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Joint Research (CREATE ACT)

Updated: 06/21/2010

RESEARCH COLLABORATIONS AND IP OWNERSHIP

Research collaborations among universities and private industry are becoming increasingly important as federal and state funding sources are decreasingly available.  Joint research is a very good way to pool resources and to facilitate innovation and technology transfer.  However, joint research agreements must be carefully crafted to avoid the unintended result of a bar to patentability due to the prior invention of a research partner.

In most countries, a patent is allowed for an invention only if the claimed invention is novel and not obvious in view of the “prior art”.  Simply stated, prior art is that knowledge which was in the public domain before the date of the claimed invention.  Prior to 1997, it was assumed that only publicly available prior art could be used to determine whether claims in a patent application were obvious and, therefore, it was assumed that information disclosed by one party to another in a joint research project would have to be publicly disclosed or published to qualify as obviating prior art to a future joint invention.  This assumption was disproved in Oddzon Products, Inc. v Just Toys, Inc., 122 F.3rd 1396 (1997).  In that case, one party shared unpublished information with a second party that subsequently filed a patent application for an invention anticipated by the unpublished information.  The Court held that the confidential information could be used as prior art for determining obviousness under 35 USC 102(f), even though the information was never shared with the general public.

Under the patent law prior to December, 2004, specifically 35 USC 103(c), this shared information was not protected because the information and the invention were not owned by the same entity or required to be assigned to the same entity at the time the invention was made.  Hence, any joint research project between two separate entities was subject to a prior art bar where one entity disclosed to the other confidential information that was later included in a patent application.  Clearly, this had a negative impact on the ability of universities to collaborate with industry or even with other universities, due to the fact that universities generally need to retain sole ownership of their patents in order to license to research partners for further research and development and, where federal funding is involved, to comply with federal law.  

Then, in December of 2004, reacting to concerns of universities, the Cooperative Research and Technology Enhancement (CREATE) Act of 2004 was signed into law.  The purpose of this Act was to promote cooperative research among universities, the public sector, and private companies.  The Act amends Section 103(c) of title 35 of the United States Code to allow research teams to work together while preventing prior knowledge of either party from barring patentability of future joint inventions.  Section 103(c) now provides that subject matter and inventions owned by parties to a joint research agreement will be deemed owned by the same entity and not subject to an obviousness objection as prior art under three conditions.

The first condition is that the subject matter of the patent application must have been 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.  103(c)(2)(A).  The earlier invention does not have to be subject to the joint research agreement, but its owner must be a party to the agreement.  The joint research agreement can be “a written contract, grant, or cooperative agreement” and must be 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.  103(c)(3).  

Consequently, it is important to have a written contract, signed by the parties, prior to the initiation of the collaborative project.

Second, the invention must be made as a result of activities undertaken within the scope of the joint research agreement.  Hence, it is critical to have a very well but broadly defined scope of work and to maintain good laboratory notes prior to and after entering into the agreement.  And, third, the application for patent must disclose the names of the parties to the joint research agreement.

While the CREATE Act provides significant improvement over prior law with regard to joint inventions, there remain issues to be resolved.  The most critical relates to the terminal disclaimer requirement to avoid obviousness-type double patenting rejections.  The USPTO promulgated rules in September of 2005 which require parties to a joint invention subject to a terminal disclaimer to include a provision in the terminal disclaimer waiving the right to separately enforce any patent granted on that application or any patent subject to the reexamination proceeding and the patent or any patent granted on the application which formed the basis for the double patenting.  In addition, any patent granted on that application (or reexamination proceeding) will be enforceable only for such period that the patent and the patent which formed the basis for the double patenting, are not separately enforced.  70 Fed. Reg. 54267 (Sep.14, 2005)

Because of the obvious impact of the above described rule on the earlier filed patent, a collaborator owning the earlier patent may find it difficult to agree to such a consequence in order to allow the other collaborator to obtain a similarly restricted patent.  Where a terminal disclaimer is required to avoid double patenting, there is no requirement that the earlier collaborator cooperate.  Consequently, the parties to the joint research agreement should consider a specific provision in the agreement to require each party to identify the other party in any patent application and to sign the required disclaimer if the later inventor finds it necessary to obtain a patent.  No doubt, such an agreement will require formidable negotiating skills.