Patent Bars under the American Invents Act

by Bill Naifeh - November 20th, 2016. Filed under: Intellectual Property - General, Patents.

Many companies or inventors unknowingly engage in activities which essentially forfeit their right to file for U.S. and international patents.  Patent attorneys call these activities “statutory patent bars” because the patent statute lists several activities which will “bar” an inventor or company from obtaining a patent.

The Good Old Days:

Before 2013, U.S. patent law was relatively friendly towards small inventors and smaller companies – who often take longer to develop inventions due to limited time and resources.  Under the previous regime of U.S. patent law, inventors could theoretically take years to invent and develop their product – and they would still have patent rights.  Additionally, once the invention was developed, inventors had a year to show the invention to different companies, investors, and manufacturers without losing their patent rights (as long as the inventors had good documentation of their inventive process and activities).  This “grace period” gave inventors time to explore the market and talk to investors before spending time and money investing in a patent application.

The rest of the world is not as friendly to small inventors and small companies.  The rest of the world has a first-to-file regime and strictly enforced secrecy requirements.  In other words, the first one to file a patent application takes priority over someone who invented first, but waited to file their patent application.  Furthermore, the rest of the world does not usually have a grace period.  In other words, any non-confidential or non-secret disclosure usually bars one from being able to obtain a patent in the future.

The American Invents Act or (“AIA”) became fully effective in 2013 and generally tried to harmonize U.S. law with the rest of the world.  However, as Congress tends to do, the AIA also tried to keep a few provisions from the previous regime – resulting in a confusing mess.  This post attempts to clarify some points of the more important “bars” of the AIA.

Best Practice:

The best practice is to assume that U.S. law is now harmonized with the rest of the world.  In other words:

(1)       You should file a provisional patent application as soon as practical – even if the product is not fully developed;

(2)       You should never disclose your idea or invention to anyone before you file for a patent application; and

(3)       You should file additional provisional applications as you develop or finalize the product or process.

U.S. law allows the filing of a provisional application.  So, even if your invention is not fully developed, you can supplement your initial provisional filing with additional detail as the invention develops – as long as you file the supplement provisional applications within a year of the first filing.  Again, it is important to file early and often.

Another best practice is to never disclose your invention until you file your provisional application, then only disclose the material that is in the provisional application (or applications).

Practical Realities:

Unfortunately, the best practices for disclosing an invention cannot be followed by all companies – especially small or start-up companies with limited funds.  Even provisional patent applications can be expensive, so often a small company must show or describe the invention to potential investors in order to have the money to properly obtain patent protection.

When a company cannot follow the best practices, companies should negotiate and obtain a confidentiality agreement or non-disclosure agreement (commonly known as a NDA agreement) with the recipient (or receiving party) of the disclosed invention (i.e., whomever the company is about to disclose the invention).

However, there are many potential problems with NDA agreements, some are:

Not all NDA agreements provide adequate protection – especially if the NDA agreement is provided by the receiving party.

Many investors (especially venture capitalists) will not sign NDA agreements.

(For more on NDA agreements see this ebook on NDAs from Amazon.)

As will be explained below, there is still a one year grace period under the AIA, but the new grace period is substantially weakened from the previous law.  Consequently, a company should never rely on the one year grace period and only use the grace period as a last resort to remedy inadvertent disclosures.

Current State of the Law:

The modern patent statute goes back to 1952.  Since 1952, every “barring activity” mentioned in this statute has been heavily litigated and courts have developed a fairly mature and well-defined body of case law interpreting the barring activities and exceptions to the barring activities.

When Congress passed the American Invents Act or the “AIA” which became effective in 2013, the statutory language changed.  Any lawyer will tell you that courts do not always interpret statutory language in a reasonable nor predictable manner.  Thus, we are now in an era where there is a great deal of uncertainty regarding the meaning of the new statute because courts have not yet had an opportunity to interpret the new language.

It is part of the United States Patent and Trademark Office (“USPTO”) job to interpret any new patent statute.  The rest of this memo attempts to explain and simplify the USPTO’s interpretation of the patent bars or patent barring activities of the new AIA statute.  However, the courts are not bound by the USPTO’s interpretation.  So, we do not know if a court will agree with the USPTO.

At the risk of oversimplification, the USPTO believes the AIA statutory bars are:

  • The invention was patented previously anywhere in the world,
  • The invention was previously described in a document available to the public anywhere in the world;
  • The invention was previously in public use and the use was available to the public anywhere in the world;
  • The invention was on sale or offered for sale to the general public anywhere in the world;
  • The invention was otherwise available to the public anywhere in the world.

However, there are exceptions to the above “disclosures.” The exceptions are:

A disclosure does not bar patentability if made 1 year or less before the effective filing date of a claimed invention where:

(A)       the disclosure was made by: (1) the inventor, (2) a joint inventor or (3) by another who obtained the disclosure directly or indirectly from the inventor or a joint inventor; or

(B)       the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the disclosure from the inventor or a joint inventor.

The “exceptions” are designed to give the patent owner the one year grace period for his/her own activities.  This is Congress’s attempt to carry over an old provision in U.S. law which allowed for a one year grace period.

So, if an inventor (or assignee): (1) publishes, (2) uses in a public way, (3) offers to sell or sell the invention to the public, or (4) makes the invention public more than one year before filing a patent, the inventor or assignee loses the ability to file for a patent.

Additionally, the inventor or assignee will be prevented from obtaining a patent if a third party (who has independently invented the invention or a similar invention) files for a patent before the inventor or assignee files for their patent.  In other words, the first person to file is entitled to receive the patent.  This is another major change of the AIA.  Previously, the first person to invent was entitled to receive the patent.

So, theoretically, if an inventor discloses an invention to a third party, the third party cannot file for a patent on the invention.  However, a fourth party, with no contact to the inventor or disclosure, can independently develop the invention and if the fourth party files a patent before the inventor, the fourth party filing will prevent the inventor from obtaining his/her patent.

But what if the third party told the fourth party about the invention?  Theoretically, the fourth party could not obtain patent rights.  However, it may be impossible to prove that the third party told the fourth party of the invention.  This is why one should never rely on the one year grace period.

Thus, one should still file provisional applications as early and often.  If you must disclose the invention before filing provisional application, then make sure you have a strong “disclosure friendly” NDA in place with the receiving party.

Bill Naifeh

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