tricycleHave an invention that you have been meaning to patent? Better get on it. Over the weekend the U.S. patent system underwent a historic change from “first to invent” to “first to file” as part of part of the America Invents Act and went into effect March 16, 2013. Although the act includes a number of small changes, the meat of it is considered the biggest shakeup at the USPTO since 1952.

The move makes the U.S. patent system more in line with standards already in place in the European Union and Canada that already following a first-to-file rule.  The change has some big implications for inventors and entrepreneurs who have a product that they intend to patent.

This is a big deal to have the U.S. patent system under first to file, and has patent attorneys scrambling to get patents filed ASAP for their clients now that the new law has gone into effect. The new system has the potential to put entrepreneurs and small businesses at a substantial disadvantage to larger corporations who can move faster and have more money to file a patent faster.

What Does “First to File” Mean?

The “first to file” versus the previous “first to invent” system, grants the right of a patent for a given invention to the “first person to file a patent application for protection of that invention, regardless of the date of actual invention.” Under the previous system, if an inventor could prove they had reduced the invention to practice first, then they were entitled to the patent – even if someone had filed a patent previously for the idea or invention.

Is “First to File” a Good Change?

It had long been argued that the old system created a lengthier and more expensive review and approval process. Smaller businesses complained that the costly litigation fees were too expensive. Under the new first to file rule it should — theoretically at least — be easier to determine who gets the patent. The U.S. Patent Office simply will look at who filed the patent application first.

There are some that argue that the new change could in fact hurt small businesses more than the previous rule. Under the new patent system, a public disclosure (even in an academic paper or at a scientific conference) of the invention may negate your patent application, despite being the first to file. Furthermore, small businesses have fewer resources (time and money) to put toward patent applications and therefore may miss out if a large corporation files for a patent on something they have been working on, but neglected to make any public disclosure. While the patent office will offer steeper discounts to small businesses, a majority of the costs in filing a patent remain in lawyer fees.

What Should Entrepreneurs Do Now?

Under the new rules legal experts are recommending that investors 1) file early and 2) don’t talk about their inventions to anyone.

  1. Do not disclose your invention – As entrepreneurs we love to talk about our ideas and get feedback from the business community. Moving forward, you will have to be be even more careful than before when doing this. Under the new patent law, public disclosure by a third party prior to the patent application can negate the “first to file” rule.  If the person you discuss your idea with discloses your invention publicly, it could undermine your patent rights  . . . yes, the threshold is really low. 
  2. File early –  Previously, many small business would hold off on filing a patent until they had brought their product to market. Now, these same businesses will need to consider filing patents much earlier in order to protect their ideas. For startups and individual inventors without customers, this could be a financial drain and difficult to afford for an unproven product.

Likely Outcome – More Provisional Patents

With the U.S. patent system under first to file, the mostly likely outcome will be the increase in the use of provisional patents which provides for an early filing date of a patent without a full blown patent and all the fees associated it. For entrepreneurs or bootstrapped businesses, this can present a viable option if their product has not yet come to market and they have not had the opportunity to assess its viability. The same standards of first to file will apply to provisional patents, so it is important to get it early. After a year of holding the provisional patent, the entrepreneurs can then file for a full patent, but with the earlier filing date on record – thus protecting their rights from anyone else. While using provisional patents can be a more cost-effective method, there are still numerous implications to consider that could affect your ability to later file for a full patent on the product. You should at least consult a patent attorney before pursuing this avenue.

 

About Author Matt Faustman


Matt is the co-founder and CEO at UpCounsel. Matt believes in the power of online platforms to change antiquated ways of life and founded UpCounsel to make legal services efficiently accessible. He is responsible for our overall vision and growth of the UpCounsel platform. Before founding UpCounsel, Matt practiced as a startup and business attorney.

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