Executive Summaries » Internal Procedures and Third Party Agreements Under the Aia

Internal Procedures and Third Party Agreements Under the Aia

August 13, 2014

The America Invents Act introduced sweeping changes to patent law in the United States, among them the “first to file” system, which became effective on March 16, 2013. Before that patent law followed a first- to-invent paradigm.

All businesses have agreements with independent contractors, key suppliers, customers, and/or joint ventures. Under first-to-invent, in most business relationships there was no need for a company to obtain an agreement that its partners would not file a patent application in areas related to the work of the company. If partners learned of patentable technology during the relationship, they would have a difficult time establishing that they were the first to invent that technology, even if they filed first.

With the change to first-to-file, the risk that a business partner would claim the company’s invention as its own has risen dramatically. First-to-file has created a “race to the patent office” that even a well-intentioned company with good internal processes may lose. If that should happen, there is a remedy called a derivation proceeding through the Patent Office, but its estimated cost is over $100,000.

A good protection strategy for inventions includes practices such as requiring signed and dated invention disclosure memos from inventors and recording results in notebooks, with witnesses. Signed agreements should prohibit third parties from filing patent applications in your company’s area of work, assign invention rights to the company and prohibit disclosure of information relevant to the company’s inventive activity.

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