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Effects of GATT and NAFTA on PTO Practice

Contents

1. Former Administrator for Legislative and International Affairs, United States Patent and Trademark Office.

Introduction

Significant changes in practice before the Patent and Trademark Office (PTO) are required to implement changes in U.S. patent law mandated by the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT), particularly the agreement known as the Trade Related Aspects of Intellectual Property Rights (TRIPs). The purpose of this paper is to examine the changes in PTO patent practice that are required by NAFTA and GATT-TRIPs.

Changes in U.S. patent law required by the NAFTA are implemented by the North American Free Trade Agreement Implementation Act (Act). Public Law No. 103-182, 107 Stat. 2057 (December 8, 1993). The principal change mandated by the Act was to amend 35 U.S.C. to permit reliance on activities occurring in a NAFTA country to prove a date of invention for the purpose of obtaining a patent. A "NAFTA country" is now limited to Canada and Mexico.

Changes to U.S. patent law required to implement the GATT- TRIPs Agreement is contained in the Uruguay Round Agreements Act signed by President Clinton exactly one year after the Act. Public Law No. 103-465 (December 8, 1994). The GATT-TRIPs Agreement has the potential to affect intellectual property protection in over 100 countries that may adhere to this Agreement. Implementation of the Uruguay Round Agreements Act will expand the opportunity to establish a date of invention outside the U.S. for the purpose of obtaining a patent, will create the opportunity to file a new type of patent application called a provisional application, and will adopt a 20- year patent term.

Date of Invention

The date of invention can be an important factor in both an effort to obtain a patent and as evidence that an inventor is not entitled to a patent. The prior art provisions of 35 U.S.C. (a), (e) and (g) all provide that a person is entitled to a patent unless there is some type of evidence of prior invention by another before the date of invention by the applicant for patent. Under (g), the prior invention in this country by another who has not abandoned, suppressed or concealed the invention can defeat an applicant's right to a patent.

Obtaining a patent

Prior to the change in required by the Act, an applicant for a patent was not able to establish a date of invention by reference to activity in a foreign country except as provided in 35 U.S.C. 119 and 365. Thus, applicants who made their invention outside the territorial limits of the United States were only able to rely on the filing date of a foreign priority application or the filing date of an international application filed under the Patent Cooperation Treaty to establish a date of invention before the U.S. filing date of their application. The necessity to establish a date of invention typically arises in an interference proceeding under 35 U.S.C. 135 or in an attempt to a overcome a cited patent or publication by filing an affidavit or declaration under 37 CFR 1.131. Article 1709(7) of NAFTA provides that:

[P]atents shall be available . . . without discrimination . . . as to the territory of the party where the invention was made.

Pursuant to this provision, was amended by the Act to permit an applicant or patentee to rely on activities in a NAFTA country to prove a date of invention in proceedings in the PTO, the courts, and before any other competent authority. Furthermore, a person domiciled in a NAFTA country who makes an invention anywhere in the world in connection with operations by or on behalf of that NAFTA country, is entitled to the same rights of priority in the U.S. as if the invention had been made in that NAFTA country.

The amendment to also provided some safeguards for a party that would be affected by the presentation or lack of evidence relating to proving a date of invention in a NAFTA country. To the extent that any information in a NAFTA country concerning a date of invention is not made available in any relevant proceeding to the same extent as such information could be made available in the U.S., the Commissioner, court, or such other authority is authorized to draw appropriate inferences, or take such other action authorized by statute, rule or regulation, in favor of the party that requested the information in the proceeding.

The amendments to as they apply to proving a date of invention in a NAFTA country are prospective. That is, an applicant may not establish a date of invention in a NAFTA country earlier than the date of enactment of the Act (i.e. December 8, 1993), except as provided by 35 U.S.C. 119 and 365. Article 27(1) of the GATT-TRIPs Agreement provides:

. . . patents shall be available . . . without discrimination as to the place of invention . . .

Pursuant to this provision, has been amended to read, in part, as follows:

In proceedings in the Patent and Trademark Office, in the courts, and before any other competent authority, an applicant for a patent, or a patentee, may not establish a date of invention by reference to knowledge or use thereof, or other activity with respect thereto, in a foreign country other than a NAFTA country or a WTO member country, except as provided in sections 119 and 365 of this title.

