Partnerships and Patentability

It's not uncommon for universities, private companies, and government labs to collaborate on research projects. These relationships allow researchers to interact and share information, which can lead to scientific advances and, in some cases, patentable inventions. But when patents are involved, problems can arise.

Under the current court interpretation of the patent statute, unpublished information--what lawyers call secret prior art--exchanged between researchers from different organizations, such as universities or companies, can be used to show that a resulting invention is not original and therefore not patentable. Although this situation rarely arises, it's an unexpected risk that surprises most researchers when it occurs.

To help remedy this situation, Congress has stepped in with legislation that would give the same protection to collaborative researchers as is currently given to researchers within the same institution. The bill, the Cooperative Research & Technology Enhancement Act, has cleared the House (H.R. 2391) and is on the Senate Legislative Calendar awaiting a vote by the full Senate (S. 2392).

According to Alan Ehrlich, patent counsel for the Environmental Protection Agency, the origin of the situation traces back more than 30 years. "There was kind of a working knowledge for a number of years that the prior art had to be public in order to be considered for invalidation of a patent," he says.

But in 1973, the courts--which interpret the laws and pass down decisions used as case law in future litigation--ruled that work from one researcher at one institution could be used to render not patentable an invention from another researcher at another institution, even if the work from the first researcher is unpublished, Ehrlich explains.

"Such invalidation of a patent is a rare event because the 'prior art' is secret," points out Thomas E. Kelley, patent counsel for Monsanto. To alleviate this situation, Congress took action in 1984 to pass legislation that bars such secret prior art from being used to invalidate a patent.

"The law says that if two researchers work for the same company or are under obligation to assign their invention to the same owner, then any unpublished work done by one of the two cannot be used against the other," Ehrlich explains. He adds that once the work is published, however, it is without question prior art and will be used to invalidate a given patent application.

THE ISSUE OF whether or not this protection from secret prior art applies to parties from multiple organizations was clarified in a 1997 U.S. Court of Appeals for the Federal Circuit case. The case, OddzOn Products Inc. v. Just Toys Inc., resulted in case law that limited the protection from unpublished work to researchers at the same organization. "Therefore, unpublished work by one party can invalidate a patent filed by another party at a different institution, even though the two parties are working cooperatively on the same thing," Ehrlich explains.

To avoid this situation, one can deal with this case law in several ways, Kelley notes. "One way--which sounds simple, but is in fact very difficult to achieve--is for collaborating organizations to create a common ownership for background information and future inventions. One difficulty is that it almost always fails to capture the totally unexpected inventions," he says. "Another difficulty is that most organizations are reluctant to make such assignments of property, and some, such as universities, are forbidden by law from doing so," he says.

"A more practical approach is to have minimal interaction in collaborations--an approach which frustrates the spirit of collaboration and stifles creativity," Kelley says. "The effect is that collaborations are viewed as not effective for research."

Although the pending legislation is receiving general support--particularly from universities that are leading the current reform--there are some concerns about it. Michael Lynch, chief patent counsel for Micron Technology, says: "The goal of this legislation is a positive in that it would be good to be able to facilitate cooperation between different entities; however, the bill approved in the House presents other practical problems that, in my view, overshadow the otherwise positive goal.

"The biggest concern would be the fact that you would now be allowing different patent owners to privatize the determination of what is prior art to certain applications and what is not," Lynch continues. Not all of the information that would be necessary to evaluate whether a patent is valid or not is available to the public, he explains.

"I think we have to be circumspect whenever we are allowing two parties to change the scope of prior art to their applications by a private contract," Lynch says. "We have to be very sensitive to the interests of third parties in being able to evaluate the validity of patents that are out there. For example, if third parties are not able to have access to all of the pertinent information such as the details of that contract, they are not able to make an evaluation relative to the scope of applicable prior art of a patent that they may be looking at as a potential barrier to them getting into a particular market area and thus cannot evaluate the validity or enforceability of that patent," he explains.

As the legislation moves forward, the devil will be in the details. The House bill does recognize some of the concerns raised by Lynch, but does not include specific language to address them. Whether the Senate will address these issues has yet to be seen.