The USPTO’s published fee increase proposal is going to have an impact on every patent department in every company. You can find the Patent Office’s discussion and a PDF with the fee increases on the AIA microsite.  While some fees are untouched, and a few are even reduced, many fees are significantly increased.

Some of the major fee increases:

USPTO Patent Fee Change Table

Many fees are increased by a small amount, those are not listed in the above table.  The only noticeable fee reduction is for issue fees.  If an application is publishes, the issue fee will be reduced by 50% compared to an issue fee for a non-published application.  While publication will still cost $300, the savings of $1,080 on the issue fee is not insignificant.  However, this change is not scheduled to start until January 1, 2014, almost a full year after the new fee increases become effective.

The increases in the filing fees, RCEs, and maintenance fees are going to have a large impact on patent budgets.  If you budget for prosecution and maintenance fees separately, and I recommend you do, increase your estimates for both, starting in February of 2013.  Since many companies set their budgets annually, make sure your next budget cycle includes the likely increases in patent costs.

For prosecution costs, if you work with an outside firm most of the cost is attorney fees.  I would estimate that this fee increase will lead to an increase of overall costs by approximately 15% across the board.  Of course, if you are handling prosecution in-house, you should be increasing your budget for PTO fees by at least 60%, given the inflation of filing, RCE, and appeals fees.

More significantly, you will need to increase your budget for maintenance fees.  If your portfolio is evenly distributed in terms of status, then you should increase your overall maintenance fee  budget by ~50%.  If your portfolio is younger, with most of your issued patents at the first or second maintenance fee stage, increase your maintenance fee budget by ~35%.  If your portfolio is older, more heavily weighted toward patents in their final maintenance fee stage, you will need to increase your budget by 60%.  For an evenly distributed portfolio of 100 issued patents, the additional cost would be ~$45,500, raising the annual maintenance fee budget from ~$96,700 to ~$142,200.

While the Patent Office has not finalized these fees, I attended the public hearing and there appeared to be little interest in discussing changing these fees, or acknowledging their likely impact on innovation.

The America Invents Act is going to be changing many aspects of patent prosecution and litigation.  I have divided it into four segments, patent strategy, patent prosecution, post-issue owner’s rights, and post-issue third party rights.  Each change to the patent law will impact one or more areas.

These changes have been partially implemented, in September of last year.  Another large group of changes will be coming in September of this year.  The fee changes proposed by the Patent Office, which appear to be non-negotiable despite the many hearings held, are going to be implemented in February of next year.  I will make a longer post about the fee changes, and their impact later.  And finally, in March of 2013, the First to File or Disclose rules, and the associated other rules, will be coming into play.  As you can see, the September 2012 changes will mostly impact third parties, starting the post-grant opposition, and other changes.

This graph is a summary of the changes, their timing and the segments which they primarily impact.

The Patent Office has published the new rules for instituting a claim of derivation.  Derivation proceedings were part of the shift to First to File, which allows someone who can prove that the first filer stole their idea to obtain the patent, even though they were not first to file.  It effectively replaces interferences, but requires not just first invention, but actual demonstration of theft.

The basics are that the petition must state with peculiarity the basis for the charge of derivation, must be filed under oath, and must be supported by substantial evidence.  However, the new rules appear to have a built-in Catch-22 with respect to publication.

The petition must be “filed within one year of the first publication by the earlier applicant of a claim to the same or substantially the same invention.” However, “derivation is unlikely to be declared even where the Director thinks the standard for instituting a derivation proceeding is met if the petitioner’s claim is not otherwise in condition for allowance.”

The requirement that inventors monitor the Patent Office publications closely is difficult, especially when the published claims may not reflect the (derived) later claims.  But more importantly, the timing can be impossible.

The senior applicant (e.g. the one accused of derivation) may request an early publication.  Currently accelerated publication ensures that a patent application is published as early as possible, and generally 14 weeks after receipt of the request.

