Articles

Joint Research Agreements and the CREATE Act 2004

IP Value in Life Sciences Industries
February 2006

Article

The Cooperative Research and Technology Enhancement (CREATE) Act of 2004 responds to the 1997 Oddzon decision of the Court of Appeals for the Federal Circuit (Oddzon Products Inc v Just Toys Inc et al, 122 F3d 1396, 43 USPQ2d 1641 (Fed Cir 1997)). In Oddzon, the Court of Appeals for the Federal Circuit found that, in the case of an invention that involved researchers from more than one organisation, confidential information shared by members of a research team could be prior art rendering a later invention obvious within the meaning of §103, and therefore unpatentable, if the researchers did not have an obligation to assign their rights to the invention to a single entity in advance of making the invention.

The decision created a situation where an otherwise patentable invention may be rendered unpatentable on the basis of confidential information routinely exchanged between research partners. Thus, parties who entered into a clearly defined and structured research relationship, but who did not elect to define a common ownership interest in or a common assignment of inventions jointly developed, could unwittingly create an obstacle to patent protection by simply exchanging secret information among them. Under the court's interpretation of §103(c), there was no requirement that the patent disqualifying information be publicly disclosed or commonly known in order for it to apply against the later invention.

The CREATE Act ameliorates the effects of the decision by permitting the patenting of inventions that result from collaborative or team research in circumstances not permitted under prior law. Enactment of the CREATE Act provides collaborative researchers affiliated with multiple organisations a statutory safe harbour similar to the one available under the patent law to researchers employed by a single organisation or who have established certain types of legal relationships.

Under the CREATE Act, a claimed invention and subject matter developed by another person, which qualifies as prior art under the Act, are deemed to be owned by the same person, or subject to an obligation of assignment to the same person, where specific conditions are satisfied:

• First, the claimed invention must be 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.
• Second, the claimed invention must be made as a result of activities undertaken within the scope of the joint research agreement.
• Third, the application for patent for the claimed invention must disclose or be amended to disclose the names of the parties to the joint research agreement.

The United States Patent and Trademark Office issued final rules to implement the CREATE Act on 14th September 2005, but the CREATE Act is effective as of 10th December 2004.

The revised standard permits one party to a joint research agreement, who owns an invention, to claim the benefits of the Act without also proving that it owns the disqualifying subject matter. The revised standard requires that the invention be made after the date of an eligible joint research agreement.

The Joint Research Agreement (JRA)

35 USC 103(c)(3) defines a joint research agreement as a written contract, grant or cooperative agreement entered into by two or more persons or entities for the performance of experimental, developmental or research work in the field of the claimed invention. The JRA is the passage to entry into the safe harbour of the CREATE Act. The Act specifically mentions written contract, grants and cooperative agreements. The Act does not provide for oral agreements relating to joint research activities.

The form of the contract, grant or cooperative agreement is not specified in the Act. Thus, confidential disclosure agreements, trade secret agreements, consulting agreements, and even employment agreements and material transfer agreements, may qualify as joint research agreements if they contemplate the sharing of information for experimental, developmental or research work. There would seem to be no impediment under the Act to including appropriate clauses for invoking the Act in licence agreements or manufacturing agreements where such work is contemplated.

The Act thus places a premium on well documented collaborative research activities. Existing collaborations should be reviewed to insure that they are properly documented. An existing collaborative research agreement can be amended to be in compliance with the Act. The date an amended joint research agreement was executed is the date the joint research agreement was executed for purposes of the Act. New collaborations should be in writing to comply with the Act.

Content of the JRA

The joint research agreement must have been in effect on or before the date the claimed invention was made. Further, the JRA must be for the performance of experimental, developmental or research work in the field of the claimed invention. As a practical matter, what should be specified in the JRA may only be determined after the invention is made, a patent application is filed and claims are drafted or amended. The field of the claimed invention can be ascertained at that time, and the claimed invention can then be compared with the content of the JRA to determine whether they are in the same field.

