TABLE OF SCENARIOS - GRACE PERIOD I. TREATMENT OF INDEPENDENT INVENTORS These scenarios are based on the assumption that pre-filing disclosures ( PFDs ) from independent inventors are not graced, in line with the majority of patent systems in the world. Also, the prior user rights considered are based on the German definition of these rights, implying in particular that (a) any use should take place by or on behalf of the third party for his own purposes/ those of his business; and (b) such use must be undertaken subject to a requirement of good faith ( Redlichkeit ). Facts Analysis Proposed appropriate outcome Comments Prior art effect of disclosure prior to priority/filing date of applicant Applicant A is the first to file an application for his invention. Independent inventor B publishes his own (same) invention, ie makes it available to the public: A) Prior to applicant A s priority/filing date, as a first discloser Independent inventor B is the person entitled to claim the benefit of the grace period and file an application B s disclosure forms prior art against applicant A s application. However, if B files an application after A, no one will get a patent, as B s prior disclosure is prior art against A, and A s earlier application will form a conflicting application against B. 1
Facts Analysis Proposed appropriate outcome Comments B) Between applicant A s first disclosure and the priority/filing date of the application Applicant A is the person entitled to claim the benefit of the grace period and file an application. The invention has also been made available to the public by B without being appropriated and is now in the public domain. B s disclosure forms prior art against applicant A s application. Granting a patent to applicant A as the first discloser would entail that the public bears the social costs of a patent for an invention which it would have obtained anyways. Prior user rights for independent inventors The independent inventor has either used the invention, or made serious and effective preparations to use the invention, without such activities making the invention public: In all the following cases, except where indicated, the prior user has the burden of showing that all the constitutive elements are met enabling him to invoke a prior user rights defence. A) One year prior to either the priority/filing date or the date of the earliest disclosure by the applicant and this is the critical date There can be no doubt that the invention was independently invented. Prior user rights should accrue - Critical date is arbitrarily set. - Independent inventors who invent during the excluded period will lose all investments, giving protection to the applicant for a period of time at which the invention was 1) not appropriated by him and 2) might be prior to his own date of invention. -It is possible that a first inventor will thereby be prevented from using his own invention. 2
Facts Analysis Proposed appropriate outcome Comments B) Prior to the earliest disclosure by the applicant and this is the critical date There can be no doubt that the invention was independently invented. Prior user rights should accrue -Critical date is not arbitrary. -Questionable whether norm would be workable in practice critical date might be difficult to determine, as it is not a matter of record, unlike the priority or filing date. -Potential for litigation! C) Prior to the filing/priority date of the applicant, including in the interval between a first pre-filing disclosure by the applicant and the filing/priority date. Where a PFD has occurred, copying from the applicant is then a possibility. a) In a system in which only independent inventors or third parties not having derived the invention from the applicant are eligible for PURs The accrual of PURs will then turn on a showing, as the case may be, either: That the invention was made independently (through testimony of employees, lab books, relevantly dated evidence of experiments, etc. - probably not unlike establishing facts in an interference proceeding) OR That knowledge of the invention was derived in good faith from a third party independent inventor (eg. through a trade secret licensing contract). Prior user rights should accrue Prior user rights should accrue -The prior user should not be required to provide evidence of either NOT having been aware of the PFD or NOT having copied. (It is impossible to prove a negative...) -Whether a graced disclosure exists and whether the third party is aware of it is not necessarily relevant. The mere reading by an independent inventor of a graced pre-filing disclosure ( PFD ) should not disqualify him from obtaining PURs, provided he meets the burden of proof that he falls within the statutory requirements. 3
