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Tuesday, 13 April 2010

Reason and rhetoric: patents, grace periods and evidence

Although some days have passed since David Kappos opened this year's Fordham Intellectual Property Conference, the impression which his keynote address made on me is one of the most powerful and enduring memories of an event which was not short of memorable moments. The US Under Secretary of Commerce for Intellectual Property, who is also Director of the USPTO, is a persuasive performer: his clarity of expression, coupled with his seasoned judgement, combine style and content in a most effective manner.

It seems almost churlish to take issue with a man who is both deeply knowledgeable and experienced within the field over which he exercises his qualities of leadership. However, without in any sense wishing to be iconoclastic or offensive, I feel that it would not be amiss to return to one issue which he raised in his address and on which the conference's traditional limitations of time prevented any lengthy debate: the grace period within which, having publicly disclosed an invention, an inventor in the United States (and, to be fair, in some other countries too) may file a patent application without loss of novelty.

Taking notes at the time, I jotted down the following phrases with which Mr Kappos garlanded the grace period. It was the "gold standard"; it constituted "best practice"; an "incentive to the inventive community", it also "creates employment". While a brief address cannot be expected to furnish either a raft of reasoning or reams of statistical evidence on which to base such claims, it seemed to me that these propositions were articulated as self-evident truths which admit of no contrary position.

If Mr Kappos is correct, then some big questions must be asked of all those very many countries in the world, including those of the European Patent Organisation, which do not -- through choice and the careful weighing of options -- provide a similar grace period. If the self-evident virtue of the grace period is there for all to see, by what stroke of wilful blindness or failure of comprehension do these other regimes persist in ignoring it? How have the businesses based in those countries, as well as US entities trading outside the grace period zone, managed to cope with the inconvenience?

These questions are no mere academic trifle. Mr Kappos has affirmed the commitment of his government and of his office to increased levels of legal harmonisation and practical cooperation throughout the world. It appears, though, that these advances are conditional upon all the non-grace-period regimes marching in step with the United States.

The present trend in IP circles is to call for law reform proposals to be evidence-based where possible (the UK's Strategic Advisory Board for Intellectual Property Policy -- SABIP -- is particularly enthusiastic in this regard, to its credit). Now here is an issue concerning which there must be evidence in abundance, so long as we can agree on the criteria by which it is culled and then evaluated. If a genuine will to achieve greater harmonisation and cooperation exists on all sides, and there is no objection founded in professional politics or self-interest, a trial and evidence-based evaluation of the two systems should be the next item on the patent reform agenda.

Great cat inventions here and here


Anonymous said...

Interesting - in fact if an applicant wants to protect his invention under the European and many other national systems, he would then be unable to do so, if he had already disclosed the invention in a way which is non-prejudicial according to US law. This is particularly the case, since with US applicants, the US filing would be the priority filing and so the disclosure by the applicant would be before the priority date for any subsequent filing outside of the USA.

Indeed, in the early years of the EPO many US applications came to grief in the European system because the applicants they were unaware that the European system did not have such an automatic period of grace. Happily, this is no longer the case and US applicants are now usually advised to be wary of non-prejudicial disclosures if they intend to file subsequently outside of the USA, in particular in Europe.

Under the EPC Article 55 EPC does allow applicants to make a non-prejudicial disclosure, but this is subject to stringent requirements. The disclosure must be made at an exhibition according to the Paris Convention on Exhibitions (there are not many of these in any given year); what is disclosed and when it is disclosed must be certified by the IP authority at that Convention and this certificate provided to the EPO and, most important of all, the existence of the non-prejudicial disclosure must be declared on filing the European application (Art.55(2) EPC), even when filed under the PCT (the PCT allows for this statement to be made on the Request form under Rule 4.17(v) PCT). In addition the non-prejudicial disclosure must be made by the applicant or his legal predecessor and must be made no earlier than six months before the European filing date under Art.55 EPC (irrespective of any claimed priority - G3/98 and G2/99 - although the Supreme court of the Netherlands, an EPC contracting state, differed from the EPO Enlarged Board on this point). This means that where the US applicant claims a US priority, he can only make his non-prejudicial disclosure in the priority period (six months before the European filing) and this would only be meaningful if the claimed priority turns out not to be valid or is subsequently abandoned or invalidated for formal reasons.

Given this onerous burden for non-prejudicial disclosure by the applicant under the European system, very little use is made of it.

Consequently, in an increasingly global patent system, the US period of grace presents benefits (in the sense that a scientist may publish his work earlier than might otherwise be possible and can do so before he knows if he will file for a US patent), but also presents a danger to the patent for that research, should the applicant wish to file in many jurisdictions beyond the USA (Europe being one notable case in point).

Anonymous said...

I do not believe that the grace period is the root cause of the success of the US patent system, as the grace period is not that often used, even in the US.
As the grace period cannot explain the US success in the cases in which it is not used, there must be another cause. IMO, this cause is that inventions can be exploited once turned into reasonably thrustworthy ownership titles by means of an examined patent, which can be used effectively in court.

The lesson to be learned is thus that we should not copy the US grace period, but rather ensure that we provide strong patents within a reasonable period of time, combined with a high-quality and efficient enforcement system that makes it worthwhile to obtain patents.

MaxDrei said...

