How Entrepreneurs Can Take Advantage of the “First-Inventor-to-File” Patent System

In September 2011, President Obama signed the America Invents Act (AIA) into law. Under an important provisions of the AIA, the longstanding first-to-invent (FTI) patent system was replaced with what is often called a first-inventor-to-file (FIF) system for patent applications with an effective filing date of 16 March 2013 or later.

Here are six things that entrepreneurs can do to take advantage of the new FIF patent system.

1 – Understand how first-inventor-to-file works.

Contrary to what is implied in many articles about the AIA, FIF does not mean that the winner of a race to the patent office will be guaranteed to get the patent. Under the new U.S. FIF system, rights to a U.S. patent will involve the interplay between the dates of filings with the U.S. Patent and Trademark Office (USPTO) and the dates of any pre-filing public disclosures of the invention. In fact, a company that files a patent application after a competitor will sometimes be able to prevail in obtaining the corresponding U.S. patent if it publicly disclosed the invention before a disclosure or filing by the competitor. The company’s application must be filed within one year of the disclosure. It is best to consult a patent attorney for the finer points of the FIF system.

While pre-filing public disclosures can play an important role in impeding the ability of competitors to later patent the same or similar invention, those same disclosures can also foreclose the company’s own ability to obtain a patent in jurisdictions outside the US. So, care should be taken. Entrepreneurs should educate themselves and their employees regarding these tradeoffs. This can ensure that patent filings, product releases, discussions with potential partners and customers, and presentations at trade shows are all conducted with a full awareness of their intellectual property implications.

2 – Proactively form a patent strategy.

Critics of FIF argue that it favors larger companies over small entrepreneurs who may be unfamiliar with the patent system. But this logic confuses two issues that do not need to be correlated: company size and the ability to engage with the patent system.

Entrepreneurs owe it to themselves and to any investors to proactively formulate a strategy for protecting the intellectual property (IP). This will typically include putting in place mechanisms to identify and document inventions, and engaging the services of a good patent attorney to help navigate the patent application process. Trademarks, copyrights and implementing procedures to keep trade secrets may also be involved in the IP.

3 – Understand when FIF applies.

The FIF rules are used for applications with an effective filing date of 16 March 2013 or later. The key word here is “effective.” Under certain conditions, patent applications filed well after March 2013 will nonetheless be subject to the old FTI rules. This creates some interesting strategic opportunities. Startup companies could particularly benefit from the right opportunity – if it is available. Significant strategic value in the applications may inure to the benefit of an acquirer or purchaser of the patent rights that pre-date the AIA. For example, a company could use the earlier priority dates over their competition by purchasing patent rights from a start-up company with early priority dates.

4 – Be agile.

Large companies have more money, but they also have more people creating inventions, and often have complex organizational structures that can impede internal information flow. This can make it more challenging to execute an effective patent strategy.

In contrast, small companies can quickly spot patentable innovations and act to make sure the inventions are protected. In some respects, the FIF system favors companies that are more agile with their patent staff and better able to allocate resources to their most promising inventions.

5 – Consider the use of provisional applications.

Provisional applications were originally introduced in 1995 and left in place by the AIA. Provisional applications can be a cost-effective way of obtaining a priority date without incurring some of the expenses of preparing and filing a non-provisional application. Provisional applications can be used to buy 12 months to see how the market plays out and to give time to find funding for products and services. Provisional applications provide different advantages over a public disclosures, but involve their own obligations and risks. Once a provisional application is filed, the corresponding non-provisional application needs to be filed within one year.

Additionally, a provisional application that fails to include a sufficiently detailed written description and drawings will not be accorded the early filing date, the purpose for making the patent filing in the first place.

6 – Take advantage of the micro entity discount.

Generally, in a startup company where every dollar counts, the costs associated with patent applications can be budget breaking. However, the AIA introduced a new micro entity status that gives companies a further discount on most patent fees. Companies should still employ a patent attorney to prepare applications and to respond to the patent office.