Facts Analysis Proposed appropriate outcome Comments b) In a system in which any third party having used or prepared to use the invention in good faith prior to the critical date may obtain PURs (ie, where derivation of the invention from the applicant in good faith may ground PURs) i) Where there has been no PFD Good faith is presumed, it is for the applicant to make a showing of bad faith, or of the existence of a contractual relationship precluding the arising of PURs. The legal/factual situation is then similar to the existing framework in Europe. The third party invoking PURs as a defence to an infringement action must show that he meets the criteria for the PURs to accrue: qualifying acts made before the critical date within the applicable national territory. If all criteria fulfilled, PURs should accrue. Input from Australia would be helpful here, regarding any experience or principles associated with the operation of Sec. 119 of the Australia Patents Act. The requirement of good faith still applies, and thus the issue of derivation from the applicant or another inventor may still be relevant (theft; breach of confidence). ii) Where the applicant can show evidence of a PFD If the applicant shows either relevant privity between him and the third party (contractual relationship; contact with the third party at a trade show where the invention was shown, etc.) or traceability of the PFD alleged to have led to the prior use (eg. name of the applicant on an publication, or any other circumstance in which a third party can reasonably be expected to be able to determine the origin of the If privity with the applicant or traceability of the PFD shown, and no evidence of independent invention or derivation in good faith from a third party, no prior user rights should accrue 4
Facts Analysis Proposed appropriate outcome Comments PFD), the burden of proof should then shift to the third party claiming PURs. The prior user will then have to show either independent invention or derivation in good faith from a third party independent inventor, as above, to qualify for PURs. If the applicant cannot show either privity with the third party prior user or traceability of the PFD: Regarding good faith: 2 options (1) the presumption of good faith stands; OR (2) the prior user must show that he has taken necessary precautions prior to engaging in qualifying activiites (eg. checking for pending applications in the jurisdiction; making basic enquiries). If so, prior user rights should accrue Prior user rights should be able to accrue in principle - If there has been independent invention or derivation in good faith from a third party, there is no reason to prevent the prior user from acquiring PURs simply because he may have been aware of the PFD. -Here, chronology may play an important role in the evidence. - These two options must be discussed in light of the policy considerations inherent in allowing PURs to arise in the case of derivation from the applicant, regarding the protection of third parties who begin to make use of information at a time when it is in the public domain and the deterrent effect of this measure on PFDs, but also with regard to the potential impact on litigation. How does one show that one has searched a registry online or made basic enquiries? 5
II. RE-DISCLOSURES OF THE APPLICANT S INVENTION BY THIRD PARTIES Introduction and assumptions On the one hand, it is argued that if the grace period does not protect applicants from re-disclosures of their own invention by third parties, it will not be apt to perform its policy function. On the other hand, this issue rapidly becomes extremely complex. The greatest problem will be how to deal with re-disclosures which on their face cannot be traced back to the inventor. The risks and obligations in this respect must be distributed in a coherent and balanced manner. The scenarios below are based on an assumption that the following option considered by the Industry Trilateral is being pursued: any part of a disclosure by a third party which is derived from the applicant is graced, and any part of a disclosure by a third party which is not derived is not graced. Facts Analysis Proposed appropriate outcome Comments Re-disclosure of the applicant s invention by third parties It is assumed that these disclosures by third parties were made later than the applicant s PFD. A) Re-disclosure by third party identical to original PFD (eg cut and paste, digital copy, link published leading to different server storing the digital file, photocopy, link to video of conference where oral intervention made by applicant or his successor/predecessor in title or employee, etc.) It can be assumed that the disclosure is that of the applicant s invention. Presumption that the disclosure is graced 6
Facts Analysis Proposed appropriate outcome Comments B) Some parts of the re-disclosure are identical to the PFD, some are not a) Parts that are not identical cover subject-matter disclosed in the graced PFD For the identical parts, presumption that they are graced For non-identical parts: issue is whether the subject-matter is substantially similar, ie is it new over the earlier graced PFD Form of disclosure is different, but identical parts show that graced PFD must at least have been known to the third party. The subject-matter disclosed in a different form but substantially similar to the subjectmatter disclosed in the graced PFD can be assumed to have been derived from the same source as the identical parts. Presumption that identical parts graced If non-identical parts cover substantially similar subject-matter contained in the earlier PFD, ie it is not new over that contained in the graced PFD, presumption that these parts are graced b) Parts that are not identical cover subject-matter which was not disclosed in the graced PFD i) And the information has already been disclosed elsewhere prior to the critical date by someone other than the applicant No further analysis of the status of the additional material in the alleged re-disclosure is necessary. The identical part of the re-disclosure is graced, and the status of the rest of the subject-matter is irrelevant as it is part of the prior art due to the other third party disclosure anyway. That other disclosure forms part of the prior art. 7
