Patents and patent licences

Patentability. A patent can be granted for:

  • any invention;
  • which is susceptible to industrial application (it must be of practical use);
  • which is new; and
  • which involves an inventive step.

An invention is ‘new’ (i.e. novelty criterion) if it does not form part of the state of the art. The state of the art (or state of technology) comprises everything in the public domain, whether made available by publication, oral description, use or in any other way before the date of filing of the patent application. An invention involves an ‘inventive step’ if, in view of the state of the art, the invention is not obvious to a person skilled in the art.

Patented inventions vs. copyrighted works. Inventions are considered new ideas or solutions to technical problems. Unlike protection of inventions, copyright law protects only the form of expression of ideas, not the ideas themselves. The creativity protected by copyright law is in the choice and arrangement of words, musical notes, colours and shapes.

From this basic difference between inventions and works of authorship, it follows that also the legal protection differs. Because a patent gives a monopoly right to exploit the invention, such protection is shorter in duration (usually 20 years). The essentials of the invention must be disclosed publicly in an official register. Because the protection of a work of authorship only prevents unauthorised use of the expressions of an idea, the term of protection is much longer, without any risk of damage to the public interest. Also, because copyright law entitles the author of a work to prohibit other persons from copying or otherwise using the work (a) the work is protected as soon as it is created, and (b) a public register of copyright protected works is unnecessary.

Scope of the patent. The scope of the patent is determined on the basis of the ‘claims’ in the patent registration. The patent claims are accompanied by descriptions (e.g. specifications, explanations, illustrations, calculations, examples, drawings) supporting the interpretation of the patent claims. The scope of patent protection is usually a strict, literal interpretation of the wording of the claims. The purpose of the descriptions is to resolve any ambiguity in the claims. The claim does not serve as a guideline for the descriptions.

Scope of patent protection. The scope of patent law protection is a matter of the national patent law of a State in which the patent is granted. Generally, the patent owner’s exclusive rights consist of the following:

  • in case of a product patent, the right to prevent third parties (non-licensees) from making, using, offering for sale, selling, distributing or importing the product;
  • in case of a process patent the right to prevent third parties (non-licensees) from:
    • applying or using the process; and
    • making, using, offering for sale, selling, distributing or importing products which are created directly by that process.

If a patent has been granted in a particular jurisdiction, others who wish to exploit the invention in that jurisdiction must obtain the authorisation (e.g. a licence) from the patent owner (or from a licensee of the patent owner who has the right to grant sub-licences). Unauthorised and non-licensed use or application constitutes a crime.

Encouraging inventions. Many large technological companies have an internal association of inventors. Many companies have adopted a policy to reward employees who make an invention. Such a policy facilitates the revelation of inventive ideas within the company and prevents that inventive ideas remain unprotected. In large organisations, this is often the result of a lack of awareness about the existence of inventions or the inventors’ failing to acknowledge the importance of their creations. Also, it incentivises an employee to report a potentially patentable invention and thereby earn a nice bonus. Such policy could also be extended to external suppliers (whose inventions are even less visible).

Identifying a patent. Every patent is registered with a unique number (European patents are preceded by the letters EP). In a patent licence or deed of patent transfer, it is common to include the title which the patent has been given, as well as the date as of which the patent was requested or granted. There are numerous websites with search engines including national patent registers worldwide. Although not strictly necessary, a (licensed or transferred) patent is usually identified by the following catch-all phrase:

Patent means the patent [application] registered under no. [_____] (and entitled [___________]) with priority date [_____], including [national patents issued on such application and] any continuations, continuations-in-part, divisions or additions thereof, reis­sues, renewals, revalidations, re-examinations, substitutions, extensions and any immediate foreign equivalents of them.

Infringement.  Contrary to trademark infringements, any action is typically taken after an infringing party has used the patented invention for some time. In a high-tech market where companies file hundreds or thousands of patent applications per year, also patent infringements are numerous, often not easy to prove and relatively costly to identify and challenge.

