Commemorating Five Years of the America Invents Act

On Wednesday, September 21, members of Congress and key congressional staff, USPTO leadership, and stakeholders from industry and the inventor community came together again to commemorate the 5th anniversary of the AIA on Capitol Hill.  What follows is a guest blog by Dana Robert Colarulli, Director of the Office of Governmental Affairs that appeared on the Director’s Forum Blog on the USPTO website. Enjoy!


“We’ve come a long way in five years. The Leahy-Smith America Invents Act (AIA), signed in 2011 by President Obama, modernized the U.S. patent system and, as a result, helped strengthen America’s competitiveness in the global economy. Together with our stakeholders, the USPTO sought to implement the act consistent with the intent of Congress to increase certainty in our nation’s intellectual property (IP) landscape and enable the brightest ideas and most ambitious endeavors in the world to come to light.

I was there in 2011 and the years leading up to the President signing the AIA and have watched the agency embrace and implement the numerous provisions in the act. On Wednesday, September 21, members of Congress and key congressional staff, USPTO leadership, and stakeholders from industry and the inventor community came together again to commemorate the 5th anniversary of the AIA on Capitol Hill.

The event featured remarks from USPTO’s Director Lee, Representative Lamar Smith and Senator Patrick Leahy on the history of the AIA, the need for change, and the AIA’s impact on the IP system – even as we continue to evaluate these sweeping changes and look for ways to further improve our system. A panel discussion at the event focused on the impact the act has had on businesses and inventors of all sizes and what may be next in the way of improvements to the patent system.

The AIA implemented a number of significant changes to update and improve the U.S. patent system.  Upon signing the bill in 2011, the President described what the bill hoped to accomplish this way:

“It’s a bill that will put a dent in the huge stack of patent applications waiting for review. It will help startups and small business owners turn their ideas into products three times faster than they can today.  And it will improve patent quality and help give entrepreneurs the protection and the confidence they need to attract investment, to grow their businesses, and to hire more workers.”

The USPTO has delivered on that promise by reducing the patent application backlog by nearly 30 percent from its high in early 2009, speeding up examination including introducing a fast track option with discounts for small entities, and leveraging the increased financial stability and fee setting authority provided by the act to reinvest user fees into increasing quality under Director Lee’s Enhanced Patent Quality Initiative.

And just this week, the USPTO and the Economics & Statistics Administration at the Department of Commerce released an updated report on the impact of IP on the U.S. economy, reiterating in quantifiable terms the importance of a well-functioning IP system.

The increased attention and focus on our IP system in recent years is critical, and our job to look for ways to further improve did not end with the AIA. Again, the President stated in 2001:

“And we have always succeeded because we have been the most dynamic, innovative economy in the world. That has to be encouraged. That has to be continued.”

Inventors and innovators in the U.S. and around the world deserve a system that evolves and improves right along with the pace of technology – an important reminder as we celebrate the 5th anniversary of the AIA.”

Learn more about the impact AIA has had over the last five years in:

Ensuring Clear Title To Your Intellectual Property When Crowdfunding

By Debby Winters

Let’s start with the basics. What is “crowdfunding” and why is everyone talking about it? Crowdfunding is a way of raising capital from a large number of small donors. The number of crowdfunding portals available is expected to grow rapidly now that equity-based crowdfunding investments have become legal. This allows companies to sell up to $1 million of securities annually. Crowdfunding presents an exciting opportunity to raise money or to pre-sell a product while building product buzz and an engaged customer base.

But here’s the problem when it comes to your intellectual property. To engage the crowd, a large amount of information about the project is shared with the public. If this information sharing includes previously confidential technological details, it could be considered a public disclosure under U.S. patent laws, which could trigger patent filing deadlines.

Those using crowdfunding (either donation-based or equity-based) must be mindful of these filing deadlines to ensure they do not jeopardize their intellectual property rights. This is particularly true for crowdfund issuers who have used government funding or resources while developing their ideas, as they may be subject to the Bayh-Dole Act (BDA). The BDA allows government contractors to elect to retain title to an invention that was created with the aid of government funding, but only if they follow specific steps, in a timely fashion. Crowdfund issuers who have used government funding must ensure that their crowdfund offerings comply with the requirements of the BDA, particularly in light of the recent amendments to the BDA and patent laws affected by the America Invents Act (AIA) patent reforms.

