New First-To-File-Rules – They’re Good For Small Businesses and How to Prepare So You Can Take Advantage of Them.
A new paper, Priority Rules: An Empirical Exploration of First-to-Invent Versus First-to-File by R. Polk Wagner and David Abrams has come to the conclusion that the switch to a first-to-file system that happened in Canada in 1989 has resulted in a significantly lower number of patents being granted to small inventors.
However, the changes that occurred in Canada in 1989 did not involve the publication rule, which grants patent rights to the first person to publish, so long as the inventor files within a year. Although the paper by Wagner and Abrams provides an interesting insight to a pure first-to-file system, it is not a good comparison to what is going to happen in the U.S. patent system; Canada does not have the self-publication grace period. Inventors in Canada do not have an option to publish to a website to secure their rights. The only option they have is to spend the money to obtain a patent and be fast enough to win the race to the patent office. By not implementing a self-publication exception, Canada set itself up for difficulties, making it hard for small inventors to beat large companies to file first, as evidenced in the paper by Wagner and Abrams.
Although there are many explanations floating around for the phenomenon described in Wagner and Abrams’s article, one acceptable explanation is that small businesses will not have the money to compete with larger businesses under a first-to-file system. Small inventors are unable to file everything and see what pans out; an active decision must be made if the invention is valuable enough to justify the cost of patenting. With the self-publication exception in the America Invents Act, inventors large and small can easily secure their rights for one year, without an expensive race to the patent office, while temporarily prohibiting another company from getting a patent on the same idea. Let’s take a look at the changes from the perspective of the inventor, and see how you can take advantage of the new changes to make the patent system cheaper for your business.
In order to compare what is happening in our patent system, let’s look at the current rule in effect for the next 18 months. Currently the U.S. patent system grants priority to the first person to invent, which is seen as a way to protect the small inventor. If a small inventor can prove that they created the idea first, they get the rights to the patent.
Simple, right? Not so much. What really happens is that the patent enters an interference proceeding to determine who actually invented the invention first. Many times interference proceedings turn on such small details as a scribbling of a date in a notebook , which can make for expensive litigation.
If you are a small business or solo inventor, do you really have the money on hand to fight an expensive litigation battle to prove that your scribbling in your notebook happened before some major lab’s notes? Having been a small business owner, I know I did not have a few extra hundred thousand dollars lying around to fight that battle. I would suspect that in most cases, the inventor must go out and seek some financing. I would not want to be making that sales pitch: “I actually invented this first, but another company is claiming they did, so I need a large chunk of cash to try and prove that I scribbled this date before they scribbled their date.” I am sure it has been done, it just does not seem like a good start.
The new rules under the America Invents Act, taking effect March 16, 2013, are implementing the infamous first-to-file system. By itself, this means that whoever submits their application to the patent office first, gets rights to the patent regardless of who invented the invention first. This by itself would be bad for small inventors, as I am sure any large company would be able to churn out a patent application faster, by either having patent attorneys on retainer or in house counsel, than most small inventors can get the finances required to turn their invention into a patent. It would appear that many smaller companies would have to consider the choice of spending the money to file, instead of having a set budget or in house counsel that they are paying if they file patent applications or not. (For a good discussion on the costs and some suggestions to reduce the cost under the current system see The Cost of Obtaining a Patent in the US)
It’s important to remember that a pure first-to-file system is not the whole story. The exception that will be implemented is equally important, especially for small inventors and small business owners. An inventor who publishes first gets rights to the patent regardless of who files first, so long as the inventor files their application within one year. This exception is great for small inventors, large inventors and everyone. Not only does it promote one of the major goals of the patent system, to increase public knowledge though publications, it also makes it easy for small budget inventors to secure their patent rights.
So how can you secure your patent rights? Well, you have to make a choice; do you plan to pursue a patent in only the U.S., or are you considering an international application? Remember, international applications can get very expensive very quickly: filing fees per country range from a few thousand to over $50,000. This does not count the costs of translations if needed, additional research, and the associated attorneys fees. Additionally, a U.S. patent still prohibits foreign companies from importing a competing product.
If you plan to only pursue a patent in the U.S. in order to secure your rights, it’s simple: publish everything on your company’s web page. Although there is a minimal amount of law regarding whether the Internet can count as a prior art publication, currently the USPTO states that it does. (See 2128 “Printed Publications” as Prior Art [R-5] – 2100 Patentability of the MPEP) Consider starting a research blog or other regular update on what you or your company has invented. Remember though, when you make those posts the clock begins ticking and you only have one year to get your patent application in.
One key aspect right now is that it must be a self-publication, which means that if you publish your idea even one day before your competitor files, you can stop that competitor from getting a patent, while still keeping your rights for up to one year. It is not an open grace period of one year.
Considering some of the benefits, not only does self-publication secure your rights to a future patent, it also prohibits another company from securing a patent on the same idea. The time it takes to post on a website is nothing compared to the costs of obtaining or losing a patent. From the date of your post, you have one year to decide to file an application, so now you have time to consider if filing for an application is a smart investment. For the sake of your patent attorney, please do not wait until two weeks before your patent is due and come into their office expecting a patent. They will be upset, you will not get as good of a patent as you could, and they will probably charge you double. At a minimum, six months would be a good time to get in touch with your patent attorney.
If you plan to obtain patents outside of the U.S., there are numerous things you need to consider. First, you must consider whether to publish or not. Some countries do not have a grace period for publications. Thus, publishing your invention can actually prohibit you from obtaining a patent in those countries. If you are considering filing outside of the U.S., you need to talk to your patent attorney about the countries you are considering filing in and their laws.
One thing you can do, regardless of where you plan to file, is to take advantage of the provisional application. The provisional application is an under-utilized item in our patent system. If you ask different people you will get a different answer as to what it is useful for. But it does do one amazing thing. It secures your patent rights for one year, and generally it can be done much more cheaply and more quickly than filing a full application. It has a much less stringent requirement on what is included and acts like a placeholder to your rights for one year. You can still file an international application within one year of your provisional application and claim your provisional date as the priority date. (For additional considerations and cautions with the provisional see Proceed with Caution with U.S. Provisional Patent Applications)
Another consideration that must be taken into account involves what you are disclosing in your publications. You do not want to publish non-enabling disclosures and count on that securing your rights for that one year, or unintentionally publish an enabling disclosure and not file in time, there by losing your rights. Consider what you are publishing, talk to your patent attorney, and set up a plan for when and what should be included in your publications. Keep an eye on when you have to file and when you need to talk to your patent attorney. Finally, try to not ruin your patent attorney’s day by needing a patent filed in a week; someday that attorney might be me.
If you only plan to file in the United States, and only want to prohibit the sales of competing inventions within the United States, you can get up to two years to make the full commitment to obtaining a patent: publish, file a provisional application, then make a full patent application. If you do not patent and decide to pursue the invention, you have prohibited others from obtaining a patent. If you are working on an international level, take advantage of your provisional application in order to secure your rights quickly while keeping your costs in check.
The new rules make it cheaper and easier to secure your patent rights, a good thing for all inventors. The rules also promote the general distribution of knowledge.