During IPWatchdog LIVE 2021 in Dallas, Texas, this week, I asked a handful of willing attendees for their thoughts on the impact of the America Invents Act (AIA) in anticipation of today, the ten-year anniversary of the bill being signed into law by President Barack Obama. I began writing for Managing IP magazine around 2007, and remember well the lead-up to the law. The discussion centered mostly on the change from a first-inventor-to-invent to a first-inventor-to-file system, which was seen as a way to harmonize the United States with the rest of the world, but which many feared would be detrimental to U.S. innovation (and, indeed, some feel it has been). Some of the most controversial provisions were ultimately dropped in order to get the law through Congress, and overall, the IP world was celebrating on September 16, 2011, that at least some action had been taken on reforming, and ostensibly strengthening, the U.S. patent laws.
But today, many weaknesses have been exposed. The Patent Trial and Appeal Board (PTAB) is extremely controversial, and the Supreme Court and Federal Circuit in Arthrex v. Smith & Nephew have now both declared, in different ways, that the structure the AIA created for the PTAB’s administrative patent judges (APJs) was unconstitutional. The comments below reflect a mix of perspectives from IPWatchdog LIVE attendees, as well as other stakeholders, but overall weigh heavily toward the view that it’s time to reevaluate and make improvements to correct a variety of unintended consequences of the law.
Note: the majority of those pictured in front of the IPWatchdog logo provided their comments extemporaneously, via “vox pop” interviews on site.
Meredith Addy, AddyHart, P.C.
The America Invents Act has performed like yet another anchor weighing down America’s innovation community over the past decade. Despite what its Orwellian title purports to encourage, the AIA is killing innovation, not promoting it. Under the AIA, it is too easy to destroy good patents at the Patent Trial and Appeal Board. It has made it costly and difficult for anyone other than large technology and pharmaceutical companies with large budgets to enforce their patent rights.
Hence, the AIA is driving innovation out of the U.S.—including into the hands of our adversaries, namely China.
If we do not take a hard look at amending or rewriting the America Invents Act, restoring the ability of America’s Inventors to protect their innovations and benefit from their hard work, investments, and accomplishments, then our last and best industry—the innovation industry—will be destroyed. We will lose our competitiveness and we will have permitted the further concentration of market power into the hands of a few behemoth technology and pharmaceutical companies.
Vishal Amin, Intel Corporation
This week marks the tenth anniversary of the enactment of the America Invents Act, a bill that was significant not only in its scope, but in its impact on the innovation landscape and our laws. The AIA was the first comprehensive reform to U.S. patent law since the 1952 Patent Act and arguably the most substantial change since the 1836 Patent Act that created the system of patent examination. I remember the day we introduced the bill, and I walked it down myself to the House floor to “get it in the hopper” and get the bill number, H.R. 1249. It was truly an exciting time getting that bill enacted. There are lots of stories to tell, but ultimately it was the friendships made on both sides of the aisle – we showed that Washington can work. We had a Republican House, that came in on the Tea Party wave, and a Democratic Senate and President. But we were able to work together and get that bill across the finish line. Not everyone got what they wanted, but on the whole, it was a bill that was built on consensus. It was written to help improve, update, and balance the system. And as we watched the bill get implemented by the PTO, and as we’ve seen cases heard by the Federal Circuit and the Supreme Court – we can all see just how important IP is to America, and how important it is that we follow the law and the Constitution.
MaryAnne Armstrong, Ph.D., Birch Stewart
Overall, the AIA has been positive. Provisions for a post-grant review of patents outside of a litigation and which involves significant third-party involvement was a fundamental gap in U.S. patent laws compared to other countries. Almost all countries have some form of an opposition system, which permits the preemptive challenge to a patent’s validity without the need for a corresponding assertion of the patent, by the patent owner. While not perfect, under the AIA, the United States now has an analogous system for third parties to challenge patents prior to a litigation. This permits companies to more concretely determine the risk associated with going forward with a new product or technology area, prior to making significant investments of resources, capital and time. The AIA also took the United States one step closer to being harmonized with other countries by changing from a first-to-invent system to a first-inventor-to file system. This change is still somewhat different from true first- to-file systems of other countries; however, under the AIA the United States is much closer to the standard used in the rest of the world.
Aziz Burgy, Axinn
As we approach the America Invent Act’s 10th anniversary, it is a great opportunity to reflect on whether it has lived up to its intended goals of creating a more efficient, objective, predictable, and transparent patent system. In that regard, one of the Act’s most impactful provisions has been the creation of the Patent Trial and Appeal Board and its post-grant proceedings. Many stakeholders were initially concerned that the PTAB initially favored patent challengers in these proceedings given its relatively high institution rate (87% institution rate by petition for FY2013) for AIA trials overall. Those concerns, however, seem to have allayed a bit as that number has moderated (55% for FY2020) over the years. Despite the moderation in the institution rate, many patentees still believe that the PTAB still remains, according to former chief judge of the Federal Circuit, Randall Rader, “a patent death squad” based on its relatively high rate (~80%) that one or more claims will be held unpatentable. While stakeholders may still quibble about whether post-grant proceedings are truly objective, many do, however, agree that the PTAB provides for an efficient venue to assess invalidity of patents, despite the fact that not all invalidity defenses can be raised at the PTAB.
