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Patents Go Global

A single global patent system could simplify the international patent process. Will the United States sign on?

On May 23, 1997, Atlanta inventor Clyde Bryant filed for a U.S. patent on his conception of an improved internal combustion engine. In written descriptions of 26 claims and in 34 pages of diagrams, he disclosed an auto engine that aims not only to burn fuel more cleanly but also to deliver greater torque and higher fuel efficiency than a standard engine. Bryant had already started a company, Entec Engine, to develop the technology, and the business’s entire future was wrapped up in this patent application. The process was straightforward enough, costing less than $10,000 in filing fees and legal expenses. But Bryant was immediately confronted with an unavoidable conundrum: because of the global nature of the auto industry, unless he protected his invention worldwide, someone else would be able to patent and market the engine in another country. “The only way to do it was to file everywhere at once,” he says.

Bryant’s Entec is one of an increasing number of companies stepping into the international patent jungle, where 120 national patent systems challenge inventors with opposing philosophies and examination rules, not to mention translation requirements and separate filing fees. Working with an Atlanta law firm that has an office in Munich, Germany, Bryant learned that failure to file in certain foreign countries soon would result in forfeiting his rights forever. “It’s a lot of work to redo the claims for many of these countries,” he says.

But over the next few months, the law firm churned out applications for Russia, Ukraine, Georgia, Australia, and Singapore. Through the European Patent Office, Bryant filed an application that would protect his invention in 23 other countries. The cost of all the applications: $78,000 plus a whopping $200,000 in legal fees. When his U.S. patent, number 6,279,550, was issued in August 2001, Bryant rejoiced, but when his European application was granted in November 2002, he learned it would cost almost $7,000 more per country to take the final step of actually getting the patents issued. To pay the tabs, Bryant’s startup gave equity to the law firm.

The creation of a single global patent system could solve this conundrum for Bryant and other small inventors. Even multinational corporations that can afford to file everywhere are pushing for “deep harmonization,”
an international initiative aimed at forging a global patent. But in return for eliminating duplicate filing fees, most issuance costs, and translation requirements, such an effort will likely entail stark trade-offs for innovators worldwide.

Even as Technology Review’s annual Patent Scorecard (PDF download last page) tracks the number and strength of U.S. patents won by 150 companies in eight high-tech sectors, harmonization looms as a watchword. Harmonization means imposing a single set of global rules and depends on coming up with one answer to a controversial question: what is patentable? U.S. inventors in particular may be forced to abandon America’s 200-year-old first-to-invent system of settling disputes between rival inventors in favor of the first-to-file criterion that guides most other nations. “The goal [of harmonization] is brilliant, and there is tremendous pressure to achieve it,” says Joanne Hayes-Rines, publisher of Inventors’ Digest, the official publication of the United Inventors Association of the USA. “But it’s going to be very difficult to get there.”

Global economics are driving harmonization. The 1990s saw a modest 27 percent jump in the number of inventions seeking patents worldwide. During the same period, however, an explosion of country-by-country filings multiplied the total number of applications on those same inventions nearly fivefold, according to the World Intellectual Property Organization, the umbrella association overseeing the harmonization negotiations. “It’s a measure of globalization,” says Francis Gurry, assistant director general of the organization. About 90 percent of the seven million-plus patent applications filed worldwide each year are filings in more than one country for the same invention, he says. Reducing that number will require forging not only a better global filing system but also a common examination process. The trick, he says, will be getting the big three-the U.S. Patent and Trademark Office, the European Patent Office, and the Japanese Patent Office-“to achieve agreement on the fundamentals of patent law.”

The U.S. patent system, however, sharply conflicts with other systems. Whereas all other countries grant a patent to the party who is first to file an application, the United States maintains an elaborate legal process for sorting out the precedence of rival inventors-regardless of their filing dates. A 1989 effort to develop a single, worldwide patent system convinced Canada to switch to first-to-file, but treaty negotiations broke down when the United States refused to compromise on this point, mainly because of intense resistance from independent inventors who say it gives the upper hand to big corporations with the resources to file quickly and prolifically. The European “first-to-file system is simple, but sometimes it isn’t fair,” admits Barbara Cookson, a partner at Nabarro Nathanson, a London-based law firm. “The U.S. system aims to be fair but at a tremendous cost.” That’s because patent interference suits that aim to resolve competing claims between parties can involve trotting out strings of witnesses and evidence such as notarized lab books and prototypes. Proving who actually invented first can take years and cost millions of dollars.

