Non-obviousness requirement:  An invention is considered novel if it is not exactly the same as prior products or processes, which are referred to as the “prior art.” However, in order to be patentable, an invention should not only be novel, but also be a non-obvious improvement over the prior art. This determination is made by comparison with the prior art and a determination is made whether the differences in the new invention would be obvious to a person having ordinary skill in the type of technology used in the invention.  

“First-to-invent” System

The United States has the “first-to-invent” system. Under the Title 35 USC 102,  

“A person shall be entitled to a patent unless —  

(a)  the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent”[1]  

The United States is the only country in the world using the “first-to-invent” system. Under the “first-to-invent,” a patent is granted to the first person that invented the claimed subject matter. This system is implemented in the Patent Act of 1836, with the notion that the patent system should reward the first true inventor rather than a later inventor who merely wins the race to the Patent Office.

Grace Period

Many countries, including the United States and Japan , have the grace period system. Patent applications are not rejected, even if the invention has been published (lose Novelty), as long as it is filed with prescribed conditions. It is a shield during which prior art cannot be used to refuse the issuance of patents. This period is called “grace period.” However, there are some differences in the details among the US , Japan , and European systems.  

US patent law provides that applicants can file patent applications within one year after inventions become public domain. In other words, the patent law allows an inventor one year to file a patent after its first discloser. For example, even if the earlier disclosure is by someone other than the patent applicant, the applicant has the opportunity to overcome the earlier disclosure by a showing its prior invention.[2] This is in contrast to the patent laws in some countries where absolute novelty is required for patentability prior to patent application.[3]  

On the other hand, European and Japanese patent laws provide 6 months grace period. Grace period is one of the critical areas being negotiated under the auspices of the WIPO as part of the patent law harmonization effort.[4]

Provisional Application
The provisional application is a simple, inexpensive ($75 for small entity) patent application that will not be examined except for certain formal requirements. The provisional application allows filing without a formal patent claim, oath or declaration, or any information disclosure (prior art) statement. The benefit of a provisional application is low cost for obtaining priority or patent pending status. Filing of a provisional application does not start the 20-year patent term. It also permits additional time to obtain funding while preserving priority. Since this application will be regarded as abandoned 12 months after its filing date, a formal application must be filed within one year of a provisional application.  

  
Interference Proceedings

When more than one applicant files patent applications claiming the same invention, USPTO institutes an “interference proceeding.” In an interference proceeding, the Patent Office determines which of the rival applicants is truly the first inventor.[5] The applicant who is the last to file a patent application must establish the evidence to prove that he or she has priority over the first person that filed a patent application. Interference proceedings are also instituted between an application and a patent that is already issued, if the patent had not been issued for more than one year prior to the filing of the conflicting application.  

An interference proceeding is very complex. Each party is required to submit the evidence of facts that proves the date of invention, and each has an opportunity to engage in “discovery of the other party’s evidence.” Legal briefs are submitted that argue points of law as supported by the evidence; a final oral hearing is held, and judgment is made.[6] A board of three administrative patent judges makes determination on the submitted evidence. If the decision of the Board of Patent Appeals and Interferences is still adverse to the applicant, the losing party can appeal to the Court of Appeals for the Federal Circuit (CAFC) or file a civil action against the winning party in the appropriate United States district court. The CAFC will review the record made in the Office and may affirm or reverse the Office’s action. In a civil action, the applicant may present testimony in the court, and the court will make a decision.[7]

Definition of Invention

USC Title 35, Section 102 states that a patent will be granted to an applicant unless,  

“(g) before the applicant’s invention thereof the invention was made in this country by another who had not abandoned, suppressed, or concealed it. In determining priority of invention there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other.”[8]  

Priority of invention amongst rival applicants is decided by the Patent Office in an “interference proceeding.”[9]  The three key terms to define the first inventor in the interference proceedings are Conception, Reduction to Practice, and Reasonable Diligence.  