Inventions and patent criteria #

Novelty and prior art. Sometimes, two companies make the same invention around the same time. The inventor who files the patent application first will be granted the patent[1]. Accordingly, in the investigation of the ‘novelty’ of the invention, the date of filing is determinative. In order to be considered new, nobody may have published about the invention (taken in its entirety, with all elements of the invention together in the publication) or otherwise made it available to the public. When assessing “prior art” a global approach is taken: if an inventor elsewhere in the world was first, that preceding invention determines state of the art.

A common (but expensive) mistake is if the inventor proclaims the invention in newspapers or on internet before filing for patent protection. Disclosures made to third persons or external organisations only safeguard patent protection if each person or organisation signs a (if only retroactively effective) non-disclosure agreement.

Priority year (grace period). In view of the prior art criterion, if someone files an application in a country which is party to the Paris Convention for the protection of industrial property, the applicant has six or twelve months after the first application to file for a patent in another State party as well. Publications about the invention or a sale or transfer of the patentable invention during those six or twelve months will be disregarded when determining whether an invention is new and involves an inventive step. This ‘grace period’ (or ‘priority year’) implies a right of priority over technological developments that take place in that period. Many patent offices publish the application 18 months after the priority date or filing date (the actual patent grant may take much more time).

Duration of patent examination. An inventor normally selects a few jurisdictions to file a patent application. Usually, these are large jurisdictions in which the impact of the patent will be considerable (e.g. the US, the UK, Germany, France, China, Japan) or jurisdictions in which the judicial patent system operates efficiently and professionally (e.g. the Netherlands, Chinese Taipei). After filing a patent, a national or supranational agency[2] examines whether the invention is new, involves an inventive step and is of industrial utility. If the examiner has any doubts, the institute will issue an ‘office action’ after which the applicant may further substantiate, withdraw, abandon, modify or pursue the patent claims. In many cases, the office action leads to narrowing down the scope of the claimed invention. Also, third persons (such as competitors) may oppose the patentability. Usually such doubts are decided in the applicant’s favour because a final and less-abstract judgment on the validity or scope of a patent is possible in court (whilst the alternative, rejection of the patent, precludes all protection).

The application and examination procedure takes several years. Depending on the jurisdiction and the technical discipline involved (e.g. chemistry, biotech, pharma, electronics), a final decision may take three to five years, or much longer. Once the registration is complete, the patent protection has retroactive effect from the date of filing.

Duration. A registered patent typically lasts 20 years after the date of filing the application. The owner of the patent may prohibit others to use the patented invention in any product or to use the patented process. Extension of the duration of the patent is not possible. However, in relation to pharmaceutical patents, where clinical trials impose a further limitation of the effective duration of a patent, some countries permit a limited extension or a certain period or exclusive commercialisation of the patent.

Prior use defence. If an invention was patented by one company but already invented and used by another, most jurisdictions permit the defence of ‘prior use’ against a claim of infringement by the patent owner. Prior use is exempted from patent infringement claims if the alleged infringer can clearly and convincingly prove that it used the patented invention in a commercial setting. Obviously, the date of such prior use must precede both the patent filing and the publication[3]. Understandably, such a ‘grandfather right’ does not apply if the former invention had been derived from the subsequent inventor. In order to prevent circumvention (or parallel trade), a prior user’s right is limited in scope and transferability.

Co-inventorship. A risk associated with patents is that a third party involved in the research or development work leading to the patent, may claim co-inventorship. For example, a customer or manufacturer of a research-focused supplier-inventor who was invited (a) to testing the invention, and (b) to assist in improving certain practical aspects of the invention. The customer or manufacturer might claim that it made a substantial contribution to the invention, which could result in co-ownership. Often, the customer or manufacturer is granted another benefit for its assistance, such as exclusive distribution or manufacturing rights during a certain period of time.

