The America Invents Act Five Years Later: Reality, Consequences and Perspectives

President Obama signs the America Invents Act into Law, September 16, 2011.

At exactly 11:42am on September 16, 2011, President Barak Obama signed the America Invents Act into law. As President Obama put his pen down he said: “All right guys, congratulations, the bill is signed.” It was at this precise moment that U.S. patent laws dramatically changed forever. See The Bill is Signed: President Signs America Invents Act and Brave New World: First to File Becomes Law.

There had been much debate and discussion about the U.S. moving from a first to invent system to a first to file system. Under a first to invent regime, which was peculiar to the United States, it was possible for someone to be entitled to receive a patent if they could demonstrate they invented the core concepts first even if they filed a patent application after another party had already applied. Over the years it became increasingly difficult, if not practically impossible, for a second filer to demonstrate entitlement to a patent over a first filer. So the change was made to make America a first to file country. In so doing the grace period was substantially changed to the point where today it is hard to imagine a real world situation where it could be useful for an inventor.

As much focus and energy that was placed on the change from first to invent to first to file, without a doubt the biggest change to U.S. patent practice was the creation of the Patent Trial and Appeal Board (PTAB) and the simultaneous creation of three new opportunities for challengers to invalidate patent claims at the Patent Office. Inter Partes Review (IPR); Covered Business Method (CBM) Review and Post Grant Review (PGR) have been extraordinarily controversial. Indeed, it seems that many of the new Administrative Patent Judges (APJs) believe they were hired to invalidate patent claims rather than call balls and strikes in an impartial manner. It is impossible to ignore that the procedural and substantive deck has been substantially stacked against patent owners from the beginning.

Even today, overwhelmingly applications are still examined under first to file rules for two reasons: (1) First to file did not go into effect until March 16, 2013; and (2) If all claims in an application are entitled to priority from on or before March 15, 2013, the application will be examined under first to invent rules, which means it is still possible today to file applications that will be examined under first to invent rules. This is significant because the great majority of stakeholders have not felt the major substantive changes to the law ushered into being by first to file. Once this changes and applications are increasingly examined under first to file rules, the fact that foreign filed patent applications will be prior art in most cases as of their foreign filing dates will easily go down as the biggest change to the U.S. patent system once applications are examined under AIA first to file rules.

These and other issues deserve far more attention as we look back five years after the fact. With this in mind, over the next two weeks we will be examining the AIA in great detail in a special AIA 5^th Anniversary series. I’ve invited a number of guests to comment, discuss and/or editorialize about the AIA. Below is a sneak peak of some of the contributions already received. As articles are published this preview article will be updated with links to the entire series.

Additional articles are expected. If you would like to contribute to this AIA 5^th Anniversary series please feel free to contact us and see our Article Guidelines.

The Series

I will begin the series with an article titled Misleading PTO statistics hide a hopelessly broken PTAB. In this article I take on the grossly misleading PTAB statistics disclosed by the USPTO. Because the PTAB does not have to issue a final written decision on all claims instituted it is possible for claims to be instituted having been initially declared likely to be invalid and then ignored by the PTAB later. The USPTO counts those claims as “remaining patentable,” which is disingenuous to say the least. I also address rumors I’ve heard about institution being more likely with multiple petitions because it makes it easier for PTAB judges to satisfy their production quotas.

Manny Schecter, IBM’s Chief Patent Counsel, asks whether the post grant proceedings created by the AIA are serving their intended purpose. Focusing on inter partes review (IPR), Schecter ultimately concludes that the statistics show that IPR is not a true alternative to litigation and, instead, may actually promote litigation. Schecter also takes on the controversial issue of efficient infringement, which he says is caused by an IPR framework that favors alleged infringers. See Have We Met the Challenge of Creating Effective Post Grant Challenge Proceedings?

Bob Stoll, former Commissioner for Patents and current partner with Drinker Biddle, believes that the problems many have with post grant procedures could be better fixed by the courts and the USPTO. Stoll believes that new legislation to fix perceived problems with PTAB administrative trials would be a mistake because changing the statute can be difficult without a negotiated agreement that makes everyone happy. Instead, Stoll recommends remedying problems through iterative changes by courts or the Administration. See New legislation is not needed to fix post grant procedures at the PTO.

