International Patent & the First-to-File System
On June 8, 2005, H.R. 2795, the Patent Reform Act, was introduced in the House of Representatives. Hearings were held on the 8th of June by the House Committee on the Judiciary, on the 9th by the House Subcommittee, and in September by the House Committee on Courts, the Internet, and Intellectual Property. As of January 2006, no further action had been taken on this bill.
The Patent Reform Act, if passed, would make significant changes to Title 35. The single most important change would be the shift from our current “first-to-invent” system to the “first-to-file” system used in most other nations.
Recall that the novelty requirement of §102(a) bars patents on inventions known or used by others…before the invention thereof by the applicant….” (emphasis added). The whole basis of the U.S. patent system is that the exclusive patent rights to a new product (or process) should go to the first person who invented it. This has certain merits, not least of which is that it seems to agree with our instinctual concept of fairness insofar as the most creative and prolific individuals will benefit the most from using their skills.
Example: On May 5, 2005, Deborah invents a birthday hat for dogs which is uniquely designed to stay on their heads. On August 1, 2005, PetProducts, Inc. independently invents a nearly identical celebratory chapeau for dogs. Under the current U.S. system, even if PetProducts, Inc. files for a patent right away, Deborah could prevent PetProducts from being granted the patent and could in fact receive her own patent on the novel and useful (!) product.
It is important to note here that Deborah’s ability to prevail under the first-to-invent system depends on her ability to prove that she invented the product before PetProducts did. She will have to convince the PTO that her creation pre-dates the nearly identical creation for which PetProducts is seeking a patent.
Patent interference cases, such as the one which would ensue between Deborah and PetProducts, accounted for less than 1% of all patent filings between 1983 and 2004 (there were 3,253 two-party interferences during that period). “A Sea Change in Patent Law,” Steve Seidenberg, ABA Journal, January 2006. Nonetheless, these interferences can be costly, and they create a certain degree of uncertainty in the outcome of the patent application process for inventors filing applications in the United States. It might seem fair to grant Deborah the patent in the example above, but what if she spends a great amount of money trying, in vain, to prove that she invented the dog hat first? PetProducts keeps impeccable records of their research projects, while Deborah has only the testimony of her husband (and the love of her dog).
Unlike the U.S., other countries base their patent on a first-to-file system. In such a system, an applicant does not need to worry about anyone who might have thought up and used the invention before the applicant did, so long as nobody has yet filed for a patent on the invention. A later inventor can obtain the government granted patent monopoly simply by beating a prior inventor in the race to file.
Example: Deborah knows that the U.S. patent system is based on first-to-file. Throughout the month of May she works with a patent attorney who drafts her claim, and on June 16 she files her patent application. In this scenario, she need not worry about providing evidence about the date of invention, as beating all others to the application process establishes her priority.
Example: On August 1, PetProducts, Inc. files their patent application for the dog hat. Regardless of Deborah’s pleas for fairness, and despite overwhelming evidence that she invented the hat first, PetProducts’ patent application will not be denied simply due to Deborah’s prior invention of the product.
Because other nations already use the first-to-file system, without this change in U.S. patent law, it would be impossible to achieve the sort of international harmony which our bodies of copyright and trademark law now enjoy. In his ABA Journal article, Seidenberg suggests that the intuition many hold regarding our first-to-invent system (that it is more equitable for individual inventors) might be incorrect, and that the system might in fact favor large corporations.
While this author believes that Seidenberg’s data might not be as dispositive as Seidenberg believes, the article is well-written and covers the basics of how our first-to-invent system compares with the internationally accepted first-to-file system. Large corporations can be slow to move and the delay between invention by the research and development department and patent application by the legal department might be significant. Then again, large corporations are sophisticated enough to easily draft the appropriate filings and wealthy enough to pay the application fees. Individual inventors, on the other hand, might be able to decide to file far more quickly, but hiring a patent attorney takes money and properly drafting the claim takes time. Individuals might therefore be more selective about patent applications while corporations might be likely to file applications for just about everything they invent, even if the product’s market value has yet to be determined.
A great deal of speculation is involved here, and it seems unlikely that anyone could be make a final determination as to which system benefits which group of inventors. That said, it is clear that if the United States wants to join the rest of the world in its approach to patents, as it has in its approach to other areas of intellectual property law, the first-to-invent system will eventually have to give way to the first-to-file system. For that reason alone, we should keep a careful eye on H.R. 2795.
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