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Time for a patent shake-up

Hold on to your back teeth – and your ideas. Patent laws in the US are a-changing to align with New Zealand and the rest of the world

American inventors are being dragged into the 21st century with a shake-up of the country’s IP laws.

In June the US House of Representatives passed the America Invents Act, which marks a change in the patent laws that is radical for the US but standard for the rest of the world.

America will move from a ‘first-to-invent’ system to a ‘first-to-file’ system, which is more or less self-explanatory; under the status quo, the original inventor receives patenting rights, while under the new legislation, the first person to file for a patent will be awarded it.It also increases the influence that third parties can have on the patent application and examination processes.

Under the act, a new review procedure enables third parties to challenge a patent within nine months of it being granted. Unlike now, patents can be challenged on any of the criteria allowed under pre-grant examination and written submissions can be tendered straight to the patent office for the examiner to consider.

Speaker John Boehner says the change modernises the patent system to help create private sector jobs and keep America “on the leading edge of innovation”.

Organisations such as the US Chamber of Commerce are also backing the overhaul, but the move has raised concerns that large companies will now have an advantage over individual inventors. Right now, inventors can disclose their inventions to potential investors while remaining confident that it won’t result in others beating them back to the patent office.

But international pressure calls. American patent laws have remained more or less static for decades, despite several attempts at reform. The move brings it into line with the rest of the world, as most other countries (including New Zealand) already operate on the first-to-file principle.

- Esther Goh

PATENTLY, IT'S TIME

There's a gradual awareness that we need a bit of global consistency in IP laws.

I think the world has moved on; everyone else has a first-to-file system. The issue with the US system of first- to-invent for a New Zealand investor is that they can go right through the New Zealand process, and then a third party can pop up and say, “I invented this first”.

It creates a little bit of uncertainty for New Zealanders and Australians.

From a Kiwi perspective, I don’t think it’ll be a big change for us.

One of the arguments against moving to the first-to-file system is that all the costs are front- loaded. The initial costs are right at the start – you file the application before you’ve told anyone about it and before you know whether or not it’s going to be a commercial success.

Under the US system you could sit back for a while, and if your invention looked like it would be a commercial success you could then file an application.

In New Zealand and Australia we tend to file a lot more patent applications initially that don’t go anywhere.

But it’s a system that we’re used to, and I think it’s a good move for us for the US system to align itself with other countries. We have a lot of markets in the US for Kiwi and Australian products. The US is a very important market for a lot of our clients, and they tend to want to protect their investment.

The proposal would also introduce a new procedure for oppositions, which I think will probably improve patent quality. A lot of patent offices these days are criticised for not searching hard enough, for allowing patents through that are bad, that are not new, that are obvious.

So a lot of offices now – this isn’t just the US – are moving to streamline the process where third parties can challenge the validity of those patents. This crowd-sourcing of the examination process will allow industry experts to submit material much more easily.

Matt Adams is a partner in intellectual property law firm AJ Park and an elected council member of the New Zealand Institute of Patent Attorneys.