Oblon partners Stephen Kunin (former Deputy Commissioner for Patents) and W. Todd Baker (former member of the AIPLA Board of Directors) admit that the first few years of the new post grant regime were a learning experience for the PTAB and those practicing before the PTAB. In their essay, which is titled PTAB Administrative Trials Where Are We Now, they address the changes in practice, new PTAB rules, and the way the Federal Circuit treatment of post grant appeals is evolving.

Ashley Keller, Managing Director and co-founder of Gerchen Keller Capital, explores the AIA from a patent valuation standpoint. Keller will explain in his essay that patent investors are no different than any other investors, which means that they despise uncertainty. When uncertainty is in the air a risk premium is charged, and the AIA has created a cold cloud of uncertainty that hangs over the patent marketplace. Keller believes this will have long-term ramifications for research and development in the United States, and that it will drive technology underground in the form of trade secrets. See Valuing Intellectual Property in an AIA World.

Alden Abbott, the Rumpel Senior Legal Fellow and Deputy Director of the Meese Center for Legal and Judicial Studies at The Heritage Foundation, will take the exact opposite approach from Stoll in his essay, titled Constitutional and Economic Policy Problems Raised by Inter Partes Review (IPR) Suggest Congress Should Consider Acting. After lamenting the fact that the Supreme Court has so far been unpersuaded to step into the IPR fray, Abbott thinks Congress should consider legislative changes to the Patent Act to reform post grant proceedings. Abbott concludes the legislative creation of the PTAB and the IPR process in the first place was the wrong response to the understandable desire to “do something” to improve patent quality.

Paul Morinville, an independent inventor who has tirelessly walked the halls of Congress visiting over 400 offices to lobby against patent reform, has contributed two articles to this series. In the first article, titled, How the America Invents Act Harmed Inventors, Morinville explains that the AIA turned the patent system on its head, and today inventors can scarcely do anything with their patents. Independent inventors can’t license their inventions, which means they can’t fund their companies to continue to research, develop and commercialize their inventions. In his second article, titled How the Patent Trial and Appeal Board Harms Inventors, Morinville explains that given how easy it is for corporations to challenge patents and tie up inventors with expensive legal battles, there are few disincentives to stealing patents. So if there is money in the patented invention it will be stolen.

Kate Gaudry and Thomas Franklin, both attorney at Kilpatrick Townsend, take on the question of whether the AIA first to file rules have resulted in a greater number of provisional patent application filings, which you would expect given that the date of conception is no longer relevant. According to the analysis of Gaudry and Franklin, the data suggests that applicants have generally not changed their filing strategies to file more provisional applications in view of the AIA’s change to define prior art based on applications’ filing dates. See The AIA’s First-to-File Transition SHOULD have Resulted in More Provisional Filings.

Keith Fredlake, a partner with Kilpatrick Townsend, addresses the reality that under the AIA prior art no longer has a geographical limitation. In order to discuss the ramifications of this major change to U.S. patent law, Fredlake goes back to pre-AIA 102(e) and discusses the so-called Hilmer doctrine. He then painstakingly goes through the language of the AIA, pointing out that the term “effectively filed” now also refers to the earliest priority date of a foreign filed patent application if that application is used to establish priority in a U.S. patent application that publishes, U.S. patent that issues or in a PCT application that publishes. See Anticipating Expansion of Intervening Disclosures Under the AIA. 

Phil Johnson, Senior Vice President-Intellectual Property Policy & Strategy at Johnson & Johnson, remains optimistic that the U.S. patent system is the best patent system in the world, but he writes that the promise of the AIA has yet to be fulfilled. In The AIA: A Promise Thus Far Only Partially Fulfilled, Johnson, who has been a vocal critic of the procedural fairness of the post grant proceedings created by the AIA, writes: “The current implementation of PTO post issuance proceedings is undermining confidence in our patent system, chilling innovation at its roots, and, in eyes of some, giving the AIA a bad name.” Johnson says the AIA has succeeded by allowing the USPTO to keep the fees it collects, but explains a variety of other AIA initiatives either haven’t worked or it concludes it is too early to tell whether they will be successful.