PREVAIL Act Tightens Patent Challenges, Dedicates All USPTO Fees to Innovation Fund

The PREVAIL Act, short for the Promoting and Respecting Economically Vital American Innovation Leadership Act, is a major overhaul of how patents are challenged and how the U.S. Patent and Trademark Office (USPTO) is funded. At its core, the bill aims to strengthen patent protection, arguing that a robust patent system is essential for U.S. economic growth and national security. It does this by making significant changes to the Patent Trial and Appeal Board (PTAB) and the administrative processes used to challenge patents after they’ve been granted.

The Money Fix: Ending the USPTO Fee Sweep

One of the most immediate and impactful changes is financial: the bill eliminates what’s known as “fee diversion” (Sec. 7). Right now, the USPTO collects billions in fees from inventors and businesses, but Congress has often skimmed some of that money off the top and used it for other government programs. Think of it like paying for a gym membership, only to have the gym owner use half your dues to fix potholes downtown. The PREVAIL Act stops this practice entirely. All patent and trademark fees will now go into a new, dedicated “Innovation Promotion Fund” to be used solely for the USPTO’s operations. This means the agency should have more predictable, stable funding to improve its services, hire examiners, and upgrade its technology. For anyone who interacts with the USPTO—from a solo inventor to a large corporation—this dedicated funding should, ideally, translate into faster, better service.

New Rules for the Referee: Cleaning Up the PTAB

The bill institutes several changes intended to increase confidence in the PTAB, which acts as a specialized court for patent disputes (Sec. 3). First, the Director must establish a formal code of conduct for PTAB judges, looking to the standards used for federal judges. More critically, the bill restricts how supervising officials can communicate with the judges hearing a case, ensuring they can’t influence the decision on its merits. Finally, in a move to prevent perceived bias, any PTAB judge who votes to start a patent review cannot be on the panel that ultimately decides the case. These changes aim to make the PTAB feel less like a bureaucratic office and more like an independent, impartial court.

Closing the Loopholes: Who’s Really Challenging the Patent?

The PREVAIL Act significantly broadens the definition of who counts as a “real party in interest” (RPI) in a patent challenge (Sec. 4, Sec. 5). If you fund a challenge—directly or through a proxy—you are now considered an RPI. This is a big deal because RPIs are subject to the same rules and restrictions as the official petitioner. For example, if a company is secretly funding a non-profit to challenge a competitor’s patent, that company is now officially on the hook. This aims to prevent large entities from hiding behind shell organizations to launch repeated or harassing challenges. For non-profit organizations that challenge patents, the rules are even tighter: they must certify that none of their donors are accused of infringing the patent, which creates a substantial compliance burden.

The Single Forum Rule: Pick Your Fight

Perhaps the most restrictive change for patent challengers is the establishment of a “Single Forum Rule” (Sec. 4, Sec. 5). Currently, it’s common for a company accused of infringement to challenge the patent's validity in two places at once: in federal court and at the PTAB. The bill largely ends this practice. If a patent review (IPR or PGR) is instituted, the petitioner and related parties are barred from filing or continuing any other lawsuit or proceeding (like at the International Trade Commission) that challenges the patent’s validity based on the same grounds. This means challengers have to choose their venue and stick with it, which is a major win for patent owners who currently face expensive, parallel litigation.

Higher Bar for Challenges and Estoppel

The bill raises the evidentiary bar for challenging an existing patent claim, requiring “clear and convincing evidence” of unpatentability, which is a high standard (Sec. 4). Furthermore, the rules around “estoppel” are tightened (Sec. 4, Sec. 5, Sec. 6). Estoppel means you can’t re-argue something later. Under the new rules, once an administrative review is finished, the petitioner can’t challenge the patent again using any argument they raised or reasonably could have raised during the first review. This makes the initial challenge much more critical and final. For companies that rely on challenging patents to clear their path for innovation, this means they get one, high-stakes shot to get it right. If they miss an argument, they lose the ability to raise it forever.

Lowering the Barrier for University Inventors

In a move to help small inventors tied to academia, the bill expands who qualifies for “micro entity” status, which grants access to significantly lower patent fees (Sec. 8). Now, if an applicant works for a university, transfers ownership of their invention to a university, or is working with a university-affiliated non-profit tech transfer organization, they can qualify for the reduced fees. This is a practical benefit for students, researchers, and small teams trying to commercialize university-developed technology, making the initial cost of filing a patent much more manageable.