© 2012 Smart Business Network Inc. Reprinted from the November 2012 issue of Smart Business Orange County.

Insights Legal Affairs

Insights Legal Affairs is brought to you by Stradling Yocca Carlson & Rauth

Protect your assetsHow patent filing changes will impact your business and its inventions Interviewed by Adam Burroughs

The changes occurring with the imple-mentation of the America Invents Act (AIA) are important for the United

States and for anyone thinking about fil-ing a patent application. The AIA puts the U.S. on the same first-to-file patent system as the rest of the world. This means that the first person to file a patent application is the first to invent. However, because of the changes, companies need to be more vigilant about their inventions and act quickly when they have something pat-entable, especially in industries that are highly competitive.

“There needs to be a plan of action,” says Sarah S. Brooks, an Attorney at Stradling Yocca Carlson & Rauth. “Have a patent at-torney lined up and have someone moni-toring the technical department so your company can file right away. This might involve restructuring the company’s report-ing chain.”

Not adapting to the new rules could mean someone else claims your invention first.

“If you don’t file and you’ve got some-thing on the market that you’re selling, there’s nothing stopping another company from taking that and filing their own patent application and they’ll be the presumptive owner. So there are serious consequences for not filing right away,” she says. “If this occurs, there is a process called a deriva-tion proceeding that could help you if you can show that the patent applicant derived its invention from you, but you will have an uphill battle because you have to prove this by substantial evidence and it may be dif-ficult to get this evidence.”

Smart Business spoke with Brooks about the AIA and what companies should do to prepare for the changes it brings.

What is the AIA?

The AIA, passed in 2011, is the big-gest change to U.S. patent law since the 1950s. The U.S. Patent and Trademark Of-fice (USPTO) has a backlog of patent ap-plications, and the new law is an effort to streamline the patent system.

The major change coming through the AIA is to move to a first-to-file system, which aligns the U.S. system with what the rest of the world uses. Previously, the U. S. was on a first-to-invent system, which meant that even though you didn’t submit your application first, you could prove you were the inventor by going through an interference proceeding to determine

the proper inventor. However, interfer-ence proceedings were contributing to the backlog in the USPTO. Therefore, the AIA attempts to streamline the process with the derivation proceedings previously mentioned.

What are the key changes in the act that com-panies should know about?

In addition to the first-to-file provision, which takes effect March 16, 2013, there will be a significant change affecting the grace period for public uses, patents, pub-lications and sales. Previously, you had one year from a prior patent, publication, public use or sale in which to file your pat-ent application. Now, that grace period has been eliminated with just a few excep-tions. The one-year grace period now only applies to prior sales and publications of the inventor, not to prior sales and publi-cations of others. In addition, the AIA also bars someone from getting a patent if his or her invention is sold anywhere in the world by anyone other than the inventor before a patent application was filed.

One more change, meant to streamline lit-igation, is a new proceeding called a post-grant review. Through this, a third-party can claim your patent is invalid on any grounds within nine months of the patent

being issued. Post-grant reviews will offer a cheaper solution than standard litigation in the courts and may be used instead of re-examinations, which are similar but don’t operate within the same time frame.

Finally, the AIA allows a company to file a patent in its own name if the invention has already been assigned to the company or if the inventor is obligated to assign the patent to the company. This eliminates the need to file assignments with the USPTO.

How does the AIA change the way companies should conduct business going forward?

You can’t sit on your invention, especially with the rush to the patent office seen in certain industries, like the smartphone in-dustry. Previously, you could go through an interference proceeding to prove you were the first to invent, but that’s been elimi-nated and replaced with the derivation pro-ceeding in which it will be harder to prove you are the true inventor.

Filing for a patent quickly won’t be a problem for big companies that have the infrastructure already in place. It will be problematic for smaller companies and independent inventors because they don’t have their own in-house legal de-partment and the process is expensive. Therefore, you’ll likely need to line up a patent attorney.

You also have to be careful of another bar to your patent. If someone other than the inventor is making, using or selling an in-vention or publishing information about it, there is no one-year grace period for this type of prior art. Prior art is all public infor-mation disclosed about an invention before a given date.

Will the AIA simplify or make the patent system more complex?

It will likely do both. It will simplify and streamline the process in some ways, such as possibly increasing the speed with which applications are granted. But while people and companies are getting accustomed to the new rules and what they mean, there might be an increase in litigation. Further, although there has been lots of publicity about the AIA, most of the news is about the change to the first-to-file system, not the other changes coming that are just as important and have to be dealt with. <<

SARAH S. BROOKS is an Attorney at Stradling Yocca Carlson & Rauth. Reach her at (424) 214-7025 or sbrooks@sycr.com.

Sarah S. BrooksAttorneyStradling Yocca Carlson & Rauth