Multinational Patent Acquisition and Enforcement: Public Policy Challenges and Opportunities for Innovative Firms
Report for Congress
Multinational Patent Acquisition and Enforcement:
Public Policy Challenges and
Opportunities for Innovative Firms
August 31, 2001
John R. Thomas
Visiting Scholar in Economic Growth and Entrepreneurship
Resources, Science and Industry Division
Congressional Research Service ˜ The Library of Congress
Multinational Patent Acquisition and Enforcement:
Public Policy Challenges and Opportunities for
Globalization and technology have been viewed as increasingly prominent
influences upon the U.S. economy. This perception has led to renewed attention
towards the pragmatic aspects and policies of multinational patent acquisition and
enforcement. Patent protection has long been understood to be a fundamental
mechanism for encouraging the pursuit of technological knowledge, particularly for
entrepreneurs and small, innovative firms. Recent trends reveal that U.S. industry
has come to rely more heavily upon the world’s patent systems, as compared to other
intellectual property alternatives such as trade secrecy.
Although patent protection in a single jurisdiction is often ineffective to protect
the interests of inventors, no true global patent system exists. If inventors desire
intellectual property protection in a particular country, they must specifically procure
a patent within that jurisdiction. Patent rights do not arise automatically. Instead,
inventors must submit applications to a national or regional patent office. Patent
examiners then assess whether the application fully discloses and distinctly claims
a new and nonobvious invention. If allowed to issue, a granted patent provides its
proprietor with the right to exclude others from making, using or selling the patented
invention. Patent rights are not self-enforcing, however, and those patent owners
who wish to compel others to observe their intellectual property rights usually must
commence civil litigation.
The patent systems of the United States and its trading partners are linked
through a handful of international agreements that, together, comprise the
international patent regime. The oldest of these treaties, the Paris Convention,
established an international priority system that facilitates the filing of patent
applications in many jurisdictions. The Patent Cooperation Treaty built upon the
Paris Convention by establishing a further procedural framework for expediting
multinational patent acquisition. Finally, the World Trade Organization Agreement
on Trade-Related Aspects of Intellectual Property Rights, the so-called TRIPS
Agreement, in part required all of its signatories to provide for minimum substantive
standards of patent protection and enforcement.
Acquiring and enforcing patent rights around the world is often a complex and
expensive task. Entrepreneurs must additionally deal with considerable delays,
difficulties in obtaining professional representation, differences in national patent
laws, inconsistent results and the particular problems of the developing world.
Should Congress decide to address this issue, legislative options for addressing the
multinational patent system include offering financial support to inventors, assessing
the impact of legal harmonization, reviewing patent office worksharing initiatives,
providing technical assistance for foreign patent officials, and considering the
propriety of an international agreement pertaining to patent enforcement.
The Role of Patents in Entrepreneurship................................2
Introduction to Foreign Patent Law....................................9
Foreign Patent Acquisition......................................9
Patentable Subject Matter..................................13
Publication of Pending Applications..........................14
Foreign Patent Enforcement....................................16
Patent Validity as an Infringement Defense....................17
Scope of Patent Protection..................................18
The International Patent System.....................................18
The Paris Convention..........................................19
The Patent Cooperation Treaty..................................20
The TRIPS Agreement.........................................23
Minimum Standards of Protection............................23
National Enforcement Procedures............................26
Dispute Settlement Between Member Countries.................26
Challenges for Innovative Firms.....................................29
Differences in National Patent Laws..............................33
Patentable Subject Matter..................................34
Problems of the Developing World...............................35
Legislative Issues and Options......................................36
Patent Office Worksharing Initiatives.............................38
Jurisdiction and Enforcement of Judgments........................39
Multinational Patent Acquisition and
Enforcement: Public Policy Challenges and
Opportunities for Innovative Firms
Observers have increasingly recognized the prominent role technological
advances play in driving the global economy.1 As a result, interest in both
innovative enterprises and the international patent system has expanded.
Entrepreneurs and small, innovative firms are generally perceived as a major source
of innovative products and processes.2 By allowing enterprises to capture the
benefits of their research and development efforts, the patent system too is
understood to be a fundamental mechanism for encouraging the pursuit of
Globalization trends have brought with them growing international trade,
increasing flows of information and more distributed manufacturing capabilities.4
As a result, patent protection in a single country is often insufficient to protect
inventors. To be effective in an increasingly global economy, even individual
inventors and small firms must often secure patent rights in multiple jurisdictions.5
Obtaining and enforcing patent rights in many countries can prove a demanding
endeavor, however. No true global patent system exists. Inventors who seek
intellectual property protection must file individual applications in each country or
region where patent rights are sought. This task can be one of significant expense,
practical difficulty and legal complexity. Even where patent rights have been
successfully procured, they are not self-enforcing. Innovative enterprises must often
invoke civil litigation in order to compel competitors to respect their patent rights.
1Tassey, Gregory, The Economics of R&D Policy (Connecticut: Quorum Books, 1997);
Edwin Mansfield, “Intellectual Property Rights, Technological Change, and Economic
Growth," in Intellectual Property Rights and Capital Formation in then Next Decade, eds.
Charles E. Walker & Mark A. Bloomfield (New York: University Press of America, 1988),
2Cordes, Joseph J. et al., A Survey of High Technology Firms, Small Business Admin.
Contract No. SBA-8141-OA94 (Feb. 1999).
3Adelman, Martin J. et al., Patent Law: Cases and Materials (Minnesota: West Publishing
Co., 1998), 1.
4Friedman, Thomas L., The Lexus and the Olive Tree (Farrar, Straus & Giroux 1999).
5Thomas, John R., “Litigation Beyond the Technological Frontier: Comparative Approaches
to Multinational Patent Enforcement,” 27 Law and Policy in International Business (1996),
This undertaking too may require individual lawsuits in each country where a patent6
has issued, an effort that has been described as “fractionalized and onerous.”
This report provides an overview of multinational patent acquisition and
enforcement. It begins by explaining the significance of entrepreneurs and small,
innovative firms in high technology industries. This report then introduces the patent
system and describes the role of patents in the process of technological change.
Patent acquisition and enforcement mechanisms both domestically and abroad are
then reviewed. This report next provides an overview of the international
agreements that together comprise the international patent system.
With this background complete, this report next catalogues persistent concerns
that innovative firms have faced when interacting with the multinational patent
system. Among these challenges are expense, delay, obtaining professional
representation, differences among national patent laws, inconsistent rulings and
problems of the developing world. This report then closes with a discussion of
legislative issues and options.
The Role of Patents in Entrepreneurship
Technological advancement is a principal driving force in the growth of the7
U.S. economy. Technical innovations contribute to the creation of new goods and
services, new industries, new jobs and new capital. They can expand the range of
services offered and extend the geographic distribution of those services. Where
national problems are amenable to technological solutions, innovation also
contributes to the resolution of these problems.
Entrepreneurs and small, innovative firms play a role in the technological
advancement and economic growth of the United States.8 Several studies
commissioned by U.S. federal agencies have concluded that such enterprises are a
significant source of innovative products and services. For example, the National
Academy of Engineering concluded that “small high-tech companies play a critical
and diverse role in creating new products and services, in developing new industries,9
and in driving technological change and growth in the U.S. economy.” This
assessment was founded on the ability of small firms to develop markets rapidly,
generate new goods and services, and offer diverse products. The study also
concluded that small businesses were less risk adverse than larger, established
7Tassey, Gregory, The Economics of R&D Policy (Connecticut: Quorum Books, 1997), 54.
See also Congressional Research Service, Patents and Innovation: Issues in Patent Law
Reform, by Schacht, Wendy H., CRS Report 97-599, 24 August 1999, 2-4.
8National Science Board, Science and Engineering Indicators, 1993, 8 Dec. 1993, 185. See
also Congressional Research Service, Small, High Tech Companies and Their Role in the
Economy: Issues in the Reauthorization of the Small Business Innovation (SBIR) Program,
by Schacht, Wendy H., CRS Report RL30216, 28 May 1999, 1-6.
9National Academy of Engineering, Risk & Innovation: The Role and Importance of Small
High-Tech Companies in the U.S. Economy (Washington: National Academy Press, 1995),
corporations and were often better positioned to exploit market opportunities
Similarly, a 1982 study supported by the Small Business Administration (SBA)
determined that small firms produce twice as many product innovations per
employee as large firms.10 More recent SBA studies claim that 55% of the country's
innovations originated with entrepreneurs and small, innovative firms.11 A National
Science Foundation report found that entrepreneurs and small firms are six times as
effective as larger firms in utilizing research and development expenditures to
generate new products.12
High technology industries contain an especially large number of small
companies. According to a 1996 SBA study, 94% of high technology companies had
under 500 employees and 73% had less than 20 workers. These small firms
accounted for 18% of the total receipts generated by high technology industries.
Almost forty percent of workers in private sector, high technology businesses were
employed by small companies; 22.2% of all private sectors, high technology workers
worked in firms with less than 100 employees. High technology employees
comprised 3.1% of the total number of workers in the small business community,
compared to 4.6% for the number of high technology employees in all companies13
regardless of size.
Whether innovating directly or forging partnerships with larger enterprises,14
small, high tech companies have frequently turned to the regime of patents. The
patent system authorized by Article I, section 8, clause 8 of the U.S. Constitution
serves to encourage the advancement of the useful arts. A principal effect of patent
law in a market economy is to provide economic incentives to commit resources
towards technological innovation. This effect is achieved by granting inventors
exclusive rights to practice the patented invention.15
Industrial response to the Plant Variety Protection Act of 1970 (PVPA) is often
cited in support of the rationale that patent rights can stimulate invention. In a field
in which proprietary rights were previously unavailable, the PVPA allowed plant
breeders the ability to obtain patent-like protection on novel varieties of plants grown
from seed.16 In the decade prior to the promulgation of the PVPA, industry
12National Science Board, Science and Engineering Indicators, 1993, 8 Dec. 1993, 185.
Anderson, Anne, “Small Businesses Make it Big in the SBIR Program,” New Technology
Week, 6 June 1998, 2.
14Levin, Richard C. et al., “Appropriating the Returns for Industrial Research and
Development,” Brookings Papers on Economic Activity, 1987, in The Economics of
Technical Change, eds. Edwin Mansfield and Elizabeth Mansfield (Vermont, Edward Elgar
Publishing Co., 1993).
15Rose, Simone, “Patent ‘Monopolyphobia’: A Means of Extinguishing the Fountainhead?,”
167 U.S.C. § 2402(a).
developed approximately 150 new plant varieties. But in the decade following the17
enactment of the PVPA, over 3000 new varieties were created.
The regime of patents purportedly serves other goals as well. The patent
system encourages the disclosure of products and processes, for each issued patent
must include a description sufficient to enable skilled artisans to practice the patented
invention.18 When the patent expires, ordinarily 20 years from the date the19
application is filed, others are given the ability to practice the patented invention.
Although estimates vary, one report observed that 85-90% of the information
available in published patent instruments would not otherwise be publicly20
Issued patents may also encourage others to “invent around” the patentee’s
proprietary interest. A patentee may point the way to new products, markets,
economies of production and even entire industries. Others can build upon the
patentee’s disclosure to produce their own technologies that fall outside the exclusive21
rights associated with the patent.
The patent system has also been identified as a facilitator of markets. Absent
patent rights, an inventor may have scant tangible assets to sell or license. In
addition, an inventor might otherwise be unable to police the conduct of a
contracting party. Any technology or know-how that has been disclosed to a
prospective licensee might be appropriated without compensation to the inventor.
