Cooperative Research and Technology Enhancement (CREATE) Act of 2004

IP Update

December 17, 2004
Frost Brown Todd LLC

The Cooperative Research and Technology Enhancement (CREATE) Act of 2004, amends Federal patent law in an effort to promote collaborative research, particularly between scientists at separate universities and between industry and university scientists. This new law provides that sharing of confidential information under a joint research agreement that was in effect on or before the date the claimed invention was made will not be the basis of an obviousness determination under patent law.

In brief, the Act will make it more difficult to use one invention from the joint research project to defeat the patentability of another invention that arises from that research.  During the course of collaborative research, patent applications may be filed which arise from the research.  The filing of these patent applications can become unforeseen prior art when these patent applications or resulting patents become prior art against subsequent patent applications coming out of the collaborative research.  In this case, the previous applications or resulting patents would be prior art under 35 U.S.C. §102(e), (g), and (f). 

The Cooperative Research and Technology Enhancement (“CREATE”) Act
The Cooperative Research and Technology Enhancement (“CREATE”) Act provides that researchers working for different employers may collaborate without jeopardizing a future patent application on the basis of “obviousness” in light of prior art developed by the first contributor. This overrules the Federal Circuit’s decision in Oddzon Products Inc. v. Just Toys Inc. (122 F.3d 1396, 43 U.S.P.Q.2d 1641 (Fed. Cir. 1997)), which held that derived prior art may serve as evidence of obviousness.

In Oddzon, the Federal Circuit interpreted 35 U.S.C. 103(c) to mean that prior art under Sections 102(f) or 102(g) could be used to determine the obviousness of an invention where there is no common ownership or assignment of the invention and information being shared among the collaborators is not publicly known. The CREATE Act amends Section 103 to provide that patentability is not precluded in the case of research conducted across entities pursuant to a joint research agreement, as so called “secret prior art.”

The Act amends Section 103(c) 35 of the United States Code to treat the jointly developed subject matter as being owned by the same person or obligated to assignment to the same person if the subject matter was: (1) made by or on behalf of parties to a joint research agreement in effect on or before the date of invention; (2) was made as a result of activities undertaken within the scope of the joint research agreement; and (3) the patent application discloses the names of the parties to the joint research agreement.

Prerequisites
The law sets forth several prerequisites that must be met before its protections can be invoked:

  1. The research must be undertaken pursuant to a joint research agreement, which means a written contract, grant, or cooperative agreement entered into by two or more persons or entities for the performance of experimental, developmental, or research work in the field of the claimed invention. (35 U.S.C. §103(c)(3)).

    The CREATE Act encourages parties to freely share information among researchers that are working under a joint collaborative research agreement to develop new technology.  Thus, where a collaborative agreement is in place, and a patent application results from activities falling within the scope of the collaborative agreement, the claims of the patent application would no longer be “obvious” in view of a previous patent application that was born out of the same collaborative agreement.
  2. The claimed invention must be made by or on behalf of parties to a joint research agreement that was in effect on or before the date the claimed invention was made. (35 U.S.C. §103(c)(2)(A)).

    A qualifying agreement must have existed prior to the creation of the claimed invention and demonstrate that the subject matter of the claimed invention is within the scope of the agreement.  Therefore, it is important to have the collaborative research agreement in place before any research is conducted.
  3. The joint research agreement must be written broadly enough so that the claimed invention is the result of activities undertaken within the scope of the joint research agreement. (35 U.S.C. §103(c)(2)(B); see also 35 U.S.C. §103(c)(3)).

    Therefore, it is important to draft the agreement broadly enough to encompass all the subject matter that may come out of the collaborative agreement.
  4. The patent application for the claimed invention must disclose, or be amended to disclose, the names of the parties to the joint research agreement. (35 U.S.C. §103(c)(2)(C)).

    The CREATE Act applies to patents granted on or after the date of enactment, December 10, 2004, including patent applications pending at the time of enactment. According to a statement by Senator Orrin Hatch in the Congressional Record, a joint research agreement existing prior to the date of enactment can be used to qualify an application to claim the benefits of the Act.  Applications pending on the date of enactment, however, must comply with all of the requirements of the CREATE Act, including not only the requirements for disclosure among the parties to the agreement but also the applicable requirement for a terminal disclaimer.
  5. The owner of the second patentably indistinct patent must waive the right to enforce that patent (a disclaimer) separately from the first-issued patent whenever double patenting is created based upon the CREATE Act’s amendment to 35 USC § 103(c). 

    The disclaimer required for the issuance of a patentably indistinct patent pursuant to the CREATE Act must apply to all owners of all involved patents, including the owner of the patentably indistinct patent as well as any owners of any first-issued patents for which the disclaimer is made.  The disclaimer in the patentably indistinct patent must be executed by all of the involved patent owners.  The disclaimer must also limit the term of the disclaimed patent to the term of the first-issued patent.   

From a practical standpoint, the Act means that:  (a) prior to entering into a collaborative agreement, consider whether you are willing to potentially give up the opportunity to separately enforce your patent, taking into consideration where most research will be conducted, who is in better condition to bring an infringement action, and whether you are willing to be tied to your collaborator in the event there is a need to pursue a patent infringement action; (b) review any pending patent applications which may have come out of a collaborative research agreement; (c) review all collaborative agreements to determine if the agreement will satisfy the criteria set forth above; (d) amend any relevant pending patent applications or issued patents to include the names of the parties to the agreement; and (e) consider filing a Certificate of Correction to amend patents that have issued as a result of collaborative works.

For further information about the CREATE Act or any intellectual property matters, please contact Ann Schoen or anyone in our Intellectual Property practice group.

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