Pages 155-165

INTERNATIONAL TREATIES

European Union

A hearing of the interested parties on a grace period for patents was held in Brussels on 5 October 1998. The conclusions of that hearing have been summarised by the European Commission in the following report*.

Report on the hearing of 5 October 1998 on a grace period for patents

The main purpose of this report is to set out the arguments and ideas put forward during the hearing. Explanations are given where they are necessary for a better understanding of the arguments. By way of introduction, the report describes the European legal context. The conclusions of the hearing are set out at the end.

The European legal context

The European legal context was introduced with reference to the Munich Convention on the Grant of European Patents (European Patent Convention, EPC).

European law does not provide for a grace period. The requirement of novelty is an absolute condition for the granting of a patent1. Article 54 of the Convention states:

"(1) An invention shall be considered to be new if it does not form part of the state of the art.

(2) The state of the art shall be held to comprise everything made available to the public by means of a written or oral description, by use, or in any other way, before the date of filing of the European patent application."

Article 55, however, provides for two types of non-prejudicial disclosures, ie disclosures of the invention which were made prior to the date on which the application was filed and which do not compromise the novelty of the invention. The disclosures in question are those which are due to, or in consequence of:

"(a) an evident abuse in relation to the applicant or his legal predecessor, or

(b) the fact that the applicant or his legal predecessor has displayed the invention at an official or officially recognised, international exhibition falling within the terms of the Convention on international exhibitions signed at Paris on 22 November 1928 and last revised on 30 November 1972."

The case law of the European Patent Office (EPO) has on numerous occasions defined the principle of absolute novelty2.

The word "public", for example, applies to all information which is accessible to the public, even in cases where one person who is not bound to secrecy has had the possibility of obtaining and understanding the information. In other words, a single sale of the item is enough to make it accessible to the public, on condition that the buyer is not bound by an obligation to respect its confidentiality. It is not necessary to prove that other persons have a knowledge of the item. However, if the person who had the possibility of obtaining the information was bound to secrecy, the invention is not deemed to have been made accessible to the public.

EPO case law states that the obligation of confidentiality must derive from an express agreement. Tacit agreements or agreements deriving from circumstances are problematic. For example, a technical description circulated among customers cannot be regarded as secret information. Nevertheless, EPO case law appears to be more flexible in the case of sales negotiations, where there is a tendency to acknowledge the obligation of confidentiality. This is also the case where a sample is given to a third party for analysis or tests.

The Appeals Boards consider there to be "accessibility" where there is a theoretical possibility of a person becoming privy to an item of information. It is therefore sufficient for the public to have had the possibility of becoming privy to the information. It is not necessary for a member of the public to have known that this possibility existed and effectively to have become privy to the information.

As regards non-prejudicial disclosures, EPO case law contains a number of decisions relating to evident abuse. Basically, evident abuse exists where it is clearly apparent that a third party has not been authorised to communicate to others the information to which he is privy. Thus, evident abuse exists where there is an intention to damage the interests of the inventor, or where a third party acts in such a way as to risk damaging those interests, or where a third party violates an agreement on confidentiality which he has entered into with the inventor. A decisive element in deciding whether there is evident abuse is the intention of the person perpetrating that abuse.

In the light of the above, it is easy to see why a grace period is not recognised under European patent law. A period of grace would give the inventor the possibility, during a limited period, of disclosing his invention prior to filing a patent application, without that disclosure affecting the novelty of the invention.

The arguments

The arguments in favour of a grace period are set out first, followed by the arguments against.

The arguments in favour of a grace period

Prior to the hearing of 5 October 1998, in the questionnaire which the Commission sent to the interested parties, the potential beneficiaries of a grace period were divided into the following categories of inventors: non-industrial researchers, independent inventors and SMEs. The hearing of 5 October 1998 revealed that it is basically non-industrial researchers and, above all, independent inventors who have specific requirements in this connection. The arguments put forward by researchers are set out first.

Essentially, the aim of the researcher is to increase the sum of scientific knowledge. The economic significance of the results of his research does not appear to be a sufficiently motivating element.

The requirements of patent law are basically perceived as constraints which exist alongside other requirements which are increasingly imposed on researchers: advertising, marketing and development research.

On the other hand, inventors have their own, special system of evaluation, essentially involving publication in scientific journals which have their own scientific committees. The mere fact of filing an application counts for little.

In the age of the Internet, the situation is becoming even more complicated: every researcher has the possibility of disseminating his latest results immediately. This phenomenon is especially familiar in the field of biotechnology.

