New provisions of the America Invents Act went into effect on March 16, 2013.
New provisions of the America Invents Act went into effect on March 16, 2013.

The Leahy-Smith America Invents Act, also know as the America Invents Act (AIA), was enacted on September 6th, 2011 and modifies the laws governing patent rights in the United States.  The most significant change went into effect on  March 16, 2013 and switches the U.S. from a first to invent to a first inventor to file patent system. This article suggests some ways in which entrepreneurs can take advantage of some of the other changes brought about by the America Invents Act.

1. Micro-entity status changes- The AIA introduced a new micro-entity status that will give qualifying companies  a 75% discount on most patent fees.  Independent inventors, who within the previous calendar year grossed income of less than 3 times the national median household income and who had previously filed no more than four non-provisional patent applications (excluding those applications the inventor was obligated to assign to an employer) qualify for micro-entity status. This cost savings should be particularly appealing to startup companies with tight budgets.

2. Prior User Rights-  A key consideration for many startups is freedom to operate. The Smith Leahy Act expanded the prior user rights defense by allowing prior users (i.e., an individual/entity that uses an invention more than one year before the filing of a patent on the same invention) the right to continue using an invention in the same way even if a subsequent inventor is granted a patent on the same invention.  Before this change in the law, prior users could be enjoined from practicing their trade secret invention once a patent was filed on the invention.  With this change in the law, and by commercializing properly documented trade secrets, a startup does not risk having to cease using that technology due to a competitor’s later-filed patent..

3. Prioritized Examination- Under the AIA, patent applicants can now expedite the patent prosecution process for a fee. This process gives growing companies the ability to have their patent approved within approximately twelve months after filing a patent application or a request for continued examination.  As securing IP rights is oftentimes important to start up companies, especially prior to funding rounds, this new process may be particularly attractive to startups.  Even better is the fact that small entities, which most startups are likely to classify as, only have to pay half of the $4,800 fee for expedited prosecution.

4. Post-grant review proceedings– A new post grant review system has been created under the AIA that expands the ability of third parties to challenge the validity of patents granted by the USPTO. The AIA mandates a nine-month Post-Grant Review period under which a patent can be challenged on any ground. This process will be significantly faster and less expensive than litigation in federal court. This change in the law offers savvy entrepreneurs the chance to monitor their competitors’ patents, and invalidate those patents that may be detrimental to the startup’s business.

5. Virtual MarkingOne final change to the patent laws that may be attractive to entrepreneurs is the change to the laws governing patent marking.  Damages for patent infringement are only available to the patent owner beginning from the time that an infringer had knowledge of the patent. Under 35 U.S.C. § 287, marking a product with the number(s) of any patents that cover that product constitutes constructive notice that the product is protected by those patents.  Marking products with the correct patent number can be difficult given the nature of the product and the fact that the patent numbers that need to be listed on the product may change over time.  Recalling items with incorrect patent numbers and relabeling them in order to comply with § 287 can be cost-prohibitive, especially for small startups.

Under the new law, to comply with § 287, patent owners need only mark their products with the word “patent” along with an address of a website that associates the patented item with its patent number. Furthermore, under the new revisions to the patent laws, marking a product with a patent that formerly covered the product, but has since expired, is no longer a violation.  These changes can result in a cost-savings to companies in that they provide a cheap way for companies to put potential infringers on notice of their patents, and remove liability for false marking.

These are only a few of the ways in which entrepreneurs can take advantage of the recent U.S. patent reform.  For more information visit the USPTO’s guide to AIA implementation.