Facts Analysis Proposed appropriate outcome Comments ii) And the information is new over the subject-matter disclosed in the graced PFD, and has not been disclosed before If re-disclosure contains subjectmatter which is substantially different from that of the original PFD of the applicant s invention, there should be a rebuttable presumption that this subject-matter is not derived from the applicant but originates with the third party and forms part of the prior art. If new over the applicant A. s PFD, rebuttable presumption that new part of the third party disclosure forms prior art C) The disclosure is similar to that of the applicant s but its form is not identical in any of its parts The issue turns on who is the originator of the information. The applicant should have the burden of showing that the disclosure of the third party constitutes a redisclosure of his own invention, for it to be graced.* Comments are welcome here from users and offices in JP and KR in terms of how the applicant may succeed in proving this in practice. Notes: * With respect to C), this is a difficult issue to balance. On the one hand, the applicant may have none of the information at hand to meet his burden of proof, and must then rely on a third party (if identifiable and locatable) to bring cogent evidence, which may put him in a difficult situation, particularly in jurisdictions without discovery. On the other hand, creating a presumption that anything similar has originally emanated from the applicant in the absence of evidence that its origin is different gives the applicant an advantage which may not be justified. The legal uncertainties for the applicant arising from potential evidentiary issues in relation to re-disclosures of his invention may in the long run be a tempering element in choosing to use the grace period, in line with a safetynet approach. 8
III. STATEMENT ISSUES Introduction The Industry Trilateral has provisionally agreed that a statement should be filed. However, until the nature and extent of the obligation of the applicant as well as the sanctions for non-compliance are settled, this requirement cannot be considered to be fully agreed. The lack of consensus on the metes and bounds of the obligation to file a statement and the sanctions in case of non-compliance makes scenarios building regarding these issues much more complex. For this reason, alongside basic scenarios, a second part is included dealing with options in regard to these two issues, for which input from both offices and stakeholders are requested. There is a double tension here: the scope of the applicant s obligation must be balanced as must be the sanctions for noncompliance. If the applicant s obligation is watered down to what he knew at the critical date, without any obligation of due diligence, and if sanctions are too lenient, decisions could be made by big players to pay penalty fees as a matter of course rather than to attempt to comply with the requirement, making it completely ineffective. In such a case, doing away with a statement requirement altogether might be preferable. On the other hand, the opposite approach, an absolute requirement to list all PFDs with non-compliance sanctioned by loss of rights, is argued to have the potential to render the grace period largely ineffective, particularly in terms of protecting unsophisticated actors within the system, and unwieldy for large corporate entities. A balance must thus be found providing enough incentives for applicants to comply diligently with the requirement, yet lenient enough so that honest mistakes do not spell disaster for the applicant. The Industry Trilateral has defined the obligation as having to list in the statement disclosures which are known to the applicant. In a corporate environment, this raises the issue of to whom such disclosures must be known. At the outset, it is submitted that this definition is not optimal, as whether something is known is a subjective element, the presence or absence of which can be hard to show. How does one show when someone knew what? In Japan and Korea, the requirement is for disclosures by the applicant to be listed. This is an objective criterion, but it may result in a more stringent obligation, which is presumably why the Industry Trilateral rejected it. 9
