by Robert MITCHELL
Grace Period and First-to-File
Harmonization of substantial patent law is dead. The present Patent Law Treaty being negotiated in Geneva relates to harmonization of formalities and not anything that matters, such as "first to file" or "grace period". During the negotiations leading towards the first round of the Paris Convention some 110 years ago, the wish list of items to be included in the Convention was similar to the list of substantive provisions forming part of the Basic Proposal.1
Patent law seems to be among the most jealously guarded of national laws. This may be as result that Patent Law should be, more logically, an internationally enforceable unitary system. Regardless of the efforts of WIPO and predecessor organizations over the last century, individual countries have continued to improvise their patent laws without regard to their impact internationally. In many cases some national laws appear to be discriminatory to foreign applicants, while still arguably being within the letter of the Paris Convention.
On the face of it, the lack of a Grace Period is one of the unfriendly features, to an applicant, of most national or regional patent laws. The fact that the Grace Period exists in some countries such as the United States and Canada only raises the level of confusion to the applicant and to the public.2 Because of global markets and the need for an American or Canadian applicant to eventually file in foreign countries under the Grace Period, applicants from those countries cannot rely on the Grace Period.
The Grace Period, in Canada, allows an applicant to file a Canadian Patent even though the invention might have been published or used publicly anywhere in the world, by the applicant, before the filing date of the application in Canada.3
Aside from certain European industrial players, and the National Governments which they influence, most interested parties favor a Grace Period. Heinz Bardhele in his paper recites, that various associations, including AIPPI and FICPI4, have passed resolutions to the effect that a Grace Period should be introduced in domestic and regional patent laws. The advantages to the potential applicant are numerous.
The special circumstances surrounding University research argues strongly for a Grace Period. Within the last twenty years, the importance of the University researcher as a substantive user of the patent system cannot be underestimated or ignored. University research has gradually moved from pure research to applied research, as government funding of such research has not kept up with expenses. The United States Government, since the early 1970s, has allowed universities full ownership of patents, where it had previously been the major beneficiary of such rights. At the same time it transferred most of the burden of funding such research to the universities. Canadian universities have been undergoing a similar transition over the last 15 years.
The result is that universities have had to concentrate their research more and more to the applied sciences at the expense of pure research. By making inventions that are more useful in the immediate future, universities have used the patent system to protect their useful (industrially applicable) inventions. Any patent practitioner, who has dealt with the universities, is aware of the "Publish or Perish" policies of such institutions. The pressures that such policies place on the inventor-researcher results in premature publications of discoveries or inventions, even before the usefulness or industrial applicability can be fully appreciated.
However when the Grace Period is being considered for countries other than the United States, it must be considered in the context of a First-to-File system. The United States, as we know, has a First-to-Invent system. In such a system, as long as the inventor proceeds to file a patent application within the Grace Period of 12 months from publication or other novelty damaging act, the inventor will still have confidence that he will prevail, even if others have derived his invention or have filed before the first inventor on a similar invention.
A First-to-File system is an arbitrary system at best. Compared to a First-to-Invent system, it is brutal and a somewhat over-simplified method by which an inventor may be entitled to a patent. Opponents to a First-to-File system characterize the regime as a mere race to the Patent Office. In fact, in some national patent offices, the receipt of a patent application is determined by the hour and minute it is received.
However, in view of the adoption of a First-to-File regime by every industrialized country, with the notable exception of the United States, it is futile to argue the merits of a First-to-Invent system in the present global context.
Canada has adopted a First-to-File system as a result of amendments to its Patent Law adopted in October 1989. However the Canadian Parliament, while maintaining the Grace Period in the amended Act, omitted to protect the inventor who wishes to rely on the Grace Period, by juxtaposing a First-to-File system without having a provision in the Law that would protect an applicant, taking advantage of the Grace Period.5
The Grace Period does not fit easily into a First-to-File system. At first glance, a First-to-File system operates better on the basis of absolute novelty. The Grace Period was a so-called pillar of the Patent Law Treaty discussions leading up to the Diplomatic Conference of 1991. The proposal for a Grace Period was presented in the Basic Proposal preceding the Diplomatic Conference, as Article 12.6 The Grace Period as set out in Article 12 of the Basic Proposal7 provides that the Grace Period is counted back from the Priority Date.8
Opponents to a Grace Period, argue further that counting the Grace Period from the priority date, potentially adds another 12 months to the period of uncertainty about whether a patent application exists. In a system, with Absolute Novelty, this period of uncertainty is 18 months; but with a Grace Period counted from the priority date, that period of uncertainty can extend to 30 months.
One of the main objections for a country to adopt a First-to-File system, if it has a First-to-Invent system, is the concern for the fate of the first inventor. Under a First-to-Invent system a first inventor, although a late filer, could prevail in any number of situations. However, even in a First-to-Invent system, the first inventor, who chooses not to file a patent application, is also at a disadvantage. The first inventor may choose not to file because either he does not believe his invention to be patentable; has received a negative patentability opinion; wants to rely on his trade secrets, or, is ignorant of the advantages of proceeding under the patent system. This same first inventor might not contemplate publishing his invention to allow his invention to become published prior art, which would be patent-defeating on an international scale. This first inventor, under these conditions, if a resident of Canada or the United States, would be in a position without any rights, and might be obliged to stop the use of the invention, if a patent has been obtained by a later inventor who proceeds to obtain a patent.
