• Canadian University Patent Policies and the Inadvertent Creation of Self-Inflicting Prior Art
  • July 28, 2011 | Author: Mark Sajewycz
  • Law Firm: Norton Rose Canada LLP - Toronto Office
  • Many Canadian universities take a fairly generous, flexible approach to patent ownership for inventions created in their environment. However, in doing so, in some cases, less than optimal conditions for securing broad US patent protection may be being inadvertently created. This is because of the unique manner by which prior art is defined under US law, and the fact that, in all likelihood, university-based inventors are likely not defining relationships between themselves with the necessary written agreements which would otherwise prevent them from inadvertently creating prior art against themselves.

    A summary of patent ownership policies at Canadian universities
    The patent ownership policy of most Canadian universities generally adopts one of the following schemes in determining the initial ownership of an invention created in the university’s environment: (i) the inventor takes full ownership of the invention; (ii) the inventor can choose to take full ownership of the invention, or has the option of assigning the invention to the university so as to enable the university to patent and commercialize the invention; (iii) the inventor and the university share ownership of the invention; or (iv) the university takes full ownership of the invention. Even when the university assumes invention ownership, whether through the inventor’s election or not, any economic benefit is usually shared with the inventor.

    In more than a few instances, these policies fail to normalize patent ownership with a single ownership entity over successive developments arising out of a discrete R&D project involving multiple professors/staff/students, when each one of the collection of successive developments do not share the same invention date and do not share the same contributing inventors. In these circumstances, earlier developments function as prior art, under US patent law, against later developments, making it more difficult to secure patent protection for these later developments, unless the professors/staff/students are sufficiently knowledgeable and organized to pre-empt these consequences with suitable agreements.

    How US patent rights attached to Canadian university-created inventions may be vulnerable due to “inventor-owned” policies
    Springsteen, Clemons and Bittan collaborate on an invention. Being acutely aware of the negative patent rights consequences associated with public disclosure, their collaboration is carefully cloaked in secrecy. On “day 1”, Springsteen has a vision of the basic concept: a guitar. Unfortunately, the guitar is very basic, but still, he learned how to make it talk. The “Springsteen guitar” is relatively heavy, the guitar strings break too frequently, and it is not very loud, Acknowledging his technical limitations, Springsteen decides to call on Clemons and Bittan to help develop the guitar so that it matures into more of a respectable instrument, and, hence, the collaboration begins. During this collaboration, various improvements are developed. On a later date, day 10, Bittan figures out a way to make the guitar lighter (the “lighter guitar”). At a later date, day 12, both Clemons and Springsteen think of a new way of securing the strings to the guitar neck to increase their service life (the “robust guitar”).
    Finally, at even a later date, day 21, all of Springsteen, Clemons and Bittan decide to introduce electricity (the “electric guitar”), and the rest is history.

    Now, let us assume that Springsteen, Clemons and Bittan are employees of E-Street Band Inc. (Springsteen, of course, is the “Boss”), and that the above-described collaborative research and development efforts arose out of performance of their employment obligations. Because E-Street Band Inc. has been provided with excellent legal advice, when Springsteen, Clemons and Bittan joined E-Street Band Inc., each of them has signed an employment agreement at the outset of their respective employment relationships. By virtue of their respective agreements, and amongst other things, each of them have agreed to assign the rights to their respective inventions, arising out of the employment, to E-Street Band Inc. Fortunately, because of these pre-existing agreements between E-Street Band Inc. and its employees, the timing of each one of the above-described research and development milestones is irrelevant to patentability of successive developments.

    Without these employment agreements, each of the Springsteen guitar and its successive improvements (ie. each of the lighter guitar, the robust guitar, and the electric guitar) function as potential prior art under US patent law versus its respective succeeding improvement(s), even though the entire R&D process was conducted in secrecy. In other words, without the employment agreements, the following prior art consequences arise: (1) the Springsteen guitar functions as potential prior art versus each of the lighter guitar, the robust guitar, and the electric guitar, (2) the lighter guitar functions as potential prior art versus each of the robust guitar and the electric guitar, and (3) the robust guitar functions as potential prior art versus the electric guitar. The basis for these potential prior art consequences, and the reason why they are not operative under these circumstances, can be traced back to the legislative scheme of the US Patent Act.

    US patent law recognizes several forms of “secret prior art” under 35 U.S.C. sections 102(e), (f), or (g). That is, even though information is not publicly available (ie. secret) before the invention date of the subject invention, such information still qualifies as prior art if it falls within one of the categories enumerated in any one of 35 U.S.C. sections 102(e), (f), or (g).

