The history of innovation in the US is formidable. Abraham Lincoln had an avid interest in cutting-edge technology. As an attorney, he represented railroads. During the Civil War, he frequented the telegraph office (which provided the instant-messaging of its day) for the latest news from the front, and was actively involved in directing troops. He encouraged weapons development and even tested some new rifles himself on the White House lawn. He is, in fact, the only US president to hold a patent (No. 6469, granted May 22, 1849). It was for a device to lift riverboats over shoals.

The US is very proud of its record on innovation, more than its history in innovation, some might say. In his 2011 State of the Union address, President Barack Obama, championing US innovation, research and development, called on Americans to “win the future“, This, he said, is “our generation’s Sputnik moment.”  The Senate approved a sweeping reform of the nation’s patent laws on Thursday, sending to Obama an Act that changes the system for determining priority for inventions at the patent office, and provides more financing for an agency beset by application backlogs and outdated computer systems.

State of the problems

It now takes, on average, two years to get a preliminary ruling on an application, and an additional year for final grant, according to the US patents office. The Internet age, furthermore, has created a surge in applications: in 1997, 2.25 patents were pending for every one issued, but by 2008 the rate had nearly tripled, to 6.6 patents pending for every one issued, according to patent office statistics. A backlog of about 700,000 applications is made worse by computer systems that are out of date, according to Gary F. Locke, the current US Scretary of Commerce.

The America Invents Act (formerly the Patent Reform Act of 2011)is the product of extensive consideration. For four Congresses, the US have worked on this. A principal justification for the impending changes to patent law is that they will promote technological progress in the United States (and thus create jobs).  It will possibly change America’s inventor-friendly patent system to favor whoever files for an application first. The House of Representatives passed their version of the Act on June 23, 2011 by a vote of 304-117. After rejecting proposed amendments to a bill approved by the House last June, the Senate voted 89 to 9 to pass the bill, completing an effort of at least six years to overhaul the patent office’s operations and the procedures by which patents can be challenged. The full text of the Act can be accessed here from JD Supra.

Some interesting key features of the new Act are as follow.

Changes to Novelty Rules

The shift to a first to file system is central to the America Invents Act.  This provision has the potential to encourage early disclosures of information by the inventor.  Although prima facie it appears to provide no more ability for inventors to engage in disclosures than the existing one-year statutory bar, under which an inventor was free to disclose whatever it wanted for the one-year period prior to filing, it perhaps may result in more disclosures than under the present structure.  A disclosure race may be encouraged. It is perhaps rather simpler to award patents to the first person that files an application, regardless of whether or not they are the original inventor.

The new Act arguably favours big corporations who can file patents as soon as they hear about a new invention. Several groups representing small businesses, entrepreneurs and early-stage investors have said that change puts small companies, which usually account for the bulk of new jobs, and individuals at a disadvantage to large companies that employ fleets of patent lawyers. Many large corporations — like General Electric, Caterpillar and IBM — supported the bill, which opponents suggested was evidence that the bill favors behemoths at the expense of the little guy.

Creation of a Prior User Defense

Even as the changes to the novelty rules seem to encourage early peripheral disclosures of technological information, at least for US-only inventors, the creation of a prior user defense pushes towards less disclosure. The types of inventions that the prior user defense most applies to are those with the capability of being protected through secrecy.  A prior user defense is less important for inventions whose workings are readily understandableM once they are placed on the market because these products already represent potentially invalidating prior art; thus, this type of defense is considered to have most relevance for non-self disclosing inventions, a category that includes many processes.

Elimination of Best Most Requirement

Section 15 of H.R. 1249 effectively eliminates the best mode requirement by amending the list of invalidity defense to exclude best mode  While the best mode requirement remains in 35. U.S.C. 112, and thus theoretically could be used by a patent examiner to reject an application, failure to disclose best mode may also not be a basis for holding a patent unenforceable any longer.

Post-grant review

The Act currently contains a provision for an eight-year period of postgrant review of patents already issued. The measure was specifically aimed at so-called business method patents, which provide protection for a unique method of performing a task. The measure was, in fact, heavily favoured by the banking industry, which has been beset by patent infringement suits over things like electronic imaging of paper checks.