1. Introduction to the Cooperative Research and Technology Enhancement Act of 2004 CREATE Act Prepared by Office of Sponsored Programs & Research Administration April 2007, Rev. January 2008

2. 2 Overview Patent law basics –Prior art Undesirable results of applying the law –Bass case –Congressional response No. 1 –Oddz On case –Congressional response No. 2: CREATE CREATE Act issues Conclusion

3. 3 What is the CREATE Act? Signed into law by President Bush – 12/04 Amends the Patent Act at 35 U.S.C. § 103(c) Purpose: To encourage collaborative research through sharing of confidential information Effect: Eliminates certain legal obstacles to obtaining patent protection for inventions arising from collaborative research

4. Patent Law Basics

5. 5 Patent law’s constitutional origin The Congress shall have the 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; –U.S. Cont. Art. I, § 8

6. 6 The role of Congress Congress enacts patent laws under its constitutional grant of authority to protect discoveries of inventors. Patents grant an inventor the right to exclude others from producing or using the inventor's discovery or invention for a limited period of time.

7. 7 Patent laws Statutes: The main body of law concerning patents is the Patent Act of 1952, codified at Title 35 of the United States Code (35 U.S.C. § xx) Regulations: The U.S. Department of Commerce, through the U.S. Patent and Trademark Office, implements the patent statutes by rulemaking. USPTO regulations are codified at Title 37 of the Code of Federal Regulations (37 C.F.R. § xx.x)

8. 8 Patentable Inventions Patent Act says the invention must be: –Useful (35 U.S.C. § 101) –Novel (35 U.S.C. § 102) –Non-obvious (35 U.S.C. § 103)

9. 9 Novelty 35 U.S.C. § 102(f) and (g) A person shall be entitled to a patent unless: –(f) he did not himself invent the subject matter sought to be patented, or –(g) the invention was made in the U.S. by another person (prior to the patent application) who has not abandoned, suppressed or concealed it.

10. 10 Novelty provisions §§ 102(f) and 102(g) 102(f) –Prevents inventor from obtaining a patent if there was: (1) a prior conception (2) communicated to the inventor. 102(g) – Prior work (reduction to practice) of another can block a patent of a second inventive entity even if the second entity had no knowledge of the invention.

11. 11 Obviousness (35 U.S.C. § 103) A patent may not be obtained though the invention is not identically disclosed or described as set forth in § 102 if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art …

12. 12 Obviousness provision §103(c) Even if the invention is new, further inquiry is required to determine if it is new enough. A patent may not be obtained if, in light of prior art, the invention would have been obvious when it was made.

13. Undesirable results of applying the law

14. 14 The Bass invention

15. 15 Jenkins patent issued 10/24/67 Jenkins patent issued 10/24/67 Bass & Horvat patent issued 4/25/67 Bass & Horvat patent issued 4/25/67 Jenkins application filed 10/13/64 Bass & Horvat application Filed 8/23/65 Bass & Horvat application Filed 8/23/65 Bass, Horvat & Jenkins application filed 10/11/65 Bass, Horvat & Jenkins application filed 10/11/65 Reduced to practice and held prior art under 102(g) Novel but obvious under 103(c) because prior Jenkins invention

16. 16 In re Bass 474 F.2d 1276 (CCPA 1973) Three inventors applied for a patent on vacuum system for collecting waste from textile carding machines. USPTO applied §§102(g) and 103 to reject the application. 102(g) – Appellate court treated each new combination of inventors as a distinct inventive entity. 103(c) - Invention was obvious in view of the prior art: previous invention by Jenkins.

17. 17 Undesired result Large research organizations could lose ability to patent inventions created by in- house teams if team membership changes even slightly

18. Congressional response to Bass

19. 19 Amended 103(c) to effectively exclude “in-house” knowledge from definition of prior art. Prior inventions of in-house team do not bar patenting of new inventions of a different in-house team when prior invention and new invention are under common ownership. Patent Law Amendments of 1984

20. 20 1984 Amendment to 103(c) Subject matter developed by another person that qualifies as prior art only under §§102(e), (f) or (g) shall not preclude patentability where the subject matter and the claimed invention were, at the time the claimed invention was made, owned by the same person or subject to an assignment to the same person.