Since the term field is not defined in the Act, the meaning and scope of the term may require case law development. Meanwhile, the JRA should use the language of the statute and specify that it is for the performance of experimental, developmental, or research work. The draftsmen of the JRA may also specify the purpose of the collaboration and the goals to be achieved with the expectation that these will encompass the field of the claimed invention.

Overcoming Prima Facie Obviousness

The CREATE Act applies only to a rejection based on obviousness where the prior art relied on qualifiers under §102(e), (f) or (g). The Act cannot be relied on to overcome a rejection based on anticipation.  

In practice, once an examiner has established a prima facie case of obviousness under 35 USC §103(a), the burden of overcoming the rejection by invoking the safe harbour of the Act is on the applicant. To overcome an obviousness rejection based upon subject matter which qualifies as prior art, the applicant must provide a statement claiming benefit of the Act. In addition, the specification must disclose, or the applicant must amend the specification to disclose, the names of the parties to the joint research agreement, or specify where (ie, by reel and frame number) this information is recorded in the assignment records of the Office. An amendment to the specification to comply with the Act is not treated as a new matter.

The Act does not require that the invention of the disqualified patent be made as a result of the activities within the scope of the JRA. Thus, the safe harbour can be invoked whether or not the disqualified patent is within the field of the claimed invention.

Further, if a patent does not include the names of the parties to the joint research agreement, the patent can be corrected by a certificate of correction. It is unnecessary to file a reissue application or a request for reexamination of the patent to submit the amendment and other information necessary to take advantage of the CREATE Act (see HR Rep No 108-425, at 9 ("[t]he omission of the names of parties to the agreement is not an error that would justify commencement of a reissue or re-examination proceeding")).

Disclosure Requirements

It should be evident that reliance on the safe harbour of the CREATE Act requires disclosure, that is, disclosure of the existence of the JRA and disclosure of the identity of the parties to the JRA. This may prevent the applicant from relying on the Act if the applicant is obligated to maintain secrecy or confidentiality of the JRA. Thus, draftsmen should consider specifying in agreements whether the existence of the agreement and the identity of the parties can be disclosed to the PTO and in any resulting patents.

While disclosure is required, the disclosure is limited. There is no requirement to inform the PTO of the field of the invention in the JRA. Thus, the draftsmen may provide for only the minimum disclosure required to comply with the Act.

There is no requirement that a party invoking the CREATE Act notify the other parties to the JRA prior to invoking the safe harbour. Such a requirement could be made part of the JRA by the draftsmen. Nevertheless, while the disclosure required by the Act is limited, it does require disclosure to the USPTO of the identity of all of the parties to the JRA. The Act does not limit the required disclosure to just the owners of the conflicting patent rights. Thus, the draftsmen must exercise care in formulating restrictive disclosure provisions in the JRA that may otherwise defeat reliance on the safe harbour provided by the Act.

Double Patenting

The effect of the CREATE Act on the applicant is that the application or patent under re-examination and the patent disqualified under the Act are treated as commonly owned for purposes of double patenting analysis. As a result, the PTO can make a double patenting rejection regardless of whether the application and the noncommonly owned patent have the same or a different inventive entity.

A double patenting rejection may be obviated by filing a terminal disclaimer. A terminal disclaimer submitted in response to a double patenting rejection after invoking the CREATE Act dispenses with the usual requirement that the applicant agrees that any patent granted on the application shall be enforceable only during the period that it and the prior patent are commonly owned. Instead, the terminal disclaimer must include a provision that the owner of the rejected application or patent waives the right to separately enforce any patent granted on the rejected application, and that any patent granted on that application is enforceable only during the period that the patent is not separately enforced.

In order to take advantage of the new safe harbour offered by the CREATE Act, joint research partners need to make sure that they prepare joint research agreements before inventions emanating from joint research have been made. The requirements of the Act make it possible to comply with the Act while permitting creative draftsmanship to tailor the JRA to the needs of the parties.

Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes and is not intended to constitute legal advice. This memorandum may be considered advertising under applicable state laws.