United States: Unique Aspects Of U.S. Patent Protection

Originally published in China Legal Review, June 2007

Innovation powered by patent protection has been becoming a widely-spread slogan in China, especially for large Chinese enterprises and privately-owned high-tech companies. From 2000 to 2005, Chinese applicants increased their filings in the U.S. Patent and Trademark Office ("U.S. PTO") from 469 to 2,127. From 2005 to 2006, the number of PCT applications filed by Chinese applicants increased 56.8%.

Those filing increases are no doubt positive signs that Chinese companies value patent protection and that the Chinese government supports that protection. At the same time, scholars and commentators warn that, particularly for high value technology, the quality of patents far outweighs quantity, as strong patents provide patent owners leverage and competitive market advantages over their competitors, particularly in the U.S. market. For example, a U.S. patent owner can use strong patents offensively, filing patent infringement suits in the United States against its competitors for possible injunctions and monetary damages or extracting royalties through licensing.

In addition, strong U.S. patents might survive vicious invalidity and/or unenforceability challenges. U.S. patent claims may be invalidated for indefiniteness, non-enablement, or being anticipated (i.e., not novel) or obvious (i.e., lack of inventive steps) in view of the prior art. The U.S. patent law also provides the following three unique mechanisms, not commonly known by Chinese companies, for competitors to invalidate or make a patent unenforceable.

I. Inequitable Conduct

First, inequitable conduct is currently a popular defense to patent infringement in the U.S., especially in pharmaceuticals-related patent litigations. Inequitable conduct can render all claims of the patent unenforceable, even if the inequitable conduct applied to less than all of the claims.

In particular, each individual associated with the filing and prosecution of a U.S. patent application has a duty of candor and good faith in dealing with the U.S. PTO,which includes a duty to disclose to the U.S. PTO all information known to that individual to be material to patentability. The individuals "associated" with the filing and prosecution of a patent application include not only the inventors and attorneys or patent agents, but also every other person who is substantively involved in the preparation or prosecution of the application and who is associated with the inventor, with the assignee or with anyone to whom there is an obligation to assign the application.

Inequitable conduct is committed if the duty of disclosure owed to the U.S. PTO is violated, for example, if any individual "associated" with the filing and prosecution of a patent application, during the prosecution of the patent application, fails to disclose to the U.S. PTO known material information or submits materially false information. In determining whether inequitable conduct is committed, a court looks at two factors: (1) whether the document or information that is not disclosed or is false is material to patentability; and (2) whether the material document or information was not disclosed because of an intent to deceive. The court then balances the materiality and the intent to decide whether inequitable conduct is committed. For example, there is a trend in recent U.S. cases to rule that if the materiality is high, the intent may be inferred.

Inequitable conduct is determined by the federal district court judge, not a jury. Because the standards in determining the materiality and the intent in courts are not clear in view of the recent cases, some urge legislative reform, but that seems doubtful. To avoid non-disclosure issues, applicants should submit all material information known to those having the duty by filing during prosecution Information Disclosure Statements ("IDS") with the U.S. PTO. Because of the possible serious unenforceability consequences of nondisclosure, filing of an IDS can be important.

However, many Chinese companies lack knowledge of both the IDS and inequitable conduct in the U.S. Even for informed Chinese companies that are aware of this process, they might have chosen to ignore it or otherwise failed to comply with it because they view the IDS as an administrative act that is too expensive and/or they misunderstand materiality. Neither reason may avoid an unenforceable patent if a U.S. judge later rules that the withheld information was material and infers intent. Therefore, to obtain a strong patent, it is important to submit related references and other material information to the U.S. PTO through filing an IDS and, of course, not to submit any materially false information. And it is very important to realize that the duty to disclose remains in effect until the patent issues.

II. Inventorship

Improper inventorship may invalidate a patent or render one unenforceable if the requisite materiality and intent to deceive are found. Conception is the cornerstone of inventorship in the U.S. The key question in determining inventorship is who conceives the invention. Inventorship is the complete development of the conception of the idea to achieve the desired goal in sufficient detail so that all that remains to bring the invention into physical existence, i.e., reduction to practice, merely requires the application of routine skills.

Anyone who contributes to the conception of at least one claim of a patent should be named as an inventor. However, those who merely follow the inventor’s instructions and apply ordinary skills to reduce to practice the conception should not be named as inventors.

Inventors may apply for a patent jointly, even though they may not physically work together or at the same time, and even if each inventor does not contribute to the subject matter of every claim.

The importance of inventorship stems from the U.S. property law, wherein property rights are owned privately. Thus, patent rights are, in the absence of an assignment, intellectual property of the inventors. However, privately-owned property right is not part of Chinese culture, wherein individual achievements belong to a larger working unit. In China, even if only one person makes an invention, many other people, in that unit, such as the boss and other co-workers, may also be listed as inventors. Over inclusion of inventors, while not a problem for Chinese applications, may cause problems for a U.S. application, although improper inventorship can be corrected absent deceptive intent.

A more serious issue may arise from under inclusion, particularly if the excluded inventor worked for a different company. There, the exclusion might have affected ownership in the U.S. and a competitor, during vigorous discovery in a litigation in the U.S., may establish unenforceability of the patent if there was deceptive intent in excluding that inventor. In that case, correction of inventorship is not effective, because the inequitable conduct independently renders all claims unenforceable, even if the excluded inventor had no intent to deceive. Furthermore, under the U.S. law, assuming that there was no intent to deceive in excluding an inventor who later is correctly named, that later-named inventor, in the absence of an agreement to the contrary, can disclaim the patent or license it to a competitor. Therefore, it is important for a strong U.S. patent to have correct inventorship.

Finally, failure to disclose the best mode of making the invention may result in invalidity of a patent. In addition, intentional concealment of a best mode may constitute inequitable conduct, rendering every claim of a patent unenforceable, even claims to which the nondisclosed best mode was irrelevant.

The U.S. patent law requires that the best mode be disclosed in the specification at the time when a patent application is filed. Thus, a nondisclosed best mode cannot be added later without losing the original U.S. filing date.

The best mode refers to the mode that each and every inventor regards as the best as of the filing date of the Chinese application, if the later-filed U.S. patent application seeks to claim priority benefit of the Chinese application. Significantly, each inventor might have a different best mode.

Obviously, that makes it important not to be under inclusive in naming inventors. In that case, the best mode of a later named inventor may not have been disclosed, thus rendering invalid any claims related to that best mode.

Furthermore, U.S. law presently requires only that the best mode be disclosed. It does not have to be claimed or highlighted such as by the applicant stating in the application which example disclosed in the specification is the best mode. Moreover, if an inventor subjectively has no best mode, none needs be disclosed, even if after the relevant filing date the inventor in fact develops a best mode.

As Chinese patent law does not have such a best-mode requirement, many Chinese patent applications or PCT applications originally filed by Chinese applicants with State Intellectual Property Office ("SIPO") in China may not disclose the best mode. If such Chinese patent applications are used as priority documents for filing U.S. patent applications, it is important to revise the specification to include the best mode at the time when the U.S. patent application is filed. However, for PCT applications, it may not be possible to add the best mode when entering into the U.S. national stage without violating the PCT prohibition against new matter. Therefore, if Chinese companies want to obtain patent protection in the U.S. through a PCT application, it is critical to include the best mode of each inventor when the PCT application is originally filed with SIPO.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.