The availability of patent protection decreases the ability of contracting parties to
engage in opportunistic behavior. By lowering such transaction costs, the patent
system may make technology-based transactions more feasible.22
Through these mechanisms, the patent system can act in more socially desirable
ways than its chief legal alternative, trade secret protection. Trade secrecy guards
against the improper appropriation of valuable, commercially useful and secret
information. In contrast to patenting, trade secret protection does not result in the
disclosure of publicly valuable information. That is because an enterprise must take
reasonable measures to keep secret the information for which trade secret protection
is sought. Taking the steps necessary to maintain secrecy, such as implementing
physical security measures, also imposes costs that may ultimately be unproductive23
17Newman, Pauline, “Legal and Economic Theory of Patent Law,” in Chisum, Donald S. et
al., Principles of Patent Law: Cases and Materials 67, 70 (New York: Foundation Press,
1835 U.S.C. § 112.
1935 U.S.C. § 154.
20Newman, supra note 17, at 72.
21Eisenberg, Rebecca S., “Patents and the Progress of Science: Exclusive Rights and
Experimental Use,” 56 University of Chicago Law Review (1989), 1017.
22Merges, Robert P., “Intellectual Property and the Costs of Commercial Exchange: A
Review Essay,” 93 Michigan Law Review (1995), 1570.
23Friedman, David D. et al., “Some Economics of Trade Secret Law,” 5 Journal of Economic
Perspectives (1991), 61.
The extent to which the patent system practically achieves these goals is
difficult to assess. Economic research suggests that different industries attach widely
varying values to patents. For example, one study of the aircraft and semiconductor
industries suggested that lead time and the strength of the learning curve were24
superior to patents in capturing the value of investments. In contrast, members of
the drug and chemical industries attached a higher value to patents. Differences in
the perception of the patent system have been attributed to the extent to which
patents introduced significant duplication costs and times for competitors of the
Studies have indicated that entrepreneurs and small, innovative firms rely more
heavily upon the patent system than larger enterprises. Larger companies often
possess a number of alternative means for achieving a proprietary or property-like
interest in a particular technology. For example, trade secrecy, ready access to
markets, trademark rights, speed of development, and consumer goodwill may to
some degree act as substitutes to the patent system. As Sally Wyatt and Gilles Bertin
reported in their survey of alternatives to patenting, a representative of one European
corporation opined that "multinational corporations could easily cease to use patents
and use other available methods to achieve the same aims."25 However, individual
inventors and small firms often do not have these mechanisms at their disposal. As
a result, the patent system may enjoy heightened importance with respect to these
Perhaps the best evidence available as to the perceived value of patents is that,
in the United States, the number of filed patent applications and issued patents
continues to climb.27 In 1995, inventors filed 221,304 patent applications at the
United States Patent and Trademark Office (“USPTO”). In 2000, that number had
increased to 293,244 applications. The number of applications filed at the Japanese
Patent Office increased from 369,215 in 1995 to 436,865 in 2000.28 At the European29
Patent Office, the number of applications increased from 78,300 in 1995 to 121,750
in 1999, the latest year for which data are available.30 These statistics suggest that
members of the technological community continue to view patents as valuable.
The patent system has long been subject to criticism, however. Some observers
believe that the patent system encourages industry concentration and presents a
24Levin et al., supra note 14.
25Wyatt, Sally & Bertin, Gilles Y., Multinationals and Industrial Property 139 (Harvester
26Hawkins, J. Douglas, “Importance and Access of International Patent Protection for the
Independent Inventor,” 3 University of Baltimore Intellectual Property Journal (1995), 145.
27Hunt, Robert, “Patent Reform: A Mixed Blessing for the U.S. Economy?,” Federal Reserve
Bank of Philadelphia Business Review, available at http://www.phil.frb.org
28Japan Patent Office, Annual Report 2000 at 58 (available at www.jpo.go.jp).
29The European Patent Office is an organization formed to unify patent acquisition
procedures in certain European nations. For more on the European Patent Office, see
infra text accompanying notes 129-31.
30European Patent Office, 1999 Annual Report (available at
barrier to entry in some markets.31 Others believe that the patent system too
frequently attracts speculators who prefer to acquire and enforce patents rather than
engage in socially productive activity.32 Still other commentators suggest that the
patent system often converts pioneering inventors into technological suppressors,
who use their patents to block subsequent improvements and thereby impede
When analyzing these contending views, it is important to note the lack of
rigorous analytical methods available for analyzing the effect of the patent law upon
the U.S. economy as a whole. The relationship between innovation and patent rights
remains poorly understood. As a result, current economic and policy tools do not
allow us to calibrate the patent system precisely in order to produce an optimal level
of investment in innovation.
Introduction to U.S. Patent Law
The patent system’s policy aspirations are fulfilled only to the extent that
inventors engage in patent procurement and enforcement, the mechanics of which34
bear further explanation. As mandated by the Patent Act of 1952, U.S. patent rights
do not arise automatically. Inventors must prepare and submit applications to the
U.S. Patent and Trademark Office (“USPTO”) if they wish to obtain patent35
protection. USPTO officials known as examiners then assess whether the
application merits the award of a patent.36 The patent acquisition process is37
commonly known as “prosecution.”
In deciding whether to approve a patent application, a USPTO examiner will
consider whether the submitted application fully discloses and distinctly claims the38
invention. In addition, the application must disclose the “best mode,” or preferred
way, that the applicant knows to practice the invention.39 The examiner will also
determine whether the invention itself fulfills certain substantive standards set by the
patent statute. To be patentable, an invention must be useful, novel and nonobvious.
The requirement of usefulness, or utility, is satisfied if the invention is operable and
31See Thomas, John R., “Collusion and Collective Action in the Patent System: A Proposal
for Patent Bounties,” University of Illinois Law Review (2001), 305.
33See Merges, Robert P., & Nelson, Richard R., “On the Complex Economics of Patent
Scope,” 90 Columbia Law Review (1990), 839.
34P.L. 82-593, 66 Stat. 792 (codified at Title 35 United States Code).
3535 U.S.C. § 111.
3635 U.S.C. § 131.
37Thomas, John R., “On Preparatory Texts and Proprietary Technologies: The Place of
Prosecution Histories in Patent Claim Interpretation,” 47 UCLA Law Review (1999), 183.
3835 U.S.C. § 112.
provides a tangible benefit.40 To be judged novel, the invention must not be fully
anticipated by a prior patent, publication or other knowledge within the public
domain.41 A nonobvious invention must not have been readily within the ordinary
skills of a competent artisan at the time the invention was made.42
If the USPTO allows the patent to issue, the patent proprietor obtains the right
to exclude others from making, using, selling, offering to sell or importing into the43
United States the patented invention. Patent title therefore provides inventors with
limited periods of exclusivity in which they may practice their inventions, or license
others to do so. The grant of a patent permits the inventor to receive a return on the
expenditure of resources leading to the discovery, often by charging a higher price
than would prevail in a competitive market.
Patent rights are not self-enforcing. A patentee bears responsibility for
monitoring its competitors to determine whether they are using the patented
invention or not. Patent proprietors who wish to compel others to observe their
intellectual property rights must usually commence litigation in the federal courts.
Patent trials are held in the federal district courts. As these courts possess
jurisdiction over a wide variety of civil and criminal matters, patent cases form only
a small portion of their docket. According to patent attorney John B. Pegram, a
typical district court conducts a full patent trial only once every 6 to 8 years.44 This
number be misleading, however, as a recent study revealed that only about 6.9% of45
patent cases proceed to a full trial. Another survey, conducted by Circuit Judge S.
Jay Plager, concluded that from 1996 to 2000, there were about 1250 published
district court decisions dealing with patents, heard by some 375 different district46
judges. Either litigant may request a jury trial in patent litigation. From 1997
through 1999, 59% of all patent trials were tried to juries.47
The U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) possesses
exclusive national jurisdiction over all patent appeals from the district courts.48 The
Federal Courts Improvement Act of 1982 created the Federal Circuit by merging two
predecessor courts, the Court of Claims and the Court of Customs and Patent
4035 U.S.C. § 101.
4135 U.S.C. § 102.
4235 U.S.C. § 103.
4335 U.S.C. § 271(a).
44Pegram, John B., “Should There Be a U.S. Trial Court with a Specialization in Patent
Litigation?”, 81 Journal of the Patent and Trademark Office Society (2000), 766.
45Moore, Kimberly A., “Judges, Juries, and Patent Cases – An Empirical Peak Inside the
Black Box,” 99 Michigan Law Review (2000), 365.
46Plager, S. Jay, “Challenges for Intellectual Property Law in the Twenty-first Century:
Indeterminacy and Other Problems,” University of Illinois Law Review (2001), 69.
47Moore, supra note 42.
4828 U.S.C. § 1295(a)(1).
Appeals.49 Since its creation, the Federal Circuit has sought to bring uniformity and50
predictability to patent law. The U.S. Supreme Court possesses discretionary
authority to review cases decided by the Federal Circuit.51
Patent enforcement can be expensive. As patent trials often involve complex
legal and technological issues, the need for extensive discovery proceedings, expert
witnesses and specially qualified attorneys can lead to high costs.52 One study53
concluded that the average cost of a patent enforcement case was $1.2 million.
Even patent infringement cases with smaller stakes, involving damage claims
between $1 million and $10 million, cost about $748,000 to litigate, according to the54
median figure in a survey by the American Intellectual Property Law Association.
The maximum term of patent protection is ordinarily set at 20 years from the55
date the application is filed. The patent applicant gains no enforceable rights until
such time as the application is approved for issuance as a granted patent, however.
Further, the patent will endure for its full term only if its owner pays maintenance
fees at different times throughout the life of the patent. In the United States, a
maintenance fee of $890 must be paid at 3.5 years; $1950 at 7.5 years; and $2990 at
11.5 years.56 These fees are halved if the patent proprietor qualifies as a “small
entity,” a category that includes independent inventors, small businesses and57
universities. Once the patent expires, others may employ the patented invention
without compensation to the patentee.
Introduction to Foreign Patent Law
Significantly, U.S. patents provide their owners with rights only within the
United States.58 If inventors desire intellectual property protection in another
country, they must specifically procure a patent in that jurisdiction. Ordinarily the
foreign patent acquisition process begins with the submission of a patent application
49P.L. 97-164, 96 Stat. 25.
50See C.R.Bard, Inc. v. Schwartz, 716 F.2d 874, 878 (Fed. Cir. 1983).
5128 U.S.C. §1254(1).
52Elleman, Steven J., “Problems in Patent Litigation: Mandatory Mediation May Provide
Settlement and Solutions,” 12 Ohio State Journal on Dispute Resolution (1997), 759.
53Gill, Dee, “Defending Your Rights: Protecting intellectual property is expensive,” Wall
Street Journal (25 Sep. 2000), 6.
5535 U.S.C. § 154(a)(2). Although patent term is based upon the filing date, the patentee
gains no enforceable legal rights until the USPTO allows the application to issue as a granted
patent. A number of Patent Act provisions may modify the basic 20-year term, including
examination delays at the USPTO and delays in obtaining marketing approval for the
patented invention from other federal agencies.
5637 C.F.R. § 1.20.
5737 C.F.R. § 1.27.
58Quality Tubing, Inc. v. Precision Tube Holdings Co., 75 F.Supp.2d 613, 619 (S.D. Tex.
in a patent office overseas. As a practical matter, multinational corporations often
obtain a set of corresponding national patents for each of their significant inventions.
This report next considers the process of prosecuting and litigating patents
overseas, focusing on Europe and Japan but with reference to other patent systems
as well. These two systems merit special attention because along with the USPTO,
the European and Japanese patent offices receive over 80% of the patent applications59
filed in the world. In terms of the number of patent applications filed, U.S. industry
is the largest single user of both the USPTO and the European Patent Office, and the
second largest user of the Japanese Patent Office.60
Foreign Patent Acquisition
Recent years have witnessed a substantial legal harmonization process within
the field of patent law. As a result, the similarities have increased between the U.S.
patent system and parallel regimes overseas. However, several notable differences
between U.S. patent law and many foreign patent systems are worthy of mention
Deferred Examination. One distinct aspect of patent practice in some other
nations is that examination is deferred following submission of an application. In
contrast to the USPTO, where every filed application is automatically placed into a
queue for substantive examination, in many other patent-issuing states the mere
filing of an application does not mean that the patent office will further consider the
application. Inventors who wish their applications to mature into an issued patent
must submit additional requests in order for the patent office to consider the
application. Such requests must occur within a specified time and be accompanied
by the appropriate fee. In Germany, an inventor may defer examination for up to
seven years;61 in Japan, the maximum deferral period was recently reduced from
seven to three years.62 If no request for examination is made in a timely fashion, the
application is deemed abandoned. If a request for examination is seasonably made,
the novelty and nonobviousness of the application are judged as of the application’s
Supporters of deferred examination regimes observe that they allow applicants
the option of deciding to postpone the decision to obtain patent protection or not.