Vadim Cherkasov, McCarter & English
Overall, the effect has been fairly neutral. Although there was an uptick in patent filings immediately prior to the AIA out of an abundance of caution, our filing strategies have generally remained the same since then. The most prominent effect has been the switch from a first-to-invent to a first-to-file system, which has encouraged clients to file provisional patent applications earlier and more often than perhaps they would have done pre-AIA. This push for an earlier filing date has created a potential risk of filing with an incomplete disclosure of the invention. It is important to remember that the earlier filing date provides little value if the invention is not sufficiently described. We therefore generally advise clients to take a step back and carefully consider the completeness of the disclosure before taking the next steps of filing their application, ensuring a strong priority claim in the future.
Makan Delrahim, University of Pennsylvania
On balance, the America Invents Act has harmed innovation, and the rewards of innovation, and it’s created a little bit of uncertainty. There have been a number of times where the AIA has been subject to cases at the Supreme Court, and a number of times where it’s been the subject of a cert petition where it didn’t get a review, but that just shows there are some big policy fights over the meaning of the AIA. I think its overall direction ended up taking away—for the first time, in my view, in U.S. history—intellectual property rights.
Judge Theodore Essex, Hogan Lovells
I think they fixed some of the things that they wanted to fix, but I believe that it’s a constant struggle to continue to try to keep patent law strong and vigorous in the country. The AIA is one step, but there are many more that we need to take. There are some new problems created that need to be addressed now, with the PTAB and other situations. So, while it may be progress, there’s still a long journey left to take. I don’t think we’ll ever arrive where we’re not doing further tweaking and further work, but I think there are good people working on things and we can improve some of the problems that the AIA has created or exacerbated; I have no confidence we’ll ever get perfection but I think we may get improvements. The courts have a limited ability to fix it because they’re limited as to the facts in front of them. I have less confidence in Congress because of various political interests, so it’s going to take the entire intellectual property community to continue to work on it.
Joseph A. Farco, Norris McLaughlin, P.A.
The AIA has made several important improvements in patent law, including streamlining otherwise cumbersome patent prosecution tasks such as inventorship changes, application changes, and late disclosure of prior art. However, there are key areas that could be improved upon. The AIA made the representation that switching from a first-to-invent system to a first-to-file system would benefit inventors, but many solo or small to mid-sized inventors have seen their costs go up under this system in order to file applications at the USPTO before a larger competitor does so. Additionally, the AIA’s post-grant review proceedings have been met with mixed reviews, with some seeing the AIA as creating a venue where their patent rights can be taken away and others applauding the proceedings because they offer a way to avoid costly patent infringement litigation in district courts. While it may not be perfect, the AIA has taken important steps that allow inventors to safeguard their patents.
Michael Gulliford, Soryn IP Capital Management
Unfortunately, the America Invents Act has not provided the boost to innovation that its name suggests. As a patent moderate, I firmly believe that those who crafted the legislation were well-intentioned. Companies need a way to deal with bad actors asserting patents, without having to spend millions of dollars in wasteful litigation. IPRs were supposed to be that fix, but instead tarnished the patent rights of all innovators, not just the bad actors. By putting in place rules that make it significantly easier to invalidate all patents – for all patent holders – the IPR regime has made it very difficult for innovators to be confident in the validity of their patents. And by adding 18-36 months to the litigation timeline in many jurisdictions, IPRs have made it immensely difficult for innovators to seek justice in a timely fashion. By the time they do, markets are often stolen and cannot be recovered.
If we want our innovation ecosystem to be dominated by the few giants that don’t need to rely on patents because they’ve already climbed the mountain, the America Invents Act is a crowning piece of legislation. But if we want to give the next generation of innovators a chance to protect their innovations and build new markets, the America Invents Act needs to be rethought, and soon.
Jeff Hardin, Inventor
From an inventor’s standpoint, it creates an issue of trust in the system because, before the AIA, you could get a patent and it was presumed valid. Now, no one knows. Do you have the financial resources to get a patent and then defend it on every challenge? Most inventors don’t even know that’s today’s system, but for the knowledgeable inventor, the reliability of the patent grant and the trust in that is lost. And to get that is extremely expensive—to get a patent, pursue the patent, and now that you have it, to defend it on each and every challenge. When you look at the intent for the AIA, it was to protect small businesses and inventors from predatory behavior—they did not say “patent troll”; so, I think that’s important. On the ten-year anniversary, looking at the bill, [we should ask] has that bill created predatory behavior against small businesses and independent inventors? And there’s a strong argument that can be made that, yes, it has, because now we have this PTAB system; is there predatory behavior happening there?
