American Inventors Protection Act of 1999

Citation

American Inventors Protection Act of 1999 (AIPA), Pub. L. No. 106-113, amended by Intellectual Property and High Technology Technical Amendments Act of 2002, Pub. L. No. 107-273.

Overview

Over the years, companies have complained about problems caused by “submarine patents.” The basic scenario is that a patent applicant allows its application to languish in the PTO while watching another company make substantial investments in a technology or product that will infringe the yet-to-be-issued patent. Once the other company’s sunk costs are large, the patent applicant obtains the patent, asserts infringement, and “holds up” the other company, demanding supra-competitive royalties for a license to the “submarine patent.” The company must agree to supra-competitive royalties or forego its production or innovation. As a result, consumers will either pay higher prices for the company’s goods, or will never get the benefit of the innovation that the company had to abandon.

Partly in response to problems created by submarine patents, and partly to conform U.S. practice to international practice, this law was enacted. The Act now requires publication of a patent application eighteen months after filing, unless the applicant certifies that the invention will not be the subject of any foreign or international application in jurisdictions that provide for eighteen-month publication. Roughly 90% of all pending patent applications are published at eighteen months.

This new publication requirement can assist inventors and businesses to some extent in avoiding patent hold-up and making more informed decisions about where (and where not) to spend R&D resources.