The Patent Act of 2005 (the "Act"), introduced in the House of Representatives as Bill H.R. 2795 on June 8, 2005, contains changes to the law that, if enacted, would represent the greatest change in U.S. patent law since passage of the Patent Act of 1952. Significant changes proposed in the Patent Act of 2005, as originally drafted, include the following:

1. Changing from a first-to-invent to a first-to-file system for evaluating the priority rights of patent applicants;
2. Overhauling the definition of "prior art" in coordination with the new first-to-file system;
3. Eliminating the "best-mode" requirement for disclosure in patent applications;
4. Authorizing limitations on priority claims in continuation applications;
5. Publishing nearly all utility applications at 18 months;
6. Enabling pre-grant submissions of prior art to the United States Patent and Trademark Office by third parties and creating a new post-grant opposition procedure for challenging issued patents;
7. Limiting inequitable-conduct inquiries and shifting enforcement of duty-of-candor issues to the United States Patent and Trademark Office;
8. Limiting willful-infringement liability; and
9. Reducing the availability of injunctive remedies to a patent holder against an alleged infringer in patent litigation.

The House Subcommittee markup hearing on the Act was originally targeted for June 30, 2005, though the hearing has now twice been postponed, most recently due, in part, to industry opposition to the proposed limitations on the availability of injunctive remedies (#9 in the list, above). The hearing is now expected to be held in early September 2005, though a draft substitute bill¹ was recently introduced by Representative Lamar Smith of Texas (the Chairman of the House Subcommittee on Courts, the Internet, and Intellectual Property). In this substitute draft, items #4 and #9, italicized in the above list, have been removed.

Notably, the substitute draft also added a new provision, stipulating in the final paragraph thereof that claims to the priority of previously filed foreign applications will not be recognized in the United States until and unless the European Patent Office and the Japanese Patent Office issue laws providing for a one-year grace period after a public disclosure to accord with United States practice. This provision signifies an attempt to extract concessions from Europe and Japan, the other two major players in the worldwide patent market to harmonize with this provision of U.S. law as reciprocation for the various changes made to U.S. law in this Act in various other amendments to U.S. practice in recent years to change U.S. patent practice to more closely match that of Europe, Japan and other regions.

Nevertheless, as evolution of this Act remains uncertain, references to the "Act" in the subsequent text refer to the original draft of the Act, unless otherwise indicated.

Most of the above-listed changes are spurred by an effort to further harmonize U.S. patent law with international standards and/or to reduce the uncertainty and potential risk faced by defendants in patent litigation. Most or all of these changes are also intended, at least in part, to simplify and improve the efficiency of patent prosecution and/or patent litigation. Each of these changes, as well as others, are discussed in greater detail below.

Changing from a First-to-Invent to a First-to-File Priority Framework

The first significant change proposed in the Act would amend 35 U.S.C. §102, recognizing all earlier-filed applications that are eventually issued or published as "prior art." This change represents a radical departure from the current priority system, which allows an inventor who files his patent application second to prove that he actually made his invention at an earlier date. Under the new system, referred to as a "first-to-file" system, the first entity to file a patent application would always win a priority contest over another, later applicant, even if the other applicant had actually made the invention at an earlier date. The shift to a first-to-file system, accordingly, would enhance the importance of obtaining an early filing date and, in many cases, would increase the defensive value of filing a provisional patent application as early as possible.

Two principal reasons for moving to a first-to-file system are to further harmonize U.S. patent practice with that of the rest of the international community and also to simplify the priority determination and reduce legal costs related to the resolution of priority issues. Specifically, the present system for contesting priority rights of competing inventive entities (i.e., the patent interference system) will be eliminated, with a more limited procedure for "inventor's rights contests" introduced. The first-to-file framework is expected to level the field for smaller entities who often cannot afford a full patent interference proceeding, which typically costs an applicant hundreds of thousands of dollars. The first-to-file framework also is intended to explicitly reconcile the legal framework for evaluating priority with the practical reality of the present first-to-invent framework, wherein only a small percentage of applicants who enter a patent interference without having the earliest effective filing date have been able to prevail in the interference by establishing an earlier date of invention.

Eliminating the Best-Mode Requirement

Another major revision to U.S. patent law, provided in section 4 of the Act, is the elimination of the best-mode requirement from 35 U.S.C. §112. This amendment would also further harmonize U.S. patent law with the law in Europe and other jurisdictions, though the impact of this change would potentially be profound. In particular, though the best-mode requirement may sometimes only require marginal disclosure beyond what is otherwise mandated by the written description and enablement requirements of 35 U.S.C. §112, the best-mode requirement generally requires the disclosure of particularly favored parameters or features relating to the claimed invention, which an applicant may otherwise wish to maintain trade secrets.

With the elimination of the best-mode requirement, an applicant would enjoy greater latitude in terms of being able to patent the general features of an invention, while still maintaining the confidentiality of particular aspects of the invention. The applicant can accordingly rely upon trade-secret (rather than patent) law to protect those aspects so as to preserve some level of secrecy without jeopardizing the validity of the related patent. By reducing the extent to