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 STRATEGY FOR HARMONIZATION  
OF THE US PATENT SYSTEM WITH  
THE INTERNATIONAL NORM

 

Takashi Kinoshita 

 

Master’s Project
Commercial Diplomacy
Monterey Institute of International Studies

 

Advisors:  
Geza Feketekuty, Bill Monning, and William Arrocha
 

May 2001


TABLE OF CONTENTS  

SCENERIO

BACKGROUND

ANALYTICAL PAPER

COMMERCIAL ANALYSIS

LEGAL ANALYSIS

POLICY ANALYSIS

STAKEHOLDER ANALYSIS

STRATEGY PAPER


Assuming the role of an independent consultant hired by the International Relations Bureau of Keidanren (Japanese Federation of Economic Organization), I will propose a strategy that changes the unique US patent system. Through commercial, economic, legal, and political analysis, I will show that the current US “first-to-invent” patent system is an impediment to international business activities. I will propose that Keidanren, by building a coalition with other trade organizations and government agencies in developed countries, including the US and Japan , press the US to shift its patent system from its “first-to-invent” to the near universal “first-to-file” system.

The US patent system, based on the “first-to-invent” principle, is unique. All other countries employ the “first-to-file” system, and this discrepancy is an impediment in terms of predictability and certainty of patent protection. Under the “first-to-invent” system, if more than one applicant files patent applications claiming the same subject matter, the USPTO (United States Patent and Trademark Office) institutes so-called “interference proceedings” in order to determine who is truly the “first-to-invent.” The interference proceeding is costly and time consuming. It becomes a huge impediment, not only to foreigners, who want patent protection in the US, but also to Americans seeking protection overseas, since the US is the only country that employs a “first-to-invent” system. Despite the fact that international bodies such as WIPO (World Intellectual Property Organization) and WTO (World Trade Organization) are trying to create a patent system that assures patent protections all over the world, the United States still strictly maintains its 200-year old system. On behalf of Keidanren, which represents major Japanese companies, the US is urged to change its patent system to create a “world patent system” under the “first-to-file” principle.

 

KEIDANREN (Japanese Federation of Economic Organization)

Keidanren is the largest business association in Japan. Members represent 1,005 of Japan ’s leading corporations, including 62 foreign firms. One hundred eighteen industry-wide groups such as manufacturing, trade, distribution, finance, and energy are represented. The organization’s goal is to resolve major problems facing the business community in Japan and abroad in order to realize the Japanese and world economies’ sound development.[1] Committees in Keidanren deal with many different policy issues. These committees gather input from the business community, draft position papers, and delivering them to the government and to political parties. Keidanren also cooperates with governments and business organizations in other countries to solve international problems. The International Relations Bureau conveys the views of the Japanese business community to international organizations, and helps to formulate international rules governing trade and investment. It also frequently exchanges opinions not only with the Japanese government, but also with business communities overseas. Keidanren recognizes that Japan faces important changes this century, such as economic globalization. In order to meet such challenges, Keidanren and Nikkeiren (Japan Federation of Employers Association) chaired by Mr. Hiroshi Okuda, Toyota Motor Corporation, agreed to merge by May 2002. The new organization’s name will be Japan Business Federation (JBF).

Patent and Its Protection

 

A patent is an exclusive right granted for an invention which protects the owner. The protection is granted for 20 years from the date of filing a patent application. The invention cannot be commercially made, used, distributed or sold without the patent owner’s consent during that limited time. A patent owner has the right to license others to use the invention or even sell the patent to them. When a patent protection expires, an invention becomes commercially available to others.[1]

 

Patent rights reward individuals for their marketable inventions, thereby encouraging the innovation that continuously enhances the quality of human life. Accordingly, patents provide not only protection for the owner but valuable information and inspiration for further research and development.[2]

 

In order to acquire a patent, the invention should fulfill the following conditions.

 

  1. Practical Use: the invention is subject to practical use.
  2. Novelty: Invention should not be known to existing knowledge, or “prior art.”
  3. Inventive Step: Invention could not be deduced by a average knowledgeable

person in the technical field.

 

Patent systems, which protect technological innovations, differ from country to country. A national patent office or a regional office, such as the European Patent Office and the African Regional Industrial Property Organization, is in charge of granting patents.  Under regional systems, an applicant requests protection for the invention in one or more countries, and each country decides whether to offer patent protection within its borders.[3]

 

“First-to-Invent” and “First-to-File”

There are two principles for patent issuance, the “first-to-invent” and the “first-to-file” systems. Under the “first-to-invent” system, a patent is granted to the first person to invent a subject matter. Under the “first-to-file” system, a patent is granted to the first person to file the patent application. Currently, the US is the only country utilizing the “first-to-invent” system. Ever since the Philippines changed their patent system from “first-to-invent” to “first-to-file,” the rest of the world has abided by the “first-to-file” system. The conflicting standards become an issue if two or more applicants file for patent application, claiming the same invention.

Trend Toward International Harmonization

In response to global business practice, the growing trend toward international harmonization of intellectual property laws is also evidenced by the number of treaties and agreements accepted by participating countries in the World Intellectual Property Organization and the World Trade Organization.

