Articles

New CREATE Act Provides Additional Protection, Bolsters Validity, For Inventions Jointly Made By Employees Of Multiple Entitites

Jenni Moen

On December 10, 2004, President Bush signed into law an amendment to 35 U.S.C. Section 103(c) that broadens the scope of collaborative research that is exempted as prior art for obviousness rejections. Prior to the  a mendment, Section 103(c) provided a safe harbor for inventions that were the product of collaborative efforts of co-inventors within a single company or other entity. The recent amendment, which has been largely welcomed by industry and the legal community, is called the Cooperative Research and Technology Enhancement (CREATE) Act. The CREATE Act broadens the scope of the Section 103(c) exception by encouraging and rewarding joint research and collaborative efforts among inventors in separate research organizations. More specifically, the CREATE Act allows the sharing of confidential information among research partners of differing entities without creating a bar to the patentability of their joint invention. Thus, the CREATE Act is of particular interest to companies, universities, government labs, and other organizations who commonly join others outside their organization for the purposes of inventive research.

The reform was prompted by a 1997 Federal Circuit decision, OddzOn Products, Inc. v. Just Toys Inc . , 122 F.3d 1396 (Fed. Cir. 1997), which ruled that confidential, non-public prior art may serve as evidence of obviousness. In OddzOn , a toy manufacturer brought action against competitors alleging, among other things, the infringement of a design patent relating to a football-shaped ball with a tail and fin structure. The defendant denied infringement and asserted that the patent was invalid. The court agreed and held that two confidential designs, which had been disclosed to the patentee and which had inspired the claimed invention, could be combined with publicly known prior art for an obviousness rejection. Basically, the court interpreted Section 103(c) to mean that prior art under Sections 102(f) or 102(g) could be used to establish the obviousness of an invention when there was no common ownership or assignment of the invention and information was shared among the collaborators, even if the information exchanged  was not publicly known. The court rationalized the decision by stating  that “[w]hile the statute does not expressly state in so many words that § 102(f) creates a type of prior art for purposes of § 103, nonetheless that conclusion is inescapable; the language that states that § 102(f) subject matter is not prior art under limited circumstances clearly implies that it is prior art otherwise.” Id . at 1403.

The holding of the OddzOn case has, until now, affirmatively limited the scope of the Section 103(c) exceptions to only those instances in which the inventors were employed by the same company or entity. In effect, the result of the OddzOn decision was to discourage collaborative research by inventors employed by respective multiple entities. Echoing the concerns of many collaborative entities, the House Judiciary Committee report supporting the CREATE Act states:

Many view the court's ruling as far-reaching . . . The court's ruling was arguably required by the language of the statute. Nevertheless, Oddzon represents a significant potential threat to inventors who engage in collaborative research and development projects . . . Put another way, the decision created a situation where an otherwise patentable invention may be rendered nonpatentable on the basis of confidential information routinely exchanged between research partners. Thus, parties who enter into a clearly defined and structured research relationship, but who do not (or cannot) elect to define a common ownership interest in or a common assignment of inventions jointly developed, can unwittingly create an obstacle to patent protection by simply exchanging secret information among themselves.

The CREATE Act seeks to address the possible anti-cooperation effect of the OddzOn holding on collaborative research. According to the Committee Report, by enacting the CREATE Act, Congress intends “to enhance the effectiveness and security of patent protection for inventions that arise from collaborative arrangements between multiple organizations.” Representative Smith, the Chairman of the Subcommittee, stated that the bill's purposes are “to promote communication among ‘team researchers' located at multiple organizations,” “to discourage those who would use the discovery process to harass co-inventors who voluntarily collaborated on research resulting in a patentable invention,” “to increase public knowledge,” and “to accelerate the commercial availability of new inventions.”

Specifically, the CREATE Act amends Section 103(c) to provide that patentability is not precluded in the case of research conducted across multiple entities as long as certain specified conditions are satisfied. These conditions include that: (1) the claimed invention was made by or on behalf of parties to a joint research agreement that was in effect on or before the date the claimed invention was made; (2) the claimed invention was made as a result of activities undertaken within the scope of the agreement; and (3) the application for patent for the claimed invention discloses, or is amended to disclose, the names of the parties to the agreement. Accordingly, the effect of the CREATE Act is to overturn the 1997 holding of the Federal Circuit in OddzOn . Under the new law, secret prior art of another is excluded for obviousness purposes as long as the claimed invention was made under a joint research agreement and the application discloses the names of the parties to the agreement.

The amendment applies retroactively. Accordingly, both pending applications, and recently-issued patents eligible for the filing of a reissue application, can benefit from this change in law. In most circumstances, however, reaping the benefits of the CREATE Act will require more than simply amending a patent application to identify the parties to the agreement. For example, when a double-patenting situation arises under the Act, a new form of double-patenting disclaimer must be filed. In addition to limiting the term of a patent issuing from the application, the disclaimer must also include a waiver of the right to enforce the patent separately from the cited patent. Although the CREATE Act itself is completely silent as to the requirement and form of such a disclaimer, the legislative history makes it clear that Congress intends that the disclaimer should include the separate enforcement waiver.

One other cautionary note is in order, because the meaning of the language of the amendment is not completely clear. While it is clear that the new law requires that a joint research agreement be in effect on or before the date the claimed invention was made, the phrase “the date the claimed invention was made” is not defined in the amendment or in the legislative history. Whether the date the claimed invention was made coincides with the date of conception or the date of a reduction to practice, or is instead meant to signify another milestone date altogether, is left for the courts to determine.

Finally, entities that participate in collaborative research and that may be affected by the new law should consider seeking advice on whether any joint research agreements in place meet the qualifications for the new safe harbor provision .