[1]           Including the US since the Leahy-Smith America Invents Act 2011 (AIA) of 16 March 2013. As of that date, the first-to-invent system was replaced by the first-to-file system, which has been adopted everywhere in the world.

[2]           In the EU, whilst the technical examination (of novelty and inventiveness) is conducted by a pan-European institute, a ‘European patent’ does not exist yet. After determination as to whether an invention is patentable, the applicant must choose in which EU member states it wishes to obtain patent registration (and in order to achieve this, certified translations of the selected member states must be prepared). European patents are therefore national patents.

[3]           In the US AIA (2013), the scope of excusable prior use defence is more extensive. The patented invention has to have been used at least within one year prior to the earliest effective date.

Utility patents #

Some countries, such as Germany, France, Spain, Italy, Japan, China and Australia,[1] have introduced a system with a lighter degree of protection for ‘inventions’, which is known as the utility model[2].

Utility model vs. patents. A utility model also provides a monopoly right for an invention: the owner of a utility model can prevent an infringer from exploiting the invention in the territory for which the utility model was granted. Normally, the same remedies for infringement available under a patent are available for infringement of a utility model.

Differences between utility models and patents. A utility model is different in that the requirements are typically less burdensome. For a patent to be granted, the invention must be both ‘novel’ and ‘inventive’. For a utility model, the ‘prior art’ in assessing novelty is often more limited (‘absolute’ novelty is not always required), and an ‘inventive step’ has a considerably lower threshold and is sometimes not even required. Most jurisdictions will only grant utility models for products, and not for methods or processes. The first utility model laws actually limited protection to mechanical innovations. Furthermore, the term of protection of utility models is shorter, and a utility model is much cheaper to obtain.

Importance of utility models. In view of the shorter term of protection, utility models can be useful for products with a relatively short product lifecycle. Since the novelty and inventive step criteria are less stringent, utility models can be useful in connection with incremental research and development, where only small changes to existing inventions are made and therefore might not meet the requirement of an inventive step for a patent. Since utility models are granted much more expeditiously than a patent, they are effective in acting against an infringer in a timely manner. Furthermore, the lower costs for obtaining utility models make them particularly attractive for SME’s.

If an inventor has published about its invention, and thus a patent cannot be granted anymore, some jurisdictions such as Germany, allow a grace period. This grace period permits the inventor to obtain a utility model despite it being part of the state of the art.

Duration. Whereas a patent provides protection of up to 20 years, a utility model provides protection for a shorter term. The exact term depends on the jurisdiction, but is usually between 7 and 10 years.

Application procedure. Utility model applications can be filed at the patent offices of countries that acknowledge or grant utility models. Similar to a patent application, an application for a utility model should include a description, explanations, drawings and claims. Utility model applications are usually not examined before being granted and are therefore granted much sooner (the average time approximating six months).

Conversion into a utility model. Many countries allow the conversion of a patent application into a utility model application. Some countries provide a time limit for such conversion. If a patent application is refused, some countries allow the patent application to be converted into a utility model within a certain period after the refusal.

In some countries, such as Germany, it is possible to obtain both a patent and a utility model for the same invention.

[1]           Utility models (or similar IP-rights with a different name) are available in Albania, Angola, Argentina, ARIPO, Armenia, Aruba, Australia, Austria, Azerbaijan, Belarus, Belize, Brazil, Bolivia, Bulgaria, Chile, China (including Hong Kong and Macau), Colombia, Costa Rica, Czech Republic, Denmark, Ecuador, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Guatemala, Honduras, Hungary, Indonesia, Ireland, Italy, Japan, Kazakhstan, Kuwait, Kyrgyzstan, Laos, Malaysia, Mexico, OAPI, Peru, Philippines, Poland, Portugal, Republic of Korea, Republic of Moldova, Russian Federation, Slovakia, Spain, Taiwan, Tajikistan, Trinidad & Tobago, Turkey, Ukraine, Uruguay and Uzbekistan.

[2]           Utility models are also referred to as innovation patent, utility innovation or petty patent.

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