Technology Commercialization: Russian Challenges, American Lessons (1998)

Kenneth D. Sibley

Myers Bigel Sibley & Sajovec, P.A.

The United States currently operates under the Patent Act of 1952, which was codified as Title 35 of the United States Code. A number of changes have been made to the patent statute since 1952, but the basic framework remains that specified by the original act.

The university community had little input to the 1952 Act. The major change affecting university patents has been the passage and implementation of the Bayh-Dole Act in 1982. Other than the Bayh-Dole Act, however, the University community has had little input into revisions to the patent statute.¹ Clearly, it has had nowhere near the influence on statutory changes that various segments of industry have had.

The patent statute is interpreted by case law, most notably the case law promulgated by the U.S. Court of Appeals for the Federal Circuit (the "CAFC"). The CAFC was created in 1982 to strengthen the patent system in the United States by providing a single appeals court for all patent cases. Although the CAFC has carried out this task admirably, it was not created to provide any special benefit to the university community, and special considerations of universities have had little or no impact on the CAFC's decisions.²

None of the foregoing is meant to suggest that the U.S. patent statute contains no provisions that are beneficial to universities. Several provisions that the university community can use to its advantage are listed and discussed below. However, U.S. patent statute has not been specially adapted to benefit the university community. Provisions in the patent laws of other jurisdictions also can be of benefit to a research university.

The United States is a grace-period jurisdiction: if a professor publishes his or her invention, he or she has one year from the date of first publication to file a patent application before that invention passes into the public domain.³ If the professor waits more than one year, then patent rights are forfeited. Most other jurisdictions are absolute novelty jurisdictions. In an absolute novelty jurisdiction, a patent application must be placed on file before the invention is published (or, in many jurisdictions, disclosed to the public in any way, such as by a speech) or rights to that invention are lost.

The advantages of the grace period to the university community are great. Industrial research can be kept secret for long periods of time. University research, in contrast, is made known to the public much more rapidly. Because industry has more time to develop a line of research before it is published, it also has more time to decide whether a particular invention is worth the cost of filing a patent application. Universities, on the other hand, have comparably small budgets with which to pursue patent filings and simply cannot afford to file a patent application on every new invention that is published. Exacerbating the problem is that university research, while ground-breaking and innovative, may not be motivated by an immediate commercial objective. Without a commercial objective (and corresponding market information), deterring whether a particular invention, however worthy, should have patent protection is difficult.

Whenever possible, American universities attempt to preserve potential patent rights in jurisdictions outside the United States. The U.S. grace period is of no consequence in preserving such rights, and if preserving patent rights in jurisdictions outside the United States is critical to securing business interest, U.S. universities must operate under an absolute novelty rule.⁴ Nevertheless, when a commitment to a patent filing simply cannot be made before a disclosure of the invention and causes the loss of patent rights in absolute novelty jurisdictions, the one-year grace period provides time to determine (through

peer review, industry comment, and the like) whether the invention should be pursued in at least a U.S. filing.

A broad variety of different items and processes can be patented in the United States. In addition to compounds, compositions, machines, products, and methods of making and using the same, diagnostic procedures, methods of treatment with known compounds, microorganisms, plants (including transgenic plants and new, classically bred plants), animals, biological process inventions, computer hardware, and computer software can all be patented. Indeed, a famous quote from the U.S. Supreme Court is that the patent statute is intended to protect "anything under the sun that is made by man."⁵

An established industry can adapt to the statutory subject matter requirement: pharmaceutical industries can bias their discovery process in favor of new compounds, medical device companies can bias their discovery process in favor of new apparatus rather than new procedures, computer software companies can bias their discovery process in favor of copyright protection for detailed programs rather than broad concepts, and so forth. However, for the university research community, some of the most attractive areas for patent protection are groundbreaking technologies, or "platform" technologies, that can lead to the development of a new industry (or at least substantially modify an old industry). Stated otherwise, the university community is often in the position of pursuing patents on "things" that have not been the subject of extensive patent activity in the past. Protection of this type of technology is much easier when the patent statute, case law, and judicial system maintain an open door to patentable subject matter.

