Patent Reform

The Leahy-Smith America Invents Act (AIA), enacted September 16, 2011, was the most significant overhaul of U.S. patent law since 1952. Major changes: (1) First-inventor-to-file (FITF): replaced the first-to-invent priority system. For applications with a filing date on or after March 16, 2013, priority goes to the first inventor to file — not the first to conceive the invention. A one-year grace period under § 102(b)(1) still exists for the inventor's own disclosures. (2) IPR and PGR: replaced inter partes reexamination with faster, more powerful post-grant challenge mechanisms at the newly created Patent Trial and Appeal Board (PTAB). IPR allows challenges on prior art (§§ 102/103) grounds within 1 year of service of complaint. PGR allows challenges on any § 282(b) ground within 9 months of grant. (3) CBM review: transitional program (now expired) for financial-service patents. (4) Micro-entity fees: USPTO fees reduced to 20% for micro-entities (individual inventors/small entities with qualifying income and application history). (5) Prior commercial use defense: expanded to all patent types (not just business methods). (6) False marking: eliminated third-party qui tam actions for false patent marking. (7) Supplemental examination: allows patent holders to submit information to USPTO post-grant to cure potential inequitable conduct. (8) Interference proceedings replaced with derivation proceedings (to address the narrower case where one inventor derived the invention from another). (9) Satellite offices: USPTO opened regional offices (Detroit, Denver, San Jose, Dallas) to reduce application backlog.

The PREVAIL Act (Promoting and Respecting Economically Vital American Innovation Leadership Act) is proposed legislation introduced in Congress in 2023 (and reintroduced in subsequent sessions) that would significantly reform PTAB proceedings — primarily inter partes review (IPR) and post-grant review (PGR). As of 2026, it has not been enacted. Key proposed changes: (1) Raised institution standard: IPR petitions would be instituted only if the petitioner can show it is 'more likely than not' that at least one claim is unpatentable — currently the standard is 'reasonable likelihood,' which is lower. Some proposals would raise the bar further to 'clear and convincing evidence,' matching the burden in district court litigation. (2) Standing requirement: petitioners would need to show they are accused of or at risk of infringement of the patent they seek to challenge — currently, anyone can file an IPR without being in litigation or at imminent risk of suit. (3) Serial petition limits: limits on the number of petitions that a petitioner or its privies can file against the same patent — currently, petitioners can file multiple petitions (e.g., one right-sized petition plus reserve petitions), causing multiple rounds of review of the same patent. (4) Patent owner amendment as of right: patent owners would have a right to amend claims during IPR — currently, amendments are rarely granted by PTAB. (5) § 101 eligibility grounds: patent owners could raise § 101 eligibility as an affirmative defense in PTAB (currently not available). Proponents argue: PTAB is biased toward invalidity, lacks due process protections of district court, and threatens pharma/biotech innovation. Opponents argue: PTAB is the most efficient check on invalid patents and eliminating it would empower NPEs.

35 U.S.C. § 101 defines patent-eligible subject matter: 'any new and useful process, machine, manufacture, or composition of matter.' The Supreme Court has recognized three categories of ineligible subject matter: laws of nature, natural phenomena, and abstract ideas. The current test for § 101 (the Alice/Mayo framework) applies two steps: Step 1 — does the claim direct to a judicially-excepted subject matter (law of nature, natural phenomenon, abstract idea)? Step 2 — if so, does the claim contain an 'inventive concept' (something 'significantly more' than the exception itself, not conventional or routine) that transforms the claim into patent-eligible subject matter? Alice Corp. v. CLS Bank International (S.Ct. 2014) applied this framework to invalidate a software patent directed to computerized escrow and intermediated settlement — finding the claims were directed to an abstract idea (using a third party intermediary to mitigate settlement risk) implemented on a generic computer with conventional steps. Since Alice, federal courts and the USPTO have used § 101 to invalidate thousands of software patents and many biotech/diagnostic patents (particularly method-of-detection claims based on naturally occurring correlations). The reform debate: (1) Critics of Alice/Mayo say the test is unpredictable, has chilled software innovation and diagnostic testing, and is a judicially created doctrine unsupported by the statutory text of § 101. (2) Defenders say Alice/Mayo is necessary to prevent monopolization of abstract mathematical relationships and natural correlations through clever claiming. (3) The Patent Eligibility Restoration Act (PERA), introduced multiple times in Congress, would eliminate the judicially created exceptions, require evaluating the claim as a whole (not parsing claim elements individually), and specify that eligibility is distinct from novelty and non-obviousness. Not enacted as of 2026.

