The Leahy-Smith America Invents Act (“AIA”) will effect the transition of the U.S. from a first-to-invent system to a first-to-file system. In the current system, patents are granted to the first inventor, as determined by the patent examiners in the USPTO. Under the system embodied in the AIA, a patent would be issued to the first to file a patent application, rather than the first inventor.
So will the new system help or hurt individual inventors, start-ups and early stage companies?
The first-to-file test is supposed to reduce patent litigation that surrounded the factual question of who was the first to invent. Patent litigation is expensive, and most independent inventors simply do not have the resources to participate in these proceedings.
On the other hand, certain critics argue that the first-to-file system will favor larger companies, which would be able to afford filing multiple patent applications.
I have considered the new legislation from the perspective of a technology lawyer advising inventors, as well as from the perspective of an inventor—I filed two patent applications covering my own Internet shopping processes. My preliminary guess is that, while the AIA’s reduction in patent fees for certain micro-entity filers may be beneficial for some, the change to first-to-file may not matter much, at least for my businesses.
I already am an advocate of filing as early as possible to mitigate the risk of sharing information about your invention. Open discussions benefit an entrepreneur. You never know whether some conversation or meeting will directly or indirectly lead to something positive, whether a strategic alliance, access to complementary technology, an investment or a new customer. The more open you can be, the greater the likelihood that you will unearth a hidden opportunity. In an informal conversation, you should be careful what you say. Most recipients of information have no legal obligation respecting your confidential information. In a formal setting, you can require a confidentiality agreement (CA) that obligates the recipient of information to keep it confidential and not to use it for any improper purpose. But a CA typically has exceptions and limitations, which may raise risks, particularly in discussions with someone who is in your business. The inventor always fears that someone learning of an invention might race from meeting to engage a development team to start working on products based on his invention.
In the current system, I feel better knowing that I have put my temporal stake in the ground by having filed. At least I can establish that I made the invention not later than the filing date. Moreover, most other countries are first-to-file, so if you want foreign patent rights it already behooves you to file. The incentive to file quickly will increase under the new system.
Of course, a patent application has its limitations. It may turn out that ultimately no patent is issued, or that the claims ultimately granted, if any, may be too narrow to afford meaningful protection. A patent application may help you sleep at night, but you should still be careful about what you disclose to whom and seek a CA where appropriate.
From time to time in this blog I will consider practical issues respecting protection of intellectual property from an entrepreneur’s and tech lawyer’s perspective, leaving substantive patent issues to the patent lawyers, as you should.