A public crowdfunding disclosure may have an impact on the timing of two BDA requirements: 202(c)(2), the written election to retain title, and 202(c)(3), the agreement to file patent applications covering the subject invention before statutory bars. The deadline for electing to retain title to an invention under the BDA is two years after disclosing the invention to the government. However, this deadline may be moved up significantly by a public disclosure of the invention, including, in many cases, the disclosures associated with a crowdfund offering.

The BDA provides that if the AIA’s one-year grace period for filing a patent application would end before the BDA’s two-year grace period for electing to retain invention rights, the time for written election to maintain invention rights may be shortened by up to 60 days before the end of the AIA’s one-year grace period. Failure to act within the allotted time period could lead to forfeiture of rights to retain title to the invention.

Crowdfund issuers also should be wary of the AIA’s one-year grace period for filing patent applications. Because of this switch to first to file, inventors will no longer be able to “swear behind” art developed between an inventor’s date of invention and the patent application filing date. Thus, to avoid this potentially invalidating art, crowdfund issuers should file applications and elect rights to an invention as soon as possible and not rely on the one-year grace period for filing a patent application.

Additionally, crowdfund issuers must take care to disclose all required information to potential investors. For those subject to the BDA, this will include notifying investors about all rights that the government has or may have to the invention. This is particularly true if the company has not yet filed a patent application or has not yet made a written election to retain invention rights.

An investor may elect to purchase crowdfunded securities based on the perceived value of the technology described in the crowdfunding disclosure. However, if the company fails to follow the requirements of the BDA and does not properly elect to retain rights, the government, not the company, may obtain the patent rights to the disclosed technology. This may adversely affect the value of the securities and could trigger allegations of a material misstatement or omission.

Given the complexities of intellectual property ownership under the BDA, companies should take special precautions to ensure clean title their IP rights before they make a crowdfund offering. Here are some things to consider putting into practice:

• Once a federal agency is informed of an invention, the inventing entity should quickly follow the BDA procedures and make a written election to retain title to the invention. It should file a patent application as soon as possible, and under no circumstances should it file the application later than one year after any public disclosure.

• If the company will offer securities, it should elect to retain title to any IP that contributes to the basis for the valuation of a crowdfunding offering before the offering. This will help to ensure that the valuation properly reflects the company’s ownership of the invention.

• If the company cannot afford to file a patent application before raising funds, it should consider filing a provisional patent application as a filing date placeholder. Provisional applications can be less formal than regular patent applications and often can be filed using materials that already have been prepared for the crowdfunding disclosures. Provisional patent applications are an inexpensive way to preserve patent rights under the first-to-file system of the AIA.

• The crowdfunded security offering should clearly inform potential investors of the government’s rights or potential rights to the invention. Even if patent rights are elected in a timely fashion, the government still maintains certain rights under the BDA (e.g., “march-in” rights). Although these rights may be rarely used, they may still affect the company’s valuation and should be disclosed.

• Finally, the BDA only covers inventions made using government funding. To limit the BDA’s applicability, businesses should segregate out as much IP as possible by differentiating it from the subject matter covered by any government funding agreements.

Crowdfunding is a new and potentially powerful tool. Following these steps will help to ensure that a business has a clear title to its IP rights and that it has disclosed all necessary information to potential investors.

Who is Filing for Micro Entity Patent Status?

By Debby Winters

We looked at what micro entity status means, we noted that micro entity status is not being used as often as it might, so now let’s look to see who is filing for micro entity status.

The name “micro entity” suggests something quite small. In the patent law world, this generally means that the inventor / applicant income level over the past several years is less than around $150,000 and that the inventor is not a frequent applicant. A patent applicant who qualifies will receive a 75% discount on patent office fees. That discount is designed to make it easier for individuals and small companies to access the patent system and thus encourage innovation from this group of potentially highly innovative, but not yet financially successful, individuals.

However, the micro entity rules include a MAJOR loophole since a university-owned patent or application can qualify for the fee-reduction. The fairness of this has been questioned as around a third of the patent applications filed that used this designation came from universities. While it is true that the largest percentage, well over ¾ was to individuals, this is still a rather astonishing percentage given the designation was intended for individuals and small companies.

