Risk & Compliance

New Patent Law Highlights the Need for Speed

The new patent reform law has sparked mixed reactions, with large companies generally in favor and small businesses opposed.
Marielle SegarraOctober 1, 2011

After years of discussion and debate, patent reform is now imminent. The America Invents Act passed Congress and was signed by President Obama last month. Among a number of notable changes are a shift from a first-to-invent to a first-to-file system, and a provision that allows businesses to pay a fee to speed up their applications. Advocates say the reforms will help streamline the patent system, which currently has a backlog of nearly 700,000 applications, but opponents say the law favors large businesses that have the resources to race to the patent office and pay the expediting fee.

The first-to-file system gives priority to the first person or company to file for a given patent, making it far more difficult for second filers to claim, as they could previously, that they deserve the patent because they were the first to invent the new product or process. The new law allows second filers to dispute a patent decision only if they can prove that the company awarded the patent derived the idea from them. Such proceedings will probably not be common, says Robert Gerstein, a partner at Marshall, Gerstein & Borun LLP. “It’s not just two people saying, ‘Hey, I invented this’; it’s one saying, ‘You copied that idea from me,’” Gerstein says. “Those cases are very, very rare.”

Large companies say the shift to a first-to-file system will harmonize the U.S. with the rest of the world, making filing easier for companies that operate in foreign countries. But small companies have argued that under the new system they have little defense against large businesses that beat them to the patent office. Others say that switching to a first-to-file system will make little difference to small companies, which often cannot afford the legal fees that come with fighting for the title of first-to-invent anyway.

Under the new law, companies may file less-expensive provisional applications that essentially save their place in line for up to a year before they submit a full patent application. But the provisional application is not a magic pill, says Yar Chaikovsky, partner at McDermott Will & Emery. If companies do not spend enough time (and money) producing detailed provisional documents, he says, their subsequent, more comprehensive applications may be so far removed from their initial proposals that they may lose their rights to the earlier filing date.

Understanding Which ERP Modules Your Business Needs – And When