Center for Advanced Study & Research on Innovation Policy


CASRIP Newsletter - Winter 1995, Volume 2, Issue 1

GATT Implementation US Patent Law Changes

GATT and its effects on U.S. Patent Law

On Thursday, January 12, 1995, the Washington State Patent Law Association (WSPLA) and the Center for Advanced Study and Research on Intellectual Property (CASRIP) jointly organized a seminar on changes in U.S. induced by the domestic implementation of GATT-TRIPS. The seminar took place at the Washington Athletic Club in downtown Seattle. More than one hundred attorneys and law school students attended the seminar. The program featured Lois Boland from the USPTO and Professor Donald Chisum, CASRIP Director, as principal speakers. Also on hand for a panel discussion were David Carlson (Seed and Berry), Paul Gardner (Christensen, O'Connor, Johnson & Kindness), John Hammar (Boeing), and Toshiko Takenaka (CASRIP). The panel was moderated by Professor Chisum. The presentation and discussion explored the changes in U.S. patent law brought about by the GATT-TRIPS agreement and their ramifications for patent practice.

Overview of the changes induced by the new 20-year patent term

Lois Boland began the program by giving an overview of the changes effected by the approval of GATT. The implementing legislation for the GATT Uruguay Round is found in P.L. 103-465. While most of the changes will not take effect until January 1, 1996 (one year from the date the World Trade Organization Agreement entered into force in the U.S.), a significant part of the legislation dealing with patent terms and provisional applications takes effect June 8, 1995 (six months after the bill's signing). Therefore, it is of utmost importance that practicing patent lawyers know about the changes now so they may better advise their clients. Patent lawyers need to recognize that these changes are more than a simple shift in paradigm; these changes reach into and affect all areas of patent practice. The materials handed out included a Statement of Administrative Action for the Act which describes the changes enacted. This statement outlines the authority for interpreting the legislation. Ms. Boland indicated that proposed rules on the change in patent term were published at 54 F.R. 63951. The PTO is requesting that written comments on these rules be submitted by February 17, 1995. The PTO is also looking for comment on issues relating to 18-month publication of patent applications, as noted in 59 F.R. 63966.

As Ms. Boland pointed out, one of the major effects of GATT is a change in the term of protection for patents and how that term is calculated. Rather than granting protection for 17 years from the date a patent issues from the PTO, after June 8 the term will be 20 years from the date of application. This change affects utility and plant patents but does not affect design patents (which will remain at 14 years).

The PTO has found that the average pendency of an application from the date of filing to final disposition is 19.0 months. This means that under the new 20 year term, a patent issuing with a 19 month pendency would enjoy protection for 18 years, 5 months. This may be compared to the current 17 year protection such a patent would enjoy. As long as a patent is issued within three years of application, it will receive the same length of protection that is currently given.

The 20-year term was designed to promote prompt prosecution. It will discourage "submarine" patents that exist due to intentionally extended prosecution. Instead, it will encourage inventors to obtain a patent promptly so as to maximize the term of protection. However, as pointed out later in the program's question and answer session, inventors may feel pressured to have their patent applications prosecuted more quickly, perhaps to their detriment. The application may be more hastily written, with important claims not being adequately constructed. Some practitioners surmised there might be added pressures of legal malpractice where inventors feel that their patent lawyers "took too long" in prosecuting a valuable patent.

In any event, the 20 year term laws take effect June 8 (barring any change in legislation between now and then). The patent term will begin on the issue date and end 20 years from the date of filing. Any divisional applications that mature into issuance are also governed by the date of application of the initial parent application. Therefore, if a divisional is instituted and prosecuted into an issued patent five years after the parent application was filed, it will enjoy a total term of 15 years (where under the current law, it would enjoy its own 17 year term). Again, these new laws only affect new applications and new divisionals that are filed on or after June 8, 1995.

In order to ease transition to the new laws, the P.T.O has proposed Rule 129 regarding after-final practice. These rules only affect applications that were filed as of June 8, 1995 and having a U.S. effective date on or prior to June 8, 1993. Under these rules, an applicant is entitled to twice have a submission after final action, provided that a fee is paid and the submission is filed prior to or with notice of appeal. A submission may include an information disclosure statement, amendments, new evidence, and/or new arguments. The examiner must withdraw finality and consider the new submission in the same way as with any response to a non-final office action. When an applicant has twice made an after-final submission with the appropriate fees, all subsequent after-final submissions will be treated as any other after-final submission under current practice. Effectively, this transitional rule allows an applicant "two bites at the apple" for after-final practice.