    Section 102(e) prior art includes inventions which have been described in “an application for patent, published under section 122(b), by another filed in the United States before the invention by the applicant for patent”. Under this section, prior art includes US patent applications which have been filed before the invention by the applicant for patent, so long as such US patent applications become published under section 122(b) - section 122(b) is the provision which outlines conditions when US patent applications are published and conditions when they are “kept in confidence”. In this respect, it is important to note that in the period between the time of filing and the time of publication, a US patent application is maintained secret, yet a US patent application functions as potential prior art versus all inventions created after the US patent application filing date.

    Section 102(f) denies entitlement to US patent protection if the patent applicant did not “invent the subject matter sought to be patented”. This provision has been interpreted in Oddzon Products, Inc. v. Just Toys, Inc., 122 F.3d 1396 (Fed. Cir. 1997) to cover all information derived by an inventor (or inventors) from another, and that this includes information derived during private communications. Importantly, the court in Oddzon makes clear that derived nonpublic information qualifies as prior art for consideration under the section 103 obviousness inquiry.

    Section 102(g) establishes further categories of secret prior art. Section 102(g)(2) provides prior art significance to prior inventions of another inventor, but only for those inventions made “in this country” (ie. the United States). Section 102(g)(1) expands the categories of prior inventions which are accorded prior art significance, in that inventions are not restricted to those made “in this country”, but this prior art significance is only accorded “during the course of an interference conducted under section 135 or section 291”. In this respect, “made in Canada” inventions are eligible for prior art significance under section 102(g)(1) (ie. during interference proceedings), but not section 102(g)(2) (ie. outside the interference context). Importantly, public disclosure is not a pre-condition in order for prior invention to be accorded prior art significance under section 102(g)(1) or (2). In order to qualify as prior art under section 102(g)(1) or (2), however, the prior invention must not have been “abandoned, suppressed, or concealed”.

    Notwithstanding these prior art rules, section 103(c)(1) of the United States Patent Act provides an exemption from prior art status, for purposes of the obviousness determination under section 103, for subject matter developed by another person which would otherwise qualify as prior art under section 102(e), (f), or (g). In particular, the section 103(c)(1) exemption is operative when “the subject matter (developed by another person) and the claimed invention were, at the time the claimed invention was made, owned by the same person or subject to an obligation of assignment to the same person”. This is the reason why technology developments within a company cannot be used as prior art versus each other, assuming suitable employment agreements are in place which create obligations to assign employee inventions to the company. The existence of the section 103(c)(1) exemption underlines the fact that intracompany technology developments, even when occurring in secret, are not otherwise insulated from each other’s prior art effect.

    Even if there is no “obligation of assignment to the same person”, subject matter developed by another person, which would otherwise qualify as prior art under section 102(e), (f), or (g), could still be disqualified from prior art significance for the obviousness inquiry under section 103(c)(2). Under section 103(c)(2), subject matter developed by another person will be treated as if it was exempted under section 103(c)(1) under the following conditions:

    • 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;

    • the claimed invention was made as a result of activities undertaken within the scope of the joint research agreement; and

    • the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.

    Importantly, and amongst other things, the joint research agreement must be memorialized in a written document before the invention date. A written joint research agreement, executed after the invention date, will not attract the section 103(c)(2) exemption.

    This provision assists legal entities who are collaborating on research and development by insulating each party’s technology contribution from the prior art effect of the technology contribution of its collaboration partner. Introduced to the US Patent Act in 2004 by virtue of amendments effected by the Co-operative Research and Technology Enhancement Act (otherwise known as the “CREATE Act”), these measures are generally viewed as a response to the decision in the Oddz-On case, which, to some degree, caused a great deal of angst in patent circles by bringing to bear the possibility that prior art consequences could attach to seemingly innocent non-public communications between arms-length parties, including those within a collaborative relationship.

    Turning to the above-described collaboration at E-Street Band Inc., even though different inventive entities (Springsteen is a different inventive entity than Bittan or Clemons/Springsteen, etc.) are contributing to the technology development at different points in time, none of these contributions is subjected to the prior art effect of the earlier contributions under any one of section 102(e), (f), or (g). This is because all of the technology contributions are subject to a pre-existing obligation of assignment to the same entity, namely, E-Street Band Inc., and are thereby exempted from consideration as section 102(e), (f), or (g) prior art for purposes of the obviousness inquiry under section 103(c)(1).

    Now, let’s change the facts slightly, and pretend that the collaboration occurred in a Canadian university environment. Bittan is really now “Professor Roy Bittan”, and Springsteen and Clemons are graduate students working in Professor Bittan’s research group which is part of the larger Faculty of Spiritual Arts. Patent ownership for inventions arising out of research and development activities occurring at the university is defined by university policy, which is legally impressed upon the relationships between the university and each of Springsteen, Professor Bittan, and Clemons. Under university policy, its professors/staff/students enjoy the right to own any and all patent rights for inventions arising out of research and development occurring at the university and for which they are inventors. For any inventions arising out of collaborations between the professors/staff/students, the university policy decrees that patent ownership is to be shared between the contributors. Apart from this, there are no further terms or restrictions imposed by the university on patent ownership, and the professor/staff/students are presumably free to deal with their ownership rights as they so choose.

