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Licensing-In From The First-To-File: The Strategy Of Filing Early Concepts As Incomplete Patent Applications

James AnglehartJames Anglehart

Anglehart et al, Owner/Patent Agent
Montreal, Canada

This is an executive summary of this important topic, and is not a complete review. Business decisions should not be made based only on information given here, but in consultation with your Intellectual Property (IP) professional. In reading this summary, you should understand the framework of patent application priority and the first-inventor-to-file system, as well as the importance of including such issues in managing your business.

Patent Application Priority

In 1883, the Paris Convention1 was established to allow a patent applicant to gain access to patent rights outside the home country with the same rights as the home country. The Convention established that a patent applicant would have twelve months to file the corresponding patent applications in other countries, while keeping the benefit of the filing date of the first-filed home application. This was an important milestone since the filing date is a critical element to the validity of a patent application. Today, most countries require that a patent application for an invention be filed before the invention is disclosed publicly, and such countries are known as "absolute novelty" countries.

The Paris Convention and the rules for awarding a priority date have evolved considerably since 1883. Today the Paris Convention forms part of the WTO's Trade Related Aspects of Intellectual Property Rights (TRIPs)2 with all WTO member countries as subscribers. The effective filing date is not given to a patent application as a whole, but is given on a patent claim by claim basis. Furthermore, a patent application can claim priority dates from two or more earlier patent applications. The priority rights of a patent application is limited to the subject matter disclosed in a valid priority document. Any new matter not part of the priority document is not entitled to the priority date. This is called partial priority.3

Different Standards

The PCT International Search and Preliminary Examination Guidelines4 prepared by the World Intellectual Property Organization (WIPO), that administers the Patent Cooperation Treaty (PCT), sets out in Section 6.09 the basic test to determine whether a claim is entitled to the date of a priority document. The test is the same as the test of whether an amendment to an application satisfies the requirement of PCT Article 34(2), namely the requirement that no new descriptive subject matter can be introduced by way of an amendment. Section 6.09 goes on to add that, for the priority date to be allowed, the subject matter of the claim must be explicitly or inherently disclosed in the priority document, including any features implicit to a person skilled in the art. Under the PCT guidelines, when it comes to assessing priority based on an earlier-filed patent application, priority is not granted when the earlier-filed patent application contains only a mere mention of an invention with sketchy details.5

The issue of new matter being introduced to an application as a result of claim amendments is handled differently in some countries. In the USA and Canada, for example, the policy is quite generous to patent applicants. A way of defining or characterizing an invention, that was not expressed in the originally-filed application, but that defines operable embodiments disclosed in the original application will generally be accepted in newly presented or amended claims. For example, when a patent application described an apparatus having elements A+B+C in combination, it will likely be accepted to present a claim to the combination of elements A+C, even if there was no implicit or explicit description of the exclusion of element B, as long as the reader would understand how to make the combination operate in the absence of element B.

In the European Patent Office (EPO), a claim amendment would not be permitted to claim a subcombination of a disclosed combination, unless the omitted element was inherently understood from the original description as being optional. In general, the characterization of the invention formulated in a claim must be found in the patent application description or claims as originally filed. Even if there is no requirement for claims in a valid priority patent application,6 its reader should have understood the scope of the invention to be claimed. China's SIPO is typically even more strict than the EPO on the point of amendments that add new matter or go "beyond the scope" of the original application.

New Zealand is a country that exceptionally is more generous than the PCT guidelines cited above in that it is possible to base a priority claim when the priority document describes the same inventive concept, but fails to enable the invention as claimed.

Bicycle Brake Example

Figure 1Imagine that the bicycle rim brake was a new invention, and a first patent application describes the side-pull rim brake as shown in Figure 1. This device is described as allowing the pulling action on the cable to bring the rubber pads against the metal rim of the bicycle wheel for braking. The cylinder 24 on the cable sheath is described as an adjusting barrel for compensating for cable stretch.

There are two questions that follow concerning priority rights based on such a description: (1) can a claim define a sub-combination of what was described and (2) can a claim cover more than the embodiment described in the priority application? Specifically, can a claim omit the adjusting barrel? And, can a claim cover equivalents, such as the center-pull shown in Figure 2.

Figure 2In most countries, including the European Patent Office (EPO) states and China (SIPO), priority is to be given to an earlier-filed patent application when there is clear support for the characterization of the invention as claimed. If there was no mention in the priority document that the adjusting barrel was optional, likely the patentee will not be allowed to benefit from the filing date of the priority patent application for a claim that omits this feature. Likewise, a generic claim to the cable actuating at least one brake lever, without including the feature that the sheath is mounted to one lever, while the cable end is connected to the other lever, will likely not be accepted in Europe or China.