Do You Qualify As A Micro-Entity?

By Debby Winters

The America Invents Act provides for a new entity for independent inventors called a “micro-entity.” A micro-entity pays certain fees at a 75% reduction of the normal amount.  To qualify as a micro-entity, certain conditions must be met. Below is a list of those conditions.

For unassigned applications, the entity must not include any inventors that have been named on 5 or more patent applications, not including provisional or non-US applications.  Thus, “micro-entities” are newer inventors.  The application must not be licensed or the inventors must not be legally obligated to license or assign the application.  Each inventor must have an income of less than 3 times the average gross income reported by the Department of Labor for the previous calendar year.

For assigned applications, the inquiry is similar.  None of the inventors must be named on 5 or more patent applications.  The application can only be assigned to an entity with 5 or fewer employees.  And the assignee must have an income of less than 3 times the average gross income for the previous calendar year.

Finally, for applications where the applicant receives the majority of his income from an institution of higher learning or where the applicant is under an obligation to assign or license the application to an institution of higher learning, micro-entity status applies.  This is regardless of the income level or number of applications previously filed by the applicant.

Thus, micro-entities will be a very small group of applicants, but it can result in significant savings on PTO fees. If you are in doubt, see your patent attorney for a determination.

How’s it going with the First-to-File Patent System?

By: Debby Winters

Design Patent D685,381, issued to b
luelounge, is the first patent filed under the new First-to-File system to issue. It was filed April 1, 2013 and issued July 2, 2013. It is a design patent directed to a foldable laptop stand. It was issued as part of the Design Patent “Rocket Docket” System, which is one way that it issued so quickly. The process of applying for a design patent has been made speedier though the use of the “Rocket Docket.” The “Rocket Docket” allows an applicant of a design patent to move their application ahead of other applications by paying a fee, conducting a pre-examination search, making sure the drawings are in compliance with strict patent guidelines, and submitting an Information Disclosure Statement (IDS) with the application. Typically the IDS is submitted later in the process. Even design patents that are filed without requesting expedited examination typically issue much quicker than utility patents. As such, an inventor may again decide to apply for both a design and utility patent, because the design patent may issue in a year, whereas a typical utility patent may take between one and three years. However, this one issued in 3 months time…that’s quite a “rocket” it was on.

Three other applications that have been filed post-AIA have been published. These all claim priority to filings that were made before the system changed and are really subject to the first-to-invent rules. Stay tuned for any major legal challenges associated with the first-to-file system as they are likely to take another year or two to surface.

How To Assess The Protection Of A Patent

By Debby Winters

I often have clients who ask how they can review competing patents to know what kind of protection is available. A quick look at what a patent is all about will answer that question.

The heart of a patent is its claims. These are the numbered sentences in the back of all issued patents. Claims outline the limits of patent protection and are interpreted in light of the specification that comes before it. In addition to what you see in the printed patent, there are also usually arguments that were made at the U.S. Patent and Trademark Office (USPTO) when getting the patent allowed. These arguments can be limiting on what the patent covers.

Under the new changes to the patent law under the America Invents Act, a patent is also limited in that it does not cover what was known by those having ordinary skill in the art of the invention prior to the filing of the patent application. (For patent applications filed before March 16, 2013, patents don’t cover what was known more than a year prior to when the invention was made. However, this is further limited by public uses or sales in the United States and publications or patents issued anywhere more than one year before the filing date.) A patent is further limited by the patent law and the opinions of the courts.

Nevertheless, simply looking at the patent document will give you some idea of what to expect. The thinner the patent application, the smaller the likely scope of patent protection. One reason is that while claims are often interpreted to cover the components or steps of a claimed invention, as well as its reasonable equivalents, those equivalents are more likely to be protected if they were described or suggested in the patent. A patent document with fewer pages implies a specification with fewer details of the invention and little discussion of alternatives. On the other hand, a thicker patent document implies a specification with more detail, more discussion of variations and, simply, a stronger patent.

The claims determine the “metes and bounds” of the claimed invention. The numbered claims that don’t refer to any other claim are “independent claims” and each wholly identifies the patented invention. Claims that refer to earlier numbered claims are “dependent claims” and are interpreted to include all limits of the earlier numbered claims. A single patent may include several independent claims, each describing a single invention in slightly different ways. For example, one independent claim may describe a device, another may claim a system incorporating that device and a third may claim a method of using that device. The dependent claims modify the independent claims to add limitations, other features or further steps in the claimed invention.