A WTO member country is a country that is subject to rulings of the World Trade Organization (WTO) that is established under the GATT to resolve disputes among signatories to the agreement. The changes to made in the Uruguay Round Agreements Act parallel those made under NAFTA, including the safeguards relating to proving a date of invention based on activity outside the U.S.

The amendments to as they apply to proving a date of invention in a WTO member country are also prospective. Thus, in relevant part, the Uruguay Round Agreements Act provides that:

An applicant for patent, or a patentee, may not establish a date of invention for purposes of title 35, United States Code, that is earlier than 12 months after the date of entry into force of the WTO Agreement with respect to the United States by reference to knowledge or use, or other activity, in a WTO member country except as provided in sections 119 and 365 of such title.

Thus, since the WTO Agreement entered into force with respect to the U.S. on January 1, 1995, the earliest date that an inventor from a WTO member country could establish a date of invention in a WTO member country is January 1, 1996, except as provided by 35 U.S.C. 119 and 365. The clear implication of the prospective nature of the amendments to is that it will be several years before an applicant will attempt to rely on a date of invention in a NAFTA or WTO member country.

Defeating a patent

There is no obligation under either NAFTA or GATT to treat a prior invention of another in a NAFTA or WTO country as prior art. Thus, the provisions of (a) relating to an invention known or used by others in this country, the provisions of (b) relating to public use or sale in this country, and the provisions of (g) relating to a prior invention made by another in this country are not affected by either the NAFTA or the GATT.

Some concern has been expressed that the failure to amend (g) could lead to some strange and unjust results. For example, consider a party that loses an interference to another who proves a date of invention in a NAFTA country. The losing party, it is argued, could obtain a U.S. patent for practically the same claims lost in interference because there is no prior art basis for rejecting the claims of the losing party that are patentably indistinct from the interference count. The prior invention by another in a NAFTA country would not be prior art under (g) because the invention was not made in this country.

An amendment to (g) is not necessary to preclude two patents from issuing to different parties on patentably indistinct inventions. The doctrine of interference estoppel has been applied in similar circumstances to avoid this clearly undesirable result. In re Deckler, 977 F.2d 1449, 24 USPQ2d 1448 (Fed. Cir. 1992).

In Deckler, an applicant had lost in an interference proceeding in which priority was awarded to the other party based on a foreign application filing date. The PTO held that the interference judgment barred Deckler from obtaining a patent containing claims that were patentably indistinguishable from his claim corresponding to the interference count. The Federal Circuit concluded that the decision to bar Deckler from obtaining claims that were patentably indistinguishable from the claim corresponding to the interference count constituted a permissible application of the settled principles of res judicata and collateral estoppel. The court distinguished this case from a situation where claims that are patentably indistinguishable from the claim corresponding to the interference count are rejected as being obvious under 35 U.S.C. 103 over the lost count of the interference together with other prior art. In re McKellin, 529 F.2d 1324, 188 USPQ 428 (CCPA 1976).

Regulatory implementation Changes to interference practice that are responsive to the changes made to by the Act were proposed in a notice of proposed rule making titled "Patent Appeal and Interference Practice" published in the Federal Register at 59 Fed. Reg. 50181 (October 3, 1994) and the Official Gazette at 1167 Off. Gaz. Pat. Office 98 (October 25, 1994). Written comments were due by November 30, 1994.

Changes to Rule 131 practice to overcome a cited patent or publication that are responsive to changes made and proposed to were proposed in a notice of proposed rule making titled "Revision of Affidavits Under 37 CFR 1.131" published in the =46ederal Register at 59 Fed. Reg. 49876 (September 30, 1994) and the Official Gazette at 1167 Off. Gaz. Pat. Office 96 (October 25, 1994). The public comment period closed December 1, 1994.

Provisional Application

The GATT implementing legislation establishes a new type of patent application called a provisional application. A provisional application is designed to be a simple, inexpensive patent application that will not be examined except for certain formal requirements. A provisional application can be filed on or after a date that is six months after the date of enactment of the legislation, or June 8, 1995.

Benefits

There are several benefits that can be obtained by using a provisional application. The cost of filing a provisional application will be $150 - $75 for a small entity.