Increasing the awareness of the requirements of patent law is essential. In the meantime, however, an inventor cannot allow his invention to slip through his fingers.

This is why a period of grace should be regarded as a legally acceptable solution, though certainly not as a panacea. A grace period can be no more than a compromise solution which allows inventors to correct their mistakes. It would provide them with a safety net. In France, a working party has submitted a report on this issue to the Ministry of National Education, Research and Technology, in which it recommends that a grace period have the following characteristics:

(1) Given the "first to file" system which operates in Europe3, a grace period could not determine priority, but only give immunity, ie it should not give priority and protect the inventor or his successor and also cover disclosures by third parties which reproduce or repeat, in full or in part, the disclosure made by the inventor;

(2) A grace period should be instituted at least at European level, and preferably at world level;

(3) A grace period must cover all fields of technology and all forms of publication:

(4) A grace period must be an exceptional practice which is hedged about by constraining conditions (filing of a patent application within six months of the disclosure, declaration by the applicant and payment of a fee).

The grace period envisaged in the report would not in any way require Europe to abandon the "first to file" system in favour of the "first to invent" system practised in the United States. The American system is felt to be highly complex because it makes it necessary to establish the date of the invention which, in itself has no bearing on the period of grace4.

Article 28.2 of the relevant Canadian law is an example of how a period of grace can happily co-exist with a "first to file" system:

"(1) The subject-matter defined by a claim in an application for a patent in Canada (the "pending application") must not have been disclosed (a) more than one year before the filing date by the applicant or by a person who obtained knowledge directly or indirectly, from the applicant, in such a manner that the subject-matter became available to the public in Canada or elsewhere; (b) before the claim date by a person not mentioned in paragraph (a) in such a manner that the subject-matter became available to the public in Canada or elsewhere;

Independent inventors are asking for a general grace period of 12 months. The aim is not to encourage disclosures, but to protect the novelty of inventions whose subject-matter can only be disclosed by the inventors, either because they are seeking financial backing, or have to perform tests in order to confirm that their inventions work, or because they wish to make their inventions known or disclose them without knowing if they may be required to file a patent application.

If an inventor is forced too early to initiate a patent application, he risks freezing an inventive process. Moreover, a patent application may require an independent inventor to spend funds which he needs in order to bring his invention to completion.

It was pointed out that certain industrial sectors may have no alternative to disclosure (eg the development of agricultural machinery, the manufacture of footwear or, in the medical field5, orthopaedic bandages).

Before it was brought into line with the EPC, German law provided for a grace period which failed to produce a single disaster. A grace period still applies under German law on utility models.

The arguments against introduction of a grace period

These arguments were put forward by the industrial sector and European professional representatives before the EPO. Essentially, the arguments rest on the assumption that companies, irrespective of their size, cannot reasonably decide to invest if too much risk is involved: part of the value of patents is their power to protect investments.

An invention has no economic significance until it has been patented and commercialised. A grace period would only serve to create uncertainty.

For example, once an invention has been published and appears promising in terms of potential commercial returns, competitors will attempt to reproduce it. If there is any uncertainty regarding the patent likely to be granted after publication, investment decisions become much more complicated and competition will suffer.

Moreover, even if the inventor's competitors assume that a patent application will follow publication, no one can predict with certainty what the scope of the protection applied for will be.

Quite apart from the legal uncertainty which a grace period would create, it was argued that no one would be able to prevent a second publication, whether or not done in good faith, from drawing on the first. This would risk protracted litigation to establish who had the right to publish.

It was also pointed out that American competitiveness owed nothing to a period of grace and that a grace period was in any case little used in the United States. Moreover, it was felt that the introduction of a grace period in Europe would disproportionately benefit American and Japanese inventors who could obtain protection in Europe, rather than the other way round, if Europe retained the "first applicant" system, since a grace period in the USA and Japan was granted subject to specific requirements.

It was argued that clock could not be turned back to the 1970s. Circumstances had changed. What pertained in the 1970s no longer pertained, especially given that SMEs, contrary to what one might think, had the same concerns as the major companies.

The academic tradition of publication was a fact of life. However, if the universities wished to become players in the economic world, they would have to discard some old habits. They would have to become more aware of what was happening. Appropriate training could help, although it should not be assumed that the players who knew nothing about patent law with no period of grace knew much more about patent law with a grace period.

In any case, it was essential to realise that a grace period could only be introduced on the basis of international consensus: a unilateral initiative could only weaken the competitiveness of its sponsors.