Deferred examination regimes may also reduce patent office workloads. Further,
since all pending applications are published approximately 18 months following their
filing dates, the public has notice of the prospect of a granted patent whether63
examination is deferred or not. Detractors note that a deferred examination system
59Japan Patent Office, Annual Report 2000 at 35.
60Ibid; European Patent Office, 1999 Annual Report.
61Linck, Nancy J., et al., “A New Patent Examination System for a New Millennium,” 35
Houston Law Review (1998), 305.
62Japanese Patent Office, “Procedures for Obtaining a Patent Right” (available at www.jpo.
63Linck, supra note 61.
may delay the issuance of a fully considered patent instrument and, as a result,64
substantially increase marketplace uncertainties.
Opposition Proceedings. Many foreign patent regimes allow for so-called
opposition proceedings. An opposition is a patent revocation proceeding that is
usually administered by authorities from the national patent office. Oppositions
often involve a wide range of potential invalidity arguments and are conducted
through adversarial hearings that resemble courtroom litigation.
Although the U.S. patent system does not include oppositions, the U.S. patent
system has incorporated a so-called “reexamination” proceeding since 1981. Some
commentators have viewed the reexamination as a more limited form of an65
opposition. Under the reexamination statute, any individual, including the patentee,
a competitor, and even the USPTO Director, may cite a prior art patent or printed
publication to the USPTO. If the USPTO determines that this reference raises a
“substantial new question of patentability” with respect to an issued patent, then it
will essentially reopen prosecution of the issued patent.
Traditional reexamination proceedings are conducted in an accelerated fashion
on an ex parte basis. Following the American Inventors Protection Act of 1999, an
inter partes reexamination allows the requestor to participate more fully in the
proceedings through the submission of argument and the filing of appeals.66 Either
sort of reexamination may result in a certificate confirming the patentability of the
original claims, an amended patent with narrower claims or a declaration of patent
Congress intended reexamination proceedings to serve as an inexpensive
alternative to judicial determinations of patent validity.68 Reexamination also allows
further access to the legal and technical expertise of the USPTO after a patent has69
issued. However, some commentators believe that reexamination proceedings have
been employed only sparingly and question their effectiveness.70 Legislationth
introduced in the 107 Congress would introduce the more full-featured opposition71
proceedings into U.S. patent law.
Priority Principle. Sometimes several persons independently develop the
identical or similar invention at approximately the same time. In the United States,
when more than one patent application is filed claiming the same invention, the
patent will be awarded to the applicant who was the first inventor. In a so-called
65Thomas, supra note 31.
66Janis, Mark D., “Inter Partes Reexamination,” 10 Fordham Intellectual Property, Media
& Entertainment Law Journal (2000).
69Nard, Craig Allen, “Certainty, Fence Building and the Useful Arts,” 74 Indiana Law
Journal (1999), 759.
70See Thomas, supra note 31.
71H.R. 1333, 107th Congress, 1st Session (“Patent Improvement Act of 2001").
“interference” proceeding, applicants are allowed to submit evidence of their dates
of inventive activity, such as the dates that they conceived of the invention and
reduced it to practice.72 The applicant that was the first to invent in the field is
presumptively entitled to the patent.73 The U.S. priority rule is described as74
following the “first-to-invent” principle.
In every other patent-issuing state, priority of invention is established by the
earliest effective filing date of a patent application disclosing the claiming
invention.75 Stated differently, the first patent applicant is presumptively entitled to
the patent. Whether or not the first applicant was actually the first individual to
complete the invention in the field is irrelevant. This priority system follows the76
The international patent community has witnessed an extensive and sometimes
emotional debate on the relative merits of the first-to-invent and first-to-file
principle.77 Supporters of the first-to-invent principle in part assert that the first-to-
file system creates inequities due to a “race to the Patent Office”; encourages
premature and sketchy disclosures in hastily-filed patent applications; and
disadvantages small entities with less resources to prepare and file patent
applications quickly. Supporters of the first-to-file principle in part assert that it
provides a definite, readily determined and fixed date of priority of invention;
believe that it would decrease the complexity, length and expense associated with
current USPTO interference proceedings; and observe that most of U.S. industry is
already acting on this basis in order to avoid forfeiture of patent rights abroad.
Although many U.S. trading partners have proposed that the United States shift to
the first-to-file priority principle, some observers believe that there is currently no78
U.S. consensus on the advisability of this approach.
Grace Period. The U.S. patent system essentially provides inventors with
a one-year period to decide whether patent protection is desirable, and, if so, to
prepare an application. Specified activities such as publications or sales act to bar
the applicant from obtaining a patent before the so-called “critical date,” the day one79
year before the application was filed. If, for example, an entrepreneur first
discloses an invention by publishing an article in a scientific journal, he knows that
he has one year from the publication date in which to file a patent application.
Importantly, uses, sales, and other technical disclosures by third parties will also start
7235 U.S.C. § 135.
73In addition, the party that was the first to invent must not have abandoned, suppressed or
concealed the invention. 35 U.S.C. § 271(g).
74See Gholz, Charles E., “First-to-File or First-to-Invent?”, 82 Journal of the Patent and
Trademark Office Society (2000), 891.
75See Jackman, Peter A., “Adoption of a First-to-File System: A Proposal,” 26 University of
Baltimore Law Review (1997), 67.
77See Gholz, supra note 74.
7935 U.S.C. § 102(b).
the one-year clock running.80 As a result, inventors have a broader range of concerns
than merely his own behavior.
In contrast, many other patent-granting states provide more limited grace
periods, or no grace periods at all. In Europe, any sales or publication of an
invention anywhere in the world prior to the filing date defeats the patentability of
an invention.81 The Japanese patent system includes a six-month grace period tied82
only to the activities of the inventor. Under the patent law of Japan, any disclosures
of an invention made by a third party even one day before the filing date defeats the
novelty of that invention.
Much discussion has occurred over the wisdom of a grace period. Supporters
of a grace period say that it assists inventors who are not sophisticated in patent
matters; encourages the development of inventions that require a certain amount of
public testing before the invention can be said to be complete; and comports with
norms of the academic and scientific community that call for early publication of83
research results. Detractors claim that grace periods increase commercial
uncertainties and imply a prolongation of the patent term, and also assert that
academics and scientists who wish to enter the commercial world must abide by the84
legal rules already established there.
Patentable Subject Matter. The sorts of inventions that are subject to patent
protection appear to be narrower in some foreign jurisdictions than in the United
States. For example, the July 23, 1998, decision of the United States Court of
Appeals for the Federal Circuit in State Street Bank & Trust Co. v. Signature85
Financial Group, held that inventors may obtain patents on methods of doing
business. Subsequent judicial opinions from U.S. courts have confirmed this
holding.86 Recently issued U.S. patents in fields such as architecture, investment,
marketing, psychological analysis and sports methods also suggest that inventions
from virtually any human endeavor may be the subject of proprietary rights through
the patent system.87
In contrast, many patent systems overseas, including the harmonized European
patent regime and the Japanese patent law, have declined to extend patent protection
to business methods and other inventions outside the realm of traditional industry.
For example, European patent law includes the requirement that an invention possess
80Adelman et al., supra note 3, at 204-05.
81European Patent Convention, Article 54(2).
82Japanese Patent Act, Article 29(1).
83Straus, Joseph, Expert Opinion on the Introduction of a Grace Period in European Law (8
May 2000) (available at http://www.european-patent-office.org/news/pressrel/pdf/
84Galama, Jan E.M., Expert Opinion on the Case For and Against the Introduction of a Grace
Period in European Law (2000) (available at http://www.european-patent-office.org/news/
85149 F.3d 1368 (Fed. Cir. 1998).
86See, e.g., AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999).
87See Thomas, supra note 31.
“industrial application” and expressly excludes from patentability such inventions
as “schemes, rules and methods for performing mental acts, playing games or doing
business.”88 A September 8, 2000, decision of the European Patent Office Board of
Appeal applied this reasoning to reject a patent application filed by a U.S. inventor89
on a computerized pension benefit system.
Biotechnology is also more amenable to patent protection in the United States90
than in other nations. Broadly speaking, a plant or animal invention that is either
a non-naturally occurring substance, or results from a substantial amount of human
intervention, is patentable in the United States.91 Both the Japanese and European
systems impose additional restrictions on biotechnology patenting. According to the
Japanese Patent Office, "processes in the fields of medicine, diagnosis, therapy, and
pharmacology in which the human body is an indispensable element” are not92
patentable. European patent law is still more restrictive, excluding from
patentability “plant and animal varieties” and “essentially biological processes”
among other inventions.93
Much debate has proceeded about the most appropriate subject matter for
patenting. Advocates of broad notions of patentable subject matter believe that
patents can encourage investment, innovation and the disclosure of new inventions94
in a broad range of fields. Opponents of business method patents instead observe
a long history of avoiding state-granted monopolies on business methods and find
little evidence that patents will encourage further innovation in innovative business95
practices. Opponents of biotechnology patents have contended that it is
inappropriate to grant property rights in living organisms and genetic materials and
that such patents disrupt the norms and values of traditional agriculture.96
Publication of Pending Applications. Most foreign patent regimes97
publish all pending patent applications 18 months after they have been filed. Until
recent years, the U.S. patent system traditionally maintained applications in secrecy.
This regime advantaged patent applicants because it allowed them to understand
88European Patent Convention, Article 52(c).
89Improved pension benefits system, T 0931/95 - 3.5.1, European Patent Office (2000).
90North, Michael, “The U.S. Expansion of Patentable Subject Matter: Creating a Competitive
Advantage for Foreign Multinational Companies?,” 18 Boston University International Law
Journal (2000), 111.
93European Patent Convention, Article 53(b).
94E.g., Kuester, Jeffrey R. & Thompson, Lawrence E., “Risks Associated with Restricting
Business Method and E-Commerce Patents,” 17 Georgia State University Law Review
95Thomas, John R., “The Patenting of the Liberal Professions,” 40 Boston College Law
Review (1999), 1139.
96Naik, Paul S., “Biotechnology in the Eyes of an Opponent: The Resistance of Activist
Jeremy Rifkin,” 5 Virginia Journal of Law and Technology (2000), 5.
97Todaro, John C., “Potential Upcoming Changes in U.S. Patent Laws: the Publication of
Patent Applications,” 36 IDEA: Journal of Law and Technology (1996), 309.
exactly what the scope of any allowed claims might be prior to disclosing an
invention. Thus, if the applicant was wise enough to maintain the invention that was
subject to a patent application as a trade secret, then he could choose between
obtaining the allowed patent claims and trade secret status.98
However, this secrecy regime has been perceived as imposing costs as well.
Others might well engage in repetitive research efforts during the pendency of patent
applications, unaware that an earlier inventor had already staked a claim to that
technology. This arrangement also allows inventors to commence infringement
litigation on the very day a patent issues, without any degree of notice to other99
members of the technological community.
The Domestic Publication of Foreign Filed Patent Applications Act of 1999,
which was one component of the American Inventors Protection Act of 1999, P.L.
106-113, attempted to strike a middle ground. U.S. patent applications will be
published 18 months from the date of filing, except where the inventor represents
that he will not seek patent protection abroad. If an applicant certifies that the
invention disclosed in the U.S. application will not be the subject of a patent
application in another country that requires publication of applications 18 months100
after filing, then the PTO will not publish the application.
