What the America Invents Act means for the small inventor

On Sept. 16 President Obama signed the Leahy-Smith America Invents Act (the "America Invents Act") into law, ushering in the most significant changes to the U.S. patent system in decades.

There are numerous resources that provide summaries of the act's provisions. However, I would like to focus on how the America Invents Act may impact -- both positively and negatively -- small businesses and sole inventors, and offer tips for them to maximize their patent protection.

REWARDING INNOVATION: Gold medals, knighthood and $1M cash prizes: Being a tech pioneer is a real honor

The most relevant and beneficial change to the solo inventor/small company is the creation of a new class of inventors: the "micro entity." Previously, a 50% reduction for certain fees was available for applicants qualifying for small entity status. Under the America Invents Act, micro entities would be eligible for a 75% reduction in fees.

The Leahy-Smith America Invents Act, Section 123, defines a micro entity as an applicant who:

1) Qualifies as a small entity, as defined in regulations issued by the Director.

2) Has not been named as an inventor on more than four previously filed patent applications, other than applications filed in another country, provisional applications under section 111(b), or international applications filed under the treaty defined in section 351(a) for which the basic national fee under section 41(a) was not paid.

3) Did not, in the calendar year preceding the calendar year in which the applicable fee is being paid, have a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding 3 times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census; and

4) Has not assigned, granted, or conveyed, and is not under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the application concerned to an entity that, in the calendar year preceding the calendar year in which the applicable fee is being paid, had a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding 3 times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census (Act).

Additionally, a micro entity shall include an applicant who certifies that:

1) The applicant's employer, from which the applicant obtains the majority of the applicant's income, is an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)); or

2) The applicant has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular applications to such an institution of higher education.

The smallest filers will certainly embrace this new micro entity class and its 75% reduction in patent fees. It is interesting, however, that universities, often with extensive intellectual property budgets and hundreds of applications, also fall under this category of patent filers.

Amid these positive changes, the America Invents Act is likely to put an increased financial burden on inventors and small companies, primarily due to an increase in patent fees. The act calls for a 15% bump in all patent fees, effective 10 days after its enactment.

'First-to-invent' becomes 'first-to-file'

But perhaps the most publicized change arising from this bill is the transition from the current "first-to-invent" system to the "first-to-file" system. This will move the U.S. patent system closer in line with the rest of the world. There will, however, be a limited one-year grace period for filing an application after 1) a public disclosure by the inventor, 2) a public disclosure by an individual who obtained the information from the inventor, or 3) an inventor-derived public disclosure. This first-to-file practice would affect all applications having priority claims within 18 months from the date of enactment.

So what does this mean to the small inventor? Although the first-to-file system brings certainty to the previously hazy realm of priority, opponents to the America Invents Act argue that it only benefits large, deep-pocketed corporations at the detriment of the small inventor.

Obviously, the first-to-file system increases the pressure to file the application as soon as possible. For most small applicants, spending time to raise funds or obtain a licensee now runs the risk of losing priority to an earlier-filed application.

In light of these changes, there are a few tips that inventors and small companies should keep in mind in order to cost-effectively maximize their patent protection:

1) Get familiar with the patent process. Applicants can save a lot of time (and money) with even just some passable knowledge of the patent process. For example, knowing when deadlines are approaching helps you to plan ahead and avoid any unnecessary time extensions and late fees.

2) File a provisional application. A provisional application is a relatively inexpensive way to get an earlier priority date, while simultaneously buying you some time to raise additional funding or license the invention.

3) Minimize the role of your law firm. Of course, most applicants need outside counsel to handle the substantive prosecution of their applications. However, many smaller clients have arrangements in place where they get "first crack" at any incoming matters. Even producing a rough outline for a response to an Office Action, for example, reduces the work for their attorney, which cuts the cost for the applicant.

Applicants should also consider the full scope of their filing strategy. While it will now cost more to obtain a U.S. patent, applicants seeking international patent protection may be able to reduce the cost of foreign filing. Applicants should consider outsourcing certain parts of the process, such as foreign filing or annuities management, to a service provider.

Change is never easy. While there are several provisions in the America Invents Act set out to benefit the small patent applicant, others are likely to cause financial strain. The full impact of the act remains to be seen, but in the meantime, inventors and small companies can employ research and creativity in order to mitigate the impact to their wallets.

Inovia is a foreign filing technology platform provider.

Read more about data center in Network World's Data Center section.

• Bookmark this page
• Share this article
  •  
  • facebook
  • slashdot
  • digg
  • Reddit
  • stumbleupon
  • linkedin
  • twitter
• Got more on this story? Email Computerworld
• Follow Computerworld on twitter

• Share
  Share this article

  •  google+
  • facebookfacebook
  • slashdotslashdot
  • diggdigg
  • RedditReddit
  • stumbleuponstumbleupon
  • linkedinlinkedin
  • twittertwitter
• print
• email
• Bookmark