Finally, it should be understood that in principle, and in the absence of a clause stipulating otherwise, the applicant wishing to avail himself of the grace period should bear the burden of proof that he is entitled to its benefit with regard to a specific PFD. In a system in which only the PFDs emanating from the inventor/applicant or re-disclosures by third parties of the inventor/applicant s invention are graced, and not disclosures of independent inventions made by third parties, such disclosures are graced by operation of the law, but only once it is established that they fulfil the legal requirements for such gracing effect to occur. A. Pre-filing disclosures and evidentiary issues Facts Analysis Proposed appropriate outcome Comments A) PFD of applicant listed in the statement PFD graced, no need for applicant to bring evidence showing his entitlement to the benefit of the grace period. Graced Given some of the evidentiary difficulties which may crop up later, diligently monitoring PFDs and filing the statement may present certain advantages for the applicant. B) PFD not listed a) But origin of PFD apparent on its face or easily traceable i) And shows that it emanates from the applicant, or is a disclosure of his invention. PFD graced. No evidentiary issues for the applicant. No problems or legal uncertainty for third parties or examiners. Graced. Penalties may apply for noncompliance with statement requirement ii) And link to the application not immediately evident PFD graced. No insuperable evidentiary difficulties for the applicant. For instance, the author of a PFD may disclose the invention of his employer, but not be an inventor, so 10
Facts Analysis Proposed appropriate outcome Comments Problems with legal uncertainty for third parties Inefficiencies in the granting process, as examiners may need to dialogue with applicant to be able to assess status of PFD and thus, the prior art. that the PFD is graced, but the link between the discloser and the application may not be clear on the face of the document. b) And origin of PFD not apparent and not (easily) traceable Applicant has the burden of proof that the PFD discloses his own invention despite not being listed. i) But emanates from the applicant This evidentiary burden may be easy to discharge for individual applicants and SMEs, but may be problematic in the case of corporations. Graced if applicant can meet the burden of proof; Penalties may apply for non-compliance with statement requirement. ii) And is a re-disclosure of the applicant s invention by a third party Showing that, although the disclosure emanates from a third party, it is a disclosure of the applicant s invention may be an insuperable burden of proof. Graced if applicant can show that it is his invention which is disclosed; No penalties for non-compliance with statement requirement, as PFD not known to the applicant. Will not be included in the statement, as the PFD will probably not be known to the applicant. 11
B. Consequences of non-listed disclosures Below, it is assumed that the sanction for non-compliance with the statement requirement is not loss of rights, and also, that disclosures by third parties of independently developed inventions are not graced. Also, it is assumed that where a competitor is aware of a patent which may block his activities, and finds a potential piece of prior art, he has a duty to make enquiries regarding the status of that item before undertaking any activities which might expose him to an action for infringement, and cannot simply assume that the disclosure is included in the prior art, and thus, as the case may be, that the patent is invalid. Facts Analysis Proposed appropriate outcome Comments A) A third party or an examiner discovers a PFD after application published, but before grant, which is not listed in the statement Since claim breadth cannot be reliably predicted until grant, it is questionable whether there is any harm to the third party at this stage, as any use of the invention by third parties at this time entails risk, of which the third party should be aware. If the PFD emanates from the inventor/applicant or is a redisclosure of his invention by a third party, the PFD is graced. Arguably, a sanction remains appropriate at least as an incentive to comply seriously with the statement requirement. If office procedure permits, the third party can file observations on the patentability of the invention. a) And the PFD can be traced to the inventor/applicant If the origin is apparent on the face of the disclosure, no harm is done to the third party as there is no legal uncertainty despite non-listing. No harm to the granting procedure, as the examiner can assess the status of the PFD. Appropriate sanction for noncompliance with statement requirement? It should also be emphasised that whether or not the origin of a PFD can be identified or not is likely to be a matter of chance, not of intent, so it can be argued that this element should perhaps not influence the sanction applicable. 12
