CREATE Act Benefits Joint Inventors & Their Organizations

On December 10, 2004, the United States Congress updated the "obviousness" provisions of the U.S. Patent Act with an eye toward fostering joint research efforts. The proposed change, which became law with the enactment of the Cooperative Research and Technology Enhancement Act (CREATE) of 2004, was to allow certain benefits available to both individual inventors and companies to also become available to those participants of joint research agreements.

The term "obviousness" is defined in patent law as it would be defined in ordinary conversational use of the word, with one significant caveat. "Obviousness" must be determined at the time of invention, which means no hindsight is permissible, which is a sensible rule given that everything is obvious once you know about it. A patent may not be obtained if it contains only obvious differences from prior art. An invention is considered obvious 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 to which said subject matter pertains. In contrast to the above described newness determination, obviousness requires the presence of more than a single reference.

In 1973, the Court of Customs and Patent Appeals decided a case, In re Bass, that dealt a serious blow to the simplicity of the previously mentioned general rule. In many situations, there is not a single inventor, but two or more individuals who are co-inventors. The presence of co-inventors can wreak havoc on the principle that an inventor’s own work cannot be used for obviousness purposes. This is true because each different grouping of inventors creates a different inventive entity, which could undo this general fairness rule.

The Federal Circuit decision in Bass stood as the law for a number of years, but in 1984 Congress amended the obviousness provisions of the patent laws (35 U.S.C. § 103) to do away with the different inventive entity problem previously described. In most situations, prior art cannot be used against a different inventive entity as long as both the patent and the subsequently claimed invention were owned by the same person or corporate entity, or subject to an obligation to assign. This change to the obviousness provisions was updated and expanded in 1999.

The CREATE will attempt to rectify the potential obviousness problems presented by a situation where there is not exact identity of inventors and no single common owner, but rather a joint research venture. §103(c) of the Patent Act was amended to provide that patentability is not precluded on the basis of obviousness where subject matter which qualifies as prior art is developed by a person different from the person claiming the invention if: (1) the claimed invention was made by or on behalf of parties to a joint research agreement that was in effect on or before the date the claimed invention was made; (2) the claimed invention was made as a result of activities undertaken within the scope of the agreement; and (3) the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the agreement. Through the amendments of the CREATE Act of 2004, participants in joint venture research endeavors will not ultimately be penalized when it comes time to seek a patent, provided of course the above requirements are indeed satisfied.

From a procedural standpoint, the Patent Office procedure is not expected to substantially change despite the enactment of the CREATE Act of 2004. Given that this change in the law applies to any US patent granted on or after December 10, 2004, many applications may not make specific reference to the existence of a joint research agreement sufficient to trigger the benefits of the CREATE Act of 2004. Therefore, the patent examiner will still need to make an initial determination regarding obviousness as has been done previously. Assuming the examiner does believe there to be a proper obviousness rejection, the burden will then shift to the applicant to successfully challenge obviousness. In order to gain the benefit of the CREATE Act of 2004, the applicant will be required to provide a statement to the effect that the prior art and the claimed invention were made by or on the behalf of parties to a joint research agreement. In addition to providing this statement, the applicant must also: (1) amend the specification to disclose the names of the parties to the joint research agreement; and (2) either amend the specification to either set forth the date the joint research agreement was executed and a concise statement of the field of the claimed invention, or specify where (i.e., by reel and frame number) this information is recorded in the assignment records of the Office. Presumably, applications filed after December 10, 2004, which relate to an invention that is the result of a joint research agreement will be filed with enough specificity such that amendments will not be necessary.

Currently there are no permanent rules and regulations in place at the United States Patent Office to carry out the mandates of the CREATE Act of 2004, which is not out of the ordinary for new legislation. The Patent Office has drafted rules and regulations to implement the CREATE Act of 2004, and these draft rules and regulations have been published in the Federal Register. The CREATE Act rules of practice in the Patent Office will need to be amended to address several minor matters, as well as several extremely complicated questions regarding double patenting, which the legislative history tell us were indeed foreseen by Congress prior to enactment of the Act.

Author is Eugene R. Quinn, Jr., Patent Attorney and former Associate Director of the New York State Science and Technology Law Center at Syracuse University. He can be contacted at gquinn@ipwatchdog.com