Sometimes inventors seek more robust patent protection in some countries than
in others. This step may be taken for business reasons or due to differences in the
patent or competition laws in varying jurisdictions. P.L. 106-113 therefore contains
a provision allowing applicants to submit to the PTO “a redacted copy of the
application filed in the [PTO] eliminating any part or description of the invention in
such application that is not also contained in any of the corresponding application
filed in a foreign country." As a result, if an applicant seeks broader patent
protection in the United States than in other countries, only the more limited version
of the application will be published here.
This Act also creates so-called provisional rights that may attach to published
patent applications. Provisional rights are equivalent to a reasonable royalty, the
amount that the patentee would have charged an infringer had the two parties entered
into a licensing arrangement at the time the infringement began.101 Persons who
employ the invention as claimed in the published patent application are potentially
liable for this amount. Provisional rights are subject to several qualifications. They
are only effective at such time as the patent issues, apply only when the infringer had
actual notice of the published patent application and the claims of the published
application are “substantially identical” to those of the issued patent.
An example may clarify the workings of provisional rights. Suppose that an
inventor files a U.S. patent application on February 1, 2001. Assuming the inventor
98Goller, Mimi C., “Is a Padlock Better than a Patent? Trade Secrets vs. Patents,” 71
Wisconsin Lawyer (May 1998), 20.
99Thomas, supra note 37, at 187.
100Ibid. Note that if a U.S. patent applicant later decides to file abroad as well, that enterprise
is charged with notifying the USPTO so that its U.S. application may be published.
101Rodime PLC v. Seagate Technology, Inc., 174 F.3d 1294, 1308 (Fed. Cir. 1999), cert.
denied, 120 S.Ct. 933 (2000).
does not file the appropriate certification, the USPTO will publish the application 18
months later, on August 1, 2002. Suppose further that this application results in an
issued patent that the USPTO formally grants on June 1, 2003. Under these facts,
the inventor may file a patent infringement suit on or after June 1, 2003. Assuming
the statutory requirements are fulfilled, the inventor may claim provisional rights
equivalent to a reasonable royalty from August 1, 2002, the date the application was
published, through June 1, 2003, the date the patent was granted. Infringing acts that
occur after June 1, 2003, will be subject to the full range of remedies under the
Patent Act, including an injunction and damages based upon the lost profits of the
Foreign Patent Enforcement
Most patent-issuing states allow patent owners to enforce their rights in civil
courts of general jurisdiction. Because civil litigation varies considerably from
nation to nation, an exacting analysis of multinational patent enforcement would
require a lengthy discussion beyond the scope of this report. This report instead
points to several salient distinctions between U.S. and foreign patent litigation that
are persistently discussed in the professional literature.
Limited Discovery. U.S. civil procedure allows for discovery, a pre-trial
proceeding through which litigants may obtain information necessary to prove their
cases. Depositions, interrogatories, requests for production of documents, and
requests for admission are among the tools litigants may use to aid in investigating
facts and defining issues for trial. In patent cases, patentees use discovery to
determine such matters as the extent of infringing activities; accused infringers use
discovery to obtain further information as to the validity and enforceability of the
No other nation provides for the extensive pre-trial discovery available in the103
United States. Under some civil law systems, the litigants do little more than
exchange papers filed with the court. In such regimes the litigating parties must
make use of alternative methods of obtaining information, including extrajudicial
investigational efforts or using the results of discovery procedures available
Proponents of discovery claim that the availability of discovery helps eliminate
from trials the element of unfair surprise, assures that cases would be decided on
their merits, and mitigates unfairness resulting from disparities of wealth and power
by prescribing means by which less powerful litigants could obtain the information
necessary to prove their claims. Detractors assert that discovery has been subjected
to abuses that prolong litigation, and increases the expense of U.S. litigation when
10235 U.S.C. § 288.
103See Blumer, Fritz, “Jurisdiction and Recognition in Trans-Atlantic Patent Litigation,” 9
Texas Intellectual Property Journal (2001), 329.
104Revelos, William C., “Patent Enforcement Difficulties in Japan: Are There Any
Satisfactory Solutions for the United States?”, 29 George Washington Journal of
International Law and Economics (1995), 503.
compared with proceedings overseas.105 In patent infringement actions, lack of
discovery may make it difficult for a plaintiff to prove infringement, especially for
process patents where access to the accused infringer's production facilities and
documents may be critical.106
Jury System. The United States is also the only nation that uses a jury system
in patent trials. Although many commentators have criticized the use of lay jurors107
to decide patent infringement issues, others have found many merits to the use of
juries and observe the place of a jury system within the Bill of Rights.108 In other
nations, one or more judges or administrative officials decide patent validity and
infringement matters. Some jurisdictions, such as Germany, have established
positions for specialized trial judges who decide patent cases.109
Patent Validity as an Infringement Defense. In the United States and
many common law countries, courts that decide infringement matters also may110
review the validity of the asserted patent. Accused infringers often argue that the
asserted patent was improvidently granted. In some civil law nations, however, the
courts that decide patent infringement matters may not rule on whether a patent is
valid or invalid. Challenges to patent validity are instead exclusively considered by
the national patent office or by specialized courts. Some authorities believe these
split proceedings can lead to delay and higher costs.111
Court Costs. It is common practice for courts to assess some fee against an
individual who commences litigation, patent-related or otherwise. In the United
States, the fee for filing a civil case is ordinarily set at a fixed amount, which is
currently $150.112 In some foreign countries, the filing fee is tied to the amount in
controversy. For example, the fee in Japan is set to roughly 0.5% of the damages113
claimed. Because patent cases sometimes involve high stakes, some observers
believe that these scaled filing fees present a barrier to enforcing patent rights.
Attorney Fees. In the United States, each litigating party pays its own
attorney fees. In many other jurisdictions, such as England, the losing party must
105E.g., Shepherd, George B. & Cloud, Morgan, “Time and Money: Discovery Leads to
Hourly Billing,” University of Illinois Law Review (1999), 91.
106Revelos, supra note 104.
107See Leibold, Gregory D., “In Juries We Do Not Trust: Appellate Review of Patent-
Infringement Litigation,” 67 University of Colorado Law Review (1996), 623.
108See Livingston, Kevin, “Junking the Jury? As the Science at Patent Trials Becomes More
Complex, Some Advocate Dumping Juries from the System,” The Recorder (San Francisco)
(19 Oct. 1999), 1 (noting supporters and detractors of the use of juries in patent cases).
109See Aldisert, Ruggero J., “Rambling Through Continental Legal Systems,” 43 University
of Pittsburgh Law Review (1982), 935.
110See 35 U.S.C. § 282.
111Adelman et al., supra note 3, at 1225.
11228 U.S.C. § 1914.
113Revelos, supra note 104.
pay at least some of the prevailing party’s costs and attorney fees.114 Although the
so-called “English Rule” allows the prevailing party to recoup some of its litigation
expenses, the possibility of paying the other side’s fees may discourage meritorious
Scope of Patent Protection. A subtle but significant distinction between
patent systems is the scope of protection a court will accord to an issued patent
during enforcement proceedings. The scope of proprietary rights is based upon, but
not limited to, the precise wording of the patent instrument. In the United States, a
court may find infringement even if the accused infringement does not precisely fall
within the claims of the asserted patent, so long as “insubstantial differences” exist
between the patented invention and the accused infringement. U.S. courts refer to116
this concept as the “Doctrine of Equivalents.”
Some observers believe that the scope of protection accorded patent rights
differs among the national courts. The courts of Germany and the Netherlands have,
for example, been considered to accord patents a more robust scope of protection
than do the U.S. courts. At the other extreme are the courts of Japan. According to
a 1993 report from the U.S. General Accounting Office, “Japan has virtually no117
‘doctrine of equivalents’ as that term is used in the United States.” Some
commentators believe that more recent decisions suggest that Japanese courts are
construing patents more broadly than they once did.118 In addition, some observers
believe that since the late 1990's, the U.S. Court of Appeals for the Federal Circuit
has exhibited a trend towards a narrowing of patent rights.119
The International Patent System
The patent regimes of the United States and its trading partners are linked
through a handful of international agreements that, together, comprise the
international patent system. These international agreements do not create a true
global patent system, in that they do not provide for a single patent application and
grant procedure that can lead to rights effective worldwide. However, they do
provide inventors with mechanisms for expediting the acquisition of patent rights in
many countries. This report discusses the most significant of these international
agreements in the order that they were enacted.
114Davis, Kent W., “The International View of Attorney Fees in Civil Suits: Why is the
United States the ‘Odd Man Out’ in How It Pays Its Lawyers?”, 16 Arizona Journal of
International and Comparative Law (1999), 361.
116See Warner-Jenkinson Co. v. Hilton Davis Chemical Co., 520 U.S. 17 (1997).
117General Accounting Office, Intellectual Property Rights: U.S. Companies' Patent
Experiences in Japan (GGD-93-126) (1993).
118Yamamoto, Shusaku & Tessensohn, John A., “Doctrine of Equivalents Adds Torque to
Japanese Patent Infringement,” 81 Journal of the Patent and Trademark Office Society
119E.g., Cherny, Steven C. & Richetti, Joseph J., “A Year of Important Cases on Patents:
Doctrine of Equivalents Takes a Beating in the Federal Circuit,” 23 The National Law
Journal (30 April 2001), B9.
The Paris Convention
The foundational patent harmonization treaty, the Paris Convention, was formed120
in 1884. As of July 15, 2001, 162 nations had signed the Paris Convention. The
World Intellectual Property Organization (WIPO), a specialized agency located in
Geneva, Switzerland, administers this international agreement (and a number of
subsequent instruments addressing intellectual property). The Paris Convention
commits its signatories to the principle of national treatment, the principle of patent
independence, and a system of international priority. Through the national treatment
principle, Paris Convention signatories agree to treat foreign inventors no worse than
domestic inventors in their patent laws, so long as these foreign inventors are
nationals of a Paris Convention signatory state.
A second principle set forth by the Paris Convention is the independence of
different national patents. Prior to the advent of the Paris Convention, many national
laws applied a principle of patent dependence against foreign inventors. Under this
principle, domestic patents would expire at the same time any foreign patent
covering the same invention lapsed, regardless of the term the patentee was
ordinarily due. These provisions sometimes worked a hardship against inventors
who had obtained patent protection in many countries, only to discover that
marketing the invention was feasible only in some subset of them. Such an inventor
would prefer to let some patent rights lapse rather than incur expensive maintenance
fees. In a world where patent rights depended on one another, however, allowing
one patent to lapse would amount to a global forfeiture of patent rights.
The independence principle established by the Paris Convention put an end to
this situation. One significant consequence of the independence of national patents
is that they must be enforced individually. Even different national patent instruments
with identically drafted descriptions, drawings and claims do not stand or fall
together. A competitor who succeeds in invalidating one national patent may face
the prospect of repeating the effort within another set of national borders. Similarly,
the successful enforcement of a patent in one forum may simply signal the start of
patent litigation elsewhere.121
The international priority system allows an inventor to file a patent application
in one Paris Convention signatory state, which is usually the inventor’s home
country. If the inventor subsequently files patent applications in any other Paris
Convention signatory state within the next 12 months, overseas patent-granting
authorities will treat the application as if it were filed on the first filing date.
Critically, information that enters the public domain between the priority date and
subsequent filing dates does not prejudice the later applications. Paris Convention
priority allows inventors to preserve their original filing dates as they make
arrangements to file patent applications overseas.122
120Convention of Paris for the Protection of Industrial Property, 13 U.S.T. 25 (1962).
121See Thomas, supra note 5.
