Obama Signs Dramatic U.S. Patent Reform Into Law

Today, President Obama signed the America Invents Act into law, formally bringing an end to more than two centuries of American patent law. Once the law takes effect, the "first to invent" standard previously used to determine patent ownership - roughly put, the person who can demonstrate by combination of conception and attempt to put their concept into practice is likely to be declared patent holder in the event of a filing conflict - will be replaced by a version of the "first to file" system favored by every other nation on earth. In a "first to file" system, priority of deciding who owns an invention's patent goes to the first person or entity to file for the patent, regardless of the date of invention.

The chief advantage advanced in favor of a first to file system is that it would reduce the number of patent disputes and enable businesses in the U.S. and abroad to interact on similar legal ground. Detractors of the system contend that it essentially skews the business environment in favor of large corporations, at the expense of individual entrepreneurs and small startup companies. Indeed, when Canada switched to a first to file system in 1989, a later study found a small but measurable adverse effect on smaller inventors.

In addition to the change in the standard of determining patent ownership, the bill also makes some significant changes to the process of filing a patent claim itself. For instance, an entity, such as a corporation, may now file a patent application on behalf of the actual inventor, if said inventor has assigned, or is contractually obliged to assign, the invention rights over to that entity, without requiring that the inventor's execution of the application. This essentially removes the burden of proof from a company for whom the inventor works, and places it on the inventor him or herself.  However, the new law also expands some opposition procedures, including a post-grant review and expanded discovery.

It has been widely suggested that the new law could be contested on constitutional grounds. Article One, Section 8, clause 8 (AKA the 'copyright clause') of the U.S. Constitution empowers congress to pass laws in order "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." A "first to file" system seems to run afoul of the constitutional concept of invention, and the new law is almost certain to be challenged in the courts. 

How the current Supreme Court would rule is a matter of speculation, though the 2003 upholding of the Sonny Bono Copyright Extension Act is probably a clue. Though many of the law's provisions go into effect immediately, the switch from a "first to invent" to a "first to file" system doesn't happen until March 16, 2012. The official White House statement on the new law is available online. A discussion of the portions of the law that go into effect immediately can be found at IP Watch.