However, in the U.S. or Canada, such a generic claim covering the center-pull equivalent will likely be considered valid when supported by the description of the side-pull brake.

In this context, the reader will appreciate the significant gap between U.S. and EPO practices. Special care is required to ensure that patent applications describe variants to be covered and what the essential components of an invention are. Even when not including claims, there must be clear description of the invention essentially the equivalent to well-thought-out claims. To define such features, typically a patent search is done before filing a priority application.

The First-to-File System

In this article, a distinction is made between Firstto- File outside the U.S., and First-Inventor-to-File in the U.S. In First-to-File systems throughout the world, when two patent applicants file for the same invention, the patent is awarded to the applicant having the earliest priority date. Because patent applications are published at 18 months from their priority date, the existence of the first-filed patent application is discovered later, typically in examination by the Patent Office.

The patent applicant with the later priority date, namely the "second-to-file" applicant, must exclude from her claims whatever could be claimed in the first-filed application. This is what is called "citable for novelty only."7 When the second-to-file applicant files after the first-filed application is published or the first-to-file applicant otherwise publishes the invention, the published material can be combined with the state of the art to invalidate the second-filed patent application.

If the second-filed patent application were to describe the center-pull bicycle brake, while the first-filed application only the side-pull, then the second-to-file applicant might enjoy exclusive rights to his brake because the first-filed application failed to describe it.

Furthermore, if the first-filed patent application failed to support a generic claim to the equivalent described in the second-filed patent application, then the second-to-file may be free to commercialize their brake without account to the first-to-file.

If the second-to-file applicant successfully defined the generic claim to the bicycle brake while the firstto- file applicant failed to do so, then the second-to-file applicant can claim any such bicycle brake with the explicit exception of the brake as described by the first-filed patent application. This is how things work outside the U.S.

Thus, preparing a good patent application with support for accurate claims can be just as important as being the first-to-file, as there is very good potential to gain valuable patent rights as long as one files before publication of the first-to-file applicant's invention.

U.S. First-Inventor-to-File

The "Leahy-Smith America Invents Act" (AIA) came into effect on March 16, 2013. It changed the U.S. from being a first-to-invent system to a first-to-file system with unique characteristics like none other in the world.

The difference in the U.S. system is that the firstfiled application is prior art combinable with the whole state of the art.8 In the above example, the central pulling cable bicycle brake would have to be inventive over the side-pull brake to be patentable. The second-to-file applicant does not have nearly the same opportunity to obtain valuable patent protection for differences between what each applicant described. For example, the cable tension release lever and mechanism shown in association with the cable mount would have to be non-obvious over the side-pull brake patent application description and other prior art references to be patentable.

Earlier-filed patent applications were combinable with other prior art in U.S. first-to-invent patent law, however, such earlier-filed patent applications were able to be overcome as a reference if the second-filer could show a date of invention prior to the filing date of the earlier-filed patent application.9 The ability to establish a date of invention for overcoming any reference has been abolished with AIA.

The net effect is that U.S. first-to-file rules are punitive to those who are second-to-file in comparison with the first-to-file systems around the world.

Leveling the Playing Field in the U.S.

With the distinct system in the U.S., a distinct approach is called for. In the rest of the world, it is important to be the first-to-file a patent application that can support future claims, as discussed above. Such patent applications can be called "complete priority applications." These applications require a full understanding of the invention, its variants, the prior art and of the desired claim scope. Accordingly, a patent applicant cannot be ready to file a complete priority application as soon as the concept for the invention is available.

However, because a U.S. patent application is com- binable with the state of the art in the U.S., its prior art effect is much greater than in other countries. This makes it worthwhile to file a patent application much earlier, even if such a patent application fails to meet the standard of a complete priority application. If a patent application is filed as early as possible, based for example on early concepts related to an invention, it will not necessarily be a direct benefit to the applicant's priority rights, but instead it will serve as a tool to compromise the scope of potential claims of a later filer's U.S. patent application.10 Patent applications that are not prepared to necessarily contain full enablement, description of variants and of claim scope can be called "rough provisional pat- ent applications."

Bicycle Brake Example—Initial Concept

Figure 3The initial concept related to the center-pull brake was to use a pair of levers or arms to move rim-engaging pads. Let's assume that the details of imple- mentation were not fully understood when the initial concept was made. Only after mak- ing a prototype and testing was done, did the inventor fully understand the details (including the addition of the cable tension release mechanism). For the sake of the example, let's presume that the initial conceptual drawing was provided as shown in Figure 3, namely without describing how the cable is mounted with respect to the brake, and without such mounting being implicit11 (there are variety of ways to actuate the brake).