122See Bodenhausen, G.H.C., Guide to the Paris Convention for the Protection of Industrial
Property (United International Bureau for the Protection of Intellectual Property, Geneva,
Suppose, for example, that an inventor files a patent application at the USPTO
on October 1, 2001. The inventor then files a patent application claiming the same
invention in the Japanese Patent Office on September 1, 2002. As part of his
Japanese application, the inventor informs the Japanese Patent Office of the earlier
U.S. application. Because Japan has acceded to the Paris Convention, the Japanese
Patent Office will treat that inventor’s application as if it had been filed on October
1, 2001. As a result, information that entered the public domain after the U.S. filing
date would not prejudice the inventor’s Japanese application. A journal article
published on January 1, 2002, for example, would not limit the opportunity of the
inventor to obtain a Japanese patent.
The Paris Convention was an advanced treaty at the time of its formation in the
late nineteenth century. However, many observers believed that its shortcomings
became more pronounced with the passage of time. Other than the minimal standard
of national treatment, the Paris Convention does not provide substantive patent law
standards for its signatories to adopt within their domestic patent systems.123 The
Paris Convention further lacks an effective enforcement mechanism. Although one
nation could commence an action against another for Paris Convention violations in
the International Court of Justice, that tribunal’s lack of enforcement powers made
this possibility more theoretical than practical. In the 120-year history of the Paris124
Convention, no such suit has ever been brought.
Finally, the Paris Convention requires unanimous consent to amend. As the
number of signatory states grew, such consensus became difficult to obtain. The
opportunity to advance the international patent system shifted to other vehicles,
including the Patent Cooperation Treaty.
The Patent Cooperation Treaty
The Patent Cooperation Treaty, or PCT, was formed in Washington, DC in
1970. Recognizing the needless repetition of duplicative patent examinations around
the world, representatives of different patent offices agreed to a procedural
framework to facilitate the often burdensome task of multinational patent acquisition.
The PCT is open to any nation that has acceded to the Paris Convention, and in fact
over 100 nations have currently signed the PCT. It provides for the filing of one
patent application that can lead to issued patents in many countries.125
An inventor may use the PCT if he is a national or domicile of a PCT
contracting state. Most often, an inventor commences the PCT process by filing a
so-called “international application” at his local patent office. The international
application designates all PCT member states in which the inventor wishes to obtain
patent protection. An international application has the effect of a national
application in all of the countries that the applicant designates.
This application will then be sent to one of several entities designated as an
International Searching Authority. In addition to the USPTO, the national patent
123Abbott, Frederick et al., The International Intellectual Property System: Commentary and
Materials (Kluwer Law International, The Hague 1999), 646.
124Ibid at 661-62.
125Ibid at 1430-41.
offices of Australia, Austria, China, Japan, the Republic of Korea, the Russian
Federation, Spain, and Sweden, as well as the European Patent Office, have been
designated as International Searching Authorities. These entities research existing
patent documents and other technical literature in order to determine public domain
knowledge pertinent to the invention claimed in the patent application. The
applicant then receives an international search report, which lists citations of prior
art relevant to the claims of the international patent application and gives an
indication of the possible relevance of the citations to the questions of novelty and
If the international search report does not reveal any public domain knowledge
that would defeat the patentability of the claimed invention, the applicant may wish
to enter the second part of the PCT process, the so-called “national stage.” Here the
applicant submits the PCT application to various national offices. At this time,
patent examiners in each country examine the application based upon their own
national laws, either allowing or rejecting the patent application.
The PCT also allows for an optional intermediate step between the time an
applicant receives an international search report and enters the national stage. The
applicant must also request an international preliminary examination of his
application. This preliminary examination is made, on the basis of the international
search report, according to internationally accepted criteria of patentability, including
novelty and nonobviousness. It is carried out by an International Preliminary
Examining Authority, which consists of one of the International Searching
Authorities mentioned above, with the exception of the national patent office of
Spain. An international preliminary examination provides inventors with an even
stronger basis on which to evaluate their chances of obtaining patents in the national
stage. However, the ultimate decision on the granting of a patent remains the task
of individual national or regional patent offices; the international preliminary
examination report is authoritative but not binding upon those authorities.
The PCT has attracted a large number of applicants, with a disproportionate
share of users based in the United States. In 2000, the International Bureau of WIPO
received 90,948 international applications filed with PCT receiving Offices
worldwide, an increase of 22.9% from 1999. According to WIPO, the 90,948
international applications received in 2000 had the equivalent effect of 8,457,172
national applications. Applicants from the United States filed the largest number of
PCT applications in 2000, filing 42.0% of all applications. U.S. inventors were
followed by Germany (13.2%), Japan (10.3%), the United Kingdom (6.1%) and126
Still, the PCT has been subject to some criticism. Upon entering the national
stage, many patent offices do not appear to respect fully the work product of the
International Search Authority. In fact, most Patent Offices normally repeat the
search and examination at the national phase in the same manner as for an ordinary
national application. Under the view of some observers, these redundant efforts
appear to undermine much of the logic behind PCT.127 In addition, the PCT fee
126PCT Newsletter, available at http://www.wipo.int/pct/en/newslett/2001/index.htm.
127See Nolff, Markus, “TRIPS, PCT and Global Patent Procurement,” 83 Journal of the
schedule is based upon Swiss francs. Past currency fluctuations have sometimes led
to significant cost increases for U.S. applicants.
A number of regional agreements provide for some sort of centralized
examination procedure, through which an inventor obtains patents effective in
member nations designated by the applicant. Although the United States is not a
party to any of these treaties, applicants filing in the United States frequently take128
advantage of these regional examination techniques when seeking patents abroad.
The European Patent Convention (EPC) is the most prominent example of a129
regional patent harmonization agreement. Among other measures, the EPC creates
a European Patent Office based principally in Munich, Germany and the Hague, the
Netherlands. An inventor may file a single patent application at the European Patent
Office, which, if accepted, matures into a number of individual national patents in
the European states the applicant has designated. Significantly, the EPC does not
create a unitary European patent. A European Patent Office application amounts to
a group of national patent applications that are processed together but then are given
individual legal effect within the appropriate jurisdictions. Once issued by the
European Patent Office, these patents enjoy independent legal lives, and must be130
enforced and maintained separately. A draft treaty known as the Community
Patent Convention would take this system one step further, creating a true unified
European patent, but its ratification has been delayed for many years.131
Other regional agreements include:
! African Intellectual Property Organization (also known as the Organization
Africaine de la Propriete Intellectuelle or OAPI), for portions of French-
!African Regional Intellectual Property Organization (ARIPO), for portions of
!Eurasian Patent Convention, joined by certain former members of the Soviet
Patent and Trademark Office Society (2001), 479.
128For example, in 1999, U.S. entities filed 25,333 applications at the European Patent Office
(EPO). This number represented 28.35% of the total applications at the EPO and made the
United States the largest single source of EPO applications. European Patent Office, 1999
129See Paterson, Gerald, The European Patent System: The Law and Practice of the
European Patent Convention (Sweet & Maxwell, London 2000).
131See Thomas, supra note 5.
The North American Free Trade Agreement (NAFTA), currently joined by the
United States, Canada and Mexico, includes a number of intellectual property
provisions.132 More rigorous than the Paris Convention or the PCT, NAFTA requires
its signatories to commit to substantive patent law measures, including term of
protection, scope of rights accorded to patentees, and standards of patentability such
as novelty and nonobviousness. At the time of its effective date of January 1, 1994,
NAFTA was a premier intellectual property treaty. However, in terms of the extent
of its obligations and the scope of signatories, NAFTA was quickly eclipsed by the
World Trade Organization’s TRIPS Agreement. Rather than focus on the particulars
of NAFTA, this report next discusses the TRIPS Agreement.
The TRIPS Agreement
One component of the international agreement forming the World Trade
Organization (WTO) is the so-called TRIPS Agreement, or Agreement on Trade-133
Related Aspects of Intellectual Property Rights. Although the TRIPS Agreement
addresses a number of intellectual property laws, including copyrights, trademarks
and trade secrets, this report confines its discussion to the patent provisions of the
TRIPS Agreement. The TRIPS Agreement has three principal components:
minimum substantive standards of protection; enforcement provisions; and dispute
settlement between member countries. The TRIPS Agreement also includes
transition provisions governing the effective date of its obligation in different WTO
member states. This report reviews each of these topics in turn.
Minimum Standards of Protection. Under Part III of the TRIPS
Agreement, all member countries agreed to enact patent statutes that include certain
substantive provisions. In particular, each signatory agreed to allow patents to issue
on inventions “in all fields of technology, provided that they are new, involve an
inventive step and are capable of industrial application.”134 The TRIPS Agreement
includes some exceptions to this broad principle, however. Certain methods of
medical treatment, plants and animals other than microorganisms, and inventions that
violate the order public or morality may be excluded from patentability at the option
of the member state.135
WTO members also agreed that patentees shall have the right to exclude others
from making, using, offering for sale, selling, or importing the patented invention.136
The TRIPS Agreement again creates an exception to this broad principle, however,
allowing member states to limit patent rights under certain circumstances. Article
132North American Free Trade Agreement, Dec. 17, 1992, 32 I.L.M. 289; see also North
American Free Trade Agreement Implementation Act, P. L. 103-182, 107 Stat. 2057 (1993).
133See Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994,
Annex 1C, 33 I.L.M. 1197 (1994) [hereinafter “TRIPS Agreement”].
134TRIPS Agreement, Article 27(1).
135TRIPS Agreement, Article 27(2).
136TRIPS Agreement, Article 28.
Members may provide limited exceptions to the exclusive rights conferred by a
patent, provided that such exceptions do not unreasonably conflict with a normal
exploitation of the patent and do not unreasonably prejudice the legitimate
interests of the patent owner, taking account of the legitimate interests of third
WTO members further agreed that the term of patent protection available shall not
end before the expiration of a period of 20 years counted from the filing date.137 In
addition, the TRIPS Agreement requires that member states must provide patent
owners with the opportunity for judicial review of any decision to revoke or forfeit
Part III of the TRIPS Agreement also addresses compulsory licenses. A
compulsory license allows a competitor of the patent owner to use the patented139
invention without the patent owner’s permission. Although compulsory licenses140
have played only a minor role in the United States patent system, many foreign
patent statutes include such provisions.141 These statutes typically require an
interested party formally to request the compulsory license from the foreign
government. Competent authorities then decide whether to grant the license as well
as the terms of any granted license. Grounds for granting a compulsory license
include the abusive exercise of patent rights, lack of domestic manufacture of the
patented product, commercialization of the patented good that does not satisfy the
needs of the local market and national emergencies.142 While some accounts suggest
that formal compulsory licensing proceedings are commenced only infrequently, the
mere existence of a compulsory licensing statute may do much to encourage
bargaining between a foreign patentee and domestic industry, on terms favorable to
The TRIPS Agreement places some limits upon the ability of WTO member
states to award compulsory licenses for the use of another’s patented invention.
Among the most detailed provisions of the TRIPS Agreement, Article 31 imposes
in part the following restrictions upon the issuance of compulsory licenses:
137TRIPS Agreement, Article 33.
138TRIPS Agreement, Article 32.
139Sherwood, Robert, “Intellectual Property and Investment Stimulation: The Ratings of
Systems in Eighteen Developing Countries,” 37 IDEA (1997), 261.
140Dawson Chemical Co. v. Rohm and Haas Co., 448 U.S. 176 n.21 (1980).
141Julian-Arnold, Gianna, “International Compulsory Licensing: The Rationales and the
Reality,” 33 IDEA (1993), 349.
142Ibid. For studies of specific compulsory licensing provisions of individual nations, see,
for example, Baca, Rafael V., “Compulsory Patent Licensing in Mexico in the 1990's: The
Aftermath of NAFTA and the 1991 Industrial Property Law,” 8 Transnational
Lawyer (1995), 33; Rosenthal, Robert E., “The Chinese Patent System,” 17 Law and Policy
in International Business (1985), 907; Wechkin, John M., “Drug Price Regulation and
Compulsory Licensing for Pharmaceutical Patents: The New Zealand Connection,” 5 Pacific
Rim Law & Policy Journal (1995), 237.
143Boseley, Sarah, “Opinion: Pharmaceuticals move their battleground to Brazil to stem the
tide of cheaper drugs,” Irish Times (20 April 2001), 14.
