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It’s taken over 60 years, but change has finally come to American patent law. While the effects of new legislation governing patents is unclear, what is certain is that the landscape for that burgeoning area of law is about to be transformed in several ways.

For example, when the final phase of the America Invents Act (AIA) went into effect March 16, 2013, American history dating back to 1790 was permanently altered. That’s because a new “first to file” law granting a patent to the first person to file for it became the law of the land. Prior to March 16, the United States Patent and Trademark Office granted patent protection to the first person who created the invention, regardless of when they filed for a patent.

And when the SHIELD Act (Saving High-Tech Innovators from Egregious Legal Disputes Act of 2012) was introduced into Congress this past February, it became clear the House had set its collective sights on combating patent trolls.

Patent trolls are entities that purchase broad patents then sue companies alleging infringement. What often happens is the inventor/defendant settles the lawsuit just to save themselves the time and expense of defending against it. That’s the exact scenario the SHIELD Act is designed to prevent by injecting a “loser pays” provision into patent litigation.

Patent trolls have become so prevalent and troublesome they have even garnered attention President Barack Obama, who has said that despite the SHIELD Act, more needs to be done to combat them.

Big bucks

Experts disagree about whether the SHIELD Act’s “loser pays” provision will actually deter patent trolls.  According to Joe Dreitler, an attorney in Columbus, Ohio specializing in intellectual property (IP) law, the logic behind this aspect of the legislation is flawed.

Why? Because it’s likely far less expensive for a defendant to settle a case early in its inception rather than slogging through the bureaucratic legal system in the hopes of prevailing and subsequently recovering legal fees, says Dreitler, namesake of Dreitler True, LLC. “It is expensive, time consuming and very difficult to predict the outcome (of a case), with any reasonable degree of certainty. One of the main problems in patent litigation today is many lawsuits are not brought by competitors against one another, but by patent trolls, companies created to acquire patents and sue multiple parties” for alleged violations, he says.

Meanwhile, patent trolling is big business. Studies have estimated that American companies and inventors paid approximately $29 billion to patent trolls in 2011 alone.

First to file wins the race

While the AIA’s ‘First to File’ provision brings U.S. patent laws in line with the rest of the world, where ‘First to File’ prevails, it is a complete reversal of American patent law.

The switch “will cause a major shift in how U.S. patent attorneys think,” because now they might rush to patent a client’s inventions, maybe even before a product is ready, says J.K. “Sandy” Mueller, an IP attorney in Columbus with over 40 years of experience.

Mueller also predicts this change will “add extra stress (on inventors) to get funding for patent filings, especially in highly competitive technologies.” Small companies and “garage inventors” will also suffer, since they generally don’t have the funding for patent protection.

Adding insult to injury, the prices associated with patent protection also increased March 16.

In light of the switch to a “File First” system, U.S. patents will be governed by two sets of laws, the one in effect prior to March 16 and the new legislation that went into effect that day. The two-tiered system will rule for 20 years.

Judicially speaking

While the majority of the SHIELD Act is aimed at how patents are issued, it also implements changes in litigating patent cases. A tightened offering of venues for pursuing patent infringement matters also went into effect.

According to Bob Kahrl, Distinguished Professor  in Residence and Senior Lecturer at the University of Akron School of Law, 14 pilot districts “where judges commit to learn patent cases so they can learn the nuances of (patent) litigation” were established.

Kahrl predicts it will take two years “to see how patent litigation caseload will shift between districts.”

Wreaking havoc

Another complication with the most recently implemented legislation is that the U.S. Patent Office (USPTO) only published the final wording of the patent office rules February 15.

According to Mueller, the short time between the rule’s publication and subsequent implementation is unprecedented. The USPTO usually publishes laws well advance of implementation to allow attorneys “time to conduct seminars about how to” put the new law to practical use. This time, however, that didn’t happen.

In early March, Mueller attended a continuing legal education course sponsored by the University of Akron Law School designed to teach IP lawyers about implementing the new law. And he wasn’t alone. Three hundred other lawyers from across the country were there, too.

“A lot of us are scrambling,” he says.

Correction: The final section of the America Invents Act (AIA) went into effect March 16, 2013. A previous version of this story incorrectly indicated that the SHIELD Act had take effect on that date. The final section of the AIA is known for its promulgation of “First to File,” meaning the first person to seek patent protection on an invention is granted the patent. The SHIELD Act was re-introduced to the U.S. House of Representatives this past February and is squarely aimed at deterring people from patent trolling, a practice whereby an entity purchases patents then sues others for patent infringement. One of the main provisions of the SHIELD Act calls for the loser of such litigation to pay the attorney fees of the opposing party. The Progressive Law Practice regrets the error.

Tami Kamin Meyer is a Columbus attorney and freelance writer.

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Last modified on Sunday, 19 May 2013
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