Saturday, October 1, 2011

First to File - Part One

Under the guise of harmonization with international law and modernization of the patent system, the American Invent Act signed into law by the President, creates a serious obstacle to successful innovation by small American entrepreneurs. This month and next I shall review some problems raised by this act.

Loss of Grace Period. Under the previous (first to invent) law, the inventor benefited from the “grace period” defined as the time interval starting on the day that the inventor shows, sells or offers to sell his invention to the public, and ending on the day he files it. During the grace period the inventor retained ownership of the invention as long as he could prove that he diligently worked at developing it and did not abandon it. The grace period provided free protection to the inventor, even before a patent application was filed, and was a deterrent to anyone else who might be tempted to copy the invention. It allowed the inventor to talk about his invention, solicit funding, discuss it with designers and manufacturers, approach distributors, run focus groups, perform small market runs etc.

Under the new first to file system this grace period is eliminated leaving the inventor no protection against theft of his intellectual property. For example, now, if another person, upon observing the invention fraudulently files first, he gets all rights to the invention. To reclaim his rights the inventor will then have to show that the filer has “derived” (stolen, in common language) his intellectual property from him, a very difficult if not impossible task.

Advice: do not make any public disclosure and file early.

Public Disclosure is Dubious Protection. Under the new law, any description of the invention available to the public can be counted as prior art and prevent the invention from being awarded, with one exception designed to protect the inventor. If he discloses his invention to the public, for example in a newspaper, scientific journal, or in a sale, his disclosure is not regarded as prior art against him, as long as he files within one year of the disclosure. If any one else discloses his invention and names him as the original inventor, the same rule applies. He has one year from the earliest disclosure to file.

Therefore, in theory, the new law offers an inexpensive protection to the inventor: his disclosure is regarded as prior art against other inventors: the first person who publically discloses his invention locks out everyone else. However, in practice, such a public disclosure is problematic.

The new law is vague regarding what constitutes a disclosure. Is it a full description of the invention or simply an offer for sale without any description? Does the disclosure include all variations and embodiments conceived by the inventor or is it a single example of an embodiment? Does the disclosure of a single example (a species) protect all possible variations (a genus)? Unfortunately, these questions have no answer at this time and will have to be decided in court.

Can an inventor protect his invention inexpensively by publicly disclosing it? Hardly. Unfortunately, a disclosure automatically eliminates all foreign patent rights. More ominously, early public disclosure carries considerable risk. A potential infringer – locked out of receiving a patent by the disclosure - may decide to publicize the invention himself after the first disclosure (by the inventor), without acknowledging the original inventor. This second disclosure – with or without improvements to the invention by the second discloser - then locks the original inventor out of getting a patent because it is now prior art against him. Everyone is locked out and the original inventor has an uphill battle proving derivation (theft). The potential infringer is then free to practice the invention without fear of an infringement lawsuit.

Advice: do not make any public disclosure and file early.

Intervening Rights is a Loophole. The new law protects trade secret holders from infringement. It grants “Intervening Rights” to those who, before the invention is filed by an inventor, own trade secrets and are secretly practicing the invention. It allows them to continue the practice without being liable for infringement by the inventor. The concept of intervening rights will encourage businesses to hide their inventions from the public. It goes against the spirit of the patenting system, which is to disclose information for the good of everyone. Even worse, this clause will encourage potential infringers, who, upon being informed of an invention by a disclosure from the inventor, begin to practice the invention thereby establishing their “intervening rights” and making it harder for the inventor to prove infringement.

Advice: do not make any public disclosure and file early.

For archived newsletter and a lot of information for the small inventor go to: www.patentsandventures.com.
If you have any question you can contact me at (858)259-2226 or email me at glevy@patentsandventures.com. This newsletter should not be construed as being legal advice. ©2011 by George Levy

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