International Harmonization 

Under the auspices of the WIPO, participating countries negotiate in order to facilitate and reduce the cost of patent protection. Two major treaties, the Paris Convention and the Patent Cooperation Treaty, have succeeded in reducing the cost. However, more effort should be taken towards this end.  

The total cost involved is still very high due to the different procedures in each country. Under the Paris Convention, for example, the applicant is required to follow separately the procedures that vary with each country, and to pay a substantial amount of money as a result. Simply having the application translated into different languages costs a considerable sum.[71]  

Patentability of the same technology is examined in each country under both treaties. Theoretically, an examination result obtained in one country can be regarded as valid in other countries. However, in practice, the same invention undergoes substantive examinations in each country.  This duplication in the examination process results in an increase in cost and time required before the granting of a patent.[72]

Each country has its own system to substantively examine patentability. Thus, different standards are applied in deciding patentability of the same invention, and judicial judgments made after the grant of a patent may differ from country to country. This leads to an insecurity of rights in terms of the legislative aspects.[73]

In order to further harmonize patent systems in the world, the issue of whether or not the US should shift its patent system from “first-to-invent” to “first-to-file” must be on the agenda of this discussion.  The US has pursued a series of bilateral negotiations in order to protect the US inventor in some developing and less developed countries which do not provide adequate patent protection by exercising Section 301, Special 301, and other US trade laws. However, resolving the issues by having a series of bilateral negotiations with specific countries is a costly, difficult, and highly politicized process. The US could pressure these countries by actively participating in an international harmonization process.

“First-to-Invent” vs. “First-to-File” 

“First-to-Invent”:

The “first-to-invent” system is designed to protect individual inventors rather than the licensee of the inventions or the whole society in general. Under “first-to-invent,” as long as the inventor keeps an appropriate record, he or she can discuss the invention with others, since there is no fear that someone else would steal the idea and file a patent.[74]  

The inventor also can take time before filing an application to ensure the invention has patentability. There is no disadvantage to delaying an application, provided the grace period assures that a one-year delayed application is still acceptable, even if someone else files an application for the same invention.[75] Hence, applicants can take advantage of the grace period to clarify in what context, and to what extent the invention would be utilized. Applicants can make claims covering the broad range of its use.[76]  

However, the “first-to-invent” system lacks certainty and predictability. The senior applicant (the first person to file a patent application) has no idea whether or not other inventors (who file a patent application after the senior applicant’s filing or issuance of the patent) have priority until the litigation. In addition, a unique interference proceeding has negative impacts in terms of time and cost, not only on patent holders, but also on its users.  

For example, operations would be stalled by the appearance of another party claiming that it is the “first-to-invent.” A patent held could be invalidated later. Subsequently, contracts related to the patent are delayed as well. In addition, if the junior party prevails, the licensor will be changed by interference proceedings and a new contract will be needed.  

Although interference is a mechanism to determine the true inventor, inventors not familiar with interference may misperceive the legal requirements for the adequate “conception” of an invention.  

“First-to-File”

Under the “first-to-file” system, there is no interference proceeding instituted by the patent office, since the first applicant automatically has priority. In addition, an accurate search for prior art is accomplished easily. Files in the patent office are searched for any pending and issued patents that disclose the same invention. Accordingly, the “first-to-file” system is simpler and faster in terms of processing procedure for patent applications, decreasing the complexity, expense, and time length associated with interference proceedings.[77] Hence, adopting a “first-to-file” system is advantageous in terms of predictability, efficiency, certainty, and transactional costs incurred in patent prosecution.[78]  

In fact, much US industry already performs on a “first-to-file” basis. The “first-to-invent” system could be disadvantageous to US industry in terms of competitiveness.[79]  

Independent inventors, small businesses, and universities oppose the “first-to-file” system. They argue that under “first-to-file,” an inventor must be careful in talking to others about his invention for fear that someone else will be the first to file a patent.[80] This fear would force inventors to rush patent applications before completely developing the inventions. The result would be the filing and abandonment of many patents for inventions.[81] Consequently, the volume of patent applications would increase and the USPTO would be consequently burdened. This situation could also cause small entities to be disadvantaged due to limited resources for preparing and filing patent applications. 

The fundamental argument against adopting the “first-to-file” system is that it would disadvantage independent inventors and small businesses. These are important and productive cogs in the US economy. Universities and individual investors believe that the US “first-to-invent” system is a key factor in the US leading the world in technological development.  

Though it might be true that somebody can steal an inventor’s idea for commercial use, there will always be a question whether the invention satisfies the inventiveness or non-obvious requirement. In order to acquire a patent, the invention must fulfill an inventive step requirement, which means the invention could not deduced by an average knowledgeable person in the technical field. An invention easily stolen by someone else may not be patentable.  

As for the concern over the resources to file an application, provisional applications could serve for small entities. Though provisional applications originally were designed to protect inventors seeking foreign patents, they could also protect small-entity inventors if US were to adopt the “first-to-file” system. The provisional application is much cheaper than the formal application and does not require any specifics or disclosure of background. Thus,  applicants can keep trade secrets to protect from theft, and the financial burden of the filing race will be solved. The provisional application would give the small inventor a year in which to file a professionally prepared patent application.[82]  

The “first-to-file” system assures “prior user’s rights.” Even when a patent application is filed, any person using the invention prior to the filing date may continue to use the invention.[83] Thus, non-commercially oriented inventors (universities) are not necessarily disadvantaged by a “first-to-file” system.  