If the future claim to the bicycle rim brake recites the cable mount and connection to the brake (and this is an essential component for operation, and thus a reasonable limitation to include), the description of the initial concept in a rough provisional patent application cannot support the claim according to the PCT standard of awarding priority.

When products are more complex than a bicycle brake, developing the invention can take even more time. However, as soon as an R&D team identifies interest in a new technology or product, a review should be made to see if any concepts related to the technology or product should be made the subject of one or more rough provisional patent applications.

U.S. patent applicants have traditionally relied on establishing dates of invention in lab books or other internal communications resulting from early work in developing a complete understanding and readi- ness to file a priority patent application. These dates of invention were useful for overcoming as prior art the patent applications filed by others in obviousness rejections. A similar type of effect can be achieved by filing rough provisional patent applications to early concepts of an invention being developed.

While a rough provisional patent application may be considered to be weak on details or premature and may serve little or no useful priority purpose outside of the U.S., for the reasons given above, a rough pro- visional can and should be filed once the concept is made and before engaging the R&D process.

Non-Convention PCT Option

If there is any reason to believe that a rough provi- sional could support a claim to the invention, and an applicant wants to postpone the filing of the complete patent application, for example because of an ongoing R&D effort to properly and fully define the invention, the complete application could be filed directly as a PCT application with no priority claim to the rough provisional. This approach avoids the consideration of whether a priority claim based on a second patent application can be fully effective, however, it requires filing the PCT application a year earlier than when relying on an earlier priority application.

Managing Rough Provisionals

The goal is to gain sufficient understanding of an invention so as to be able to file a complete priority application. When such an application is ready, the previously-filed rough provisional can be studied to see if it can serve as a basis for priority. If it cannot, then its priority value is zero for the U.S. and particularly for other countries. The complete priority application can then be filed as the priority document for the invention as it will be claimed.

Separate from the question of priority is whether the rough provisional could be useful as prior art in the U.S. only against a competitor who might have filed between the filing date of the rough provisional and the filing of the complete priority application. This utility can be determined if one or more claims in the complete patent application could be considered obvious in light of the rough provisional.

Rough Nonprovisionals

When a rough provisional is shown to have sufficient description of the invention to support one or more claims in the complete patent application, then its priority is claimed. The rough provisional will thus become, in the U.S., prior art as of its filing date combinable with other prior art once the complete patent application is published in the U.S.

An earlier-filed patent application is prior art against the same applicant's later-filed patent application (unless priority is claimed) in most countries, but not in the U.S., where the same applicant's earlier-filed patent applications are not prior art unless they were published more than one year12 before the filing of the later-filed application. The rough nonprovisional can only serve as prior art against third parties, and not against the applicant herself.

When a rough provisional is shown to be insufficient to support a claim (as in the example of the brake concept), but sufficient when combined with the state of the art to render obvious a claim in the complete priority application (this would be the case in the example if cable actuator mounts are known in the art), the rough provisional can be maintained as a U.S. patent application separately from the complete priority patent application. This application can be called a rough nonprovisional, as it will be a formalized version of the rough provisional with a claim and abstract but no substantive new subject matter. The objective is to keep the date of the rough provisional for the subject matter disclosed.

It can be effective in this case to request nonpublication13 of the rough nonprovisional as it will only be filed in the U.S. A request for nonpublication can be done on filing, as long as the applicant declares that the application has not also been filed in a country with automatic 18-month publication. There is little to gain by showing the public the content of a rough provisional that is not able to support a claim in the complete priority application. And there is another advantage to be gained by keeping the rough nonprovisional secret, namely it will not become prior art until the applicant chooses to have it published.

The duration of secrecy of the rough nonprovisional is limited to its pendency. Most U.S. patent applications are examined within two years of their nonprovisional filing date. This time period is about 3 years from the filing date of the rough provisional. This should be ample time to discover the presence of any competitor's application filed prior to the complete priority application. If a longer pendency period is required for the rough nonprovisional, a continuation application can be filed with a further request for nonpublication.

Abandonment of an unpublished rough nonprovisional can be done by not responding to an office action, not paying an issue fee, or by filing a request for express abandonment under 37CFR1.138.