Another part of the transitional rule proposed by the PTO affects restriction practice. This rule affects only those applications filed as of June 8, 1995 and having U.S. effective dates on or prior to June 8, 1992. (In other words, this gets at older cases.) This rule provides that no restriction can be made or maintained except where (1) the requirement was made more than two months prior to June 8, 1995 (i.e. prior to April 8, 1995); (2) the examiner has not issued any Office action in the application due to the applicant's actions; or (3) the required fee for examination of each additional invention was not paid.

Professor Chisum's Perspective on the 20-year Patent Term

After Ms. Boland finished this first part of her presentation, Donald Chisum of CASRIP presented his perspective on the 20-year patent term. Professor Chisum opened his remarks by asking: "Where does the 20-year patent term come from?" TRIPS, the component of the GATT Uruguay Accord on Intellectual Property Rights, requires a minimum patent term of 20 years from filing date. The U.S. could have provided for a patent term of either 20 years from filing date or 17 years from grant of patent, whichever is longer. Therefore the 20-year patent term in the U.S. domestic implementation of GATT did not come directly from TRIPS. The 20-year patent term, a feature of the European and Japanese patent systems, really came from the framework talks with Japan. Through bilateral discussions and negotiations conducted between the PTO and the JPO, the U.S. committed itself to make changes in the U.S. patent system that would eliminate submarine patents. Many Japanese companies felt victimized by submarine patents, and pressed for changes in U.S. patent law to deal with the problem.

For its part, the U.S. agreed to introduce legislation for a 20-year patent term, for early publication of patent applications, and for expanded third-party participation in reexamination. In return, Japan agreed to accept English patent applications, to abandon pre-grant opposition and to institute an accelerated examination system (to conclude within 36 months rather than the current six or seven years.) Japan also agreed to abandon the practice of compulsory licensing. (In Japan, the holder of a dependent patent is required to get a license from the basic patents holder before the dependent patent can be used, and if negotiations fail, the JPO may intervene to require compulsory licensing.)

The 20-year patent term was included with the GATT implementation bill, while early publication and expanded examination are introduced in other bills.

There was a lot of opposition to the 20-year patent term, particularly from the biotech industry. Senator Dole has promised to introduce legislation for an either-or patent term: either 20 years from filing or 17 years from grant, whichever is longer. President Clinton has indicated that he would not oppose such a change. Therefore there is a real prospect that the current switch to the 20-year patent term will just be temporary. This puts us in limbo. Still, we have to plan for the GATT changes already in effect, including the 20-year patent term.

The 20-year term will force us to completely change our way of thinking and working. Now any delay in prosecution has its cost, since we are cutting into the client's potential patent term.

The transition period will be a terribly difficult one, given the large amount of divisional or continuation applications that people would want to file prior to the June 8, 1995 deadline. With the pressure of having to speed up prosecution and yet trying to get the best possible claims for clients, attorneys will also face a greater risk of malpractice liability.

Overview of provisional applications

Provisional application was discussed in the beginning of the second half of the GATT seminar. Provisional application filing has been added to U.S. patent law to benefit U.S. inventors after the recent GATT agreement. Under the new agreement, foreign applicants may use the early foreign filing date for patent claims subsequently filed in the United States. Although the foreign applicants enjoy the earlier filing date, the United States is prohibited by the new agreement from measuring the term of protection from the date of a foreign filed application. To give United States inventors an even chance with the foreign applicants, the United States implemented a new domestic priority system. This new system is called provisional application filing. An inventor files a provisional application to take advantage of the new domestic priority system. A provisional application minimally requires four items to obtain a priority filing date. These are (1) specifications, (2) drawings, (3) naming of inventors, and (4) the application must be identified as a provisional application. Two additional items are needed however to complete the provisional application: (1) the filing fee and (2) a cover page.

Conversion is possible under the new system. A patent application filed under 37 U.S.C. Section 111(a) can be converted to a provisional application. Conversion is allowed only before payment of the issued fee or before expiration of twelve months from filing date of application, whichever is earlier. Fees paid for the patent application filed under 37 U.S.C. Section 111(a) will not be refunded.

Seven characteristics mark a provisional application. First, a provisional application does not require a claim. Second, an oath or declaration is not required. Third, it is not examined and thus will never mature into a patent. Fourth, the application cannot claim priority of an earlier foreign or domestic application. Fifth, it is a regular national filing that starts the Paris Convention priority year. Sixth, it is automatically abandoned by law after one year from filing. And seventh, it may be revived after one year from the filing date, but pendency cannot be extended beyond one year from filing date.