Reasonably generic protection can be obtained for most inventions in the United States: that is, the patentee cannot only preclude others from making, using, or selling that which the patentee has made, but can preclude others from making, using, or selling logical and reasonable extensions of that which the patentee has made. For example, the patentee may develop a new compound containing a fluorine atom, where any halogen atom may be acceptable in place of the fluorine atom. The patent applicant can extend the claims of the patent, and hence the coverage of the patent, to these alternate versions of the invention, without being required to synthesize every conceivable compound covered by the claim. Indeed, "generic" patent claims commonly cover thousands, and even

millions, of different permutations and variations on the invention (or different "embodiments") with only ten or twenty examples of things actually made.⁶

The university-based inventor is usually more interested in making a "proof of principle" rather than making repeated demonstrations that different variations of the invention worked. Indeed, even if the university-based inventor is willing to test different variations of an invention to help support a broad patent position, the funding for this type of research is often not available. Hence, the availability of generic patent protection under U.S. law is a great advantage to university inventors.

The United States is a "first-to-invent" jurisdiction, whereas many other jurisdictions are "first-to-file" jurisdictions. That is, one who failed to file a patent application before another, independent, inventor, can nevertheless prove that he or she was the first to make the invention, and hence the one entitled to the patent, through an "interference'' proceeding in the U.S. Patent and Trademark Office.

Given the pressure to publish early, the frequent need to preserve patent protection in "first-to-file" jurisdictions outside the United States, and the high cost of interference proceedings, the mere fact that the United States is a first-to-invent jurisdiction is not of great advantage to the university community. However, a side benefit of the first-to-invent system is that the United States has a well-developed law of inventorship. In general, the law of inventorship credits to the person or persons who contribute to the "conception" of an invention, as defined by any claim in a patent application. Conception is the mental portion of the inventive act, rather than the physical portion (called the "reduction to practice"). Hence, an inventor can communicate his invention to others, who may then reduce the invention to practice without depriving the inventor of his status as the true inventor. This rule should be of great benefit and protection to the university research community, where new ideas are generated and exchanged at a rapid pace.

Unfortunately, the law of inventorship in the United States does not always protect the university inventor as it should. There is frequent confusion over the law and difficulty in documenting the specific origin of ideas. Ideas that should be credited to a university-based inventor are found in the patent filings of other parties outside the university more often than they should. Universities are constantly involved in studying the patent filings of others to ensure that a inventorship has been properly attributed. They at least have an established, favorable body of law on this point to which they can refer.

The United States, like the Russian Federation, is party to a number of treaties that help defer the costs of filing foreign patents. These treaties include the Paris Convention and the Patent Cooperation Treaty. Careful use of these treaties allows the university to preserve patent rights in other jurisdictions for 30 months beyond the original filing while efforts are made to locate a licensee willing to support the cost of filing for foreign patents. Without a licensee willing to support such filings, the high costs of extraterritorial prosecution on a speculative patent filing are impractical for a university to cover in all but the most extraordinary of cases.

Many stories circulate about enormous patent costs of university inventions that, while based on outstanding science, never led to a successful license. In general, these stories relate back to the early days of university technology transfer, shortly after passage of the Bayh-Dole act. Few patents ultimately cover commercial products and most patent applications must be filed before their commercial viability is confirmed. However, it has become apparent that university technology transfer programs cannot afford to pursue patent protection on highly speculative or extremely early-stage technology, no matter how meritorious the underlying science may be. These are extremely difficult judgments to make, but they are judgments that university-based technology transfer specialists must deal with every day. Through the efforts of professional organizations such as the Association of University Technology Managers (AUTM), the university community has become (in relatively few years) much more sophisticated at making these types of judgments. In short, they have brought industrial patent strategy considerations into the world of university technology transfer. Without such efforts, the university technology transfer program would quickly sink under the weight of managing patent portfolios that have no reasonable business prospects. This author applauds the professionals who carry out this task, wherever they are located.