National Association of Manufacturers
Comments for the
USPTO Round Table Meeting
On Achieving Additional Harmonization of Patent Laws
December 19, 2002
In a notice dated October 28, 2002, (67 Federal Register 65786) the Undersecretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office requested public comments on achieving additional harmonization of patent laws. The National Association of Manufacturers (NAM) is pleased to present the following comments in response to that request.
The National Association of Manufacturers (NAM) is a voluntary business association of more than 14,000 member companies (including more than 10,000 small and mid-sized manufacturers) and 350 member associations serving manufacturers and employees in every industrial sector and all 50 states.
The NAM applauds the United States Patent and Trademark Office for returning to its efforts to seek greater worldwide patent harmonization. The NAM advocates a stance that would bring about a fully harmonized patent treaty that could act as the basis for reforming the patent systems in all member states. For instance, the NAM supports a treaty that would dispose of the U.S. "first-to-file" system and the "best mode" requirement, but such a treaty should also address the lack of a meaningful "grace period" and the demand for "industrial applicability" found particularly in the European Patent Office. Only through a unified approach to reach a final draft treaty will the interests of users of a harmonized patent system be attained.
The key component of harmonization efforts should be the formation of a treaty whereby U.S. inventors could receive meaningful cost savings along with a more efficient procedure for obtaining and enforcing patent rights throughout the world. Any draft treaty should therefore eliminate many of the complexities currently found in the patent statutes of the United States and in the systems of other member countries.
The NAM would most specifically advocate the production of a draft treaty that could be used as a prototype patent statute within all signatory states. The NAM advocates that the draft treaty contain a clear, comprehensive and definitive statement of all substantive requirements for patentability of any subject matter available for patenting. The draft treaty should include provisions calling for publications of all patent applications within a specific time period after filing of the priority documents and specific provisions related to the treatment of these publications as prior art. In addition to an exhaustive set of requirements for patent examination, the draft treaty should also include provisions related to post-grant, third-party patent oppositions, appeals and mechanisms for claim interpretation. Finally, the draft treaty should contain provisions whereby decisions of patent offices within any signatory country will be given full faith and credit in the patent offices of other signatory countries. In effect, this entails mutual recognition of the patent examination in the signatory countries.
Today, world business is entering the 21st century with a 19th-century, country-by-country patent system. That system is drowning under the huge amounts of rework that it generates. The NAM does not have an interest in harmonization as a matter of legal theory. The NAM does, however, have a vital interest in harmonization as one indispensable element in an overall strategy to reach an acceptably fast, cheap, global electronic-based system world within a decade. Specifically, the NAM continues to stand behind its comments to the PTO on harmonization a year ago:
(1) First-to-File System. The NAM has previously supported a position whereby the United States moved from its current "first-to-invent" system to a "first-to-file system" and currently still strongly favors such a change. Prior to the enactment of the Uruguay Round Agreements Act, NAM had proposed that this change should be made only as part of a broadly based international harmonization agreement whereby other countries also would make improvements in their respective patent systems. With the erosion of the advantages to U.S.-based inventors of the current "first-to-invent" system, we believe that the movement of the United States to a "first-to-file" system now has a greater urgency.
(2) Patent-eligible Subject Matter. The NAM supports a patent harmonization treaty that would provide patent eligibility for all subject matter that can be shown to provide a "useful, concrete and tangible result." The NAM does not support any requirement for patent-eligible subject matter to reside in a specific field of "technology," but believes that patent eligible subject matter should demonstrate some technical contribution above and beyond mere commercial impact. The NAM supports a system whereby all useful subject matter is patentable unless specifically excluded as part of the patent law.
(3) Requirements for Patent Disclosures. The NAM strongly supports a unified approach to all requirements for patentability, particularly the requirements of what should be in the patent disclosure. Inasmuch as all major patent systems throughout the world have enablement and written description requirements, but do not require the disclosure of the best mode, the NAM is supportive of a patent system that does not contain a "best mode" requirement.
(4) Technical Field Identifications. Some patent systems require the identification of the "technical field" to which the claimed invention relates. The NAM sees the identification of the technical field requirement as an overly restrictive and unnecessary formality that does not add any meaningful benefit to the examination or enforcement of the patent claims, or, if invoked as a substantive requirement, is likewise unwarranted.
(5) Unity of Invention. The NAM advocates the adherence to a "unity of invention" standard for examination of patents under a patent harmonization treaty. This standard has been found to be reasonable and simple to administer in both the European Patent Office and through the Patent Cooperation Treaty. However, no granted claim should be held invalid for an alleged lack of "unity of invention."