Patrick Kilbride, Global Intellectual Property Center (GIPC), U.S. Chamber of Commerce
The Chamber supported the passage of the AIA in 2011, and I think we recognized that it was important to set some guardrails that could help to increase transparency and predictability. In implementation, I think we maybe see that the pendulum often swings too far. Our core principle is that patent and other IP rights should be a reliable basis for investment in long term, high-risk, capital-intensive undertakings. And that requires, as former USPTO Director Iancu said again and again, transparency, predictability and reliability. People need to know that if they’re granted a patent there’s a very high standard for invalidation; that does not seem to be the case today and it’s a real problem in our system. I think what we’ve seen since the AIA is that policy principally has been made in the courts, including the administrative courts at the USPTO, and through litigation, and Congress has not acted to put its own direction or even to confirm where it had been. I think there’s wide agreement, for instance, that Section 101 is very clear as to intent, and yet the courts have taken it in a different direction. What you see is that, when there’s momentum in a certain direction, business responds to that new reality and they start to stake interests on what they perceive the direction of travel to be. I think you’ve seen with the eroding reliability of IP rights that many large U.S. businesses have relied on them less and relied more on trade secrets; that can only be fixed by a determined act of policymakers. It takes a bold stroke and, unfortunately, I don’t think we’ve seen the political will for that anytime recently or anytime soon.
Judge Paul Michel, Chief Judge, U.S. Court of Appeals for the Federal Circuit (Ret.)
Congress saw a need for an improved process at the PTO to review issued patents because earlier review procedures, particularly Inter Partes Re-examination, had proved insufficient partly because of multi-year timelines. It therefore created three new reviews, the most important of which, contrary to expectations, turned out to be Inter Partes Review [IPR], available for the entire life of the patents, including to defendants in pending district court cases so long as filed within one year of the commencement of the lawsuit. In practice, the vast majority of IPRs concern pending suits. Although Congress included Estoppel provisions to prevent repeat challenges and harassment of patent owners, in practice they have not succeeded. Above all, Congress wanted a cheaper, faster process to expensive and slow court cases.
In the minority of IPR filings, all claims are invalidated, ending the lawsuit. But in the vast majority of instances, the IPR did not end the litigation, but actually added substantial expense and delay, contrary to the intent of Congress.
The ill effects arise from three unintended design defects in the statutory scheme:
1. the lowered standard of Preponderant Evidence, contrary to the court standard of Clear and Convincing Evidence;
2. the lack of a clear presumption of validity as in court;
3. the lack of a requirement of Standing, as in court, allowing for anyone including associations that enroll the defendant to challenge the patent without Estoppel arising.
Now that the benefits and defects of the Act are clear, Congress must make the necessary adjustments if the United States is to remain the world leader in technology, rather than China replacing it.
Justin J. Oliver, Venable LLP
While the AIA introduced numerous changes to patent law, the creation of post-grant proceedings (e.g., IPRs) before the PTAB proved significant. Congress intended for PTAB proceedings to provide more meaningful alternatives to litigation, for purposes of challenging patentability, as compared to prior administrative options. From that perspective, the AIA provides its intended impact. Unlike prior options, PTAB proceedings have become routine responses to litigations, often fully resolving the disputes.
Patent owners and challengers often disagree on whether the impact represents a positive or negative for patent rights. Notably, while the PTAB and district courts exhibit similar statistical tendencies with respect to anticipation challenges, the PTAB has proven to be more receptive to obviousness challenges. Naturally, views differ as to the more proper attitude toward obviousness.
Recently, the impact of PTAB proceedings as a litigation alternative has evolved. Specifically, the intersection between the significant percentage of patent cases filed in “rocket dockets” and the PTAB’s stance regarding potentially denying review when the district court will reach a trial before the PTAB’s final decision has led to discretionary denials. The significance (and further evolution) of this development will continue to be a trending storyline.
Judge Randall Rader, Chief Judge, U.S. Court of Appeals for the Federal Circuit (Ret.) and The Rader Group
The AIA is a monument to unintended consequences. The main issue during AIA enactment was finding a way to close any “second window”—an opening to challenge patents throughout their term and keep them under a perpetual cloud of validity challenges. Congress voted to close that “second window.” Yet the inter partes reviews at the PTAB have opened the “second window” that Congress voted to close. Sadly, some of the benefits of the AIA—like the first-to-file improvement—are overshadowed by that unintended consequence. Thus, the AIA reform bill—saluted as a major IP initiative—has unfortunately not operated to advance U.S. innovation policy and advance our competitive position in the world economy.
Matteo Sabattini, Ericsson
Ten years on from the America Invents Act, I think it’s time to examine the data. We now have a decade of case law and statistics behind us to look at how the AIA has played out in a number of areas, and to begin forming conclusions about its net effects on innovation. It’s time to let the data drive the conversation.