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Senate Approves Patent Overhaul
This week, the U.S. Senate passed the Leahy-Smith America Invest Act, representing a major overhaul of the U.S. patent system. The legislation would make a number of changes to the current patent regime, including the shift to a "first-to-file" system. Under this system, the right to a patent would be granted to the first party to file a patent application for the protection of their invention. In addition, the legislation would adjust the fee structure for the evaluation process and create a new fee category for low-income applicants. The House of Representatives passed the bill in June. President Obama is expected to sign it on Friday, September 16.
The switch to a first-to-file system will bring the U.S. in line with most national patent systems around the world. The current first-to-invent system, allows a second patent applicant to begin interference proceedings against the first patent applicant if they believe that they can demonstrate that they conceived of the invention first, and diligently worked to apply the invention in practice. Supporters of the reform say that the first-to-file regime will bring more clarity to the patent system and reduce the burdensome expenses of patent challenges.
Opponents note that the first-to-file system could put smaller businesses and inventors at a disadvantage. Completing and filing patent applications is time-consuming and expensive. While inventors at larger companies often have access to intellectual property legal resources, the costs could hinder the development of startups. A New York Times article also notes that the new system could create a rush to file new patent applications, further slowing the evaluation process.
In order to overcome any delays, the legislation allows the U.S. patent office (USPTO) to create a reserve account for revenues generated from application fees beyond the amount already appropriated to USPTO in the U.S. budget. These reserves may be used for new projects, though the office will need Congressional approval to do so.
Most of the changes included in the legislation would take some time before they go into effect. The first-to-file provisions would go into effect 18 months after enactment. Several of the provisions regarding fees, however, would be valid in the near future. Ten days after enactment, patent applicants would begin paying a 15 percent surcharge on USPTO filing fees. Applicants also would be able to pay an additional $4,800 for prioritized evaluation. Immediately following enactment, some applicants with sufficiently low income and fewer than four previous applications will be able to file as "micro entities." The applicants would be eligible for a 75 percent reduction in patent fees. The current 50 percent fee reduction for "small entities" would remain in effect.