The New AIA Patent Law, How Will it Affect Entrepreneurs?

By Cynthia Dahl, Practice Associate Professor of Law, Penn Law School

The following is the opinion of the author, and does not constitute legal advice. 

On March 16th, the country quietly slipped into the final phase of the roll out of the America Invents Act (AIA) – what many call the most important patent legislation for the last fifty years.  What does this mean for entrepreneurs?   In a nutshell, they must significantly change what they do to protect their Intellectual Property (IP).   Here are five important takeaways:  

  1. Entrepreneurs must now decide earlier whether or not to patent.  Under the prior system, if an inventor could show that she was the first to conceive the idea, she could take back patent priority from a later filer.  No more.  Since the AIA transforms the U.S. from a “first to invent” to a “first to file” jurisdiction, generally the first person to file an application with the USPTO now will get the patent.  Some are worried that this may disadvantage solo inventors or entrepreneurs that may have fewer resources and lack the sophistication to file patents quickly.  In reality, it will benefit the inventor or company – regardless of size – that is organized enough to make a swift decision on whether or not to patent. Judicious use of provisional patents may also help entrepreneurs to win the race to the USPTO.  An entity may file a provisional patent to secure an early priority date without waiting to draft claims (although inventors must follow up by submitting a nonprovisional patent within a year, and may only claim what was disclosed in the provisional). 
  2. Entrepreneurs will likely have to file more patents.  Because our new system requires quick filing, entrepreneurs may not have the luxury of refining their prototype before they file a patent.  The invention described in the patent must still be developed enough to be patentable, but entrepreneurs may have to file before they have realized all of the possible embodiments of their invention.  As a result, they may need to file additional patents (or continuations) as the product develops.  This may result in higher overall costs for the patent process. 
  3. However, Entrepreneurs may be able to take advantage of special pricing.  The AIA also introduces a reduced level of pricing for “microentities,” which went into effect on March 19th.  Microentities, defined by a four-part test, are generally individuals or smaller organizations with limited numbers of patents and little revenue.  Microentities enjoy a 75% reduction in fees, which may take some of the sting out of the expense of filing more patents.  This microentity pricing also applies to “Track 1” status, where an inventor can opt to pay a little extra to speed up the pace of review substantially.  For microentities, $1000 will guarantee a first office action within four months, and a final disposition in 12 months. 
  4. Entrepreneurs should be deliberate about their public disclosures.  Under the AIA, once an inventor discloses his invention publicly anywhere in the world, he forecloses his chance to file a patent in most countries overseas, and starts a twelve month deadline to file in the U.S.  However, that same public disclosure will also act as “prior art” to preclude other parties from filing a patent over the same invention.  Disclosure, therefore, becomes a critical consideration within an overall patenting strategy.  Provided an entrepreneur is not interested in pursuing international patent coverage, disclosure might serve both a strong offensive (by being the first to claim an invention) and defensive (by precluding others from filing) purpose. 
  5. Entrepreneurs should consider whether they might qualify for “prior use” defense.  Finally, the AIA greatly expands the “prior use” defense to infringement.  Entities that use a technology in good faith for a period of time before a third party patent issues over that same technology may raise a “prior use” defense to infringement.  Entrepreneurs that are not planning to patent should consult with an attorney about this defense to see if starting to commercially use a technology might protect them against future charges of infringement. 

The Patent Bar has been readying (or steadying?) itself over the past 18 months to counsel clients in a post-AIA world.  It will take time for both the legal and the business communities to adjust.  But there are benefits in the new scheme for entrepreneurs with thoughtful, deliberate IP strategies.  Now, more than ever, business success depends on seeking early, cooperative partnerships with IP counsel. 

 

cindydahlBio: Cynthia Dahl is a Practice Associate Professor of Law at Penn Law School, where she directs the Detkin IP and Technology Legal Clinic.  Her students provide free legal assistance to guide entrepreneurs through their IP challenges, including dealing with the new AIA requirements.  For more information about the clinic, or to find out how to become a client, visit www.pennipc.com.

One comment on “The New AIA Patent Law, How Will it Affect Entrepreneurs?

  1. The AIA, WILL BE, a disaster for American innovation (you know… that great tradition in America that allowed us to be first in the world in innovation, from the 18th century through the 20th century).

    I also believe AIA, in its entirety, is just plain unconstitutional (since it’s pretty clear what the Founding Fathers intended in Article 1, Section 8 of the original Constitution!).

    I don’t think that the Constitution intended that only rich entities, or cyber-thieves got to obtain IP protection (and “derivation proceedings” just make these scenarios worse and don’t help at all – for one – who’s going to pay for them?).

    Just think what would have happened had Congress tried to (stealthily) ram through even 1/4 this many changes to 2nd Amendment provisions (which weren’t any more clearly stated)!!! There would have been riots in the streets. But I guess American IP ownership isn’t as important as American gun ownership. Shows you were Congress’s priorities are these day! The Founding Fathers are surely rolling in their graves! Way to go Congress (capitulating AGAIN to the multinational corporations and their powerful lobbyists). I’m not too worried about DOMA going away – but now we have to get rid of the AIA too (what a euphemism was that)!

    Why didn’t the Europeans and Japanese adopt our 200+ year old, proven and effective system for protecting IP, rather than the other way around (it worked pretty well over those two centuries, didn’t it)? Doing things the way we used to (or closer to it) would also have resulted in “harmonization”.

    The Congress has been pretty stupid over the last decade, but how stupid (or corrupt) can they possibly be??!! They have sold out at least 50% of America’s inventors, innovators and entrepreneurs and, therefore, up to 50% of America’s future too. Compare the changes to our IP laws, to any likely changes to our gun laws!!!! Which is easier to pull over on the American public? Which will be more costly to our economy?

    When Canada switched to “First To File”, they lost 30% of their venture capital (investors don’t want to invest in crappy patents, or patents they are not sure they will be able to get, or enforce). The AIA “might” be a boon for patent lawyers (for a while), but then we will all have to pay the piper! So, who REALLY creates all the new (high paying jobs) – lawyers, doctors, investment bankers, stock brokers, venture capitalists, or inventors, innovators and entrepreneurs?

    I would be happy to have the Supreme Court review this completely illogical legislation and decide whether or not it provides anything like equal protection to all Americans (especially non-affluent Americans). The Foundering Fathers were, clearly, a LOT wiser than ANYONE currently in Congress, or the White House (they even provided protection against cyber-theft, using good old fashion “paper documentation”).

    We will all find out how true the above statement is, soon enough. Congress has proven, once again, just how illiterate they are when it comes to matters of science, technology, and innovation.

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