One benefit of a provisional application is to provide a mechanism whereby patent applicants can enjoy the benefit of a priority year that does not start the 20-year patent term. In this sense, the provisional application acts as an internal priority document that is followed by another application within 12 months of the filing date of the provisional application. For the most part, provisional applications will be filed by and provide a benefit to applicants from the United States.

Second, filing a provisional application can help an applicant establish a filing date for an invention that may be useful in establishing senior party status in an interference proceeding (in the U.S.) or establishing a date of invention in almost every other country of the world that follows a first-to- file principle. The filing date of an application in the U.S. also establishes a prior art date effective under the provisions of 35 U.S.C. (e). Establishing an early filing date can have important procedural and/or substantive advantages.

Third, filing a provisional application can be an effective tool in deferring examination of an invention for a period of a year. This tool will be useful to those applicants who may want to seek financial assistance from third parties before the costs of prosecution begin, or the applicant who updates the content of an application within one year of the original filing date before presenting a C-I-P application for examination.

Requirements

A provisional application for patent shall be made by the
(1) inventor and shall include a
(2) specification as prescribed by the first paragraph of 112,
(3) drawing prescribed by 113, and
(4) fee (Small entity statement, if appropriate).

A filing date is granted to a provisional application as the date on which the specification and any required drawing are filed in the PTO. The fee and any requirement other than the items required for a filing date may be submitted after the filing date in response to a notice to file missing parts together with a surcharge.

Items normally associated with the filing of an application for patent such as a claim, an oath or declaration, a computer readable form for DNA/RNA sequence submissions are not required to be filed in a provisional application. The PTO will require the filing of a cover sheet identifying the application as a provisional application to distinguish the collection of papers from other documents received in the PTO such as a disclosure document, an application under 111(a), an application under 371, an international application, and a design patent application. The ability of the PTO to maintain the filing fee and surcharge associated with provisional applications at a low level is, in part, dependent on minimizing the processing costs associated with these applications.

Abandonment/continuing application

A provisional application shall be regarded as abandoned 12 months after its filing date. This abandonment 12 months after the filing date occurs by operation of law and is not subject to restoring the application to a pending status under either an unavoidable or unintentional standard. If a provisional application goes abandoned for failure to respond to a notice to pay the filing fee, for example, the provisional application would be subject to revival, but only for the limited term of 12 months from the filing date. The provisional application cannot be regarded as pending after the 12-month anniversary date.

Any continuing application that seeks to obtain the benefit of the filing date of the provisional application must be filed while the provisional application is pending. Accordingly, any continuing application must be filed within 12 months from the filing date of the provisional application in order to preserve any benefit that could be obtained from the earlier filing date. An amendment to 119 provides that a provisional application may not be relied upon in any proceeding in the PTO unless the filing fee has been paid and was pending on the filing date of the application filed under 111(a) or 363.

Conversion from 111(a) application

An application that is not designated as a provisional application will be treated as an application filed under 111(a). If this treatment is not in accordance with the unexpressed intent of applicant to file a provisional application, conversion of the application to a provisional application will be permitted for a fee.

Even if an application is filed as a regular application under 111(a) and is examined, it will be possible to convert the original application to a provisional application so long as the request is made within one year of the filing date of the original application. This procedure may be beneficial to an applicant who belatedly decides to avoid having the 20-year patent term being measured from the original application filing date.

No right/benefit of priority

A provisional application will not be entitled to the benefit of the filing date of any other patent application. Thus, a provisional application cannot claim the benefit of the filing date of a U.S. application under 120, 121, or 365(c), or the benefit of the filing date of any application under 119 or 365(a).

Although a provisional application cannot claim the benefit of an earlier filed application, and the filing date of a provisional application is not considered in the determination of a 20-year patent term, the provisional application is a regular national filing under the Paris Convention. The significance of this fact is that an applicant has 12 months from the filing date of a provisional application to file an application abroad or under the PCT to preserve the right to priority under the Paris Convention based on the filing date of the provisional application.

