The United States is the only country in the world which still awards patents under a “first-to-invent,” rather than under a “first-to-file” system. [1] If identical bills S.1145 [2] and H.R.1908, [3] both titled “Patent Reform Act of 2007,” are passed into law, the “first-to-invent” patent system will officially become extinct. One of the main provisions of the Patent Reform Act of 2007 modifies 35 U.S.C §102 and converts the United States patent regime to a “first-to-file” system. [4] Opponents of the “first-to-file” system argue that “[t]he first to invent principle is the jewel in the crown of [the U.S.] system. It is based on ultimate and unequivocal fairness.” [5] While proponents of the change argue instead that “the U.S. first-to-invent system[] ‘yields results that are inherently unstable and unpredictable.’" [6]
           This article will provide insight into the “first-to-invent” versus “first-to-file” debate by first summarizing the key components of the current U.S. patent system and the proposed legislative changes, and then analyzing the most common arguments for and against the switch to a “first-to-file” system.

Current U.S. Patent System and Proposed Changes

           U.S. patent law currently operates under a “first-to-invent” system. Under the “first-to-invent” system, a patent is awarded to the first person to invent “any new and useful process, machine, manufacture, or composition of matter.” [7] When a dispute arises between two patent applications claiming the same invention, an interference proceeding is commenced to determine who was the first to invent that particular invention. The first inventor is the first to conceive of the invention, assuming that person has been diligently reducing the invention to practice and has not “abandoned, suppressed, or concealed” the invention. [8] This principle holds true regardless of whether that inventor was the first person to file a patent application claiming the particular invention. [9] The critical date in a “first-to-invent” system is the date of conception. For example: On day one, inventor A conceives of gadget XYZ. Inventor B conceives of gadget XYZ on day two and files a patent application on day three. On day four, inventor A files a patent application. In this situation, even though B was the first to file the application, A will be awarded the patent for gadget XYZ because he was the “first-to-invent.”
           In a “first-to-file” patent system, the outcome of the above example would be the opposite. Inventor B would be awarded the patent over inventor A because inventor B was the first to file the patent application.  In a “first-to-file” system, the critical date is the filing date, not the date of conception.
The Patent Reform Act of 2007, introduced as S.1145 and H.R.1908, seeks to change the U.S. patent system from a “first-to-invent” system to a “first-to-file” system. This potential change has sparked debate over which patent system is best for the United States.

Arguments Supporting the First-to-File System

A “first-to-file” system will help create a unified international patent system which will reduce the costs of filing patent applications and provide more protection for inventors. [10]

           Creating a system of uniform patent laws throughout the world, or, in other words, achieving worldwide patent harmonization, is a way to eliminate the “debilitating redundancy built into the current national/regional patent . . . systems . . . . This unnecessary redundancy drives up the costs of obtaining and enforcing worldwide patent protection . . . .” [11] Proponents of patent harmonization argue that the “first-to-invent” patent system creates a divide between the U.S. and the rest of the world, making it more difficult and expensive for inventors to get worldwide protection. While changing to a “first-to-file” system is a step towards harmonization, one can argue it is not necessary. The Patent Cooperation Treaty (PCT) has created a system in which an individual can file one application in his home country and use that same application abroad simply by designating other PCT member countries in which he would like to apply for a patent. [12] The PCT helps cut down on the costs and time associated with applying for international protection, while maintaining the unique aspects of the different patent systems.

The change to a “first-to-file” system will have a minimal effect on who is ultimately awarded patents because most U.S. patents are currently awarded to the first inventor to file anyways. [13]

           One study of 100 randomly selected U.S. interference proceedings revealed that out of the 76 cases which were decided on a “first-to-invent” basis, the first to file was found to be the first to invent in just 57 percent of these cases. [14] In the other 43 percent of the outcomes, the second to file was found to be the first to invent. [15] Under a “first-to-file” system, 43 percent of these interference proceedings would have a different outcome. This is hardly a “minimal effect.”