TC Heartland LLC v. Kraft Foods Group Brands LLC, 581 U.S. 258 (2017), is a Supreme Court decision that fundamentally changed where patent cases can be filed. Before TC Heartland: the Federal Circuit had interpreted the general venue statute (28 U.S.C. § 1391) to apply to patent cases, meaning patent holders could sue defendants virtually anywhere the defendant did business. This led to massive concentration of patent litigation in the Eastern District of Texas (E.D. Tex.) — which at its peak in 2015 handled over 40% of all U.S. patent cases. The district had plaintiff-friendly procedures, local patent rules, fast dockets, and historically high plaintiff success rates. TC Heartland holding: the patent venue statute (28 U.S.C. § 1400(b)) is the exclusive venue statute for patent cases and is NOT supplemented by § 1391. Under § 1400(b), patent suits can only be brought (1) where the defendant is incorporated (for corporations: state of incorporation), or (2) where the defendant has a regular and established place of business AND infringement occurred there. For domestic corporations incorporated in Delaware, this means only Delaware. Impact: patent case distribution shifted dramatically after TC Heartland. Delaware and the Western District of Texas (W.D. Tex., particularly Judge Albright's Waco division, which became a new hot spot through 2021–2022) gained share. The Federal Circuit subsequently issued orders that restricted some aspects of W.D. Tex. practice. As of 2026, D. Del. and W.D. Tex. remain the two most common venues for patent litigation. For companies incorporated in Delaware (which is most large corporations), TC Heartland effectively means D. Del. is the primary available venue for domestic infringement claims.

As of 2026, the U.S. patent system reflects the AIA structure enacted in 2011 with no comprehensive legislative reform since. Status of major pending items: (1) Section 101 eligibility: the Alice/Mayo framework remains the law; PERA (Patent Eligibility Restoration Act) has been introduced in multiple congressional sessions but not enacted. The USPTO 2019 guidance attempts to rationalize the standard for examiners but courts are not bound by it. District courts and the Federal Circuit continue to apply Alice/Mayo with some variation. (2) PTAB reform: the PREVAIL Act has been introduced but not enacted; PTAB continues to operate under AIA standards. PTAB director discretionary denial practices have evolved — the Supreme Court ruled in Arthrex v. Smith & Nephew (2021) that PTAB APJs were unconstitutionally appointed, leading to a Director Review mechanism. (3) SEP/FRAND: the USPTO SEP NPRM was withdrawn; no comprehensive domestic SEP legislation. EU SEP regulation was substantially revised and delayed. Global FRAND rate-setting by UK courts under Unwired Planet continues. (4) Pharmaceutical patents: the Inflation Reduction Act (2022) established Medicare drug price negotiation — the most significant drug policy change — but did not directly modify patent law. FTC continues investigating pharmaceutical patent thickets. (5) AI inventorship: the Federal Circuit held in Thaler v. Vidal (2022) that AI systems cannot be named inventors; legislative proposals to address AI-assisted inventorship have been discussed but not enacted. (6) Patent term: no changes to the 20-year-from-filing term. Bottom line for patent strategy in 2026: file early (FITF), monitor PTAB developments for IPR strategy, evaluate § 101 eligibility risk for software and biotech claims, and track SEP developments in relevant standards bodies.