Processing of provisional applications

A provisional application for patent will be examined to determine whether the filing date requirements are met (i.e., is there a specification and any drawing referred to in the specification), and whether certain other requirements are met to complete the provisional application. Provisional applications for patent will be treated as other patent applications except that provisional applications will not be subject to 115 (oath), 131 (examination), 135 (interference), and 157 (statutory invention registration).

The content of a provisional application will not be examined in the Office except in two situations. First, the content of the application may be relevant in determining whether certain information is prior art with respect to a claim in a subsequent application that claims the benefit of the filing date of the provisional application. The examiner would have to determine whether the claimed subject matter was supported in the provisional application in the manner required by the first paragraph of 112. Second, when a patent that claims the benefit of the filing date of the provisional application is being used as prior art, the issue may arise as to what is the effective date of the subject matter in the patent that is being relied on for prior art purposes. In these respects, the practice of the examiner will parallel procedures now used in examining continuing applications and relying on a patent that resulted from one or more continuing applications as prior art.

20-Year Patent Term for Patents

Issued on New Applications - 154(a)

Patents are now granted in the United States for a period of 17 years measured from the date the patent is granted. The amount of time an application or invention, through a series of continuing applications, was pending in the PTO before a patent is granted has been irrelevant to the term of a patent. The 20-year patent term adopted in the Uruguay Round Agreements Act will change not only the number of years associated with the patent grant, but more importantly, will change the date from which the patent term is calculated from the issue date of the patent to the filing date of the application for patent. The introduction of a 20-year patent term for patents issued in the U.S. is contained in the GATT implementing legislation as an amendment to establish 154(a). Specifically, the section reads as follows:

Subject to the payment of fees under this title, such grant shall be for a term beginning on the date on which the patent issues and ending 20 years from the date on which the application for the patent was filed in the United States or, if the application contains a specific reference to an earlier filed application or applications under section 120, 121, or 365(c) of this title, from the date on which the earliest such application was filed.

The implementation of this provision is discussed below. The change to the patent term applies to utility and plant patents, but does not apply to design patents.

Applications affected

Under the Uruguay Round Agreements Act, patents issuing on applications filed on or after six months from the date of enactment would be subject to the 20-year patent term. In other words, the last chance to file an application to obtain a patent with a patent term of 17 years from grant is to file a new application the day before the effective date of the 20-year patent term - i.e., before June 8, 1995.

All applications filed after the effective date will be subject to the 20-year patent term. The change applies to all original applications filed under 111(a), all national stage applications filed under 371 based on international applications filed on or after the effective date, and all continuing applications (i.e., continuations, continuations-in-part, and divisionals) filed under 111(a). The change does not apply to provisional applications filed under 111(b) because a provisional application can never issue as a patent.

Calculating 20-year patent term

As noted above, the patent term of a patent issued under the 20-year provision starts on the date the patent issues. Thus, like the current 17-year patent term, no enforceable right is granted to the patent holder until such time as the patent issues. The patent term is stated to end 20 years from the date on which the application for the patent was filed in the United States. It is obviously critical to determine the appropriate filing date from which to measure the twenty years.

For an original application filed under 111(a), the patent term shall end 20 years from the filing date of the original application. For a continuing application filed under 111(a), the patent term shall end 20 years from the filing date of the first application to which reference is made under 120, 121, or 365(c). This means that, after the effective date, the term of a patent issuing on a continuing application that was filed after the effective date will be measured from the filing date of the earliest application in the chain, and it does not matter what type of continuing application is filed.

The 20-year patent term is likely to have its biggest impact on those situations where a series of continuing applications are filed to obtain a patent, whether those continuing applications are straight continuations or some combination of continuations, continuations-in-part, or divisional applications. For the purpose of calculating the 20-year patent term, it does not matter whether a patentee is entitled to rely on the filing date of the earliest application referenced in the continuing application that matures into the patent. The mere reference to an application having an earlier filing date to obtain any benefit available under 120, 121, or 365(c) will set the date from which the 20- year term is calculated. If an applicant is not entitled to the benefit of a filing date of an earlier filed application, then the applicant should consider deleting that reference to the earlier filed application in the specification.