    Springsteen, while employed as a graduate student under Professor Bittan’s supervision, dreams up the concept of a fairly basic guitar and presents his idea to Professor Bittan. Professor Bittan finds the idea intriguing, and asks Springsteen if they could turn this into a research project, involving Professor Bittan, Springsteen, and Professor Bittan’s other graduate student, Clemons. Springsteen agrees, and the collaboration proceeds in the manner described beforehand. Not surprisingly, none of Springsteen, Professor Bittan, or Clemons consider the consequences of moving forwards on this project, and assume that the university patent ownership policy, or some other kind of divine intervention, will take care of any patent ownership issues which may arise in the future.

    Just before they are about to publish their findings in Rolling Stone Magazine, Springsteen et al decide to hire esteemed patent lawyer Sajewycz to prepare and file one or more US patent applications covering their R&D efforts to date. Patent lawyer Sajewycz is very knowledgable and thorough. During their first meeting, Sajewycz quizzes Springsteen et al. about their relationships vis-à-vis one another, and slowly pulls the details of the electric guitar development story from the suspicious musicians, and then begins discussing claims strategy. It becomes clear that claim 1 is going to cover a guitar, and that Springsteen is the sole inventor. When considering further claims, each directed to a respective one of the lighter guitar, the robust guitar, and, finally, the electric guitar, it becomes clear that, for each one of these additional claims, a different group of inventors has contributed to the claimed subject matter, and a different invention date applies. Importantly, impressing on these circumstances is the fact that the legal regime dictates that inventions are inventor-owned, which means that, under these circumstances, for each of the claims, the subject matter is owned by a different ownership entity1. In this respect: (1) Springsteen owns the claimed subject matter directed at the “guitar” and this claimed subject matter enjoys the earliest invention date, (2) Professor Bittan owns the claimed subject matter directed at the “lighter guitar” and this claimed subject matter has the second earliest invention date, (3) Springsteen and Clemons co-own the claimed subject matter directed at the “robust guitar” and this claimed subject matter has the third earliest invention date, and Springsteen, Clemons, and Professor Bittan co-own the claimed subject matter directed at the “electric guitar” and this claimed subject matter has the latest invention date.

    Desperately, patent lawyer Sajewycz probes the disheveled rockers as to whether they ever executed a written joint research agreement, prior to riding through mansions of glory in suicide machines. Unfortunately, and perhaps unsurprisingly, they cannot recall, and admit that it is unlikely that this would have happened. Without a written joint research agreement, section 103(c)(2) is unavailable to Springsteen et al, and the patentability of each of the later developments is now exposed to the potential prior art effect of the earlier developments. This is because, under section 102(f), the earlier developments function as potential prior art versus the later developments, as the later developments could be characterized as derivations from the earlier developments. As a result, the “electric guitar” claim is subject to the potential prior art of Springsteen’s guitar, the “lighter guitar”, and the “robust guitar”. As well, the “robust guitar” claim is subject to the potential prior art of the Springsteen guitar and the “lighter guitar”. Further, the “lighter guitar” claim is subject to the potential prior art of the Springsteen guitar.

    Collecting himself, patent lawyer Sajewycz becomes resigned to the fact that the situation is irreparable. He begins explaining to Springsteen et al. the section 102(f) prior art consequences of their actions and that playing blindman’s bluff is a little baby’s game. Initially, Springsteen et al. express dismay at this self-inflicted prior art, and find it difficult to believe that their own R&D can potentially be used against them as prior art, even though they took great pains to conduct their R&D in total secrecy. As time passes, it sinks in, and Springsteen et al. accept that the facts cannot be changed. Sajewycz further explains that the timing of the R&D milestones may need to be explained in an information disclosure statement, to be filed during prosecution of their US patent application by virtue of 37 C.F.R. section 1.56. In this respect, the materiality of earlier developments to the patentability of a claimed later development would need to be assessed to determine whether there is a duty to disclose any of the earlier developments to the US Patent and Trademark Office.

    It probably would not be surprising to find that the Springsteen et al. scenario is not all that uncommon in the Canadian university setting. Some Canadian universities have adopted policies which accord ownership rights based on contribution to the invention, and may even provide their professors/staff/students with the freedom to deal with their patent rights. In such cases, where there is a group of people (for example, a research group consisting of a professor and her graduate students) concertedly working towards developing technology, a risk exists that ownership of US patent rights associated with successive technology developments will reside with different individuals or different subgroups of individuals, unless the same individual or the same group of individuals contributes to each of the successive technology developments.

