The second phase of the America Invents Act (AIA) takes effect this week and IP practitioners are predicting that it could change the face of patent litigation, according to a recent article in Corporate Counsel.
Signed into law on September 16, 2011 by President Obama, the historic legislation is the most significant change to the US patent system in half a century. Most notably, the third and final phase of the AIA, which takes effect next March, will convert the US patent system from a “first-to-invent” to a first-inventor-to-file” system.
Other important changes, as outlined in a policy brief prepared by The Brookings Institution include:
- A new proceeding in the USPTO for third-party challenges to the validity of a recently issued patent
- An expanded mechanism for a third party to provide information to the PTO that could be used to narrow or eliminate claims in a pending patent application being prosecuted by a commercial rival
- The introduction of a new, broadly applicable patent infringement defense based on prior commercial use
The third party inter partes review – the new trial proceeding conducted at the Patent Trial and Appeal Board – has the potential to be a powerful tool reports Corporate Counsel because “the review takes place in front of judges rather than examiners, and there is a statutory time limit placed on the process: a ruling must be made within one year from the time the patent was granted.” Matt Kreeger, co-chair of the patent interferences practice group at Morrison & Foerster, said:
“This is a real, viable option that could change the face of patent litigation. . . . The review can run parallel to litigation filed in a district court, and the court will stay the case while the patent is under review at the PTO.”
While it is highly likely that the AIA will impact the ways that patents are filed, challenged and litigated in the coming years, the exact effect that such changes will have on IP activity in the US is currently unknown. However, what is clear now is that patent litigation is still on the uptick according to data from PwC and the Hildebrandt Institute’s Peer Monitor program.
According to the latest Patent Litigation Study from PwC, the number of patent actions in 2011 increased 22% over the number of filings in 2010, reaching 4,015 – the highest number of annual filings on record. At the same time, the number of patents granted has also grown steadily to 244,430 in 2011, increasing at a CAGR of 4.5% since 1991, the trend closely paralleling patent cases filed, with a CAGR of 6.4%.
Peer Monitor’s data tells a similar story. While the legal industry is still experiencing weak demand overall, Peer Monitor’s 2011 report revealed that demand for IP litigation was up 6.2% last year. While demand has remained sluggish this year, the Peer Monitor Economic Index for the second quarter reports that IP litigation work was up 0.2%, albeit only a slight uptick, but still one of the few bright spots in litigation.
While it will take some time to understand the full impact of the AIA, in-house counsel in particular,should take note of the new rules. As Brookings notes: “Companies that overhaul their intellectual property strategies in light of the provisions of the AIA will be in a better position to maximize the value of their patent portfolios and to strengthen their options in patent litigation matters.”
Posted by Marianne Purzycki