Although provisional applications will benefit most domestic inventors, it will be especially advantageous to independent inventors, nonprofit organizations, small businesses and universities. These groups often do not have the money to prosecute full patent applications. A provisional application is inexpensive. Also, it does not require a lot of time to file since it imposes minimal legal and formal standards.

A provisional application has other benefits as well. It provides one additional year to the "grace period" for finalizing an invention, determining marketability, acquiring funding and capital, seeking licensing and manufacturing. It establishes an early filing date. It is kept in confidence. It can be filed in any language. But most importantly, the filing does not start the twenty-year term.

Thus provisional applications will benefit domestic inventors and put them on an even footing with foreign applicants. It also broadens access to the patent system for all inventors.

Date of Invention for Obtaining a Patent

Changes have been made to 35 U.S.C. 104 and 37 C.F.R. 1.131 regarding the dates for obtaining a patent. According to both NAFTA and GATT "patents shall be available . . . without discrimination as to the place of the invention." The changes for NAFTA have already been made. Changes for GATT will be made in a similar manner.

Section 104 will be changed to read: ". . . an applicant for a patent . . . may not establish a date of invention in a foreign country other than a NAFTA country of a WTO Member country except as provided in Section 119 and 365."

Similar changes have been made in 37 C.F.R. 1.131 to incorporate the changes for NAFTA and WTO Member countries. The new regulation will read: ". . . facts showing a completion of the invention in this country or in a NAFTA or WTO Member country before the filing date."

All date-of-invention changes to Section104 are prospective. They are prospective in two ways: 1) They will only affect applicants who file after January 1, 1996 and 2) in those applications, the earliest date of invention that can be established with respect to activity in a WTO Member country will be January 1, 1996. WTO came into force on January 1, 1995; therefore, Section 104 changes become effective one year later.

Changes for NAFTA were made a year ago. The earliest date in a NAFTA country that you can prove a date of inventive activity is December 8, 1993.

GATT/NAFTA changes are intended to be used offensively only. They are not defensive changes and cannot have the effect of being patent-defeating. No changes have been made to 102 (a) [. . . invention was known or used by others in this country], 102 (b)[. . . in public use or on sale in this country], or 102 (g) [the invention was made in this country] where in those sections there are references to "in this country."

Proposed rules for changes to 37 C.F.R. 1.131 and interference were published by the OG on October 25, 1994 at 1167 OG 96 and 98 respectively. The comment period for both of those rules has already closed. Final rules should come out soon.

A safeguard has been added for those U.S. practitioners who worry about a lack of discovery abroad. If Party A has difficulty obtaining information from Party B because of the nature of discovery rules Party A may encounter in a foreign country (NAFTA/WTO Member), an inference will be drawn in Party A's favor. That inference can be drawn at an interference proceeding or at a court proceeding. Due to the nature of interferences, it will be quite awhile before we see the effects of this provision. Even though the effective date for NAFTA was December 8, 1993, there have been no cases in this area. As the effective date for GATT will be January 1, 1996, we can expect to see the first cases on this issue in four to five years.

Professor Chisum noted that it was a bit of an anomaly that the changes pertained only to rules for offensive purposes but not defensive purposes. This seems to perpetuate the Hilmer Doctrine. Such changes arguably violate the spirit of TRIPS which says that there shall be no discrimination with regard to exercise of patent rights on account of place of invention. For example: someone in the US invents an item and subsequently uses or sells it. Later someone else may get a patent on that same item. The first party can use his or her date of invention as a defense to invalidate the patent. If the same thing were to occur in Japan or Europe, the first party could not rely on that date. It could be argued that the U.S. domestic legislation violates the spirit of GATT-TRIPS.

Ms. Boland countered that there may be an alternative interpretation to TRIPS. Some commentators will argue that you do not have to change U.S. patent law to give patent-defeating effect without discrimination. The language does not read that patent rights shall be enjoyable without discrimination as to place of invention.

Participants suggested that these changes, especially the transitional revisions, were very frightening because of the potential malpractice liability.

Ms. Boland informed everyone that more changes are coming. An early publication bill should be introduced in the 104th Congress. She welcomes comments on the proposed rules. For such comments or other questions about GATT, please call: 1-(800) PTO-2224. David Carlson suggested that WSPLA may want to make of list of its own suggestions to the proposed rules and urged practitioners to send copies of any suggestions to Kate Sako, President of WSPLA, or to him. WSPLA will look at such comments and possibly forward such comments to the PTO as endorsed by WSPLA.

Prepared by
JD Research Associates:

Peter Chu
Nick Nguyen
Kevan Morgan
Janice Wingo

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