!Each application for a compulsory license must be considered on its
!The proposed user must have made efforts to obtain authorization from the
patent owner on reasonable commercial terms and conditions and must
demonstrate that such efforts have not been successful within a reasonable
period of time. However, this requirement may be waived in the case of a
national emergency or other circumstances of extreme urgency.
!Any such use shall be authorized predominantly for the supply of the
domestic market of the member authorizing such use.
!The compulsory license must be revocable if and when its motivating
circumstances cease to exist and are unlikely to recur.
!The patent owner must be paid adequate remuneration in the circumstances
of each case, taking into account the economic value of the authorization.
!The legal validity of any decision relating to the authorization of such use
shall be subject to judicial or other independent review.
WTO members agreed that patentees should be subject to certain conditions. In
particular, the TRIPS Agreement requires that WTO member states “shall require
that an applicant for a patent shall disclose the invention in a manner sufficiently
clear and complete for the invention to be carried out by a person skilled in the
The TRIPS Agreement also requires its signatories to comply with certain
provisions of the Paris Convention, including its foreign priority system.145 This
requirement has led to a dramatic increase in the number of Paris Convention
signatories.146 Apparently realizing that they were already obliged to respect the
Paris Convention, many WTO member states that were not previously Paris
Convention signatories acceded to that treaty.
National Enforcement Procedures. In addition to mandating certain
substantive patent law standards, the TRIPS Agreement also designates intellectual
property enforcement procedures that member countries are required to provide. Part
III of the TRIPS Agreement details what procedures and remedies must be available
for patent holders to obtain effective enforcement against infringers. The first
section of Part III states general obligations: procedures concerning the enforcement
of intellectual property rights must be fair, equitable, without unnecessary147
complications or costs, and absent unreasonable time-limits or unwarranted delays.
144TRIPS Agreement, Article 29.
145TRIPS Agreement, Article 2.
146Maskus, Keith E., Intellectual Property Rights in the Global Economy (Washington, D.C.,
Institute for International Economics, 2000).
147TRIPS Agreement, Article 41.
In the second section of Part III, the TRIPS Agreement requires the creation of
certain civil and administrative procedures and remedies. Members must make
available to patent owners civil judicial procedures for enforcement. These judicial
authorities must have the power to grant certain remedies, including injunctions,148149150
monetary damages and destruction of infringing goods.
The third section of Part III mandates that member states allow for the
possibility of prompt and effective provisional measures to prevent infringements
and preserve relevant evidence.151 In the fourth section of Part III, the TRIPS
Agreement mandates that member states establish border measures so that infringing152
imports may be prevented from circulating within the domestic market.
Dispute Settlement Between Member Countries. As with other
obligations imposed by the WTO, TRIPS Agreement obligations are subject to
enforcement through the WTO Dispute Settlement Body (DSB).153 If one WTO
member state believes that another member state is in violation of the TRIPS
Agreement, the member states may enter into consultation through the DSB. If the
member states cannot resolve their dispute, the DSB will convene a panel to hear and
resolve the dispute. Panel decisions are subject to review by the DSB Appellate
Body. The WTO Agreement calls for compensatory trade measures in circumstances
where the DSB finds a WTO member state to be in violation of the TRIPS
Agreement, yet that member state does not amend its laws.154
Effective Dates. The effective date depends upon whether the WTO member
state designates itself a developed, developing or least developed country. For WTO
members other than developing and least developed countries, the compliance date
for all requirements of the TRIPS Agreement was set to January 1, 1996.155
For signatory states designated as developing countries, the TRIPS Agreement
set the general compliance date as January 1, 2000. However, there is one exception
to this general date. If on January 1, 2000, a developing country did not extend
patent protection to all areas of technology within the meaning of Article 27, that
developing country may delay implementation of these provisions for an additional
five years. Prior to the TRIPS Agreement, for example, many developing countries
did not allow patents to issue on pharmaceuticals. The practical effect of this
148TRIPS Agreement, Article 44.
149TRIPS Agreement, Article 45.
150TRIPS Agreement, Article 46.
151TRIPS Agreement, Article 50.
152TRIPS Agreement, Article 51.
153Understanding on Rules and Procedures Governing the Settlement of Disputes, Apr. 15,
154Clough, Mark, “The WTO Dispute Settlement System – A Practitioner’s Perspective,” 24
Fordham International Law Journal (2000), 252.
155TRIPS Agreement, Article 65.
additional transition period was that developing countries need not allow patents on156
pharmaceuticals until January 1, 2005.
The TRIPS Agreement also allows a signatory state designated as a least-
developed country to delay implementing the TRIPS Agreement until January 1,
2010. A showing of hardship may qualify least-developed countries for further
delays and other concessions.157
The TRIPS Agreement does not oblige its signatories to protect subject matter
that fell into the public domain prior to the time its obligations became effective.158
For example, suppose that a particular developed country traditionally did not allow
patents to issue on pharmaceuticals. If that developed country joins the WTO, it
must amend its patent law to authorize pharmaceutical patents. The TRIPS
Agreement requires only that patents be allowed on new products as of January 1,
1996, however, and does not mandate that patents be granted retroactively. As a
result, patent protection need not be afforded pharmaceuticals that were known to the
public prior to January 1, 1996, even if those pharmaceuticals were patented
The TRIPS Agreement includes two other transitional measures known as
pipeline protection and exclusive marketing rights. Although the TRIPS Agreement
allows developing countries to delay implementing their patent law obligations, it
requires that they immediately establish so-called pipeline protection for159
pharmaceuticals. Some sources refer to pipeline protection as the “mailbox rule.”
Under this requirement, countries that do not allow pharmaceutical patents to issue
must nonetheless accept patent applications. These patent applications will
essentially be held at the national patent office until it comes time for the patent
application to be considered.
Pipeline protection is valuable because it allows inventors to establish a date of
priority of invention. Although many years might pass between the application’s
filing date and the date on which it would be examined, the inventiveness of the
claimed invention must be judged as of its filing date. Pipeline protection allows
inventors to maintain their priority of invention in the face of subsequent technical
The TRIPS Agreement also mandates that WTO member states award an
Exclusive Marketing Right (“EMR”) to inventors in specified circumstances. The
holder of an EMR concerning a particular product is designated as the only entity
authorized to distribute that product within the member state. The award of EMRs
provides innovators with transitional, patent-like market exclusivity in member states
that do not yet offer patent protection for pharmaceuticals.
157TRIPS Agreement, Article 66.
158TRIPS Agreement, Article 70.
159Giust, John E., “Noncompliance with TRIPS by Developed and Developing Countries:
Is TRIPS Working?,” 8 Indiana International and Comparative Law Review (1997), 69.
In order for an enterprise to obtain an EMR in one WTO member state, that
enterprise must obtain both a patent and marketing approval on that pharmaceutical
in another WTO member state. That enterprise must also take two additional steps
within the jurisdiction in which an EMR is sought. First, the enterprise must obtain
marketing approval for the pharmaceutical. Second, that enterprise must file a patent
application claiming that pharmaceutical. Upon completing these two steps, the
enterprise may obtain an EMR with a maximum duration of five years. The EMR
will expire prior to the expiration of five years if either the marketed product is
patented, or the local patent office rejects the enterprise’s patent application.
Debate on the TRIPS Agreement. The TRIPS Agreement has generated
controversy. Some commentators predict that the TRIPS Agreement will lead to
large transfers of wealth from poor countries to the developed world, and in160
particular to the United States. Others believe that deleterious public health
consequences will result from the TRIPS Agreement requirement that patents issue
on pharmaceuticals.161 Still others have contended that the introduction of patents
into the developing world restricts sustainable development and perpetuates their
dependence upon developed nations.162
Proponents of the TRIPS Agreement instead believe that the introduction of
full-fledged patent systems around the globe will provide needed incentives for
investment and innovation.163 Such efforts could promote solutions to problems that
are particular to the developing world, including the provision of nutritional needs
and cures for diseases not common in the developed world.164 Supporters also
observe that the TRIPS Agreement was one component of a multi-faceted WTO
agreement, and believe that the developing world obtained trade benefits in
exchange for protecting intellectual property.165 An exchange of views may soon
occur before the WTO, where certain officials have reportedly suggested that the
TRIPS Agreement may be the subject of further consideration and possible166
Challenges for Innovative Firms
The preceding discussion suggests that an inventor seeking patent protection in
many countries may face a complex and expensive task. Although the TRIPS
Agreement confirms the international priority mechanism established by the Paris
160See Maskus, supra note 146.
161See Correa, Carlos M., “Public Health and Patent Legislation in Developing Countries,”
162See Oddi, A. Samuel, “TRIPS – Natural Rights and a ‘Polite Form of Economic
Imperialism,’” 29 Vanderbilt Journal of Transnational Law (1996), 415.
163See Su, Evelyn, “The Winners and the Losers: The Agreement on Trade-Related Aspects
of Intellectual Property Rights and Its Effects on Developing Countries,” 23 Houston
Journal of International Law (2000), 169.
166See Reddy, C. Rammanohar, “TRIPS Under Scrutiny at WTO,” The Hindu (18 Oct. 2000).
Convention over a century ago, it did little to ease the everyday mechanics of
international patent acquisition. A true global patent system, where one patent
granting procedure leads to rights effective worldwide, is essentially a theoretical
possibility at present.167
Multinational patent enforcement may present an even more daunting task. No
international treaty directly addresses the litigation of patent rights. Although
patents held in different countries may be identical, their legal independence and
territorial limitations compel patent holders to bring suit in each country individually.
Even where a single multinational entity infringes parallel patents by marketing the
identical technology in several jurisdictions, piecemeal remedies from individual
national courts provide the only traditional possibility for relief.
One example of repetitive national patent litigation is Cuno Inc. v. Pall Corp.168
In this patent case tried in the United States District Court for the Eastern District of
New York, the court observed that the parties had just completed litigation of a
parallel British patent. In his opinion, Judge Weinstein stated:
It is a quiddity of our law that a well and thoroughly reasoned decision reached
by a highly skilled and scientifically informed justice of the Patent Court,
Chancery Division, in the High Court of Justice of Great Britain after four weeks
of trial must be ignored and essentially the same issues with the same evidence
must now be retried by American jurors with no background in science or
patents, whose average formal education will be no more than high school. This
curious event is the result of the world's chauvinistic view of patents.
The law's absurdity as revealed by this case lends force to recommendations
for a universal patent system that recognizes that ours is a worldwide169
technological and economic community.
Other observers are less sanguine about the desirability of a global patent
system, believing that the U.S. patent system should focus upon protecting U.S.170
inventors rather than achieving legal harmonization. Whether or not these
recommendations for a global patent system bear fruit, inventors seeking effective
patent protection abroad will face a number of difficulties. In addition to the
apparent difficulties associated with travel, language barriers and cultural
differences, foreign patent prosecution and litigation raise unique challenges. This
report identifies and discusses six issues of special relevance to the entrpreneurial
community: expense, delay, professional representation, differences in national
patent laws, inconsistent results, and the particular problems of the developing world.
167See Sabatelli, Anthony D. & Rasser, J.C., “Impediments to Global Patent Harmonization,”
168Cuno Inc. v. Pall Corp., 729 F. Supp. 234 (E.D.N.Y. 1989).
169Ibid at 239.
170See Roberts, Bill, “The Muddle of Invention,” 26 Electronic Business Today (1 Jan. 2000),
The expenses associated with multinational patent acquisition, including patent
office assessments, professional representation fees, and translation costs, can be
considerable. In a 1996 study, Erwin F. Berrier, Jr., patent counsel for the General
Electric Company, concluded that the cost of obtaining and maintaining patents in171
52 countries on a single invention was $472,414. Other studies have offered
comparable figures.172 Given that 162 countries are members of the Paris
Convention, and that the top U.S. patent recipient, the IBM Corporation, obtained173
2,886 U.S. patents during the 2000 calendar year alone, the sums that certain
multinational enterprises must devote towards patent acquisition and maintenance
must be considerable. Even a much smaller enterprise that seeks extensive
multinational patent protection may face formidable expenses, even without
accounting for the costs of litigation.
