Leahy–Smith America Invents Act

First to file and grace period The law switched the U.S. rights to a patent from the previous "first-to-invent" system to a "first inventor-to-file" system for patent applications filed on or after March 16, 2013. The law also expanded the definition of prior art used in determining patentability. Actions and prior art that bar patentability under the Act include public use, sales, publications, and other disclosures available to the public anywhere in the world as of the filing date, other than publications by the inventor within one year of filing (inventor's "publication-conditioned grace period"), whether or not a third party also files a patent application. The law also notably expanded prior art to include foreign offers for sale and public uses. Applicants that do not publish their inventions prior to filing receive no grace period. Proceedings at the U.S. Patent Office for resolving priority contests among near-simultaneous inventors who both file applications for the same invention ("interference proceedings") were eliminated, because priority under the Act is determined based on filing date. An administrative proceeding—called a "derivation proceeding," similar to that currently used within some interference proceedings—is provided to ensure that the first person to file the application is actually an original inventor, and that the application was not derived from another inventor. • Filing by other than inventor: An entity can file an application on behalf of an inventor who assigned or is under an obligation to assign the invention rights to the entity (or if the entity otherwise has financial interest in the invention), without seeking the inventor's execution of the application. However, any patent that issues belongs to the inventor, absent a written assignment from the inventor or inventor's estate to the entity. • Best mode: Although an inventor is still required to "set forth" the best mode for accomplishing the invention, failure to disclose a best mode is not a basis for invalidating or rendering unenforceable an issued patent. The law formally retains the best mode requirement, but by making insufficient disclosure no longer an allowable defense against patent infringement, the law renders best mode unenforceable. This has left many patent lawyers wondering why the requirement was kept at all. • Prior user rights defense: If an individual/entity begins using an invention ('user') more than a year before a subsequent inventor files for a patent on the same invention, then the user will have the right to continue using the invention in the same way after the subsequent inventor is granted a patent, as long as the user did not derive the invention from the subsequent inventor. These prior user rights are limited in scope and transferability, and have limited applicability to patents held by universities. • Micro-entity: The AIA added a micro-entity status. A micro-entity includes an independent inventor with a previous calendar year gross income of less than 3 times the national median household income who has previously filed no more than four non-provisional patent applications, not including those the inventor was obligated to assign to an employer. A micro-entity also includes a university or an inventor under an obligation to assign the invention to a university. A micro-entity is entitled to a 75% reduction in many of the patent fees payable to the US Patent Office during prosecution of a US patent application. The patent office is expected to develop regulations to identify which fees will be eligible for the reduction and how joint inventors may qualify as a micro-entity. • Confidential Sale: The Supreme Court in Helsinn Healthcare S. A. v. Teva Pharmaceuticals USA, Inc. unanimously ruled that the AIA has not overturned the long-standing rule that confidential sales of products containing the patented technology marks the beginning of the 1-year period to file the patent. Savings from small entity (prior to act, based on small entity fees & includes 15% surcharge), to micro entity (post act): USPTO practice changes • Fee Setting Authority. The USPTO is given authority to adjust its fees in a way that "in the aggregate" recover the estimated costs of its activities. • 'Review of inter partes reexamination'. Direct appeal to the Federal Circuit is the only option for judicial review in inter partes reexamination cases. • Additional USPTO facilities. Establishes additional USPTO satellite offices, the first to be located in Detroit, Michigan. • Third-party submission of prior art. Third parties may submit prior art to a published application, if the prior art is submitted prior to the later of: the mailing date of the first office action, or six months after publication. ==Legislative history==

