New Patent Rules Change Game, Harmonize U.S. Auto Industry With Rest of World

The America Invents Act, signed into law in 2011, represents the most significant and far-reaching changes to the U.S. patent system in 60 years.

The major difference is the switch from a “first-to-invent” to a “first-to-file” patent application process, which just became effective in mid-March.

Simply put, under the new regulations the first original inventor to file an idea with the U.S Patent and Trademark Office will very likely be awarded the patent rights.

Under the old “first-to-invent” procedure, the Patent Office often used a review process which could grant rights to the first person or party successfully claiming the invention, even if a later inventor was first to actually file the patent application.

So, what does this mean for the auto industry and why should it matter to you?

First of all, under the newly enacted first-to-file rules, non-U.S. patent systems will be recognized with priority in a way they weren’t under first-to-invent.

Now, competitive inventions among different entities will be worldwide, instead of being viewed primarily according to when the invention actually entered the U.S. With almost the entire world playing by the same rules, the process from invention to filing will have to be quick, or else one runs the risk of losing patent rights to another company or individual filing first.

Secondly, the revised regulations will mean a slightly more secure environment for those who try to design around patents, since the USPTO evaluator will know the actual date of filing.

In addition, an issued patent can be challenged in the Patent Office earlier and more often than before. This means that any litigation will be a bit more amorphous, since patent claims can change while the litigation is still pending.

Third, those who establish quick and efficient communication between inventors and patent attorneys and a speedy process from invention to filing stand to gain the most. At the same time, the ability to budget the necessary resources to sustain a constant stream of patent applications will also be critical to remaining competitive.

As some observers already have noted, it stands to reason that higher-margin companies will be more capable of committing the necessary resources to their innovation and patenting efforts than those with lower-margin operations.

Accordingly, lower-margin organizations that don’t invest competitively and quickly in technology could be hurt, as well as those that don’t focus on developing the quick and efficient communications with inventors necessary to obtain patents in a timely manner.

And, clearly, individual inventors also face negative implications unless their efforts are appropriately capitalized and they are efficient and fast to act on their ideas.

Finally, patent defense will be less difficult with increasingly more predictability as to the nature of prior art, or information that is already known by the public.

Also, obtaining a patent will not be a work in progress and the potential scope of patents may be more limited in some cases, as the U.S. patent system becomes more like Europe’s and the rest of the world.

As it always is with new laws and regulations, it’s hard to know what the impact of the America Invents Act will be on real-world situations until the courts start hearing and ruling on actual cases. To be on the safe side, if you haven’t yet taken a close look at your innovation and patent processes, now would be a good time to start.

Jeff Sadowski is a nationally recognized authority on many patent, trademark and copyright issues. He has practiced intellectual property law for more than 30 years and has extensive experience in the automotive industry.