the U.S. system much closer to a first-to-file system by making the filing date that which is most relevant in determining whether an application is patentable.

In addition, Section 2 eliminates costly, complex interference proceedings since priority fights – who invented first – are no longer relevant. However, the new USPTO derivation proceeding is created to ensure that the first person to file the application is also actually a true inventor; someone who has not invented something will not be able to file a patent for the invention.

If a dispute arises as to which of two applicants is a true inventor (as opposed to who invented it first), it will be resolved through an administrative proceeding by the Patent Board.

(2) Section 2 maintains a one-year grace period for U.S. applicants. Applicants’ own publication or disclosure that occurs within one year prior to filing will not act as prior art against their applications.

Similarly, disclosure by others during that time based on information obtained (directly or indirectly) from the inventor will not constitute prior art. This one-year grace period should continue to give U.S. applicants the time they need to prepare and file their applications.

(3) Prior art will be measured from the filing date of the application and will typically include all art that publicly exists prior to the filing date, other than disclosures by the inventor within one year of filing.

Prior art also will no longer have any geographic limitations; thus in section 102 the “in this country” limitation as applied to “public use” and “on sale” is removed, and the phrase “available to the public” is added to clarify the broad scope of relevant prior art, as well as to emphasize the fact that it must be publicly available. Prior art based on earlier-filed United States applications is maintained.

Note, the Cooperative Research and Technology Enhancement Act of 2004, or CREATE Act, is preserved by including an exception for subject matter of a claimed invention made by parties to a joint research agreement.

Interference proceedings are replaced with a derivation proceeding to determine whether the applicant of an earlier-filed application was the proper applicant for the claimed invention.  An applicant requesting a derivation proceeding must set forth the basis for finding that an earlier applicant derived the claimed invention and without authorization filed an application claiming such invention. The request must be filed within 12 months of the date of first publication of an application for a claim that is substantially the same as the claimed invention. The Patent Trial and Appeal Board (the “Board”) shall determine the right to the patent. It is unclear whether resources for cases heard by the Board will be increased sufficiently to handle the extra burden.

Changing to a first-inventor-to-file patent system will require applicants to more carefully consider when they file their application. Since there is a great risk of losing patent rights to an earlier applicant, inventors will need to file their patent applications much earlier than they would under first-to-invent.

In addition, inventors may need to file many a greater number of applications as a means getting a rough application on file early and then capturing each incremental change in the invention in separate filings as the product moves along the development pathway.

Ironically, under the Law of Unintended Consequences, the combination of early filings of raw, unrefined applications along with the increase in the number of applications may have just the opposite effect of what the Patent Office would like.  The Patent Office just may have an even greater backlog than the one that caused it to put forth its much-maligned proposed Continuations, Claims and IDS rules (Final Rules).

As the House has already passed a similar measure, expect to see the rules come into law in 2008 (albeit in some modified form).

Also see: Duality: Light and Dark Forces Light Up For and Against Patent Reform.

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