25 May 2013

The Hazards of ‘Fast-Tracked’ Patents

TrackShould patent offices issue patents within 18 months from their original date of filing?

The European Patent Office (EPO) recently declined to grant a patent, even though examination had identified no grounds of objection, because it was too soon to be confident that the patent would be valid.  The applicant appealed, claiming that there is no basis in the European Patent Convention (EPC) for the Office to delay the grant of a patent which is otherwise in-order.  The Board of Appeal upheld the decision, finding that the EPO is under no obligation to grant a patent until it is satisfied that a complete examination has been conducted.

I am unaware of any other patent office having a policy of not granting patents within 18 months of the original filing (i.e priority) date.  The Australian Patent Office will do so, and quite regularly examines and certifies innovation patents within this period.  The US Patent and Trademark Office (USPTO) will also do so, as I can attest from recent experience.

There is, however, a real question as to whether other patent offices should be following the EPO’s lead.

How Does the Problem Arise?

The problem with the early grant of patents arises because of the internationally-agreed 18 month non-publication period for all new patent applications.  Applications are not published immediately after filing as part of a compromise between the interests of the applicant, and the interests of the wider community. 

Full disclosure of an invention is part of the quid pro quo given by the patent applicant in exchange for a patent monopoly.  However, immediate publication of a patent application, typically before the applicant has had the opportunity to fully develop and commercialise a product – and long before any patent would normally be granted – would deny the applicant a reasonable period of confidentiality.

During the 18-month period within which an application remains unpublished, there is no way for its contents to be discovered in a search.  This ‘blind spot’ creates a number of risks.  There is a risk to businesses conducting searches in an attempt to determine whether a potential new product or service may infringe any pending patent rights.  There is also a risk to inventors conducting searches to find out whether a new invention is patentable.  These risks are well-known to patent researchers and attorneys, and are generally explained in the disclaimers provided with any professional search report or advice.

The risk that patents may be wrongly issued as a result of the 18-month blind spot is less-commonly considered.  This is probably due, in large degree, to the fact that examination and grant of a patent in less than 18 months remains very much the exception, rather than the rule.  Left to run its normal course, the examination process in most countries is far more likely to run from three to five years. 

The European Example

The Board of Appeal decision in the European case is T1849/12 (EMS Patent AG).  The decision is in German only, and since I do not speak the language I am relying on a Google translation, which is good enough to extract the general principles from the case!

The main provisions of the EPC at issue in the matter were Article 97 and Article 93.

Article 97(1) states that:

If the Examining Division is of the opinion that the European patent application and the invention to which it relates meet the requirements of this Convention, it shall decide to grant a European patent, provided that the conditions laid down in the Implementing Regulations are fulfilled.

The applicant, EMS Patent AG (EMS), contended that this obligates the EPO to grant a patent following examination (i.e. ‘shall decide’, not ‘may decide’).

The Board of Appeal disagreed.  It found that although the EPO is indeed obliged to grant a patent if there are no objections, it must first be ‘of the opinion that the European patent application and the invention to which it relates meet the requirements’ of the EPC.  One of those requirements, which is set out in Article 54(3), is that the novelty of the claimed invention be assessed against any European patent applications having an earlier priority date, but later publication date, than the claims under examination.  Clearly, the EPO can reach no ‘opinion’ on this requirement until the relevant prior art is available to be discovered!

Additionally, EMS sought support in Article 93(2) which states that:

The European patent application shall be published at the same time as the specification of the European patent when the decision to grant the patent becomes effective before the expiry of the [18 month] period…

The applicant argued that the inclusion of a specific provision for publication of patents granted within 18 months must mean that the possibility of such early grant is envisaged under the EPC.  The Board of Appeal did not dispute that this circumstance was envisaged by Article 93(2), but quite sensibly concluded that this does not in any way oblige the EPO to grant a patent in such a case, or absolve it of its responsibilities under Article 97(1) to consider the effect of prior art defined in Article 54(3).