21. 13 years later …

22. 22 OddzOn v. Just Toys 122 F.3d 1396 (Fed. Cir. 1997) Third party discloses its foam football designs to OddzOn OddzOn patents Vortex football (1994) Just Toys markets its Ultra Pass football (1994) Lawsuit

23. 23 OddzOn Products v. Just Toys 122 F.3d 1396 (Fed. Cir. 1997) OddzOn – Vortex football (patent 1994) Just Toys – Competing Ultra Pass football OddzOn alleges patent infringement Just Toys counterclaims: OddzOn patent was obvious by application of 102(f) due to confidential disclosures made by third party

24. 24 OddzOn decision Two confidential ball designs that inspired the OddzOn inventor were secret prior art Secret prior art can be evidence of obviousness under § 103(c) In other words, an otherwise patentable invention could be denied a patent simply because researchers exchange confidential information.

25. 25 Despite prior art… Ultimately, the Court: –Upheld the OddzOn patent –Found Just Toys did not infringe the OddzOn patent

26. 26 Undesired results Inventions not eligible for the §103(c) safe harbor created in 1994 when separate entities are involved Chilling effect on collaborative research between universities and between industry and university because universities cannot assign IP rights to federally funded inventions Disincentive to exchange confidential information in collaborative research endeavors because of obviousness obstacle

27. Congress responds again

28. 28 CREATE Act aka Smith-Hatch Act 35 U.S.C. § 103(c)(2): Prior art and a claimed invention are considered owned by the same person for purposes of analyzing the obviousness prong of patentability: –Claimed invention made under a “joint research agreement” in effect on or before the invention is made –Claimed invention made within scope of the joint research agreement –Patent application discloses all parties to the joint research agreement

29. 29 In other words, Secret prior art shared among researchers from different organizations will not block the patent of an invention resulting from the collaborative efforts IF there was a pre-existing joint research agreement.

30. 30 Joint research agreement Means a written contract, grant or cooperative agreement entered into by two or more persons or entities for the performance of experimental, developmental or research work in the field of the claimed invention.

31. 31 CREATE Act situation Joint research agreement involving 2+ entities Existence of prior art – not necessarily reduced to practice or disclosed in a patent application Invention arises from the joint research

32. 32 Invoking the Act Applicant files for patent Examiner rejects patent as obvious Applicant bears burden of overcoming rejection by invoking 103(c) –Statement that invention was made by or on behalf of parties to valid JRA –Invention made within scope of JRA –Amend specification to disclose parties to JRA

33. 33 Desired Result Examiner treats the application and the prior art as commonly owned for purposes of 35 U.S.C. 103. Not obvious in light of prior art.

34. 34 What if prior art is a patent? Double-patenting concern: Using 103(c) to patent an endless series of “obvious” variations on the original Solution: Terminal disclaimer Effect: Term of later patent expires with the first one and parties waive right to enforce the later patent separately But owner of first patent isn’t required to enforce

35. 35 Intended results of CREATE Encourage communication between inventors employed by different entities Foster economic development and technology transfers to public use through increased research collaborations Eliminates obstacle to patenting an invention arising from collaborative research when one or more researchers has prior art

36. 36 Potentially unintended results Unanticipated discoveries outside the scope of agreement or field of invention Unintentional collaboration: Inability to block patents arising from exchange of confidential info Race to obtain the first-issued patent to control the later-issued patent Typical inventor issues

37. 37 The ultimate questions: Does a research collaborator have prior art that could render a future invention arising from collaborative research obvious and not patentable? If yes, does the University/PI want to be able to invoke CREATE Act in order to overcome a patent application rejection based on obviousness?

38. 38 Contracting considerations Scope of research – too broad or too narrow could be detrimental May need contract amendments to ensure the research remains within the scope of joint research agreement Identify every collaborating researcher before any inventive activity takes place

39. 39 University’s general positions If there is potential for an invention arising from collaborative research, then CREATE probably should apply Research agreements with start-ups: CREATE Act probably should apply MTAs/NDAs – Generally not joint research agreements Master agreements: Consider the specific research project, not the master in isolation

40. 40 Sample contract provision The Parties agree by marking this box [x] that this Agreement constitutes a “joint research agreement” as that term is defined under the Cooperative Research and Technology Enhancement Act of 2004, 35 U.S.C. § 103(c)(3). In the event of any Inventions, the Parties will reasonably cooperate in invoking the CREATE Act and its companion regulations in order to overcome an obviousness objection to a patent application based on prior art.

41. 41 Conclusion Consider whether the research is collaborative and whether inventions are probable or intended Ask whether any researcher has prior art Discuss implications with PI Make sure the scope of joint research agreement covers the probable invention