Patent rights arise only when an administrative agency formally allows a patent
application to issue as a granted patent. The preparation and prosecution of a patent
application can consume significant periods of time. With global trends towards an
increasing number of filed applications, more complex technologies, and less
generous budgets, application pendency periods at the world’s patent offices appear
to be rising. According to the USPTO, the average U.S. patent issues about 26
months after an application is filed, compared with 21 months in 1996. The USPTO
reportedly projects that average patent pendency will increase to more than 38174
months by 2006.
Patent application pendency periods at other patent offices sometimes exceed
those of the USPTO. For the calendar years 1997, 1998 and 1999, the average
processing time at the European Patent Office was 50.2, 44.7 and 46.2 months,
respectively. Although the Japanese Patent Office does not currently provide figures
on the total pendency of Japanese patent applications, the average time for an initial
response from the Japanese Patent Office was 21.0, 19.0 and 19.8 months in 1997,
that the average pendency at the Japanese Patent Office was from 6 to 7 years.
171Berrier, Erwin F., “Global Patent Costs Must Be Reduced,” 36 IDEA: The Journal of Law
and Technology (1996), 473.
172E.g., Franklin Pierce Law Center’s Sixth Biennial Major Problems Conference, 37 IDEA:
The Journal of Law and Technology (1997), 623; Helfgott, Samson, “Patent Filing Costs
Around the World,” 75 Journal of the Patent and Trademark Office Society (1993), 567.
173Kenward, Michael, “Field Notes: Intellectual Property,” National Post (4 July 2001), C2.
174Hoover, Kent, “Patent backlog grows, approval time soars to 38 months,” Memphis
Business Journal (29 June 2001), 11.
175Trilateral Statistical Report (available at http://www.european-patent-office.org
176General Accounting Office, supra note 117.
Differences in patent examination procedures and data reporting techniques177
among patent offices make direct comparison of these pendency periods suspect.
These data do reveal that obtaining patent protection is often a time-consuming task.
Especially in industries where product cycle times are short, patents that were long
delayed in prosecution may be obsolete by the time they issue. Commenting about
the software industry, patent attorney George F. Wheeler said that “by the time we
get a patent issued, the infringers are done; and we are already on the next178
product." Patent acquisition delays may discourage inventors from using the
patent system at all, instead preferring the immediate protection available under the
trade secret law.
Given the complexity and specialized nature of patent acquisition procedures,
most inventors obtain the assistance of a patent professional. Patent-issuing states
generally require that patent applicants obtain local representation to prosecute
applications. As a result, domestic inventors most often cannot rely upon their U.S.
patent attorney to represent them before foreign patent offices. They must instead
obtain the services of foreign patent counsel.
Some observers believe that obtaining competent foreign patent representation
can sometimes be a difficult proposition. The practice of patent law is a specialized
discipline that requires both legal and technological qualifications. This mix tends
to limit the number of persons eligible to join the ranks of patent professionals. In
addition, individuals seeking to represent others before a national patent office often
must pass a difficult patent bar examination. In the United States, the pass rate for
this examination has fluctuated, ranging from 62.4% for the examination179
administered during November 1999, to 37.0% for the October 2000 examination.
In other countries, the pass rate is even lower. For example, the 1999 Japanese
patent bar examination had a pass rate of 4.9%.180 The 1999 European Patent Office
bar examination pass rate was 44% of first-time examination takers, in comparison181
with 33.5% of those repeating the exam.
In the United States, at the start of 2001 approximately 25,785 individuals were
licensed to practice patent law. In contrast, the number of licensed patent
professionals is much smaller in other jurisdictions. Japan currently features
approximately 4,200 patent attorneys,182 while 6,106 professional representatives
177General Accounting Office, Intellectual Property: Enhancements Needed in Computing
and Reporting Patent Examination Statistics (RCED-96-190) (July 1996).
178Hernandez, Nathanial, “Patent Attorneys Travel the Fast Lane to Keep Pace with Global
Changes,” Chicago Lawyer (April 2001), 8.
179United States Patent and Trademark Office, Office of Enrollment and Discipline,
Examination Reports (available at www.uspto.gov/web/offices/dcom/olia/oed).
180Revelos, supra note 104.
181European Patent Office, 1999 Annual Report.
182Watts, Jonathon, “Seeking More Creativity, Japan Overhauls IP Laws,” 43
Research-Technology Management (1 Sept. 2000), 45.
were authorized to practice before the European Patent Office at the close of 1999.183
Some observers believe that the comparatively smaller number of foreign patent
professionals acts to the detriment of U.S. industry. According to these observers,
the lack of competition can lead to delays and higher fees for patent-related184
In addition to the difficulties associated with obtaining representation before a
foreign patent office, engaging a qualified attorney-at-law to handle foreign patent
litigation may also be problematic. In contrast to the United States, in many foreign
countries few individuals admitted to the patent bar also hold qualifications as
general attorneys-at-law. Some of these problems result from the differing nature of
the educational and legal systems in the United States as compared to other
countries. In the United States, individuals most often obtain their legal education
as a graduate degree. The majority of individuals who have passed the U.S. patent
bar examination possess undergraduate degrees in technical disciplines, accompanied
by a law degree. As a result, most individuals who have passed the U.S. patent bar
have also passed a state bar examination and are qualified as general attorneys-at-
In contrast, in many other countries the law degree is obtained at the
baccalaureate level. Having obtained one bachelor’s degree, few individuals return
to obtain a second in a technical discipline. As a result, most foreign patent attorneys
are not qualified as general attorneys-at-law, and few attorneys-at-law possess
expertise in patent matters. In some countries, many attorneys-at-law who are
experienced in patent matters are engaged by domestic firms as full-time consultants.
Some observers believe that such relationships make it difficult for U.S. firms to find
competent counsel. An inability to find an attorney-at-law with intellectual property
experience can make patent enforcement difficult.185
Out of recognition of some of these concerns, the Japanese Diet passed a new
Patent Attorney Law that became effective January 6, 2001. The Diet intended this
law to increase the availability of legal services related to intellectual property in186
Japan. This legislation may serve as a model for other countries. In addition,
intellectual property law has recently been subject to increased public exposure
around the world, potentially leading more young people into the field. The training
of patent professionals remains a time-consuming process, however, and it is
possible that growing demand for patent-related services may outstrip the availability
of qualified practitioners.
Differences in National Patent Laws
The TRIPS Agreement and predecessor international agreements have
contributed to patent harmonization. For example, prior to the TRIPS Agreement,
183European Patent Office, 1999 Annual Report.
184General Accounting Office, supra note 117.
186See Rousso, Lee, “Japan’s New Patent Attorney Law Breaches Barrier Between the
‘Legal’ and “Quasi-Legal’ Professions: Integrity of Japanese Patent Practice At Risk?”, 10
Pacific Rim Law and Policy Journal (2001), 781.
patent term varied considerably in different countries. Once implementation of the
TRIPS Agreement is complete, all WTO member states will have a patent term of
at least 20 years from the date the patent application was filed. However, significant
differences remain between the patent laws of the United States and those of other187
countries. The effect of three of these differences, relating to the priority
mechanism, grace period and patentable subject matter, are discussed below.
Priority principle. Recall that every patent system except for that of the
United States employs a first-to-file priority principle. Under this regime, the first
patent applicant is presumptively entitled to the patent whether or not he was actually
the first individual to complete the invention in the field. The U.S. patent system
instead employs a first-to-invent priority principle, which instead awards the patent188
to the first applicant that actually completed the invention.
Differences between these priority systems could lead to the award of different
national patents to different parties on the same invention. For example, suppose that
inventor A synthesizes an inventive chemical compound on August 1, 2001, and files
a patent application at the USPTO on October 1, 2001 claiming that compound.
Invoking the Paris Convention, inventor A then files a patent application at the
German Patent Office on September 1, 2002. Suppose further that inventor B
invents the same compound on August 15, 2001, files a patent application at the
USPTO on September 15, 2001, and then files a patent application at the German
Patent Office on September 1, 2002. Under this simple example, inventor A would
be awarded the U.S. patent under the first-to-invent principle. Inventor B would
obtain the German patent under the first-to-file principle, based upon his earlier U.S.
The impact of this legal situation upon such factors as the rate of innovation,
industry concentration and commercialization of new technologies is difficult to
predict. In the above example, it may be that because neither inventor has exclusive
rights in both countries, neither would possess sufficient incentives to commercialize
or further develop the patented technology. On the other hand, perhaps patent rights
in a single country would suffice to stimulate both inventors to sell and improve
upon the inventive compound, and leading to a more diverse and competitive
industry at the time the patents expire.
Grace Period. Although the U.S. patent law allows inventors a one-year
grace period to file patent applications, other patent systems have more limited grace
periods. As a result, activities such as public uses, sales and publications that would
defeat patentability in Europe, Japan and other jurisdictions do not prejudice U.S.189
patent applicants. This distinction may effectively allow more patents to be
granted in the United States than in other countries. In addition, domestic inventors
who take advantage of the full grace period under the U.S. patent law may be
prejudiced when they attempt to obtain patent protection overseas.
Patentable Subject Matter. Recall that the range of subject matter for
which patent protection is available is much broader in the United States than in
187See supra notes 61-102 and accompanying text.
188See supra notes 72-78 and accompanying text.
189See supra notes 79-84 and accompanying text.
other countries.190 As a result of these differences in local patent laws, foreign
inventors may obtain U.S. patents on certain biotechnologies, business methods and
other inventions not associated with traditional heavy industry. However, U.S.
inventors may not obtain foreign patents on such inventions. This disparity in191
international patent law standards my act to the detriment of U.S. industry.
Patent acquisition and enforcement often raises conceptual, legal and
technological issues of great difficulty. In 1841, U.S. Supreme Court Justice Joseph
Story described patents, along with copyright, as belonging “to what may be called
the metaphysics of the law, where the distinctions are, or at least may be, very subtle192
and refined, and, sometimes, almost evanescent.” Patent cases sometimes raise
advanced technological issues as well. As explained by former USPTO Director Q.
Todd Dickinson, “the complexity of some of these applications is almost
unimaginable. For example, we received a DNA sequence listing as part of a patent
application that, had it been submitted on paper, would have totaled more than
In an environment containing such complex issues, it is unsurprising that
different national authorities have often differed in their judgments of the identical
patent issues. It is quite possible that the same patent application could be allowed
by one patent office examiner, rejected on a particular ground by a second examiner,
and rejected on a different ground by a third examiner. During patent enforcement,
courts may also take different view of the validity of the patent and the scope of
The result may be a climate in which entrepreneurship could suffer. A
patchwork of patent rights could make it difficult for any one inventor to obtain a
return on investment sufficient to justify marketing the innovative product. Given
the ease with which goods move in the international economy, a patentee might
experience difficulties policing the entry of infringing goods into one market when
a competitor has established production facilities elsewhere.
Problems of the Developing World
The TRIPS Agreement obliges WTO member countries to develop an
intellectual property regime by 2005, absent special concessions. In countries that
have not previously known a patent law, or where patent services are offered by a
small number of specialized practitioners, this requirement may prove both costly
and difficult. Economists Michael Finger and Philip Schuler reportedly estimate that
the total cost of implementing the TRIPS Agreement is $150 million per country.194
190See supra notes 85-96 and accompanying text.
191North, supra note 90 at 111.
192Folsom v. Marsh, 9 F. Cas. 342, 344 (C.C.D. Mass. 1841) (No. 4,901).
193Testimony Before the Subcommittee on Courts and Intellectual Property, Committee on
the Judiciary, U.S. House of Representatives (13 July 2000).
194Panagariya, Arvind, “Yes to IPRs, but not under WTO,” The Economic Times (26 Jan.