I understand, from a rather poorly-translated passage, that EMS also argued that the nine-month post-grant opposition period would provide an opportunity for any newly-published applications to be raised in objections by third parties.  The Board again quite sensibly concluded that the provision of an opposition period does not in any way subordinate the EPO’s obligation to consider Article 54(3) prior art during examination.  The Board also noted that, in an extreme case, the opposition period could itself conclude within the 18 month period, and that, at the very least, the shortened time period between publication of an application, and the expiry of the opposition period, could significantly hamper the ability of a prospective opponent to prepare a case.

The Risks of ‘Fast-Tracking’

With the increasing enthusiasm of many patent offices to provide various forms of ‘fast-tracked’ application processes for those ‘customers’ requiring them, the examination risk posed by delayed publication is far from non-existent.  The EPO has its PACE program for accelerated search and examination, while IP Australia provides expedited examination upon request, in appropriate circumstances.  The USPTO has a number of accelerated examination programs, including the ‘Track One’ procedure, under which examination is expedited upon payment of an additional fee at filing.

I was recently involved in obtaining a US patent on behalf of a client, under Track One, which took only seven and a half months from filing to issue.  This is a great service, and the client is very happy, but the reality is that previously unpublished prior art could continue to emerge for more than 10 months after the patent issued.

Which Prior Applications Are Problematic?

Unpublished patent applications are not always prior art to later-filed applications.  Even when they are, their prior art effect may be limited.  The rules regarding the effect of unpublished prior art are different, depending upon the jurisdiction.  In most jurisdictions (including Europe and Australia), an unpublished prior application can be applied only to assessing the novelty of a claimed invention.  In the US, however, an unpublished prior application can be used to assess both novelty and inventive step.

Generally, only prior unpublished applications in the same jurisdiction are prior art.  However, international applications filed under the Patent Cooperation Treaty (PCT) present a particular problem.  A PCT application usually designates all available offices (currently 147).  But it is only when the applicant actually proceeds to the national phase, around 30 months from the initial priority date (and thus a year after publication), that it is possible to know for sure in which countries the PCT application was prior art before it was published.

In Australia this is not such a major problem – any PCT application which designates Australia is treated as possible prior art from its priority date, whether or not it ever actually enters the national phase.  This means that the effect of a PCT application in Australia is known as soon as it is published.

However, in most jurisdictions (including the US and Europe), only PCT applications which actually enter the national phase are treated as possible prior art before their publication.  Thus the effect of these applications is often not known until a year or more after their publication.  But at least once they are published, their potential effect can be assessed.

In Summary – Fast-Tracked Patents May Be Invalid!

The bottom line is that any patent which is granted within 18 months of its original filing or priority date may subsequently turn out to be invalid in view of prior art which was unpublished, and therefore undiscoverable, at the time of examination.

The likelihood of this happening is probably relatively low in general.  However, there are no doubt some fields in which the direction of technological development increases the probability of ‘near-simultaneous’ invention and filing (i.e. within a single 18 month window).

This raises the question of whether any patent office should commence search and examination of applications earlier than 18 months after the priority date of the claims.  It also raises the question of whether 18 months remains a reasonable and realistic non-publication period in the modern context.

The US system raises a further particular concern, due to the strong presumption of validity enjoyed by granted patents, under 35 USC 282.  In its 2011 decision in Microsoft v i4i, the US Supreme Court affirmed the long-established principle that, in order to invalidate a patent claim under 35 USC 282, ‘clear and convincing evidence’ must be provided, regardless of whether or not the prior art was known by the Patent Office during examination of the patent application.  It is not clear (to me, at least, though there may be other relevant case law on the subject) whether this high standard applies even in cases where the prior art could not be known to even the most diligent examiner.

With Track One (and other accelerated examination programs) now producing granted patents in well under 18 months (the USPTO has a 12-month target), it is not impossible that this question could actually come before a court in the not-too-distant future.

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