A “first-to-file” system will eliminate interference litigation that results from priority contests and will reduce the costs of creating and patenting inventions. [16]

           While it is true that, in a “first-to-file” system, the number of interference proceedings will be reduced or even eliminated entirely, there are questions as to how much cost would actually be saved. While interference proceedings can cost anywhere from $100,000 to $500,000, on average, there are only about two interference proceedings per 1,000 patents. [17]  The question is whether saving costs on an average of only two out of every 1,000 patents justifies the switch to a first-to-file system. [18]

A “first-to-file” system creates greater predictability and certainty for inventors.[19]

           Under a “first-to-invent” system, when an inventor files for a patent, there is always the possibility that another inventor, believing that he was the first to invent, will challenge the validity of that patent. [20] It is not until the records of conception and reduction to practice are analyzed that the determination can be made as to who was the first to invent. This creates uncertainty for inventors.
           Under a “first-to-file” system, all the inventors have to do is file their applications. The patent office can then determine if an application is in fact the first application filed for that particular invention. Under this system, inventors know relatively quickly if they have the right to the invention or not and do not have to be concerned with litigation down the road. However, a “first-to-invent” system is not entirely without uncertainty. The Patent Reform Act of 2007 contains a provision for “inventor’s rights contests,” to be used when an applicant has allegedly “piggybacked” on the ideas of another. [21] Under an inventor’s rights contest, the Director of the USPTO has “the power to institute an investigation, after which the Board of Patent Appeals would make a determination as to which patentee is entitled to the patent.” [22]

A “first-to-file” system will result in earlier disclosure of inventions and discourage inventors from keeping their inventions secret. [23]

           With a “first-to-file” system in place, inventors will not hesitate to file applications for fear that they might lose out on the opportunity to patent their invention. The average time between conception and filing “in the United States greatly exceeds the average time in Europe,” where a “first-to-file” system is used. [24] If the U.S. does switch to a “first-to-file” system, one can expect the average time between conception and filing to greatly decrease. [25] The effect of this would be earlier disclosure of inventions, which will increase public knowledge and allow for further use of and improvements to those inventions. [26]

Arguments Opposing the First-to-File System

The “first-to-invent” system is successful, so there is no reason to change it now.[27]

           The current U.S. patent system is successful in promoting “[t]he Progress of Science and the useful arts.” [28] Progress in science and the useful arts is achieved by creating incentives to invent. In economic terms, progress is achieved by creating incentives that maximize wealth. [29] “Wealth maximization in patent law requires that a patent be given not to the one that is willing to invest the most money in filing” an application, but to “the one that is willing and able to invest the most money in developing an invention.” [30] This incentive, for inventors to devote their resources to developing inventions, rather than to filing applications, is exactly what a “first-to-invent” system promotes. Why change a system that is already creating the proper incentives to maximize wealth?

A “first-to-file” system favors large corporations and hurts small, independent inventors. [31]

           A study of interference proceedings revealed that of the 94 parties that initiated the proceedings, only 18 percent were small businesses or independent inventors, while 77 percent were larger corporations. [32] A small business or independent inventor was the respondent in 43 percent of proceedings, while larger corporations accounted for 53 percent of the respondents. [33] This means that, in the majority of instances, larger corporations are using interference proceedings to challenge smaller entities who filed first, not the other way around. According to this data, switching to a “first-to-file” system would harm larger companies more that it would small entities. Despite these statistics, opponents to the switch would argue that a “first-to-file” system encourages larger corporations, with more resources, to file as many patent applications as they can as soon as possible. As a result, the theory goes, small entities, which do not have the resources to file as many applications as quickly, will lose out on the ability to obtain a patent.