Training industry, legal practitioners and jurists in intellectual property law may
prove onerous in countries that are facing more compelling national needs.
To fully convey the magnitude of this problem, the situation in the United States
should be contrasted with some members of the developing world. The USPTO has
an annual budget of $1 billion and a staff of more than 3,300 highly-trained
scientists, engineers and legal experts to examine patent applications. The U.S.
intellectual property regime also features the Court of Appeals for the Federal
Circuit, which possesses exclusive jurisdiction over patent appeals; dozens of law
schools with advanced course offerings in patent law; a community of experienced
patent professionals; an extensive antitrust authority that can deal with overreaching
by patent owners; and an established customs service that can address the
importation of infringing goods. Some least-developed countries are reported to195
have, at best, a handful of patent examiners. To the extent some portions of the
developing world lack an effective intellectual property infrastructure, any resulting
burdens will likely fall most heavily upon private enterprise attempting to obtain and
enforce patent rights there.
Legislative Issues and Options
Legislation addressing some of the issues involving multinational patentth
acquisition and enforcement has been introduced in the 107 Congress. Proposals
and a number of legislative options are explored below.
Costs provide one challenge for innovative firms seeking patent protection
abroad.196 One approach for addressing this issue is to offer direct financial support
to innovative enterprises. This technique might be subject to criticism on the ground
that it could principally subsidize translators, patent attorneys and patent offices
based overseas, and might discourage these entities from controlling their fees.
Should Congress choose to pursue this concept, issues to be considered include
determining whether the support would be provided through loans or grants; setting
the maximum government contribution; determining which expenses are subject to
support (selecting expenses arising from patent acquisition, maintenance,
enforcement and other activities); and identifying the pertinent enterprises that would
be eligible to participate.
Legislation has been introduced in the 107th Congress that would implement this
policy. On August 2, 2001, Senator John Kerry introduced S. 1323, titled the “SBIR
and STTR Foreign Patent Protection Act of 2001.” This bill would establish a 5-year
pilot program at the Small Business Administration to provide one-time grants of up
195“The right to good ideas: How patents help the poor: Intellectual-property rights are not
just for the rich world. Carefully constructed, they can help the poorest too,” The Economist
(23 June 2001).
196See supra notes 171-73 and accompanying text.
to $25,000 for certain small businesses. These grants could be used to file overseas
patent applications on technology developed under the Small Business Innovation
Research Program (SBIR) and the Small Business Technology Transfer Program
(STTR). Grant recipients would be required to pay a royalty fee to the Small
Business Administration based upon export sales receipts or licensing fees that result
from the patented technology. Any royalty payments received would be deposited
to a Foreign Patent Protection Grant Fund and should be used to provide further
grants. S. 1323 additionally authorizes to be appropriated $2.5 million for the Fund
for the fiscal year 2003, scaling up to $10 million annually in fiscal years 2006 and
Legal harmonization has long served as a point of contention within the patent
community. Supporters of legal harmonization believe that the U.S. patent system
has long been an outlier in the international patent regime, given its unique
adherence to such principles as the first-to-invent priority system.197 Harmonization
advocates point out that certain other components of the U.S. patent law, including198199
the so-called “best mode” requirement and the Hilmer rule are also not observed
by other major patent-granting states. These advocates contend that a common set
of ground rules would ease the burden of multinational patent acquisition and200
enforcement. They also propose that U.S. representatives could negotiate with
other countries for concessions that would favor U.S. inventors, in exchange for
changes to U.S. law.201
Opponents of legal harmonization believe that the U.S. patent system has
evolved over many years to achieve the proper balances of rights and responsibilities202
for inventors, their competitors and the public. Some harmonization opponents
believe that changes to the U.S. patent system would favor larger firms and act to the
disadvantage of smaller, innovative enterprises.203 Others contend that legal changes204
would aid foreign industry at the expense of U.S. industry.
Neither side in this debate is able to point to much objective evidence
supporting their views. Although the federal patent system was introduced in 1790,
this long experience has yielded a paucity of rigorous analytical methods for
197Baremore, John Paul, “Don’t Shoot the Messenger: Congress and the Prospect of Patent
Harmonization,” 44 Loyola Law Review (1999), 761.
198See supra note 39 and accompanying text. See also Jacobs, Jr., Albert J., “The Best Mode
Requirement: What the Law Is and What It Should Be,” 16 Houston Journal of International
Law (1994), 533.
199See Neifeld, Richard A., “Viability of the Hilmer Rule,” 81 Journal of the Patent and
Trademark Office Society (1999), 544.
200Baremore, supra note 197.
202See Roberts, Bill, “The Muddle of Invention,” 26 Electronic Business Today (1 Jan. 2000),
analyzing the effect of changes to the patent laws. The relationship between
innovation and patent rights remains poorly understood, and current economic and
policy tools do not allow us to calibrate the patent system precisely in order to
produce an optimal level of investment in innovation. Notably, the United States has
recently taken some steps in the direction of patent harmonization through such
measures as adopting a 20-year patent term and, to some degree, authorizing pre-
grant publication of patent applications.205 Whether this project should be continued
or abandoned likely depends upon the observer’s point of view.
Should Congress review these issues and believe that legal harmonization is the
more appropriate course, a number of steps could be taken. First, Congress could
promote dialogue between the United States and other patent-issuing nations on
patent law reform. Second, Congress could encourage the drafting and promulgation
of patent harmonization treaties through such fora as the World Intellectual Property
Organization. Finally, Congress could enact changes to the U.S. patent statute on a
unilateral basis that bring the U.S. patent law closer to those of other nations.
Patent Office Worksharing Initiatives
Many commentators have recognized that the world’s patent offices are to some
degree engaged in redundant efforts.206 The same invention may be subject to
multiple, parallel prior art searches and substantive examinations as various national
or regional patent applications are reviewed at patent offices around the world.
Although the Patent Cooperation Treaty (PCT) takes some steps to rationalize
multinational patent acquisition, not all applicants choose to use the PCT. Some
observers also believe that some patent offices do not fully respect earlier prior art
searches and examinations conducted by other patent offices through the PCT.207
Believing that a true global patent system may be at best a distant prospect,
some commentators propose that patent offices rationalize their efforts through208
worksharing. Under a proposal offered by the Japanese Patent Office, patent209
offices would agree to recognize a previously completed prior art search. As a
result, examiners could save time and resources by examining an application for
patentability based upon the prior art previously identified by a foreign examiner.
Additional proposals call for recognition of substantive examination results as well.
Under these proposals, once a patent application had been allowed to issue by one
patent office, an application claiming the same invention would be allowed to issue210
by other patent offices without an additional search or examination.
205See supra notes 97-102 and accompanying text.
206Sherwood, Robert M., et al., “Promotion of Inventiveness in Developing Countries
Through a More Advanced Patent Administration,” 39 IDEA: Journal of Law and
Technology (1999), 473.
207See supra notes 125-27 and accompanying text.
208Wegner, Harold C., “TRIPS Boomerang – Obligations for Domestic Reform,” 29
Vanderbilt Journal of International Law (1996), 535.
209Japan Patent Office, Annual Report 2000 at 32-33.
Commentators have recognized a number of practical difficulties with these
proposals. Allowing a foreign examiner to complete a conclusive prior art search,
not to mention a binding substantive examination, may be considered a concession
of sovereign power to a foreign administrative agency. Prior art searches and
examination completed overseas may be difficult to monitor and of uncertain quality.
Differences in national patent laws may also render difficult a universal search and
Should Congress review these issues and believe that patent office worksharing
is a viable option, a number of possibilities could be explored. First, Congress could
encourage the USPTO to continue ongoing technical cooperation programs with
other patent offices. Second, Congress could commission industry, technical and
legal research that could discern whether worksharing is supported by industry,
feasible in light of the capabilities of particular patent offices, and compatible with
governing U.S. law. Finally, patent law harmonization could be advanced to the
extent that it would expedite worksharing possibilities.
At the present time, a number of entities have attempted to aid the developing
world in implementing intellectual property regimes. The World Intellectual
Property Organization offers technical assistance to countries trying to draft211
intellectual property legislation or set up their patent offices. The Japanese Patent
Office has implemented various projects that promote the establishment of212
intellectual property systems, principally in the Asia-Pacific region. The European
Patent Office too has established cooperation programs with patent offices around
the world, often in countries where the patent system has yet to become firmly213
rooted. These projects have involved legal training, technical training and
assistance in developing patent office automation systems. To the extent these
efforts have promoted legal, technical and administrative infrastructure in developing
local patent systems, such projects may assist U.S. innovative firms in the future.
Should Congress agree to support such technical assistance, the authorizing
statutes might promote the involvement of U.S. institutions in these endeavors. The
USPTO, universities, intellectual property foundations and other entities could be
funded and directed to provide technical assistance to the patent systems of the
Jurisdiction and Enforcement of Judgments
Like some other forms of complex international commercial litigation,
multinational patent enforcement can be an expensive, time-consuming and214
repetitive process. Recognizing the problems associated with multinational
litigation, the Hague Conference on Private International Law has recently proposed
211Abbott, Frederick M., “The Future of the Multilateral Trading System in the Context of
TRIPS,” 20 Hastings International and Comparative Law Journal (1997), 661.
212Japan Patent Office, Annual Report 2000 at 45-57.
213European Patent Office, 1999 Annual Report.
214See supra notes 168-69 and accompanying text.
a Private International Law Convention on Jurisdiction and the Recognition of
Foreign Judgments. The so-called “Hague Convention” would establish
international rules among signatory countries to govern rules of jurisdiction, as well
as recognition and enforcement of foreign judgments in civil and commercial215
matters. If the Convention is ultimately promulgated and joined by the major
patent-granting states, it might take some steps towards resolving some of the
problems associated with multinational patent enforcement.216 The Convention is
geared toward general civil litigation, however, and some commentators believe that
it will require modification to account for multinational intellectual property
Some legal commentators have suggested more dramatic proposals than would
be provided by the most recent draft of the Hague Convention. One such proposal
would allow one tribunal to handle consolidated multinational patent litigation. For
example, the owner of parallel U.S., Japanese and German patents could commence
a single enforcement litigation against an accused multinational infringer in one
forum. Such a tribunal could be a national court or a specialized international patent218
If Congress believes that reform of multinational patent enforcement is
appropriate, several measures could be explored. First, Congress could contribute
to the formation of the Hague Judgments Convention or another international
agreement delineating jurisdiction and recognition of judgments in this field.
Another possibility is the rationalization of the domestic patent litigation process
with an eye towards international harmonization. Finally, promotion of international
arbitration and other alternative dispute resolution methods could be considered.219
Globalization and technology have been viewed as increasingly prominent
influences upon the U.S. economy. This perception has led to renewed attention
towards the pragmatic aspects and policies of multinational patent acquisition and
enforcement. Although the international patent system has recently been subject to
significant legal reforms brought by the TRIPS Agreement, the basic mechanisms
for procuring and enforcing patent rights remain unchanged since the introduction
of the Paris Convention in the nineteenth century. With U.S. innovative industry
seeking multinational patent protection at a rapidly growing rate, many
commentators believe that the multinational patent system should be subject to
215Juenger, Friedrich K., “A Hague Judgments Convention?”, 24 Brooklyn Journal of
International Law (1998), 111.
216Dreyfuss, Rochelle C., “An Alert to the Intellectual Property Bar: The Hague Judgments
Convention,” University of Illinois Law Review (2001), 421.
218See Thomas, supra note 5.
219See Fernandez, Carmen Collar & Spolter, Jerry, “International Intellectual Property
Dispute Resolution: Is Mediation A Sleeping Giant?”, 53 Dispute Resolution Journal (Aug.
continuing modernization.220 Congress could be confronted with difficult legal,
practical and policy issues, but also with apparent possibilities for rationalizing the
legal regime that has long been recognized as an engine of innovation in the United
States and throughout the world.
220E.g., Mossinghoff, Gerald J. & Kuo, Vivian S., “World Patent System Circa 20xx A.D.,”