How the New Patent Law May Affect Businesses

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With the America Invents Act (AIA), signed by President Obama on September 16, 2011, the United States will change from a “first to invent” system to a “first inventor to file” system for patent rights. Because of this seismic shift in U.S. patent law (some are calling it the biggest change in the laws in nearly 150 years), it is more important than ever for independent inventors seeking protection for their inventions to file their applications as quickly as possible. To say that this gives new meaning to the cliché  “Race to the Patent Office” is something of an understatement.

With its shift to “first inventor to file,” the AIA is intended to streamline the patenting process by limiting certain types of challenges to patent applications, thus (at least in theory) getting the invention to the market faster. Another goal of the Act is to bring the U.S. in line with Europe, Canada and most other first-world nations who already follow a “first to file” system. This international sameness is viewed as important, as intellectual property takes on increasing international dimensions, and is also meant to improve international protection for those seeking it.

One of the biggest concerns expressed regarding the upcoming changes, though, is how they may affect small business owners and individual entrepreneurs. Getting a patent is not exactly cheap—(it can easily cost between $7,000 and $10,000 just to file a non-provisional application, and often much more), making it already difficult for independent inventors and smaller entities to keep up with large corporations in the invention arena. Now that speed is all the more of the essence, that concern about keeping up has multiplied exponentially: whereas large corporations can file thousands of patent applications per year (IBM has led the pack for nineteen years, hitting a new record in 2011 with a staggering 6180 utility patents awarded) an independent inventor can toil for years on a single invention. Further contributing to the appearance of disparity, the U.S. Patent and Trademark Office (USPTO) implemented “fast track” application processing in 2011: for the modest sum of $4800, an applicant can get a final action on an application within one year of filing. Everyone else (with scant exception) gets to wait.

Also, larger entities can often afford to file first, and ask questions later—even if that means abandoning a significant number of applications. A smaller business or individual, however, must be more cautious about possibly throwing money away, and may therefore refrain altogether from filing an application in the first place—thereby losing the race to the USPTO before it even begins.

Another potential problem for independent inventors as a result of the AIA’s changes is the cost of a “post-grant review” process, through which patents can be challenged after being granted. A challenger will need to show the “likelihood a claim of the patent is invalid.” That review period—during which marketing, use and sale rights to the invention may be uncertain—could end up costing inventors even more money they don’t have. Large entities, by contrast, can more often afford to wait it out.

Still, not everyone believes that such massive effects from the changes on the horizon are inevitable. Stanford University Law Professor Mark A. Lemley, who heads the school’s program in Law, Science & Technology, told LegalZoom that although “the AIA makes a number of changes of great interest to patent lawyers…it won’t change the fundamental economics of the patent system.”

No matter which side turns out to be correct, the best course of action for small businesses and independent inventors at this point is safety through speed—submit a provisional application for patent as soon as possible and get the “patent pending” status that comes with it. Remember that you can build on provisional applications, so what you submit at first is not necessarily the last word on your invention. As one practitioner has said: “I used to counsel inventors to take their time and submit the absolutely best application possible.  Now I tell them to draw something on a napkin and send it in.” Ok, maybe not—but you get the idea.