Because the patent term is measured from the filing date of an application in the United States, the date of any foreign priority application is irrelevant to the determination of the 20- year patent term. This is true regardless of whether foreign priority is claimed under 119, 365(a) or 365(b). Note, however, that an international application filed under the PCT and designating the United States has the effect of a national application regularly filed in the PTO under 363, so that the filing date of such an international application would be used for the purpose of calculating the 20-year term.

The filing date of a provisional application is irrelevant to the determination of a 20-year patent term. An amendment to 119 provides that an application filed under 111(a) or 363 may obtain the benefit of the filing date of an earlier filed provisional application. Since the basis for obtaining priority of this provisional application is placed in 119, it is excluded from a determination of the 20-year patent term just as in the case of an applicant claiming foreign priority under 119.

Patent term extension - delay in issuing patent

In order to compensate the patent owner for some of the most extreme delays that can occur in issuing a patent, the Uruguay Round Agreements Act contains several provisions that will extend the patent term beyond the prescribed 20 years. The possibility of extending the patent term for delays before issuing the patent is available in addition to the possibility of extending the patent term for up to five years under 156 because of premarketing regulatory review of the patented product after the patent issues. As noted, the two types of patent term extension provisions cover different periods of delay, delay before the patent issues and regulatory delay after the patent issues.

Patent term extension granted because of delay in issuing a patent is limited to a total of five years, regardless of whether the actual length of the delay exceeded that period, or whether the delay was caused by a variety of causes that are covered in the proposed legislation. Although patent term extension for delay in issuing the patent is limited to five years, this is separate from the additional five years that may be available under 156 in appropriate circumstances.

Patent term extension will be made when the issuance of a patent is delayed because of:

(1) an interference proceeding - this is intended to cover not only the application in the interference proceeding, but an application in which prosecution is suspended to await the outcome of an interference;
(2) a successful appellate review (i.e., appellate review results in at least one rejected claim being free of all appealed rejections) either at the Board of Patent Appeals & Interferences or in the federal courts, so long as the patent is not subject to a terminal disclaimer due to the issue of another patent claiming subject matter that is not patentably distinct from that under appellate review; and
(3) the patent application was subject to a secrecy order under 181.

The methods for calculating the periods of patent term extension are keyed to the periods of delay in the cases of an interference or secrecy order. The determination of the period of delay in an interference proceeding or in the case of a secrecy order are left to the discretion of the Commissioner that will be exercised in implementing regulations.

The methodology for calculating the period of patent term extension in the case of successful appellate review is somewhat more explicit in the Uruguay Round Agreements Act, but still gives the Commissioner considerable discretion to exercise in implementing regulations. The period of extension in the case of appellate review is bounded by the total period between the date a notice of appeal is filed and the date of a final decision in favor of the applicant. This total period shall be reduced by:

(1) any time attributable to appellate review before the expiration of 3 years from the filing date of the application for patent; and
(2) any time during which the applicant for patent did not act with due diligence, as determined by the Commissioner. The PTO will provide guidelines for determining due diligence in its implementing regulations. The lack of due diligence will be evaluated from the filing date of the application for patent.

While these provisions for patent term extension cover some of the more common types of delay in issuing a patent, clearly they do not address other possible causes of delay. The absence of a remedy for other types of delay will foster a healthy new sense of urgency for providing thorough Office actions and responses that are designed to advance the prosecution of patent applications to a final conclusion.

Transition provisions:

In an effort to ease the transition between a 17-year patent term and a 20-year patent term practice, the Uruguay Round Agreements Act contains provisions for relaxing PTO practice in two areas that typically lead to refiling an application as some type of continuing application. The two areas addressed are after-final practice and restriction practice. The purpose of these provisions is to give some applicants who have filed an application that could mature into a patent with a 17-year patent term ample opportunity to complete the prosecution of these applications without having to refile after the implementation date of the 20-year patent term provisions (June 8, 1995).

After-final practice

For applications that have been pending, either actually or effectively, for more than two years at the time the 20-year patent term provision goes into effect (June 8, 1995), an applicant will be able, by paying an appropriate fee, to obtain entry and consideration of any response after final action that would have been entered and considered by the examiner had it been presented before final action. An applicant will be able to take advantage of this provision on two separate occasions provided that the proposed response is presented with or before a notice of appeal to the Board. This will have the effect of enabling an applicant to essentially reopen prosecution of the pending application on two separate occasions by paying a fee, and avoid the impact of refiling the application to obtain consideration of additional claims and/or information relative to the claimed subject matter. The treatment accorded a third response after final, after two responses were entered and considered through the payment of a fee, will be in accordance with current after-final practice.