More importantly, the interference proceeding under “first-to-invent” is inherently inefficient. The proceeding costs a small entity from $500,000 to $1,000,000 (including court appeals) in order to prevail, as stated in the commercial analysis.[84] A small entity is likely to lose an interference proceeding either because it lacked the considerable resources necessary to prevail, or because of the very specific and complex rules governing “conception,” “reasonable diligence,” and “reduction to practice,” regardless of either actual or constructive evidence.  

Domestic Stakeholders  

Keidanren

Japanese nationals file more than 20% of the patent applications in the US and the EU.[85] In addition, since the 1980s, a majority of the patent recipients in the US have been Japanese companies.[86] As shown in the table below, five of the top ten patent recipients are Japanese companies. Keidanren feels that, together with the counterfeit products prevailing in developing countries, the unique intellectual property system, which does not comply with international norm, has put Japanese companies’ intellectual property rights in an unstable condition and impedes international business activities. It believes that the “first-to-file” system should be adopted as an international standard by which countries can determine priority rights on the basis of equitable rules of the date of filing patent applications.[87]

(Source: USPTO)

Ministry of Economic, Trade and Industry (METI)/ Japan Patent Office (JPO)

METI has an interest in enhancing Japan’s technological foundations, which will enable Japanese companies, communities, individuals, and other players to maximize their economic potential.[88] The Japan Patent Office is under the Ministry of Economy, Trade and Industry (METI), which is the successor to the Ministry of International Trade and Industry. The roles of JPO are as follows.[89]  

1.            Granting Exclusive Rights to Patents

2.            Planning and Designing Industrial Right Policy

3.            International Exchange and Cooperation

4.            Improving the System for Industrial Property Rights as well as its Operation

5.            Dissemination of Information of Industrial Property Rights  

METI and JPO are interested in creating a sound environment for protecting intellectual property. They voiced concern that the US is not implementing the agreement as they expected. This is because there are some exceptions, especially for early publication, in which parties that file patent applications domestically in the US do not have to publicize their inventions.

Joint Convention on Intellectual Property Rights

A joint convention on intellectual property rights is held regularly by the LDP Sub-committee on Intellectual Property Rights Policy, and the Federation of Parliamentary Members on Intellectual Property Rights. The joint convention recognizes that changing the US “first-to-invent” system is the key to harmonizing intellectual property rights. Hence, the Chairman of the Convention, Representative Akira Amari, who used to be a parliamentary vice-minister of MITI (Ministry of International Trade and Industry), is the principle person to lobby in domestic strategy. Rep. Amari is also the Vice President of the Policy Affairs Research Council in the LDP.[90]

Stakeholders in the US

American Bar Association (ABA):

The American Bar Association is the largest voluntary professional association, totaling 400,000 members. The ABA provides law school accreditation, continuing legal education, information about the law, programs to assist lawyers and judges in their work, and initiatives to improve the legal system for the public.[91] The ABA is actively engaged in public policy debate and its development before not only the Congress, but also the Executive Branch and other governmental agencies.[92]  

The ABA opposes in principle the modification of the Title 35 Section 102 (a) and (b), which would change the US patent system to a “first-to-file” principle. The ABA opposes elimination of the grace period for applications after the public use or sale of the invention or the patenting or publication of the invention. The ABA opposes any change in the law which would award the patent only to the applicant who is the “first-to-file”[93]  

Adoption of “first-to-file” leads to the elimination of interference proceedings. Since members of ABA are involved in interference proceedings in the USPTO, ABA opposes the elimination of interference proceedings, too.

Alliance for American Innovation

The Alliance for American Innovation (AAI) is a privately held corporation formed to provide a Washington, D.C. presence for individuals and organizations interested in the entrepreneurial process and the laws that provide its basis. The goal of the Alliance is to strengthen the patent system and help stimulate and create jobs in America.[94] AAI includes members of both the National Inventors Hall of Fame and the American College of Physician Inventors, several Nobel Laureates, and thousands of other inventors who recognize that we must stand up to preserve our patent system. AAI also works with other organizations that have common interests, such as the Council on Government Relations, the American Council on Education, the Association of American Universities, the National Association of State Universities and Land Grant Colleges, the Association of University Technology Managers, Inc., the National Association for the Self-Employed, and the National Venture Capital Association.[95] AAI represents the interests of independent inventors and small businesses.  

The AAI is opposed to “early publication” and “prior user rights,” and is expected to oppose the adoption of a “first-to-file” system. In past legislation regarding “early publication,” independent inventors and small businesses were concerned that their ideas could be circumvented more easily with an earlier publication date.  

The AAI feels that amending patent law makes it more difficult for US innovators to develop their ideas and products. They believe that changes in the US patent system have seriously affected the innovative community.  

The AAI has a strong stake on this issue because independent inventors and small business entities constitute 40% of all patent applications. They fear that a “first-to-file” system will punish those with few financial resources, who must compete to file applications against big multinational enterprises.  

In response to this concern, the USPTO charges a 50% lower fee for small entities.[96] In addition, the US patent law has a provisional application system. Originally designed to protect inventors’ priority for international applications, the provisional application system is much cheaper and does not require any specific documentation. Independent inventors and small businesses can protect themselves from theft and financial disability with the provisional application. More importantly, in the “first-to-invent” system, small entities are more likely to lose interference proceedings. Hence, adoption of “first-to-file” will not be as disadvantageous to them as expected.  

As I mentioned, the AAI consists of universities and academics. Universities are against the “first-to-file” system because they give higher priority to publications in academic conferences than to filing applications. They fear that theft of inventions and pre-emptive applications if the US adopts “first-to-file.” However, the US could retain the “grace period,” to give inventors a one-year term of priority to file patent applications. In addition, “prior user rights” will be in effect. Though some people think prior user rights could undermine the exclusive license to licensees, the right will help non-profit, or non-commercially oriented people to use their inventions.

Continue to Next Page