Ideas

After the exchange of views, the discussion focused on certain of the participants' ideas. These are set out below, with some elaboration designed to help the reader appreciate their scope and significance and reflect on their merits.

Would a system of provisional application or filing, with simplified formalities, provide a solution to some delicate situations?

Since 8 June 1995, there has been a system of provisional applications in the United States6. Under this system, an application can be filed with simplified formalities: a description of the invention, the appropriate drawings, the names of the inventors, payment of a filing fee and a document identifying the filing as a provisional application for a patent. The main characteristic of this system is the absence of claims. The US Patent and Trademark Office (PTO) does, however, recommend that the description be as complete as possible. Furthermore, the invention claimed in any subsequent non-provisional application (which must be filed within one year of the provisional application) must be the same as that described in the provisional filing.

The one-year period of validity of a provisional application does not run concurrently with the 20-year term of a granted patent, which runs from the filing date of the non-provisional application.

The PTO points out that the provisional application involves the applicant in a lower initial investment to assess the invention's commercial potential before committing to the higher cost of filing a non-provisional application. It also enables immediate commercial promotion of the invention with greater security against having the invention stolen. The provisional application filing date begins the Paris Convention priority year.

In addition to a system of provisional applications, one could conceive of a system of filing which involves a known date and simplified formalities. The date would be the date of the non-provisional application, i.e., unlike in the USA, the 20-year term would begin on that date. The formalities which would have to be observed would not, however, correspond to all the formal requirements for correct filing of a patent application.

Article 80 of the EPC covers this situation: "The date of filing of a European patent application shall be the date on which documents filed by the applicant contain:

(a) an indication that a European patent is sought;

(b) the designation of at least one Contracting State;

(c) information identifying the applicant;

(d) a description and one or more claims (...) even though the description and the claims do not comply with the other requirements of this Convention."

Article 4 of the draft WIPO Treaty on patent law (SCP/1/3) also provides for this possibility concerning the date of filing: "1) ... a Contracting Party shall provide that the filing date of an application shall be the date on which its Office has received...:

(i) an express or implicit indication to the effect that the elements are intended to be an application;

(ii) indications allowing the identity of the applicant to be established or allowing the applicant to be contacted by the Office;

(iii) a part which on the face of it appears to be a description."

It is worth noting that there is no requirement to file one or several claims.

Several of those present at the hearing pointed out that a system of provisional applications or simplified formalities (which would have to be completed in due course) giving a fixed date would help inventors, who are sometimes confronted with the requirements of patent law, especially in cases where a fee is not immediately payable.

The concept of evident abuse needs to be revised.

A number of persons said that, given existing law (Article 55 of the EPC, which relates to non-prejudicial disclosures), the interpretation of the concept of evident abuse was in need of revision. The interpretation was thought to be too narrow, since it did not cover unintentional disclosures. This could be particularly useful in cases of disclosure following a previous disclosure made in confidence, eg where an inventor has disclosed his invention to a third party for testing purposes and this third party then discloses the invention to others. Consideration could be given to replacing the concept of evident abuse by a more flexible concept.

The definition of international exhibitions is too narrow.

Again with regard to non-prejudicial disclosures, it was pointed out that there was currently an insufficient number of officially recognised international exhibitions, whereas independent inventors have opportunities to exhibit their inventions at a number of events.

The utility model might provide a solution.

Some contributors thought that a system of utility models could be a useful response to the wishes of independent inventors, whose activities tended to centre on mechanical inventions.

Conclusions

For the opponents of a grace period, the fear of legal uncertainty affecting investments is the decisive argument.

There are instances where inventors cannot avoid disclosing their invention, eg where tests have to be performed.

The situation in the United States should be viewed with caution because the system practised there is different from the one in Europe.

The impact of the Internet on the options for publication needs to be examined in greater detail.

As regards biotechnological inventions, it should be noted that Directive 98/44/EC requires the Commission to publish a report by 30 July 2000 assessing the implications for basic genetic engineering research of failure to publish, or late publication of, papers on subjects which could be patentable.

If a grace period is introduced some time in the future, it is crucial for this to happen at world level.

The possibilities offered by a system of provisional application or filing, with simplified formalities and no fees, should be examined in depth.

The two instances of non-prejudicial disclosure currently provided for should be reviewed: evident abuse with regard to the applicant and the display of an invention at an officially recognised international exhibition.

There is a crucial need for improved dissemination of information on the provisions of patent law. The Commission has undertaken to reflect on this question and to restructure the effort already being made at Community level. Consideration could be given to issuing a communication on this subject.