    Of course, this risk could be eliminated if suitable agreements are in place prior to embarking on the R&D, so as to trigger the section 103(c)(1) or section 103(c)(2) exemptions. However, this puts the responsibility of doing so squarely on the shoulders of the university innovators, whose lives are filled with other priorities. Further, this inherently assumes that the university innovators are even aware of this issue.

    An after-the fact assignment to a common owner does not remedy the problem, as section 103(c)(1) requires its assignment obligation to be in place prior to the invention date. Similarly, an after-the-fact joint research agreement does not help matters, as section 103(c)(2) requires the agreement to be in place before the invention date. In other words, suitable legal protections must be in place prior to embarking on the R&D process, in order to avoid these prior art consequences.

    Even if the section 102(f) prior art consequences are not avoided by pre-emptive agreements, it is important to, at the very least, recognize the requirement to disclose these prior art consequences during prosecution of any resulting US patent application. Otherwise, validity of any US patent which matures from such patent application could be compromised. As alluded to above, during prosecution of US patent applications, there is a duty to disclose all information which is material to patentability of the claimed invention, and this certainly ensnares university-based research which qualifies as prior art under section 102(f). It is uncontroversial that a failure to comply with the duty to disclose obligation could compromise the validity of any maturing US patent. This failure to comply, of course, must be coupled with an intention to deceive, before the specter of invalidity can be raised. Having said that, it would be prudent to avoid the remote possibility of invalidation altogether by ensuring compliance with the duty to disclose obligation.

    These complications generally do not arise on university campuses in the US. Generally, US university-based inventions are owned solely by the US university at which the invention has been created. This is largely a consequence of the culture at US institutions, where inventor-owned policies are relatively unheard of. Accordingly, the above-described prior art complications are avoided, as US universities are able to rely on the section 103(c)(1) exemption to steer clear of any self-inflicted prior art.

    Towards optimizing US patent rights while mitigating loss of rights
    To be on the safe side, persons responsible for managing patent portfolios for Canadian universities should review existing patent ownership policies to satisfy themselves that self-inflicted prior art is not being created. If such a problem exists, perhaps the policy should be overhauled or redesigned.

    Even if nothing is done to design against self-inflicted prior art in the Canadian university environment, it is important tobe mindful of the Springsteen et al. situation, and be sensitive to the R&D timeline and the individual contributors involved along the way. There may be circumstances when earlier technology developments may function as potential prior art versus later technology developments coming out of the same R&D group. If any earlier technology development is assessed to be material to patentability, the R&D story will need to be disclosed in an information disclosure statement during prosecution of any filed US patent application. Otherwise, risk of loss of US patent rights is being assumed.

    In an ideal world, it would be nice to try and avoid the Springsteen et al. situation and mitigate against the creation of self-inflicted prior art. However, nobody should be under any illusion that this is an easy thing to do in a Canadian university environment. Typically, the winds of political will are strongly against any changes to patent policy, so, for example, any attempt to normalize patent ownership with the institution is likely impractical. On another level, it may be possible to create processes which require the execution of a written joint research agreement whenever a new R&D group is created, or when its membership is expanded, in order to take advantage of the section 103(c)(2) safe harbour provision. Of course, this creates its own challenges, and administration of these processes could prove to be difficult.

    Realistically, educating the university stakeholders about the possibility of self-inflicted prior art, and the importance of having a written joint research agreement in place to cover technology development within an R&D group, may be the best that can be done. At the very least, it is important to manage the consequences, which means managing compliance with US law duty to disclose obligations and being mindful of the potential existence of self-inflicted prior art.

    1 37 C.F.R. section 1.110 affirms that ownership of individual claims in a US patent application may vary from claim to claim, and that invention date may vary from claim to claim, thereby suggesting that the subject matter of a first claim may function as prior art versus a second claim in the same application if the subject matter of the first claim possesses an earlier invention date than that of the second claim. 37 C.F.R. section 1.110 states the following: “Inventorship and date of invention of the subject matter of individual claims: When more than one inventor is named in an application for patent, the Patent and Trademark Office, when necessary for purposes of an Office proceeding, may require an applicant, patentee, or owner to identify the inventive entity of the subject matter of each claim in the patent application. Where appropriate, the invention dates of the subject matter of each claim and the ownership of the subject matter on the date of invention may be required of the applicant, patentee or owner. See also sections 1.78(c) and 1.130.” This situation and its resulting prior art consequences are, in fact, recognized in Chisum on Patents, Matthew Bender, ed. (New York: LexisNexis, 2009), section 2.03[3][b][vii].