A Brief Look at the American Inventors Protection Act of 1999

Summer/Fall 1999

On August 4, 1999, the House of Representatives passed the American Inventors Protection Act of 1999 (H.R. 1907).  This Bill may have an impact on how inventors protect their inventions through the patent application process.  The Bill now awaits action by the Senate.  The following is an outline of several of the sections present in the Bill, as passed:

1. Title I (Inventor's Rights Act)

This section applies to companies providing invention development services.  People may recognize these businesses as the ones who advertise to inventors and claim that for a “modest” fee they will assist the inventor in successfully developing their invention and bringing it to market with the implied understanding that the inventor could well become rich with the company’s assistance.  The Bill requires that such companies provide a standard contract and disclosure statement from the entity promoting the invention.  Included within this section is the following provision:

The disclosure statement must provide a written disclosure of the percentage of their client’s whose earnings from their inventions has exceeded the money paid to the promotion company.  Failure to provide such a disclosure to a potential client may result in a voiding of the contract as well as monetary damages.

This language clearly intends to penalize companies from misleading potential clients from believing that a “modest” investment with this company will always return greater value than initially paid.  Accordingly, although this provision may not directly address all of the seemingly fraudulent and misleading activities perpetrated by some of these invention development companies or directly address the theft of intellectual property by unscrupulous individuals, this section does provide some protection to the individual inventor and small businesses with regard to invention development companies.

2. Title III (Patent Term Guarantee Act)

This provision provides limited circumstances under which the term of a U.S. patent may be extended beyond the standard patent term.  Currently, a utility patent resulting from a patent application filed on or after June 8, 1995, has a term of 20 years from the date of filing with the U.S. Patent and Trademark Office, and a design patent has a term of 14 years from the date of issuance of the patent.  Under this provision, a patent term may receive daily extensions under the following conditions:

        (1)    If the initial examination of the pending application exceeds 14 months from the date of filing;
        (2)    If following a first office action, the Examiner exceeds 4 months in responding to any response or amendment filed by the applicant; or
        (3)    If publication of the patent exceeds 4 months from the payment and submission of the Issue Fee.

Accordingly, should this provision be enacted, inventors and patent applicants may finally achieve some of the benefits of the 20 year patent term envisioned with the implementing provisions of the GATT Treaty.

3. Title IV (Publication of Foreign Filed Applications Act)

This provision directs the U.S. Patent and Trademark Office to publish pending U.S. patent application 18 months after their effective filing date.  The current policy of the U.S. Patent and Trademark Office is that all U.S. patent applications are confidential and not published until such time as they may be issued.  Generally, this results in abandoned applications being permanently sealed and beyond public review or examination.  This resulted in eliminating a major source of prior art which may directly affect the validity of future patents and limit the information in the public domain.  Under this provision, the U.S. Patent and Trademark Office still may not publish an application if the applicant requests that the pending application not be published and states in the request that the application has not been filed in another country or under an international agreement that requires publication of pending patent applications, such as the Patent Cooperation Treaty (PCT).  However, applicants should take note that if an applicant files for patent protection in the United States and later files the same application abroad or under the PCT, the applicant is required to notify the U.S. Patent and Trademark Office within 45 days of such a filing, or their patent application in the United States will become abandoned.  Therefore, this section only provides limited publication of pending patent applications, but provides an added filing and notification requirement on applicants with respect to pending patent applications.  Accordingly, patent applicants should take notice of this potential new law and its requirements or risk abandonment of their rights.

4. Title V (Patent Litigation Reduction Act)

This section provides that a third party filing a request for reexamination will now have the right to file a written response at each stage of the reexamination proceeding.  Current U.S. law provides that a third party filing a request for reexamination may only reply to a response by the patent owner to a notice from the U.S. Patent and Trademark Office informing the patent owner that a Reexamination has been instituted.  Therefore, if the patent owner elects not to file such a response and awaits an official action by the U.S. Patent and Trademark Office before responding, the third party will have lost their opportunity to further participate in the process.

In addition, the new provision also provides that a third party requester can appeal or participate in the patent owner’s appeal of the reexamination decision to the U.S. Court of Appeals for the Federal Circuit.  Accordingly, under this provision any third party will have the right to submit “prior art” and further legal arguments for consideration at all stages of a reexamination proceeding and may delay an action by a patent owner for infringement of the patent by further extending the litigation process through the reexamination procedure by as much as years.