To infringe a patent, all of the features or steps listed in a claim must be present in the accused device, system or method. Leaving out just one feature is often enough to avoid patent infringement. Therefore, independent claims that are long, claiming a multitude of features that are not important to the novelty of the invention, tend to be weaker than those that are more focused on the patentable elements of the invention. It tends to be easier to avoid infringement of longer claims by doing without an unnecessary claimed element or step or finding a non-equivalent alternative.

Pay close attention to the language of the claims and whether you can find that language in the specification. Claims are interpreted in light of the specification that precedes them, so any term or feature that is unclear should be defined or described in the specification. In stronger patents, claim terms tend to be repeated throughout the specification, leaving little doubt as to the scope of the claimed invention. In weaker patents, the meaning of claim terms has to be interpreted or extrapolated, leaving room for doubt in the claim scope. Note any inconsistencies in the claims and between the claims and the specification. Word choice can broaden or narrow the scope of the claimed invention. Scope broadening amendments cannot be made to the patent except through a reissue proceeding filed within two years after it has been issued. Some courts have held that even when the language has clearly been drafted in error, whatever is stated within an issued patent is what the owner will be stuck with.

Look for language that describes equivalent and interchangeable features to claimed elements. Identified equivalents broaden the scope of the claims, allowing the inventor to claim that the equivalents were considered to be within the claim scope. Disclosed equivalents also make it harder to make insubstantial changes to design around the broadest claim. For example, the specification could identify various construction materials, assembly methods, alternative steps or other modifying features of the basic invention. Often, these variations are covered by dependent claims, but if the elements of the independent claims have equivalent components or steps, those should also be identified in the specification.

Equivalents could also be identified in the specification through different embodiments of the invention. A stronger patent discloses many embodiments, not just the preferred or most efficient embodiment. The more embodiments disclosed, the harder it will be for competitors to design around the claims, even when certain embodiments are not efficient or economical. Each embodiment left unsaid leaves room for a competitor to avoid infringing the claimed invention. The more embodiments discussed, the greater the value of the patent.

Another consideration is that in exchange for the rights granted by the issuance of a patent, the inventor must provide sufficient detail to enable one to practice the claimed invention without undue experimentation. If you can’t read the specification and figure out how to implement the claims, then you should reconsider the worth of the patent.

The patent document itself is not the only place to look to interpret the scope of the claims. As mentioned earlier, anything that has been presented to the USPTO as argument in support of obtaining the patent can be used for claim interpretation. Communications between the USPTO and the patent attorney who worked on getting the patent issued (the patent prosecution history) are available on the USPTO website. Any interpretation of claim elements, affidavits explaining terms or procedures, clarifications of prior art documents and amendments to claims made in the normal course of patent prosecution can be used to narrow the scope of the issued claims. A prosecution history with a lot of action between the USPTO and the patent attorney has more places to attack the patent.

Many times during patent prosecution, applicants must amend claims to comply with patentability requirements. To do this, applicants submit claim amendments showing exactly what changes are made, making it easy to track how the claims came to be issued. However, amendments made to narrow claim scope could be subject to interpretation under the doctrine of prosecution history estoppel. According to this doctrine, any narrowing amendment made to a claim to circumvent a prior art disclosure will limit the scope of the claim to the amended elements and possibly no equivalents. Therefore, the patent prosecution history must be examined to determine why amendments were made during prosecution and their effects on claim scope.

Any review of a patent is incomplete without understanding the prior art to the patent. It is important to look for patents and other public documents that pre-date the filing date of the patent you are reviewing. This can be done by searching libraries or Internet databases or ordering a prior art search through a patent-search company. Finding a prior disclosure or a combination of prior disclosures that show each and every element of the claims could make that patent unenforceable and severely reduce its value.

While this article is in no way exhaustive, the discussion here should help to give a general understanding of some basic issues to be aware of when reviewing a patent. The review of every patent should at least consider the items discussed herein. While it is recommended that such reviews be conducted by a trained patent attorney, decision-makers should have some idea of what such a review entails to have greater confidence in their final decision.