Senator Patrick Leahy (D-VT) introduced similar bill in the United States Senate on January 25, 2011, with seven co-sponsors (also members of the Judiciary Committee) that include Senators Coons (D-DE), Grassley (R-IA), Hatch (R-UT), Klobuchar (D-MN), Kyl (R-AZ), Lieberman (I-CT), and Sessions (R-AL). The Judiciary Committee unanimously approved the bill, and the United States Senate passed it March 8, 2011, by a vote of 95–5. H.R. 1249: was passed by the House Judiciary Committee on April 14, 2011, by a vote of 32-3. On September 16, 2011, President Barack Obama signed the bill into law at a ceremony at Thomas Jefferson High School for Science and Technology in Northern Virginia. Policy debate Proponents of the bill argued that it may even the playing field by removing the tricks a well-funded infringer can currently use against a startup owning patented technology. Proponents of the bill suggested that technology companies are subject to an unprecedented wave of patent lawsuits, stifling innovation and creating an overburdened and lethargic patent system. Advocates for the America Invents Act argued that it will create jobs, bolster innovation, streamline the patent system, reduce patent litigation, and keep the U.S. competitive globally. Opponents of the Bill contended that it will lead to results similar to other nations' patent systems on which the bill is modeled — market incumbents will become further entrenched, the rate of startup formation will fall to levels in other countries, and access to angel and venture capital will fall to the levels of other countries, as described in the Impact of the Changes section below. A startup that relies on patents for protection from competitive risk, would, under the AIA, lose the protections of the previous regime to assemble the capital, strategic partners, and time for R&D and testing. The startup, exposed to the risk of copying by an established player in the marketplace, will be unable to attract venture capital, and so will lack the financial resources necessary to commercialize the startup's invention and grow the company. The weakening of patent protection diminishes incentives for investments and development. Proponents also claimed that it would eliminate costly interference proceedings at the USPTO and reduce U.S. applicants' disadvantages in seeking patent rights outside of the United States. Opponents contended that a "first inventor-to-file" system favored larger firms with well-established internal patenting procedures, patent committees and in-house attorneys over small business inventors. They claimed that the Act would weaken patent protection only in America. Impact of the changes The use of reexamination, or the threat of its use, in patent infringement litigation is common. "[G]amesmanship of the reexamination process has, in the view of some, become more the rule than the exception. Reportedly it has become 'standard procedure' that a defendant in patent litigation 'take an aggressive stance by saying it plans to request a re-exam on the patent-in-suit or even all' of the plaintiff's patents. The threat of reexamination is then used as leverage in licensing negotiations, intimidating patent-holders into settling out of court for lower amounts than those to which the value of their patents might entitle them." Other issues Critics of the bill expressed concern, that the administration has been guided by the same people who previously lobbied for patent reform on behalf of IBM and Microsoft, and that their appointments were a violation of the Obama Administration's "Revolving Door Ban". USPTO Director David Kappos represented IBM, Marc Berejka (Senior Policy Advisor, Office of the Secretary, U.S. Department of Commerce) lobbied on behalf of Microsoft, and Secretary of Commerce Gary Locke, to whom the USPTO reported until Locke was made Ambassador to China on August 1, 2011, also has extensive ties to Microsoft. S.1137 (Patent Act) In June 2015, the Committee also approved the Patent act for advancement to the House and Senate floor after a markup session was held. S. 1137 is also an intended amendment to the America Invents act, and has a similar purpose to H.R.9 by addressing the disclosure of financial interests and technical details by the patent holder. The bill would require the patent owners to supply specific information on the type and extent of the patent claim before filing suit in a district court. ==Legal challenge==

In Madstad Engineering Inc. v. USPTO, Appeal No. 2013-1511 (Fed. Cir. July 1, 2014) plaintiff challenged the constitutionality of the act in placing an undue burden on its firm. Specifically, the plaintiff had to heighten computer security around potential inventions to prevent hackers from stealing intellectual property because of the first-to-file provision, litigating "much of today's intellectual property...is created on or stored on computers, virtually all of which are connected to the Internet...Since the [AIA] no longer concerns itself with actual inventorship, the new law makes it attractive and profitable for computer hackers to steal IP and file it as their own or to sell it to the highest bidder." The court ruled Madstad had no standing in court without concrete proof of an injury and dismissed the case, but reaffirmed its supremacy over patent law cases without addressing the constitutionality of the act's first-to-file provision. ==Notes==