When a U.S. patent application is subject to a request for nonpublication, publication in a foreign patent application of the invention will cause the U.S. patent application to be considered to be abandoned.14 While there is a risk of an argument that the filing of the complete priority application in other countries should be considered an application directed to the invention disclosed in the rough nonprovisional, the consequence of such an argument would be the abandonment of the rough nonprovisional. The validity of the complete priority application in the U.S., not subject to a nonpublication request, is not in question as a result of the nonpublication request made in the rough nonprovisional.

If the rough nonprovisional is filed without making a nonpublication request, it will be published at 18 months. This will make the prior art effect automatic in the U.S. The rough nonprovisional will not serve as prior art against the applicant's own complete priority application in the U.S. as mentioned above. In other countries, the complete priority application must be filed before publication of the rough nonprovisional and the rough nonprovisional must not be able to support a claim in the complete priority application. In this way, the Paris Convention priority rights established by the complete priority application are whole and unharmed.

In the above timeline example, Company A diligently pursues its development of Product C, while their competitor, Company B does the same. Company A takes a bit more time in its R&D than does Company B; and Company B files its patent application before Company A who files a few months after Company B, and before there is any public disclosure of the invention by either party.

This scenario would normally leave Company A with some patent rights outside of the U.S., and likely very little or no rights in the U.S. However, Company A files a very rough provisional describing some concepts related to Product C, as soon as was possible. When Company A has sufficient understanding of Product C, a patent application is filed, although in hindsight shortly after B filed. Patent counsel for Company A determined that the rough provisional could not support a claim in the complete priority patent application. No priority is claimed to the rough provisional in the complete patent application for Product C. However, it is decided by counsel that the disclosure of the rough provisional would, in combination with other prior art, render obvious claims to the invention in Product C. A nonprovisional of the rough provisional is therefore filed in the U.S. with a nonpublication request.

Licensing-In From the First-to-File

If during U.S. examination of one's complete priority patent application, or as otherwise revealed by a patent search, a competitor's patent application having an earlier filing date is discovered, the loss of patent scope in the U.S. due to the earlier-filed application will likely be more severe than in other countries. If the rough provisional pre-dates the filing of the earlier-filed application—meaning that work on the invention by one's inventor's had started before the competitor was able to file a patent application for the invention—then the consequences of being second-to-file need not be so severe in the U.S.

The analysis that concluded that the rough provisional should be filed as a rough nonprovisional can be repeated for the competitor's patent application. The claims in the competitor's application can be studied to determine if they are vulnerable to an obviousness rejection on the basis of the rough provisional's teachings and the whole prior art. If this is the case, then the rough nonprovisional has value. If it is unpublished, then the rough nonprovisional is a negotiation tool. If it was published, then it can be cited against the competitor's patent application.15

The applicant of the unpublished rough nonprovisional has control over its publication,16 and its ability to be cited as prior art against the competitor's patent application. If the rough nonprovisional is never published, it never becomes prior art and never impacts on the validity of the competitor's future patent.17

Disclosure of the unpublished rough nonprovisional to the competitor does not create any negative consequence, as for example a duty to disclose it as prior art to the USPTO, since it is not prior art yet. The competitor can take the required time to consider the potential prior art effect of the rough nonprovisional, and the value of its never becoming prior art.

In the example of the bicycle brake, let's presume the inventor of the side-pull brake was first to file a complete application and the inventor of the centerpull brake was first to conceive the brake. Let's also presume the inventor of the center-pull brake files a rough provisional before the side-pull brake patent application is filed, and then files a complete patent application after the side-pull application. In this scenario, the inventor of the center-pull brake will enjoy certain rights outside the USA, but could see the claims granted outside the USA be rejected for obviousness in light of the side-pull application in the USA. However, the rough nonprovisional has the power to invalidate the side-pull patent application in the USA if it were published. The rough concept of the rim brake described in the rough provisional could, in combination with other prior art, render obvious the invention described and claimed in the side-pull brake application. Control over this publication is the bargaining chip that the inventor of the center-pull brake has over the inventor of the side-pull brake.

While no one is ever pleased to offer the competition a license to one's patent, avoiding the prior art effect of the rough nonprovisional, and possibly the invalidity of one's broad patent claims, is a strong incentive to license. When two applicants are close in filing patent applications for the same or similar inventions, the second-to-file applicant regularly obtains partial patent rights in First-to-File countries (outside the U.S.), and the competitor might already have accepted that the second-to-file enjoys certain patent rights for the invention. The objective of a license can be to enjoy the same effective rights as in other countries, or to enjoy a full license to competitor's patent. The ability to negotiate will depend on the potential prior art effect of the rough nonprovisional. If the potential prior art effect of the rough nonprovisional is the likely unpatentability of all meaningfully broad claims, a royalty-free, transferable license might be warranted.