(6) Industrial Applicability. The NAM supports a system whereby the utility requirement is not bound directly to the concept of industrial applicability.
(7) Global Priority Date. The NAM supports a treaty whereby patent applications that are published or granted as patents in any signatory state are provided a global priority date as the prior art effective date. This change appears to be inherent in adoption of a "first-to-file" system. Unless undertaken as part of a move to a "first-to-file" system, this change would negate the current effects of the "Hilmer doctrine" which strictly limits the prior art effect in the United States of prior-filed non-US patent applications. NAM, therefore, supports this change as part of its categorical commitment to see the United States adopt a "first-to-file" system.
(8) Prior Art Effects. The NAM supports a system whereby the effective global priority date may be used for purposes of both novelty and obviousness.
(9) Grace Period. The NAM advocates the introduction of a limited grace period into any patent law harmonization treaty thereby allowing a patent to be granted even after a public disclosure by or on behalf of a named inventor or the assignee.
(10) Geographical Restrictions on Prior Art. The NAM is willing to accept the elimination of any geographical restrictions that limit the definition of what would constitute prior art.
(11) Loss of Rights Provisions. The NAM believes that the interests of simplification of the patent laws justifies elimination of several "miscellaneous" requirements for patentability, including the "forfeiture" under section 102(b), abandonment under section 102(d) and premature foreign patenting under section 102(d).
(12) Use of Multiple References to Determine Novelty.
The NAM favors a system whereby any reference used in a novelty attack on a claim should contain all elements of the claimed invention. If other references are needed to determine what a primary reference discloses to a person of ordinary skill in the art, then those other references should be permitted to be used.
(13) Obviousness Analysis. The NAM advocates an analysis of non-obviousness of patent claims using methodology closely aligned with the traditional United States practice arising from Graham v. John Deere and its progeny. The NAM believes that the unduly restrictive and inflexible "problem-solution" approach used by the European Patent Office is unacceptable.
(14) Multiple Dependent Claims. Any procedure that allows for the simple and inexpensive drafting and prosecution of claims is acceptable to the NAM. The NAM is in favor of a treaty that would allow multiple dependent claims that depend from other multiple dependent claims, so long as it is clear that any multiple dependent claims should be construed to include all limitations of the claims from which it depends.
(15) Claim Interpretation. The NAM believes that the language of the claim should be the dominating factor in any claim interpretation analysis. Furthermore, applicants should be given an option, for any claim that recites a means or step for performing a function, to be construed to cover either (a) only the disclosed means, i.e., the corresponding structure, material or acts described in the specification and equivalents or (b) all means, i.e., any means in an alleged infringing device that performs the recited function.
(16) Doctrine of Equivalents. The NAM strongly favors a system whereby the Doctrine of Equivalents is favored for the interpretation of claims in a post-grant infringement action.
(17) Filing Requirements. The NAM favors a system in which the patent application is filed by the real party in interest, whether that party is the individual inventor, a group of joint inventors or the assignee of the patent.
In conclusion, the NAM supports a global patent harmonization treaty designed to eliminate many of the complex and overly rigid aspects of patent systems around the world. In that vein, the NAM is willing to concede to such a treaty that would eliminate the "first-to-invent" and "best mode" requirements of United States patent law. In so doing, however, the NAM must see that the same treaty also eliminates many various encumbrances found in other countries such as technical field specifications, industrial applicability, subject matter restrictions related to computing, or overly literal claim construction reflected in the lack of an equivalency concept. Of utmost importance is a treaty that would enable inventors of all signatory states to obtain meaningful patent protection in major countries at markedly reduced cost and effort.
What can be done at the domestic level to assist small businesses in obtaining foreign patents or otherwise better protecting their intellectual property? Is there a need for legislation in this area? What current programs are considered successful?
The NAM supports the small-entity price break as a matter of social policy and has affirmed that support to Congress within the past year. At the same time, the NAM objects to the hidden cross-subsidy thereby imposed on all other users of the patent system and calls for a cost-based system with an open subsidy authorized and appropriated by Congress. The NAM believes that a true cost-based system for patent prosecution, as it has called for, by and large would benefit small businesses among its several merits. It is reasonable to believe that longer, more complex - and therefore costlier to process - applications tend to come from larger firms, with the exception of the biotechnology industry.