The debate is charged with emotion. The ability to sort out rival claims is “the only piece of armor” a small business has when it’s up against a big corporation that files patents early and often, says Don Costar, founder of the Nevada Inventors Association. According to many U.S. inventors, the first patent law signed by President George Washington in 1790 is clear on the point. Costar believes the principle is embedded even in the Constitution. The drafters “wrote the laws directly opposite to what was happening in England,” he says. “They saw that the inventor may be lying in the ditch with his throat cut, while the guy who filed it with the king got all the benefits and riches.”

Many large corporations, on the other hand, are willing to make the switch. “As a worldwide company, we favor harmonization,” says Fred Boehm, IBM’s assistant general counsel. “It would eliminate the interference problem in the U.S., and we’ve been involved in a number of those cases.” He’d like to see the United States trade away first-to-invent in return for other countries’ adopting America’s one-year grace period before filing. The grace period allows U.S. inventors to publish papers and speak publicly about their creations without undermining their patent rights. In much of the rest of the world, such activities kill eligibility. Inventors outside the United States “have to operate in total secrecy,” says Hayes-Rines.

This historic move is considered likely by those involved in the process. “The first-to-invent issue is pass,” says Q. Todd Dickinson, director of the U.S. Patent and Trademark Office under President Clinton. Dickinson now represents the American Bar Association in patent harmonization talks held every six months by the World Intellectual Property Organization in Geneva. Despite the fact that the bar association itself is divided on the issue, “I think we can sell first-to-file” to the American public, Dickinson says. “A working assumption in Geneva is that the U.S. will have to come around on this issue at the end of the day.” Independent inventors, he says, now have fewer excuses for not filing right away. The Internet provides abundant resources, including the ability to file online, and a one-year provisional application for patent filings, which was introduced in 1995, provides a simple way to lock in a filing date for as little as $80 while the inventor works on a full application.

But complications in realizing the switch to first-to-file lurk. Lois Boland, the chief U.S. negotiator on patent harmonization, says that for now, the American strategy calls for leaving the potentially disruptive issue of first-to-invent off the table in Geneva, so as not to rile the passions of independent inventors in the United States. Meanwhile, the current director of the patent office, James E. Rogan, is coy on the matter. As recently as last October in a speech to the Heritage Foundation, Rogan declared that he sees no need for the United States to switch. Currently, the U.S. patent office is floating a compromise term-first inventor to file-in order to dispel the notion that it would be common for a noninventor to rip off an idea and beat the real inventor to the patent office.

Other issues now on the table may be even more difficult to handle. Foremost among them is the definition of “patentable subject matter,” in other words, reaching universal agreement on what may be patented, a topic of vigorous debate. “The U.S. says that everything under the sun is patentable,” says the World Intellectual Property Organization’s Gurry. Almost every other country, he adds, disagrees. Among the most contentious subjects are business method patents. The United States typically, and somewhat notoriously, allows patents for business practices such as Amazon.com’s single-click Internet shopping, which allows its customers to save their shipping and payment information so they can buy books and other items simply by clicking once on an icon.

The United States is also the most generous in granting patents for software and genetic discoveries and treatments. Much of the rest of the world holds “a different view,” according to Boland, favoring what’s known as a technical-effect requirement to weed out ideas that have no technological component.

At the same time, a rift has opened between industrial and developing countries over patents on medicinal plants and other biological resources. Latin American and African nations favor rules requiring that foreign companies seek consent to remove such resources or be forbidden from receiving patents on them. Such rules would replace today’s patchwork of regulations, none of which prevent such patents. Supporters of that idea also back a requirement for citing the country of origin in any patent application. “There is absolutely no agreement on this,” says Gurry.

With so much open debate, officials involved in the negotiations don’t expect a document aimed at deep harmonization to be ready before the fall of 2004. Any global patent treaty would have to be ratified by Congress, and with no specific proposal on the table, it’s premature to guess whether ratification is likely.

In the meantime, the costs and confusion caused by differences in national patent systems continue to escalate. Boehm says IBM currently spends upwards of $200 million per year on its intellectual-property protection efforts, and redundant country-by-country patent applications comprise a large part of that expense. Independent inventors seldom file global applications at all, says Costar. “When they find out the cost, they drop the idea.” As for Entec’s engine, Clyde Bryant says his company is negotiating with DaimlerChrysler and a number of other manufacturers over licenses for his technology. Although the price was steep, he says he is relieved to have worldwide protection: the talks with the German auto giant are taking place not in Detroit, but in Stuttgart.

The Patent Scorecard 2003 (PDF)

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