Ø      Conception

“Conception is a purely mental process. It is the formation in the mind of the inventor of a definite and permanent idea of the complete and operative invention, as is hereafter to be applied in practice. The date of conception must be evidenced by written record, witnessed and dated by at least one other person, other than a co-inventor, who acknowledges that he or she understood the concept presented.”[10]  

Ø      Reduction to Practice

“Reduction to practice is a term of art representing the physical acts associated with the mental act of conception. The mere mental act of identifying a problem ripe for solution — or for that matter a potential theoretical solution to a problem — is insufficient to claim a patent.” The inventor must implement his or her idea or theoretical concept into a tangible product or process sufficiently. The inventor also has to show functions as a complete and operative invention to satisfy its intended purpose.[11]  

Ø      Reasonable Diligence

The last element to be examined in an interference proceeding is “reasonable diligence.” The inventor’s failure to exercise diligence in reducing the invention to practice may result in loss of priority. In applying the diligence requirement the proceeding considers reasonable problems and limitations encountered by the inventor. However, the USPTO does not accept any delay caused by the inventor’s efforts to refine the invention to the most marketable and profitable form.[12]  

Hence, the first inventor is the person who first conceived the invention provided that this person diligently worked to “reduce the invention to practice” from the date of the conception to the date of filing the patent application. Thus, under a first-to-invent system, interference proceedings define the point of conception and factual circumstances that would indicate reasonable diligence in reducing an invention to practice.    

Japanese Patent Law  

In Japan , a patent right expires 20 years from the date of application. A patent application in principle must be processed in the Japanese language, but documents accompanying the application may be written in English. However, within a certain period after the date of application, Japanese translation must be submitted. If two or more applications are filed claiming the same invention, the patent will be granted to the person who filed the application first, based on the “first-to-file” principle. In the Japanese patent system, the contents of the application will be published for the public 18 months from the date of application. Japanese patent law allows anyone to submit an opposition to a patent application, which is judged upon examination to meet the requirements for patentability, within 3 months from the date of publication.  

Characteristics of
Japanese Patent Law  

(Source: JETRO)

Modifications made to US patent system  

With Japan’s support, there were several provisions modified in US patent law through the GATT/WTO Agreement and WIPO treaties.

GATT/WTO TRIPS

Treatment of Inventive Activity

Title 35 of USC Section 104 was modified because there was a discriminatory provision to foreign applicants. The provision did not permit applicants to introduce the evidence of invention made outside the US in order to establish the priority of the invention.  

“In proceedings in the Patent and Trademark Office, in the courts, and before any other competent authority, an applicant for a patent, or a patentee, may not establish a date of invention by reference to knowledge or use thereof, or other activity with respect thereto, in a foreign country.”[13]  

Consequently, the date the foreign applicant filed the application was regarded as the date for both the conception and reduction to practice.[14]  

However, since the TRIPS requires that patents be available without discrimination when the Agreement entered into force, section 104 was amended to allow applicants to use the date of invention within WTO and NAFTA members in order to establish the priority.[15]

Patent Term

The term of patent protection under the US patent law was 17 years from the issuance of the patent. The TRIPS together with the bilateral negotiation with Government of Japan changed this patent term to 20 years from the filing date. This is discussed further below.

Provisional Application

The GATT established a new type of patent application called the provisional application. Since June 1995, the USPTO has offered this option for inventors.[16] The provisional application was introduced to provide an advantage for inventors who wish to preserve priority in international application where the priority is determined based on the date of filing.[17]

Japan-US Bilateral Negotiation

The Government of Japan and the Government of the US reached agreement upon several patent measures through “the Japan-US Economic Framework Talks” in 1994. Although Japan has already implemented all of its measures, the US has yet to implement the “introduction of an early publication system” and “improvement of the reexamination system,” despite the fact that the implementation of these measures is overdue.[18]  