A “first-to-file” system “encourages the filing of too many, poorly drafted, and premature patent applications,” and forces inventors to bear the cost of filing an application before they can evaluate the profitability of the invention. [34]

           This argument contends that a “first-to-file” system would create a “race to the patent office.” [35] A windfall of “premature and sketchy technological disclosures in hastily-filed patent applications” would result because inventors would be forced to file their applications before they are ready, to ensure that they are the first to file. [36] This argument is bolstered by the fact that, in Japan, a “first-to-file” country, it has been noted that “[a]s a consequence of the incentive to file first, many patent applications in Japan are filed with sketchy, speculative and unproven descriptions of the invention.” [37] Furthermore, inventors would have to bear the costs of filing an application before knowing the full potential of their inventions. However, inventors would still have the opportunity to file provisional applications. Provisional applications can be used to “reserve” an invention for one year at a relatively cheap price. [38] The applicant has one year from the filing of the provisional application to convert it into a regular utility application. This one-year period gives the inventor an opportunity to further develop and market the invention, to determine if going forward with a regular utility application is worth it. [39]  However, the disclosure in the provisional application must be sufficient to support the claims in any subsequently issued patent.  Otherwise, the patent will not be afforded the effective filing date of the provisional application. [40]  Prudent patent applicants would likely provide detailed disclosures in their provisional applications to antedate subsequent prior art and thereby strengthen their patents.  Thus, even though provisional applications have lower filing fees, the preparation costs may still be substantial.

A “first-to-invent” system deters the theft of inventions. [41]

           Explicit in 35 U.S.C. §101 is the requirement that the invention must have originated with the applicant. [42] This would not change under a “first-to-file” system. An applicant would still need to prove that he/she “invent[ed] the subject matter” of the invention in order to be granted a patent. [43] The “inventor’s rights contest” provision of the proposed legislation would help ensure that patents are not granted to applicants who did not themselves originate the invention. [44]

A “first-to-file” system would be unconstitutional [45]

           The “Patent Clause” of the U.S. Constitution states that Congress has the power “[t]o promote the Progress of Science and useful Arts, by securing for limited Times to . . . Inventors the exclusive Right to their . . . Discoveries.” [46] The debate regarding this clause centers on the interpretation of the word “inventors.” [47] Proponents of the “first-to-invent” system claim that the word “inventors” necessarily refers to those who are the first to originate. Supporters of the “first-to-file” system, on the other hand, argue that if Congress had intended “inventors” to refer to those who are the first to originate, they could have simply used the phrase “first inventors” instead of just “inventors.” [48] However, the term “first-to-invent” is redundant because it implies that there could be a second inventor. [49] “In fact, there is only one inventor…the one that devises some new process [machine, manufacture, or composition of matter]. Any subsequent person who devises the same process [machine, manufacture, or composition of matter] is not devising a new process [machine, manufacture, or composition of matter], and therefore is not its inventor.” [50] This suggests that anything other than a “first-to-invent” patent system would be unconstitutional.

Conclusion

           In general, the debate over a “first-to-invent” versus a “first-to-file” patent system comes down to balancing the policy considerations of fairness versus efficiency. [51] Those in support of a “first-to-file” system argue that worldwide patent harmonization, a decrease in interference proceedings, greater predictability, and earlier disclosure will result in a much more efficient patent system, minimally affecting the fairness of the current system. Those opposing the “first-to-file” system argue that “first-to-invent system” is proven to be successful and is the only inherently fair system because it deters the theft of inventions, treats small and large entities alike, and promotes the “Progress of Science and Useful Arts” the way the Constitution proscribes, [52] while the “first-to-file” system is actually less efficient because it encourages filing of too many, poorly drafted, and premature applications.
           While it can be debated whether the proper balance of fairness and efficiency is attained through a “first-to-invent” system or a “first-to-file” system, it is ultimately up to the legislature to decide. The Bush Administration has expressed its views of The Patent Reform Act of 2007 in a letter, dated February 4, 2008, to the Senate Judiciary Committee, stating that the Administration “supports the bill's efforts to transition the United States to a first-inventor-to-file patent system . . . .” [53] The House of Representatives has also approved the Act and it is currently on the Senate Legislative Calendar. [54]