There is a good opportunity in the above-described scenario to negotiate a license or settlement amount for the abandonment of the rough nonprovisional. In the case that a competitor was the first-to-file a complete patent application for an invention, the goal of the license would be to give a second-to-file applicant (who filed an earlier rough provisional, followed up by an unpublished, rough nonprovisional) access to rights equal to, or better than, those offered in other jurisdictions. Licensing can become an integral part of patent procurement in the AIA framework!

  1. http://www.wipo.int/treaties/en/ip/paris/trtdocs_wo020.html.
  2. http://www.wto.org/english/tratop_e/trips_e/t_agm0_e.htm, Article 2.
  3. This follows from Paris Convention Article 4F that permits an application to claim multiple priorities or to claim priority of an earlier patent application while describing further elements not in the earlier application. Priority is thus based on elements of the application, and claims to different elements can have different priorities.
  4. www.wipo.int/pct/en/texts/pdf/ispe.pdf.
  5. This also follows from Paris Convention Article 4F that introduces the notion that priority relates to the "elements… included in the application whose priority is claimed" as well as Article 4H (see below note) that requires specific disclosure of the elements claimed.
  6. Paris Convention Article 4H reads, "Priority may not be refused on the ground that certain elements of the invention for which priority is claimed do not appear among the claims formulated in the application in the country of origin, provided that the application documents as a whole specifically disclose such elements."
  7. The exclusion of earlier-filed patent applications from being cited for obviousness is defined by Article 56 EPC that states, "If the state of the art also includes documents within the meaning of Article 54, paragraph 3 (i.e. earlier-filed patent applications), these documents shall not be considered in deciding whether there has been an inventive step." In Canada, third party earlierfiled patent applications are novelty-destroying under Section 28.2(c),(d) and the definition of information that may be relied on for considering obviousness under Section 28.3 excludes the prior art of Section 28.2(c),(d).
  8. 35USC§102(a) includes earlier-filed patent applications from another inventor as prior art. 35USC§102(c) defines "another inventor" to extend to other applicants. 35USC§103 requires a claimed invention to be nonobvious in view of the prior art as defined in 35USC§102 without exception.
  9. Under 35USC§102(e) prior to AIA, an earlier-filed patent application was prior art if it was filed before the inventor made his invention. 37CFR1.131 allowed for an affidavit of prior invention to be submitted to dismiss as prior art a 35USC§102(e) reference.
  10. MPEP 2121.01 cites Beckman Instruments v. LKB Produkter AB, 892 F.2d 1547, 1551, 13 USPQ2d 1301, 1304 (Fed. Cir. 1989) as stating "Even if a reference discloses an inoperative device, it is prior art for all that it teaches." And further cites Symbol Techs. Inc. v. Opticon Inc., 935 F.2d 1569, 1578, 19 USPQ2d 1241, 1247 (Fed. Cir. 1991) as stating "A non-enabling reference may qualify as prior art for the purpose of determining obviousness under 35 U.S.C. 103."
  11. In this simple mechanical example, it might have been fully possible to have identified and specified the cable mount and its operation, such that a full priority would have been established. This would be beneficial to the applicant to obtain the earliest priority date. The author assumes that the elements omitted from the rough provisional were not readily available to the applicant, and would have required the effort of R&D over a number of weeks or months.
  12. 35USC§102(b)
  13. 35USC§122(b)(2)(B)(i)
  14. 35USC§122(b)(2)(B)(iii) states "An applicant who has made a request under clause (i) but who subsequently files, in a foreign country or under a multilateral international agreement specified in clause (i), an application directed to the invention disclosed in the application filed in the Patent and Trademark Office, shall notify the Director of such filing not later than 45 days after the date of the filing of such foreign or international application. A failure of the applicant to provide such notice within the prescribed period shall result in the application being regarded as abandoned, unless it is shown to the satisfaction of the Director that the delay in submitting the notice was unintentional."
  15. 35USC§122(e) allows for a published patent application to be submitted by a third party if it is done within 6 months from publication or prior to a first office action on the merits. A third party can provide prior art directly to the applicant or her patent attorney with the expectation that it will be brought to the attention of the USPTO under the duty to disclose of 37CFR1.56.
  16. 35USC§122(b)(2)(B)(iv) allows for the applicant to rescind the nonpublication request.
  17. Publication under 35USC§122 is a requirement for an earlier-filed application to be prior art under 35USC§102(a)(2).