Why is the American patent so potent. Choose between the following two reasons:

1. the grace period

2. i) the presumption of validity (patent valid as issued unless you can convince a sceptical jury, deferring to the expertise of the PTO, that the evidence of obviousness is clear and convincing) ii) the freedom to intimidate and sue infringers without any risk of paying their defence costs if your action is spurious and fails, iii) treble damages, whenever the jury finds that the infringement weas willful, and iv) termination (!) of the CEO of the company found to be infringing and bankrupted as a consequence.

Anonymous said...

Well whoever believes that the USPTO delivers strong patents has been missing something the last years...

There seems to be a move by Kappos to enhance the quality of granted patents, but this is still in its infancy.

MaxDrei said...

Following up on my post above, and addressing myself to any non-American who fancies the idea of asserting one of those ultra-potent US patents, keep in mind that the defendant infringer will allege that your conduct, somehow or other, somewhere or other, was in some way "inequitable" and 12 good ol' American jurymen will decide whether the allegation is made out. If it is, you lose. Not just the patent you asserted, but every family member too.

A long way from how things are done on the Eurasian mainland continuum.

By the way, does anybody know where the Law Society of Germany got its statistic from, that there are 1000 patent litigations per year in Germany compared with 60 in Great Britain? I dare say they are right about the 1000, but 60? If the German Kammer is not comparing like with like, somebody should be pointing it out.

Filemot said...

The US approach to patent examination certainly should and can deliver high quality patents. It fails sometimes and certainly struggles with the ephemeral arts such as business methods but so do we all.

I see Kappos point about the grace period - the UKs universities and the NHS would have a lot more IP assets if we had had one, but we dont because administering it was not something the UK was prepared to do way back. There is only one way to change now and even Kappos recognises that

MaxDrei said...

Would Filemot agree that a grace period is a natural complement to First to Invent but does not sit easily with First to File? Would Filemot then agree that USA should better optimise its FtI system while ROW optimises its FtF system. Two (and only two) patent systems in the world, both optimised, makes a better business environment than world-wide "harmonisation" on the basis of a foul compromise that is a bonanza only for patent litigators. We have our clients to think about here chaps.

Ron D. Katznelson said...

Jeremy’s opening questions above appear to create a false rebuttable presumption that if many countries do not implement a grace period, such policies are misplaced or frivolous. A simpler explanation appears rooted in fundamental national differences of accountability.

The U.S. Congress enacted the Small Business Act in 1953 to encourage, develop, protect and assist small business growth. “By what stroke of willful blindness or failure of comprehension did the European regimes ignore” the small business law’s benefits and have failed to adopt such law for Europe until 2008? I tend to think that it was less a “failure of comprehension” and more a failure of accountability.

Another American “obsession” with small business welfare is manifested in the small-entity 50% patent fee structure. Americans understand that society as a whole benefits when patent protections are extended broadly to all inventions that meet the patentability standards. Note that current European patent offices’ procedural fees for a patent throughout its term in 13 EU states exceed $100,000. “By what stroke of willful blindness or failure of comprehension” do Europeans ignore small entity inventors who, absent such a break, are denied protection of their inventions? To the extent that the EC and EPO’s considerations are dominated by administrative conveniences of not having to verify or determine small entity status, or avoiding a “flood” of more patent applications, neither reasons appear consistent with the purpose of the patent system or with any accountability to constituencies that depend on patent protection. Even the respectable European think-tank Bruegel that studied the European patent system recommended that the EPO establish a lower small-entity fee structure.

While small businesses and startups in America complain about threats to the robust intellectual property system that has long protected them, European small businesses complain about inability to obtain such protection: 82% of them indicated a need, or strong need, for improved IP protection. [see response to Question 4.5 at ]. Through what “choice and careful weighing of options” has the EC and EPO arrived at this state of affairs? Clearly, Jeremy’s presumption above is unwarranted.

Contrary to Jeffrey’s assertion that countries of the EPO have not provided grace periods, Estonia, Romania and Slovenia, which joined the EPO during or after 2002, have had a grace period. Have their consideration for domestic constituencies been misplaced? How accountable are the EC and EPO to these constituencies?

That said, I agree with Jeffery that evidence supporting the grace period is required. However, one is unlikely to find such evidence unless one examines constituencies that are most affected by eliminating the grace period – small businesses, startups and individual inventors. Indeed, none were heard from by the European Commission when it held its workshop on the grace period. [see Of the 19 participants, zero participants were from a small business, startup or an individual inventor (do such entities exist in Europe?)].

The most important aspect of the grace period pertains to the fundamental differences between small and large firms in disclosure environments that they operate under when reducing inventions to practice. These differences and the evidence that Jeffrey calls for are explained at

Finally, form this Coalition’s letter it should be recognized that while Director David Kappos may call the American grace period a “Gold Standard,” he actually supports weakening it and transforming it to a “Paper-Standard” that cannot be used by small businesses or startup applicants. See an explanation of this by the startup companies’ letter at

Ron D. Katznelson said...

If my post above did not make it clear, I believe that the fact that EC and EPO policy makers have not adopted certain policies originated in America, does not create a rebuttable presumption that such policies are misplaced but rather a rebuttable presumption that the EC and EPO policies are to be questioned by Europeans, because they were made under a chain of accountability that is too long to trace to an affected constituency

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