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The AIA Hurts Small Companies and Individual Inventors

January 5, 2012

The newly enacted patent law amendment, the America Invents Act (AIA),  will go into force on March 16, 2013. One major change of the act is that it eliminates the one year on sale grace period of current 35 U.S.C. 102(b). This elimination hurts smaller inventive entities who likely will not know of the soon to be enacted instant on sale bar, and/or cannot afford to seek patent protection. This change, not the much-feared first to file, will have the biggest impact on those seeking patent protection.

Current 35 U.S.C. 102(b) provides: “A person shall be entitled to a patent unless…(b) the invention was… in public use or on sale in this country, more than one year prior to the date of application for patent in the United States.” Therefore, the invention can be on sale or in public use for up to a year before the filing of the patent application.

Alternatively, section 102(a)(1) of the AIA states that “A person shall be entitled to a patent unless – (1) the claimed invention was … in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.” Thus, as soon as an invention is in public use, on sale, or otherwise available to the public, it is barred from patentability. While an exception is provided in 102(b)(1) for “disclosures” made by the inventor (joint inventor etc…) within a year of filing, the exception applies to disclosures only, and on its face does not cover public use or sale.

The AIA is quite ambiguous and leaves much for courts to sort out. As far as any exceptions are concerned, it must be assumed that the only one year grace period provided is for “disclosures” by the inventor.

The elimination of the on sale grace period will have its greatest negative impact on inventive entities that are not fully versed in patent law. Namely, this includes small companies and individual inventors, who often sell products before seeking patent protection. Of course, this is not advisable even under the present regime, but the selling typically starts before seeking patent advice. Under the new law, this unadvised sale leads to a total forfeiture of patent protection on the invention sold. Forfeiture of patent rights for a small inventive entity can be a fatal blow, particularly when a company with greater distribution and advertising ability copies the invention.

Obviously, larger more savvy companies will not have any problem with the elimination of the on sale bar. Their innovation process is streamlined and any innovation will be sure (barring some sort of mistake) to have patent(s) filed on it well before sale. Therefore, the change should have no impact on more established innovation companies.

In fact, the elimination of the on sale bar should benefit larger companies because they will be even more able to copy ideas from small entities who unknowingly abandoned patentability. Without a patent as a bargaining chip, a small entity will be hard pressed to compete against a large company with large advertising revenues, superior distribution and the like.

The elimination of the on sale grace period fails to promote good patent policy to protect inventors. Instead, it likely squeezes out many small time inventors, favors large companies, and further allows the large companies to capitalize on small timer’s unknowing abandonment their rights for patent protection.

Ed. Note: Not surprisingly, many large inventive companies and particularly manufacturers/distributors lobbied hard for AIA passage. See http://firststreetresearch.files.wordpress.com/2011/11/first-street-report-lobbying-the-america-invents-act.pdf

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One Comment leave one →
  1. Anonymous permalink
    February 10, 2012 7:09 pm

    12-02-10 16:05 – PASTED TO BLOG
    U.S. PATENTS ARE NO MORE THAN A SIMPLE FRAUD AGAINST INDEPENDENT INVENTORS WHO INNOCENTLY BELIEVE THAT THE FRAMERS OF THE U.S. CONSTITUTION MEANT IT WHEN THEY SAID “AUTHORS AND INVENTORS”

    I AM PROOF OF THIS AXIOM, AND MAY ELABORATE FOR YOU IF YOUR WISH.

    DISILLUSIONED AMERICAN CITIZEN

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