 

WIPO Treaties

WIPO (World Intellectual Property Organization) is attempting to draft an international treaty to harmonize intellectual property laws. The Committee of Experts of the WIPO discusses the provisions of each draft treaty at the annual meeting. Delegations from each participating nation vote on adoption of specific provisions and articles to select the provision that represents their nations’ interests. In its final version, all the countries ratifying the agreement will adopt the draft treaty.[4]

 

The WIPO simplifies and reduces the cost of making individual applications or filings in all the countries where a patent protection is sought through such treaties. By providing a stable environment for the marketing of intellectual property products, it also facilitates international trade and investment.[5]

 

Paris Convention for the Protection of Industrial Property

The Paris Convention was designed in 1883 to help the applicants of one country obtain protection in other countries for their intellectual creations in the form of industrial property rights, such as Inventions (patents), Trademarks, and Industrial designs.[6] The Paris Convention was the first major international treaty regarding patents. The United States , Japan and most developed and developing nations are members of the convention. It guarantees national treatment, which allows the inventors from any signatory nation to claim priority based on the filing date of its first application. However, in order to obtain foreign patents, it is still necessary to file separately with a particular nation under this convention.[7]

 

Patent Cooperation Treaty

WIPO drafted The Patent Cooperation Treaty (PCT), which was established in 1978.  PCT introduced “a single centralized filing system,” which allows an inventor to file a single application at the Patent Office of any member nation for patent protection in the signatory nations. Forty countries that account for over 90% of the total number of world filings are signatories. As of February 7, 2001, after Ecuador became a member, 110 countries in all had signed the treaty.[8]  The PCT division of the local Patent Office examines each patent application for novelty, non-obviousness and utility. The application may then be submitted for examination by the patent offices of other nations. However, the patentability of the invention is still examined under patent laws of each member nation and patents are granted by other countries only if their requirements are satisfied.[9]

Flow of International Patent Application under the PCT 

Procedure in Country A

 

Application for domestic

 

®

International application

 

®

International prior art search

 

®

Preliminary examination

 

®

 

Procedure in Country B

 

Procedure in Country C

 

(Source: http://www.furutani.co.jp/kiso/tokkyo3.html)  

 

Patent Law Treaty

The Patent Law Treaty (PLT) aims to harmonize national patent formalities throughout the world. Referring to the provisions of the PCT, the regulations under the PLT attempt to avoid creating different standards for patent formalities with respect to national and international applications.

 

Through harmonization of procedures under national laws, the applicants are expected to have easy access to worldwide patent protection.  They should also enjoy lower fees since the PLT aims to reduce the administrative costs of Patent Offices.[10]

 

PLT includes provisions on harmonization of patent applications, procedures of examination, standards for obtaining a patent, and rights and remedies under a patent. It aimed to harmonize conflicting patent systems such as “first-to-file” and early publication. During a Diplomatic Conference in 1991 however, divergent views became apparent, as the US was adamant in its desire to maintain the “first-to-invent” system. In 1995, participating nations agreed to take another approach to harmonization, covering matters concerning the formality requirements of national and regional patent procedures.[11]

 

GATT/WTO

Another international organization which deals patents is the World Trade Organization (WTO). Participating countries established the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) on April 15, 1994 , in the Uruguay Round GATT Multilateral Trade Negotiation, which was succeeded by the WTO. The TRIPS Agreement encompasses the protection and enforcement of intellectual property rights, enhancing the value of WIPO’s program. The objective of TRIPS is to protect intellectual property rights around the world under common international rules.[12]

 

TRIPS negotiations focused primarily on minimum standards of intellectual property protection in the international community. Japan and members of the EU attempted to obtain changes in US patent law, particularly the elimination of the “first-to-invent” principle. Even though the GATT draft text proposed that member countries adopt the “first-to-file” principle on October 10, 1990 in the Uruguay round of negotiation, the US delegation fought to keep its law and the text was rejected on November 23, 1991 .[13] Currently, the TRIPS Agreement does not require the “first-to-file” system.

 

The TRIPS Agreement Article 27.1 requires national treatment to Member countries. Without discrimination, and through the normal tests of novelty, inventiveness and industrial applicability, the countries must make patents available for any inventions in the field of technology. Patents must be available and patent rights enjoyable without discrimination regardless of the place of invention and whether products are imported or locally produced.[14] TRIPS also regulates that the term of protection should not expire before twenty years, counting from the filing date under Article 33.[15]

 

Regional harmonization in Europe

Nineteen countries in Europe signed the European Patent Convention (EPC).[16] The EPC established procedures whereby an applicant could file a single patent application (in one of three languages, English, French, or German) at the European Patent Office (EPO).[17] Applications through the EPC undergo a single examination proceeding, even though the ultimate decision regarding patentability still depends on each signatory according to its own patent law. The European Patent Office does not grant a single European patent. The EPC is expected to incorporate 30 countries, including the entire former Eastern block of Poland , Hungary , the Czech Republic , the Slovak Republic , and Bulgaria .[18]

