by Peter A. Jackman and Lori M. Brandes

Patents are an integral piece of the overall business plan for companies, universities, and other institutions in developing technologies, as they validate the technology, strengthen the patentee’s position to investors, and provide leverage during business transactions such as licensing, mergers, and acquisitions.

On September 16, 2011, the Leahy-Smith America Invents Act (AIA) was signed into law by President Obama, bringing the most significant changes to U.S. patent law since 1952. These changes better harmonize U.S. patent law with the rest of the world and will greatly affect patent protection strategies, particularly in emerging technologies such as the algae production industry. While certain changes took effect immediately, most do not take effect until either 1 year or 18 months after enactment. This article provides a summary of some of the notable changes created by the AIA as well as practical tips to help navigate these changes.

First-to-File System

Currently, inventorship in the U.S. is determined by who first conceived of the invention and reduced it to practice (a “first-to-invent” system). Effective March 16, 2013, the AIA will change the first-to-invent system to a system where the right to a patent will be with the first inventor to file a patent application for protection of the invention (a “first-to-file” system). Because the first inventor to file a patent application will be entitled to the patent, this change will in effect create a race to file applications at the U.S. Patent and Trademark Office (USPTO).

A first-to-file system brings U.S. patent law into accord with the patent law of other countries. However, some have suggested this change may put small businesses, universities, and other institutions in emerging technologies at a disadvantage because these entities may not have the resources to quickly prepare and file the appropriate patent applications for their inventions.

In view of the new first-to-file system, entities with limited resources should consider filing “provisional” patent applications for their inventions as early as possible, and with as complete a description as possible, to establish an early filing date and reduce upfront costs. Supplemental provisional patent applications with additional description for any significant new developments in the technology should also be considered within a year from filing the first provisional application. At the very least, companies should reevaluate their current internal invention disclosure and filing procedures to streamline the process and eliminate bottlenecks.

In view of the importance of patent protection in emerging technologies, it is often desirable to obtain patent protection as quickly as possible. However, due to backlogs at the USPTO, many biotechnology-related patent applications do not receive any substantive action for at least 2 years.

On September 26, 2011, the USPTO began a new prioritized examination program as an initiative from the AIA (also known as “Track I”). Under the Track I program, an application will be advanced out of turn for examination upon payment of a $4,800 petition fee. This fee is reduced by 50% for qualifying small entity applicants (typically an applicant who is an individual inventor, a business having less than 500 employees, or a nonprofit organization or university). The USPTO’s goal is to provide a final disposition of a Track I application within 12 months of prioritized status being granted. Although the upfront costs are greater, small businesses, universities, and other institutions in the emerging algae industry should consider prioritized examination as a means to significantly reduce delays in examination of core technologies, especially in view of the recent termination of the USPTO’s Green Technology Pilot Program.

Prior Art

An inventor is entitled to a patent if the invention is not disclosed in, or is an obvious variant of, public documents available before the invention (the “prior art”). Under current U.S. patent law, the prior art is defined by the date on which the inventor made the invention. As such, an inventor can avoid some prior art by establishing a date of invention before the publication date of the prior art. Effective March 16, 2013, the AIA will eliminate an inventor’s ability to rely on an earlier invention date; however, a one-year grace period is provided for disclosures made by an inventor or one who obtained the disclosed subject matter from the inventor. In addition, a public use or sale of a claimed invention outside the U.S., which is currently excluded from the prior art under patent law, will be considered prior art. The AIA also redefines prior art to include subject matter that is “otherwise available to the public.”

In view of these changes, companies should avoid disclosures to third parties at, for example, conferences and trade shows of inventions for which a patent application has not been filed. Under the AIA, such disclosures may play a much larger role with respect to patentability than under current patent law.

New Processes for Challenging Patents and Applications

In an effort to provide an attractive alternative to costly district court litigation, the AIA established the following new processes for third parties to challenge the validity of patents and applications directly at the USPTO.

Process Purpose Deadline for Filing Request Effective Date
Post-Grant Review Challenge validity of patent on any ground (e.g., lack of utility, novelty, enablement, or written description). Within 9 months after issuance of patent. Sept. 16, 2012
Inter partes Review Challenge validity of patent only for lack of novelty or nonobviousness on basis of a prior patent or printed publication. >9 months after issuance of patent, or after termination of post grant review, whichever is later. Sept. 16, 2012
Derivation Proceeding Challenge of inventorship on basis that an earlier applicant derived the invention from the petitioner and filed an application for that invention without authorization. Within 1 year of publication of a claim of a patent that is the same or substantially the same as the earlier application’s claim to the invention. Mar. 16, 2013
Preissuance Submission Allows third party petitioner to submit prior art references to the USPTO, with a concise explanation of the relevance. Before the earlier of (i) the date of allowance of application, or (ii) the later of 6 months after the date of publication of application or the date of a first rejection of the application by an examiner. Sept. 16, 2012


These new offensive processes may be advantageous for small businesses, universities, and other institutions in emerging algal technologies from a freedom-to-operate perspective because they may be less expensive and result in quicker resolution of patent disputes than conventional patent litigation. Also, in view of these new processes, it may be defensively advantageous to perform a detailed patentability analysis for important in-house inventions so that relevant prior art can be made of record during examination of the application, which may reduce the likelihood that such art would be used successfully in future validity challenges.

Under some circumstances, a party can defend itself against a claim of patent infringement if that party had been commercially using the patented invention. Effective September 16, 2011, the AIA expanded the availability of this prior commercial use defense beyond business method patents to include any “subject matter consisting of a process, or consisting of a machine, manufacture, or composition of matter used in a manufacturing or other commercial process” that would otherwise infringe the patented invention.

Under the AIA, the prior commercial use must have occurred in the U.S. in connection with an internal commercial use or an arm’s length sale or transfer, and must have occurred at least one year before the earlier of (a) the effective filing date of the claimed invention or (b) the date on which the claimed invention was disclosed to the public. The defense is limited to the entity that performed or directed the performance of the commercial use, and is not applicable where the commercial use was “abandoned.”

While it is too early to tell whether this defense will have a significant impact on patent litigation, small businesses, universities, and other institutions in emerging technologies that may wish to utilize this new defense should keep detailed internal records of their commercial development and use of their inventions.

The AIA has fundamentally changed how U.S. applications and patents are examined and challenged. Understanding these changes now and developing a strategic plan prior to implementation of the key AIA provisions is essential for small businesses, universities, and other innovative institutions in the developing algae production industry to maximize their patent positions.

Peter A. Jackman (pjackman@skgf.com) is a Director and Lori M. Brandes (lbrandes@skgf.com) is an Associate with the intellectual property law firm Sterne, Kessler, Goldstein & Fox P.L.L.C. based in Washington, D.C.  The views expressed herein are those of the authors and should not be attributed to former, present, or future clients or any employees of Sterne, Kessler, Goldstein & Fox P.L.L.C.