Legislation to Overhaul US Patent System Signed Into Law

President Obama has signed into law the Leahy-Smith America Invents Act, which represents a major overhaul of the US patent system.  The legislation switches the US from a “first-to-invent” system to a “first-to-file” system.  Under this system, the right to a patent would be granted to the first party to file a patent application for the protection of their invention.

One of the bill’s main goals is to relieve the patent office’s backlog of applications, which has grown considerably in recent years.  The Internet age has created a surge in applications: in 1997, 2.25 patents were pending for every one issued, but by 2008 the rate had nearly tripled, to 6.6 patents pending for every one issued.

Supporters of the reform say that the first-to-file system will bring more clarity to the patent system and reduce the burdensome expenses of patent challenges.  Opponents however believe the system could put smaller businesses and inventors at a disadvantage. Completing and filing patent applications is time-consuming and expensive. While inventors at larger companies often have access to intellectual property legal resources, the costs could hinder the development of startups.  The bill does provide for fee reductions for what it calls “micro-entities” – those with sufficiently low income and fewer than four previous applications.

According to Melanie Martin-Jones, partner with Porter Wright Morris & Arthur LLP, the legislation impacts many of the current provisions for patents.

“A small business or start-up should review its inventions and decide if patent protection is important to the company, or if the invention can be protected as a trade secret,” advises Martin-Jones.  “If a patent is desired, provisional patent applications are still available and a cost-effective means for small businesses and ‘micro entities’ to protect their inventions.”

For the full text of the Act: 
http://thomas.loc.gov/cgi-bin/bdquery/z?d112:HR01249:@@@D&summ2=m&

For the story in the New York Times: 
http://www.nytimes.com/2011/09/09/business/senate-approves-overhaul-of-patent-system.html?_r=3