Facts Analysis Proposed appropriate outcome Comments b) And the origin of the PFD cannot be traced Legal uncertainty for the third party. Need to make enquiries of the inventor/applicant to be able to assess the status of the PFD Examiner will need to dialogue with the applicant to assess the status of the PFD, using up office capacity and lengthening the procedure. A penalty would need to be imposed. From the perspective of the office, if this discovery leads to both search and examination having to be rerevisited, then one or more additional fees would be appropriate, reflecting the additional work becoming necessary as a result of the failure to list the PFD. An additional issue is whether, in such a case, the level of the fee should be (a) that normally paid for the procedure which needs to be repeated; (b) a fee reflecting the actual cost of the service rendered (higher) (c) a fee including a penalty component as a disincentive to being careless in the filing of the statement. B) Post-grant, a third party discovers a PFD which is not listed, but traceable on its face to the inventor/applicant PFD is graced, third party is on notice that the PFD emanates from the inventor/applicant. Arguably, no legal uncertainty for third parties. PFD graced. Appropriate sanction for noncompliance with statement requirement? Arguably, a sanction remains appropriate at least as an incentive to comply seriously with the statement requirement. C) A third party discovers a PFD which is not listed, and the origin of which is not apparent or traceable Legal uncertainty for third parties. Enquiries must be made of the patent holder. Here, a policy decision must be made regarding both the sanction of the failure to list the PFD, as well as the treatment of third parties. a) The third party makes enquiries of the patent holder in order to determine the status of the disclosure and the patent holder is the inventor/applicant In principle, the status of the PFD should be able to be clarified, although if the patent holder is a large corporation, this may be difficult. However, after the passage of time, as the burden of proof would be on PFD is graced if it the applicant can show that it emanates from the applicant, or is a re-disclosure of his invention by a third party. It is not graced if it emanates from an independent third party. Here, unlike the constellation in B), there is potential harm to the third party. A penalty on the applicant should at the same time if possible alleviate the issue of legal uncertainty on the third party. 13
Facts Analysis Proposed appropriate outcome Comments the patent holder to show entitlement to the benefit of the grace period, there may be difficulties in bringing cogent evidence, leaving third parties in a state of legal uncertainty. Restrictions on enforcement and liability for damages until such time as the legal situation has been resolved could be considered. b) The third party makes enquiries of the patent holder in order to determine the status of the disclosure and the patent holder is an assignee of the inventor/applicant If the patent holder is an assignee, he may not be in a position to determine whether the PFD emanated from one of his predecessors in title. If the predecessor in title has passed away, or cannot be found, the status of the PFD may never be clarified. If the origin of the PFD cannot be clarified, the patent holder not having shouldered his burden of proof, the PFD would not be graced. This might lead to loss of rights, not due to non-compliance with the statement requirement, but due to the failure to meet the burden of proof to show that the PFD should benefit from the grace period. 14
PART 2: OPTIONS REGARDING THE STATEMENT Stakeholders and offices are kindly requested to provide input on the issues below. A. Obligations of the applicant re: disclosures to be listed Options Arguments Pro Arguments Contra Recommended approach Y/N Other Comments Disclosures to be listed A) All disclosures by the applicant B) All disclosures, the origins of which are not apparent on their face C) All disclosures known to the applicant Extent of obligation of due diligence A) Obligation of due diligence in monitoring PFDs B) Obligation to undertake serious efforts to monitor disclosures C) No obligation to monitor 15
B. Assuming that the obligation of the applicant is to list all disclosures known to him/her, definition of who should be responsible for filing the statement / to whom must the disclosure be known? Option Arguments Pro Arguments Contra Recommended approach Y/N Other Comments Where the applicant is a corporate entity: A) Disclosures known to any person employed by the corporate entity anywhere in the world, or by any entity controlled by the corporate entity (wholly owned subsidiary, etc.), or by any other entity engaged with it in a joint venture B) Disclosures known to any person directly employed by the applicant C) Disclosures known to the Inventor or the team having made the invention D) Disclosures known to the team dealing with the patent application 16
C. Consequences of non-compliance with the statement requirement Options Arguments Pro Arguments Contra Recommended approach Y/N Other Comments A) Loss of rights B) Limitations on enforcement a) Inability to recover damages from party invoking the disclosure as prior art until item is entered on the statement held in the patent office file b) Inability to get an injunction against a third party invoking the disclosure as prior art, leaving only the possibility of compensation reasonable under the circumstances for continued use C) Payment of an administrative penalty a) Related only to extra work having to be carried out by the office as a 17
Options Arguments Pro Arguments Contra Recommended approach Y/N Other Comments result of difficulties in determining the state of the art / impact on substantive examination when examiner becomes aware that apparent prior art is in fact graced. b) Punitive in nature: incentive to file a complete list of disclosures to avoid fiscal consequences D) Other possibilities? 18