 

Another negotiated convention is the European Community Patent Convention in 1972. This agreement aimed to create a single patent right, effective throughout the European Community and granted by the EPO.[19] However, It has not yet entered into force.[20]

 

Trilateral Cooperation

The Japanese Patent Office, together with the European Patent Office (EPO) and the US Patent and Trademark Office (USPTO) launched Trilateral Cooperation in 1983. Trilateral Cooperation aims to coordinate the administration of patent functions for possible mutual benefits. Exchanged is information and views regarding patent administration, patent documentation and classification, automation programs and patent examination practices. Trilateral Offices hold a Conference every year to increase understanding and development in the field of patent systems. Trilateral Offices recognized that “the globalization of industry and trade would create the need for a worldwide system for the grant of patents.” This program is beneficial for users in terms of cost reduction, quality of patents granted, dissemination of patent information, and the timeliness of processing.[21]

 

 

United States Patent Law

 

The Constitution of the United States gives Congress the power to enact laws relating to patents. Article 1, section 8, reads “Congress shall have power…to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” Under this power, Congress has enacted various laws relating to patents. The first patent law was enacted in 1790. The law now in effect is a general revision which was enacted July 19, 1952 , and which came into force January 1, 1953 . It is codified in Title 35, United States Code. The patent law specifies the subject matter for which a patent may be obtained and the conditions for patentability. The law establishes the Patent and Trademark Office for administering the law relating to the granting of patents, and contains various other provisions relating to patents.[22]

 

Patent Requirements

There are four requirements for inventions to be patentable.[23]

 

Statutory requirement: The invention must fall into one of the five “statutory classes” of things that are patentable:[24]

 

1.            processes

2.            machines

3.            manufactures (that is, objects made by humans or machines)

4.            compositions of matter

5.            new uses of any of the above

 

Novelty requirement: Novelty requirement states that an invention cannot be patented if certain public disclosures of the invention have been made. The statute which explains when a public disclosure has been made (35 USC Section 102) is complicated and often requires a detailed analysis of the facts and the law. The most important rules, however, are that an invention will not be patentable if:

 

1.            the invention was known to the public before “invented” by the individual seeking patent protection

2.            the invention was described in a publication more than one year prior to the filing date

3.            the invention was used publicly, or offered for sale to the public more than one year prior to the filing date.

 

Useful requirement: US patent law specifies that the subject matter must be “useful.” The term “useful” implies both that the subject matter has a useful purpose and that it is operative. That is, that the invention can perform the intended purpose. A machine that could not do so would not be called useful, and accordingly would not be granted a patent. In most cases, the usefulness requirement is met in computer and electronic technologies.


Footnotes:

[1] Keidanren http://www.keidanren.or.jp/english/profile/index.html

[1] World Intellectual Property Organization, “about Intellectual Property,” http://www.wipo.org/about-ip/en/index.html?wipo_content_frame=/about-ip/en/patents.html
[2] Ibid
[3] Ibid
[4] WIPO “Intellectual Property Protection Treaties,” http://www.wipo.int/treaties/ip/index.html
[5] Ibid
[6] Ibid
[7] Sheldon & Mak “First-to-file v. First-to-invent, A Bone of Contention in the International Harmonization of US Patent Law,” http://www.usip.com/articles/1st2fil.htm
[8] See Appendix
[9] Ibid
[10] Ibid
[11] WIPO “Intellectual Property Protection Treaties,” http://www.wipo.int/treaties/ip/index.html
[12] WTO, “The Overview: the TRIPS Agreement,” http://www.wto.org/english/tratop_e/trips_e/intel2_e.htm#patents
[13] Sheldon & Mak “First-to-file v. First-to-invent, A Bone of Contention in the International Harmonization of US Patent Law,” http://www.usip.com/articles/1st2fil.htm
[14] Ibid
[15] Ibid
[16] The 19 member nations are Austria , Belgium , Cyprus , Denmark , Finland , France , Germany , Hellenic Republic , Ireland , Italy , Liechtenstein , Luxembourg , Monaco , Netherlands , Portugal , Spain , Sweden , Switzerland , and United Kingdom .
[17] Gerald J. Mossinghoff, “World Patent System Circa 20xx, A.D.” http://lawtech.law.yale.edu/symposium/99/speech_mossinghoff.htm
[18] Ibid
[19] Sheldon & Mak “First-to-file v. First-to-invent, A Bone of Contention in the International Harmonization of US Patent Law”

[20] This is largely because there is the problem with enforcement and translations for a single European patent right. In addition, Countries such as Switzerland , major participant of EPC are not the members of European Union.

[21] Trilateral Cooperation “About Trilateral Cooperation,” http://www.jpo-miti.go.jp/saikine/tws/gen-1.htm
[22] Sheldon & Mak “First-to-file v. First-to-invent, A Bone of Contention in the International Harmonization of US Patent Law,” http://www.usip.com/articles/1st2fil.htm
[23] US patent law Section 101 “Patent Requirements” http://www.bitlaw.com/patent/requirements.html
[24] http://www.patents.com/patents.htm#patentable

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