This could mean that a junior applicant’s case may not even be filed, much less examined, even under the 18 month first action standard, before the petition to initiate the derivation proceeding has its deadline.  Even if the junior applicant files shortly after the senior applicant, with accelerated publication it’s unlikely that the junior applicant’s case would be in condition for allowance by the time the one year deadline rolls around.

Am I missing something?

I will update this post after the hearing, or potentially during the hearing if network is accessible. I expect that my opinions will not get much traction, since the Patent Office isn’t a big fan of small inventors, but I do intend to express my dislike of the huge increases in RCE fees & Appeal fees.

I would much rather have the fees shifted to either larger patents (e.g. patent size fees increased by a lot more) or shifted to maintenance fees. If you have opinions about the fees, and want to have input, attend a hearing, or write to the Patent Office. Let your voice be heard.

The first challenge to the America Invents Act is against the termination of the private right to enforce false marking. The end to false marking, providing that the only private litigants with a claim are competitors who can show actual harm, became effective immediately after President Obama signed the America Invents Act. It applied to all cases, including those pending. Since then, numerous cases have been dismissed, including some sua sponte.

Ken Brooks had a pending case against Dunlop Manufacturing, in the Northern District of California, San Francisco for false marking, filed back in 2010. In response to Dunlop’s Motion to Dismiss, under the new America Invents Act rules, Mr. Brooks brings a constitutional challenge to the AIA. In his memorandum Mr. Brooks states that he relied upon the statutory right which existed prior to the passage of the AIA, and that this destroyed an existing property interest. He cites to U.S. ex re. Stevens v. State of Vermont Agency of Natural Resources (162 F.3d 195, 2nd Circuit 1998) which held that qui tam plaintiffs have a private property interest in the outcome of such cases.

While the brief is written rather flamboyantly, and likely to appeal to lay readers not the judge, the point is interesting. Mr. Brooks did in fact invest some amount of money in pursuing this case, in the clear expectation of recovery, if he could prove a violation of the false marking act.

Of course, the Supreme Court held unanimously in the United States v. Carlton that retroactive tax laws were constitutional, thus making it unlikely that Brooks would succeed in his claim.

Furthermore, there are at least two cases that held that qui tam actions for false marking are unconstitutional, prior to the passage of the America Invents Act. This may mean that the court would find the act a mere clarification of an existing standard.

The more interesting question is whether, if any challenge is successful, the entire statute would be thrown out, since the America Invents Act does not include a severability clause.

Via Greg Aharonian‘s eponymous newsletter.

This is a handy table of timings and applicability of the various changes in the Act.

I’ve pulled together a list of each change, and categorized it in terms of timing.  I highlighted those items that will likely change the way we practice.

Effective immediately

• Prior commercial use defense (any patent issued on or after date of enactment)
• Venue moved to District Court for Eastern District of Virginia
• Funding agreements of government with non-profit organizations
• Tax strategies are part of the prior art (all patents issued after the effective date)
• Best mode may not be the basis for canceling or holding invalid a patent (all proceedings commenced on or after date)
• Marking statutory damages only available to US, actual damages suits available to competitors.  (to all cases, including those pending)
• Joinder:  Restriction of joint litigation only if it’s the same product (all civil actions commenced after date)
• Prohibition against human organism patents (for all pending or later filed applications)
• +1 day for extension of patent term (Wilmer-Hale Act, for applications for extension of time pending, filed after, or subject to judicial review)
• Inter partes review update (applicable to all patents, regardless of filing date)

Effective one year from the enactment

• Post-grant review (applies to all patents, regardless of filing date)
• Pre-issuance submissions to the patent office (applies to all patent applications)
• Supplemental Examination (applies to all patents)
• Lack of Advice of Counsel cannot be used to prove willfulness
• Business Method patents available for post-grant review (valid for 8 years only)

Effective 18 months from the enactment

• First inventor to file
• Change in grace period (requires inventor disclosure)
• Inventor’s oath and declaration changes, changes allowing entity having sufficient proprietary interest to file without inventor
• Derivation proceedings
• Repeal of statutory invention registration

If you see any mistakes, or items missing, please let me know so I can correct it.