Restriction practice

For applications that have been pending, either actually or effectively, at least three years at the time the 20-year patent term provision goes into effect (June 8, 1995), some applicants will have the opportunity to have more than one independent and distinct invention ( 121) examined in the pending application for the payment of a fee. The PTO will not make or maintain a requirement for restriction in an application that is at least three years old unless:

(1) the restriction requirement was made at least two months before the effective date of the 20-year patent term;
(2) there has not been an action by the PTO in the application(s) over the three year period due to actions by the applicant - e.g., refiling before an action is mailed; and
(3) applicant does not pay the fee for examination of the additional inventions.

The purpose of these provisions is to enable an applicant who has not had a reasonable opportunity to file a divisional application in response to a new restriction requirement in certain applications that have been pending for at least three years to obtain examination of restrictable inventions in a single application without having to file a separate divisional application. This transition procedure will not be available in applications that are less than three years old at the time the 20-year patent term provision goes into effect. Accordingly, applicants should evaluate the outstanding requirements for restriction that have been applied in pending applications to determine whether a divisional application should be filed prior to the effective date of the 20-year patent term provisions.

Regulatory implementation

Proposed regulations to implement the 20-year patent term and provisional patent application provisions of the Uruguay Round Agreements Act law were published in the Federal Register at 59 =46ed. Reg. 93951 (December 12, 1994) and in the Official Gazette at 1170 Off. Gaz. Pat. Office 377 (January 3, 1995). A public hearing on the proposed regulations will take place on February 16, 1995, and the period for written comments closes February 17, 1995. Since June 8, 1995, is the effective date for such changes as the provisional patent application and 20-year patent term, the final rules relating to these items are expected to be published by May 8, 1995.

17/20-Year Patent Term for Enforceable Patents and Patents Issued on Pending Applications 154(c)

According to the GATT implementing legislation, the term of a patent that is in force on or that results from an application that was filed before the effective date of the 20-year patent term shall be the greater of the 20-year patent term described above or 17 years from the date of grant subject to any terminal disclaimers. This provision will provide existing holders of enforceable patents and future holders of patents that issue on an application that was filed before the effective date of the 20- year patent term provision (June 8, 1995) the longer of the 17- year or 20-year patent term provisions. This provision operates automatically. The PTO will not recalculate original patent terms. A conscious decision was made in drafting the GATT implementing legislation not to provide this alternative treatment to all future patents because the problems with "submarine" patents would not be addressed.

Although the granting of an extension of the patent term on existing patents to 20 years from the date of filing will have a retroactive effect, the implementing legislation provides that remedies of 283 (injunction), 284 (damages), and 285 (attorney fees) do not apply to acts which:

(1) were commenced or for which a substantial investment was made before the implementation date of the 20-year patent term; and
(2) which became infringing as the result of the retroactivity provision.

The implementing legislation further provides that infringing acts can be continued in the extended term only upon the payment of an equitable remuneration to the patentee.

Summary

Significant changes have occurred as a result of the NAFTA regarding the ability to prove a date of invention outside the U.S. for the purpose of obtaining a patent. Similar changes are contained in the GATT implementing legislation. These changes will not affect a significant number of applications in the U.S., and are unlikely to have any effect for many years to come. Needless to say, interference practice has not been simplified because of these changes.

The adoption of a 20-year patent term and creation of a provisional patent application present new opportunities and challenges for the entire patent community. Each participant in the community, from the inventors, their representatives, PTO staff, and the courts will be called upon to be more effective and efficient in granting valid patents, particularly in the clear minority of applications that may be pending for more than three years. Perhaps the new sense of urgency will provide a renewed focus on the desirability of presenting an application with a schedule of claims ranging from the broadest protection applicants seek to the most narrow that they are willing to accept, the desirability of preparing thorough Office actions that clearly identify patentable subject matter when it is present, and the desirability of presenting responses that clearly advance the prosecution of patent applications to their final disposition.

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