In general, other than the small-entity subsidy, it is very hard to identify changes to the patent system to benefit small business that do not benefit all users. E-filing, years overdue, is a system-wide improvement. To the extent that larger firms are better able to accept the costs and procedures of dealing with the old paper-based system, then e-filing may benefit small entities relatively more. Tax preparation software, by comparison, seems to confer a bigger benefit to individuals, compared to tax professionals. Just the same, the NAM prefers to argue for e-filing on its overall necessity rather than an inference that it helps small business even more than big business.
Relative to legislative changes, the NAM would repeat what it said above: the overall imperative is a fast, cheap, mutually recognized, harmonized global system. Eccentricities and encumbrances in the laws of all participating nations will have to be removed. The U.S. will not be immune to this need. Where U.S. law stands at odds with all its major trading partners, there can be no reasonable expectation that the rest of the world will conform to U.S. practice. Rather, the U.S. will have to conform to the rest of the world.
What are the major obstacles faced by small businesses when attempting to obtain patents in foreign countries (i.e., translations, formalities requirements, and different substantive requirements from the United States) and what order of priority would you assign to addressing such obstacles?
The question does not address perhaps the most painfully evident barrier: prohibitive costs from outlandish foreign fees that amount to a hidden tax on foreign business. Lifetime patent protection in the 50 largest countries costs about $500,000. Nobody can afford that, even large multinationals. For SMEs, these hidden taxes are prohibitive. The NAM has one small member company with a strong domestic market position that decided to forego patent protection in France for such reasons. Now it faces infringement from a company outside France selling into France, and it lacks recourse. The NAM has supported the International Chamber of Commerce in its efforts to call attention to these unjustified, hidden, anti-innovation taxes. The NAM continues to be unhappy at the lack of leadership from the U.S. Government on this issue - evidently, fallout from the continuing baneful practice of diverting some part of users' fees here domestically. Until the U.S. stops this practice, its hands will not be clean and its own leadership in question.
Regarding formalities, most foreign patent office require submission of a certified copy of the U.S. patent application. This practice is almost comic in its 18th-century fussiness and should be discontinued for paper even before it is superseded by encrypted electronic transmission. It has been discussed for 20 years but without movement. In Japan, even one large NAM member lost patent rights since it could not timely obtain from the USPTO an accurate certified copy. This needless activity eats up time and money. As the NAM understands it, the U.S., Japan, and the EPC, agreed to eliminate this cumbersome requirement last year, along with the elimination of the requirement for translations of patent applications. Yet we see no further progress on these issues, where there are significant cost savings in prospect and little risk.
Are any existing programs successfully helping small businesses to obtain patents in multiple countries? In particular, is the Patent Cooperation Treaty (PCT) sufficiently used by small businesses when seeking patent protection overseas? How should the PCT be improved?
The NAM does not have any statistics that might be of use here. If the PTO finds it necessary or worthwhile, it could develop statistics from its own workflow. Again, while the NAM hesitates to assess the relative advantage to smaller or larger business, being able to establish a global priority date with a reasonable grace period would greatly facilitate business planning and would make opting for patent protection more attractive relative to trade secret. Deterred by huge up-front costs, smaller businesses may well rationally opt for trade secret protection.
It may be worthwhile to explore the relationship between patent protection and arbitration. The NAM is aware of one small member company that markets abroad successfully by means of technology transfers to newly created special-purpose joint ventures. The JV itself then licenses technology only under condition that disputes be resolved not in national court under the Paris Convention, but in arbitration in English. The NAM does not know how widespread this practice is, or how many other companies rely on it or something similar. There is a perception, however, that arbitration is a more reliable venue than national courts with their different jurisprudence.
The PTO may also wish to look at the European Union's investigation into IP insurance programs for smaller business, with a conference in Denmark in October under the Danish Presidency. Although the NAM is not aware of any evidence of market failure, there is a perception on the part of some in Europe that an inability to obtain insurance on acceptable terms creates an international marketing barrier for SMEs.
Should any new initiatives (beyond current patent harmonization efforts) be undertaken internationally?
The Beijing WIPO Summit on April 24-26 provides the perfect opportunity for the United States to exercise leadership at a new level. The NAM expects to be developing a formal public position within the next month or so calling on the U.S. Government to seize the opportunity to lead the major trading nations of the world to a harmonized, mutually recognized, electronic, cost-based patent system. Only that kind of system can meet the needs of world business in the 21st century. Only that kind of system can make it possible for smaller companies to enter this arena confidently. The experience of recent decades confirms that national patent offices and bar associations will not push the radical changes that are minimally needed for technology to make the contribution it needs to make to improve world economic performance and living standards. Leadership from the top is needed.