Since 2013, American inventors have faced new rules for filing and challenging patents on their products and systems. These new rules are part of the Leahy-Smith America Invents Act of 2011 (AIA), a sweeping overhaul of the nation’s patent system.

The U.S. Patent and Trademark Office (PTO), which grants U.S. patents and registers trademarks, issued its final rules in September 2012. Most changes became effective over the last year. Many of the rules may be of particular interest to manufacturers, a sector that frequently finds itself on either side of – or as a third party to – disputes over inventions.

A New Standard

Before the AIA, an inventor needed to demonstrate they were the “first to invent” to be awarded a patent. This was often difficult for an inventor to prove because inventions frequently go through numerous revisions and refinements before someone files a patent application with the PTO.  Additionally, teams of inventors may work on the same project, go their separate ways and later develop similar ideas that are indistinguishable by outside experts.  Or, two inventors may have similar ideas but no knowledge of the other inventor.

As a result, the AIA now provides a more effective method for awarding patents that will eliminate the confusion of the patent process. By being the inventor who is first to file, they will be awarded the patent and will not have to demonstrate their idea was first.

Patent Disputes

Another motivation behind the AIA was to minimize frivolous lawsuits and uncertainty regarding patent ownership.  The AIA includes a clause that allows a new patent to be challenged by third parties within nine months of issuance. The two types of reviews are:

Postgrant Review — Here, PTO investigators directly evaluate the facts presented by both sides in post-grant reviews. Unlike most judges, in-house PTO personnel are experts in technical matters, such as engineering, finance, biotechnology and pharmaceutical specialties. So, this new process may significantly reduce the legal fees associated with researching, identifying and substantiating claims.

Inter Partes Review — This review is for prior challenges that allege the invention is not new or is based on prior patents.

The PTO typically issues final decisions within one year. These procedures can allow disputes to be settled more quickly and less expensively than in the past.

For example, suppose a medium-size plastics manufacturer accuses a competitor of stealing a design innovation for an aftermarket automobile component. Before the AIA, the manufacturer would need to determine whether the potential damages awards could justify the substantial — and unpredictable — costs of traditional litigation. Now, the manufacturer may face lower costs by directly asking the PTO to settle the dispute.

That being said, the AIA’s new review procedures do not completely eliminate the need to pursue patent infringement lawsuits. Appeals to both post-grant and inter partes review decisions may be filed in federal court, if necessary.

The Future of Patent Protection

One of a modern manufacturer’s most valuable assets is its intellectual property. The AIA is the most comprehensive rewrite of U.S. intellectual property laws since 1836, and will take years to truly evaluate its effectiveness.  However, proactive manufacturers would be wise to stay on top the latest developments in order to preserve intellectual property values and minimize legal risks and costs.

If you have additional questions about your intellectual property strategy and its importance to your fiscal health, contact Tanya Gierut at [email protected] or call her at 312.670.7444.