US patent reforms: closing the global gap

December 2013 | PROFESSIONAL INSIGHT | INTELLECTUAL PROPERTY

Financier Worldwide Magazine

On 16 March 2013, the central provisions of the Leahy-Smith America Invents Act (AIA) transformed United States patent law, bringing it one step closer to harmonisation with the patent laws of most other industrialised countries. Certain provisions under the AIA regarding ‘prior art’, however, still make US patent law unique.

Broadly speaking, prior art is the complete body of knowledge that predates a patent and can be used to determine if a claimed invention is worthy of government protection. Patent offices around the world consider prior art before granting a patent, and courts look to the prior art when the validity of a granted patent is challenged in litigation. Prior art can exist in various forms. It often, but not always, takes the form of a written publication. For example, prior art may be a technical journal article by a competing scientist, a Ph.D. dissertation, the writings of a sixteenth century philosopher, or even a contraption explained by fictional characters in a cartoon. Prior art may also include oral disclosures, sales or public use of a product or process.

The legal definition of ‘prior art’ varies among countries, however, creating situations where an invention may be patented in one country but not in another. On the one hand, most European countries operate under a strict ‘first-to-file’ (FTF) system. Under such a system, prior art includes any earlier-filed patent application by another inventor, as well as any written publication made by anyone, including the inventor, any time before the patent application is filed. An FTF system thus often spurs a race to the patent office, motivated by fears that someone else will file first or that the invention will become publicly disclosed. Neither delays associated with preparing a patent application nor inadvertent public disclosures by the inventor are excused. Perhaps most strikingly, any applicant who filed an application later than another applicant will automatically be prevented from patenting an invention, even if he or she was actually the first to invent the claimed innovation.

By contrast, the United States prior to 16 March 2013 had a ‘first-to-invent’ (FTI) system. In the pre-AIA United States, prior art was not defined by the filing date of the patent application, but instead was defined by reference to two different dates: (i) the date that the subject matter claimed in the application was invented by the applicant, i.e., the ‘invention date’; and (ii) the date one year prior to the patent application filing date, i.e., the start of the one-year ‘grace period’. In effect, an inventor had a one-year grace period after the first public disclosure of the invention to file a patent application, so long as the disclosure was not before the claimed invention date. For example, a publication by a competitor describing a first inventor’s unpatented invention would not necessarily be prior art precluding the first inventor from getting a patent unless the publication was made more than one year before the first inventor filed an application. Moreover, earlier filed patent applications by a competitor were not prior art to a later patent application unless the first application was filed before the second applicant’s ‘invention’ date. Finally, subject matter first invented by another, even if not the subject of a patent application, could be prior art to a first filed patent application.

The FTI system was intended to reward the first person to actually ‘conceive’ of the invention without requiring him to rush to file a patent application. The view was that small entities and independent inventors otherwise would not have a fair chance to gain patent protection in competition with corporate inventors with an army of patent attorneys at their disposal. In practice, however, the system created great uncertainties because it can be difficult to assign a correct invention date for inventions that were often conceived of and perfected behind closed laboratory doors.

The redefinition of prior art under the AIA was an attempt to remove the uncertainty associated with the FTI system. The AIA nominally changed the United States to a ‘first-inventor-to-file’ (FITF) system, which defines prior art as “before the effective filing date of the claimed invention” rather than before the invention date. Now in the US, prior art includes subject matter “described in a printed publication, or in public use, on sale, or otherwise available to the public”. Under the new law the ‘invention date’ is no longer the relevant reference date for determining prior art, and a prior undisclosed invention of another will no longer be considered prior art. These changes bring the US patent system into closer harmony with those of FTF countries.

The AIA law has certain exceptions in the definition of prior art, however, that keep the US law from being fully concordant with strict FTF countries. Consequently, commentators often refer to the new US patent law regime as a ‘first to publish’ or ‘first to disclose’ system instead of a strict FTF system. These unique exceptions are likely to create a new point of uncertainty when trying to analyse the validity of a patent with respect to the prior art. Specifically, the AIA excludes from the prior art two types of disclosures made one year or less before the effective filing date of a claimed invention. The first exception is for disclosures made by the inventor or by individuals who directly or indirectly learned of the subject matter from the inventor. The second exception excludes from the prior art subject matter disclosed by a non-inventor but coming after the subject matter had been publically disclosed by the inventor or by an individual who learned of the subject matter from the inventor. Potential for uncertainty therefore arises, because without some insight into the inventor’s communications with others, it may be difficult to determine if a disclosure is or is not prior art. From the face of a seemingly invalidating reference one may not be able to figure if the disclosing author indirectly obtained the subject matter from the inventor. Similarly, it may not be trivial to determine where and when an inventor first disclosed his or her work.

One can consider the following hypothetical scenario. Two scientists are competing to discover a new drug for the treatment of cancer. Both are highly motivated to achieve recognition by the academic community as well as to protect their invention for potential future financial gains. The first scientist, Adams, figures out on 1 March that a compound will cure a certain type of cancer. Working independently, the second scientist, Brown realises the same compound will cure cancer on 5 March. What do they do? Adams calls up his patent attorney and says let’s get an application on file as soon as possible. The patent attorney starts drafting a patent application and files a patent application almost three months later, on 1 June. Brown on the other hand calls her institution’s public relations department. The institution issues a press release as soon as 15 March, disclosing the chemical structure of the compound, and later that day at a news conference discloses the data on how to make and use the compound for curing cancer. Subsequently, Brown calls a patent attorney who files an application on 1 May. Who gets the patent?

Under a strict FTF rule neither Adams nor Brown should receive a patent because the prior art, i.e., the Brown press release, disclosed the invention publically before either had filed a patent application. In the US under the pre-AIA law, Adams would have been able get a patent on the compound because Adams was the first to invent the compound, and he filed his patent application within one year of Brown’s press release.

The outcome under the AIA would differ from that under the pre-AIA, but is still not in total harmony with a FTF system where neither Adams nor Brown would be able to get a patent. Under the AIA, Brown should be able to get a valid patent because she was the first to file a patent application and her own public disclosure made less than a year before filing is not prior art to her application. This rather simple fact pattern illustrates a potentially significant difference in patent rights between a strict FTF and the AIA.

Overall, the AIA embodied significant progress towards international harmonisation of patent laws, but areas for potential progress remain. Whether the United States needs to continue its path of integration into the global IP landscape, or whether other countries should change their patent laws to better conform to the US system, remains a lively inquiry. The best answer likely lies somewhere in the middle, as no current patent system yet reaches the ideal, and all exhibit potential for improvement.

Christopher Jagoe is a partner and Laura Keay is an associate at Kirkland & Ellis LLP. Mr Jagoe can be contacted on +1 (212) 446 4945 or by email: christopher.jagoe@kirkland.com. Ms Keay can be contacted on +1 (212) 909 3194 or by email: laura.keay@kirkland.com.

Christopher Jagoe and Laura Keay

Kirkland & Ellis LLP