Execution Status of Agreement in Japan-US Economic Framework Talks

○ Execution completed   - Yet to be completed

(Source: Japan Patent Office)

Following this agreement, on November 29 1999 , Former President Clinton signed the bill, “Intellectual Property and Communications Omnibus Reform Act of 1999” as part of the omnibus spending bill H.R. 3194. Title IV of the Omnibus Act, the “American Inventors Protection Act of 1999,” includes provisions to amend the Patent Law. Major amendments to the patent law are discussed below.[19]

Patent Term

The then JPO commissioner Wataru Asou and the then USPTO patent commissioner Lehman made a bargain under the talks. The US agreed to change its patent term from 17 years from the time the USPTO issued a patent to “20 years from filing date,” in exchange for acceptance of applications in English. Consequently, Section 154 of the patent law was amended so that “the term of protection begins on the date of grant and ends 20 years from the filing date of the application for the patent.”[20] Furthermore, the 20-year patent term could be extended for a maximum of five years in case of the delays in patent issuance, such as interference proceedings, successful appeals to the Board of Patent Appeals and Interferences or the federal courts.[21]

Early Publication System — Elimination of “Submarine Patent”

Most countries[22] have an early publication system by which the content of an application is published 18 months after the date of filing. On the other hand, in the United States , an invention was only published after it was issued. This, together with the old patent term, which protected 17 years from issuance, was the cause of the so-called “submarine patent.” The submarine patent appears when applications are kept pending and secret for long periods of time by patent applicants and the patent is established after the invention becomes common technology.[23] Businesses in that industry could be required to pay an exorbitant amount in license fees because of this submarine patent. It also causes unfair costs to consumers.[24]  

In addition, the lack of “early publication system” made it difficult to know that a patent for an invention had already been filed, and consequently, caused duplication of R&D investment.[25]  

The US agreed to correct this situation by introducing an early publication system during the 1994 Japan-US Trade Framework Talks.[26] However, the revised system has an exception: an application not filed abroad, or the content not included in the foreign application, does not have to be published until the patent is granted.[27]

Reexamination system

The United States has a re-examination system under which third parties can challenge a patent that has been granted. However, third parties’ rights are limited since a challenge can only be initiated regarding the existence of prior arts. The challenger can neither be involved in the process of the reexamination nor appeal the decisions. During the talks with Japan , the US agreed to revise current procedures by 1996, allowing other lines of reasoning in the requests for re-examinations and granting third parties the opportunity to participate in the process.[28]  

US Legislation for Harmonization

The United States Congress passed “American Inventors Protection Act of 1999,” which made substantive revisions to the US patent laws. Former President Clinton signed into law the bill on November 29, 1999 .

Early Publication

Before the legislation, US patent applications were held in confidence by the USPTO, except for in very limited circumstances. Under the new law, all pending US patent applications will be published at 18 months from the earliest convention or the PCT filing date. However, applicants can still request that their application not be published in case that there are no counterpart foreign applications.[29]

Reexamination System

Previously, US patent system provided that a third party or a non-patentee could initiate a reexamination, but that after initiating the reexamination, such a third party had no opportunity to be continuously involved with the proceedings before the USPTO. The revised law allows more complete third-party participation in reexaminations, making appeal procedures available to a third party to the Board of Appeals.[30]

Prior User Rights

The “first-to-file” system has a “prior user rights” clause which gives individuals who were using or making the invention prior to the filing date of the first applicant a limited right to continue using, making and selling it.[31] In other words, the prior user rights protect a manufacturer, who did not obtain a patent but is using a technology, as a defense against patent suits by the patent owner of the technology.[32] The “American Inventors Protection Act of 1999” established a “First Inventor Defense” only for prior users of business methods to allegations of patent infringement.[33] This is the same provision as prior user rights, which allows first inventors who did not apply for patent protection to continue to use its invention under the condition that the invention was made one year or more before the date of the filing of the same invention by others.

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