In most European countries, a "Prior User Right" tradition has developed. That right may be expressed as a mere possession of the invention according to French Law, or to more restrictive pre-conditions, as in German Law, such as showing evidence of substantial investment either in preparation or in commercialization of the invention.
Thus, with a "Prior User Right" provision, an inventor who either chooses not to proceed with patent protection or has been preceded at the Patent Office and therefore loses all of his rights to a patent, can nevertheless, under certain conditions, gain immunity from a patent infringement suit on the basis of a patent that may have been obtained by another independent inventor who has filed a patent application after the first inventor at least began preparations to commercialize the "infringing" product, process or apparatus.
Prior User Rights were contemplated in the Basic Proposal. In Article 20, a first inventor, who was using or preparing to use the invention claimed in a subsequently obtained patent, acquired a Prior User Right under Section 20 of the Basic Proposal, and could continue to use the process, product or apparatus which otherwise would infringe the patent.
The prior user must meet certain conditions that are set out in Article 20, such as showing that the invention was being used or that effective or serious preparations were undertaken for such use. The right would be a personal right and not transferable without the sale of the enterprise or business in which the use or preparations for use were made.
There is therefore a strong and compelling reason to include prior user rights in a First-to-File system. However a Prior User Right, as presently proposed in Article 20 of the Basic Proposal, includes a feature which seriously limits the Grace Period as set out in Article 12.
According to Article 20, a prior user of an invention may be entitled to a Prior User Right even though the prior user may have derived its use from the Patentees earlier publication (published during the Grace Period). Thus, if a country should introduce a Prior User Right based on Article 20 of the Basic Proposal, the Grace Period, as contemplated by Article 12, would be flawed. The Grace Period can thus be undermined by 3rd parties who would have immunity from liability to the Patentee even though the 3rd party might have copied the invention from the applicant's earlier publication and should normally be an infringer.
Asian and European observers have argued that derivation in the case of prior user rights must be allowed less the Grace Period, according to Article 12, creates a first-to-publish instead of a first-to-file system.
Such reasoning is difficult to support when the principles of a Grace Period and Prior User Rights are carefully analyzed. If an inventor should publish fully his invention in a publication prior to filing his application, a prior art bar is created, effective against any later-filed patent application by other inventors. This concept exists presently in every patent system whether it is a First-to-File system or a First-to-Invent system and whether or not the Grace Period is incorporated in the national patent regime.
Under Article 12, the only person who can still file a patent application is the inventor who published the invention. If an inventor publishes his invention, in a first-to-file system with absolute novelty, a bar is created against every inventor, from filing a patent application claiming an invention described in the publication. Thus, in a sense, there exists presently, a de facto first-to-publish system.
The only difference between this scenario and a First-to-File system with a Grace Period is that the inventor, who has published, is excepted and can still file a patent application as long as it is filed within 12 months after the publication. In the former case, that is, absolute novelty, the inventor would no longer have the right to file a patent application.
To allow for prior user rights based on derivation of the information from the inventor's publication only creates an unmerited advantage for the party who has decided to copy from the publication. This scenario is unfair to the inventor who is relying on the Grace Period.
If a third party has independently invented the same invention, that person may be established as a prior user by providing evidence that he or she was not aware of the earlier publication.
Possibly, an improved Prior User Right provision that can be used in a First-to-File system with a Grace Period, would be based on an AIPPI resolution passed at the Amsterdam congress in 1989. The AIPPI resolution is as follows:
AIPPI is of the opinion that the rule should be mandatory."
According to the AIPPI resolution, any prior user who derives the use from a publication of the patentee, during the Grace Period, would not be entitled to Prior User Rights.
Another problem would be encountered unless Prior User Rights were included in a Patent Law Harmonization Treaty. For instance unless Prior User Rights are limited to the above AIPPI proposal, France would be able to maintain, in its national laws, Article 31 of the 1978 Law, which reads:
As can be seen, the scope of the Prior User Right in French Law is much broader than that contemplated by Article 20 of the Basic Proposal. A 3rd party acquires a Prior User Right, who might only have thought of the invention before the effective filing date of the patent. In France the 3rd party can expand his use of the invention within the French territory to include anything which falls within the scope of the claims. This allows the prior user to copy anything which is described in a patent and within the scope of the claims. One can easily see where some countries might extend Prior User Rights much more broadly than contemplated.
Thus it is important that Prior User Rights be harmonized when adopted in different countries so that the rights of Patentees are not eroded.
Canada is the only industrialized country to have introduced a First-to-File provision in its Patent Law, in recent years. However Canada maintained a 12 month Grace Period as a remnant of its previous law, which was based on a First-to-Invent system. As previously mentioned, Canadas Law is flawed because in some circumstances an inventor relying on the Grace Period may be barred from obtaining a Patent, even though an application may have been filed within the Grace Period. Someone who might have been first to make an invention but decided not to file a patent application in Canada yet proceed with its commercialization may be stopped by a later
filed application. Canada did not introduce an effective Prior User Right when brought in First to File provision.
As we can see, it appears that Prior User Rights may be considered important in a First-to-File system. However such a system becomes complicated when a Grace Period is introduced in the mix. The Patent Law as amended in Canada is an example of some of the problems that might occur if the provisions establishing a first-to-File system are mixed with a Grace Period and Prior User Rights are contemplated.
However I believe that with careful drafting such a mix can be satisfactorily accomplished.
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