Prior User Rights Study Report to Congress - America Invents Act

EXECUTIVE SUMMARYThe Leahy-Smith America Invents Act (AIA), signed into law on September 16, 2011, representsthe most substantial overhaul of U.S. patent law in generations. Among the fundamental changes theAIA makes to the U.S. patent system—and a central feature of the new law—is the transition from afirst-to-invent to a first-to-file system of awarding patents.The AIA also expands the “prior user rights” defense to infringement and broadens the classes ofpatents that are eligible for the new limited prior user rights defense. Appropriate delimited prior userrights protect third parties who can demonstrate that they were commercially using the an invention for atleast one year prior to the filing date of a patent application relative to such invention. U.S. law alreadyprovided a prior user rights defense that was limited to patents directed to methods of conductingbusiness. The AIA, by contrast, extends the prior user rights defense to patents covering all technologies,not just business methods. At the same time, the AIA includes several limitations and exceptions to theprior user rights defense, including a prohibition against license, assignment or transfer of the defense,other than in connection with an assignment or transfer of the entire business to which the defense relates;the defense is geographically limited to cover only those sites where the invention was used before thecritical date; and there is an explicit exception to the defense for patents owned by or assigned touniversities or affiliated technology transfer organizations. These limitations and exceptions to the prioruser rights defense address the equitable interests of patentees, universities and affiliated organizations.In response to concerns expressed during the legislative debate about the impact of an expandedprior user rights defense on the patent system, and innovation more generally, Congress mandated theUnited States Patent and Trademark Office (USPTO) to produce a report detailing its findings andrecommendations on the operation of prior user rights in the industrialized world. Specifically, Congressdirected the USPTO to examine and report on the following issues: 1(A)(B)(C)A comparison between patent laws of the United States and the laws of otherindustrialized countries, including members of the European Union and Japan,Canada, and Australia.An analysis of the effect of prior user rights on innovation rates in the selectedcountries.An analysis of the correlation, if any, between prior user rights and start-upenterprises and the ability to attract venture capital to start new companies.1 Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 3(m), 125 Stat. 284, 292 (2011).1