Issue 94 | July 11, 2003
Joint Collaboration Agreements
for Avoiding Prior Art
 Prior to 1984, any novelty-defeating prior art could be used to invalidate a U.S. patent claim for "obviousness" under 35 U.S.C. �3, including prior art created by co-workers of the inventor(s). Seeing as how this discouraged communication among co-workers, Congress, in 1984, amended this section of the statute to exclude prior art under �2(f)(derivation) and �2(g)(invention priority) from being used in obviousness determinations. The exception clause, �3(c), requires common ownership of the prior art and the invention at the time the invention is made. Subsection (c) of the statute was later expanded in 1999 to include prior art under �2(e)(issued U.S. patents are prior art as of their U.S. filing date).

Section 103(c) also encourages joint collaboration efforts. Common ownership under the statute has come to include joint ownership between multiple institutions, such as between corporations, universities, non-profit organizations, etc. However, the �3(c) exception is available only for prior art that was commonly owned at the time the invention was actually or constructively reduced to practice. Thus, post-filing ownership transfers cannot be used to invoke these exceptions under 35 U.S.C. �3(c). This potential pitfall is far more common than it would seem at first glance.

One situation where this problem often arises is in privately-funded joint research. For example, universities often receive funding from outside organizations, such as corporations, to conduct research in particular areas. As part of the funding agreement, any matter that sprouts from the funded research is typically commonly-owned between the two parties. However, the subject matter brought from the funding organization remains the property of that organization. Thus, the prior activities of the funding organization will be prior art under �2(e), �2(f), or �2(g) and can be used for obviating the claims, and because of the funding agreement already in place, the �3(c) exception is not available.

Until 1997, it was commonly assumed that only publicly available prior art sources could be used for obviousness determinations. Consequently, the subject matter brought from the external, funding organization and not commonly owned would have to be publicly disclosed somehow (e.g. in a publication or a patent application) in order to qualify as obviating prior art. However, in Oddzon Products, Inc. v. Just Toys, Inc., 122 F.3d 1396 (1997) the Federal Circuit ruled that material which is confidentially transmitted between parties may still be prior art under �2(f) and thus can be used in an obviousness rejection. Again, due to the funding agreement between the parties, the obviousness exception under �3(c) could not be used to exclude this "non-public" prior art.

This ruling raises interesting issues that have not been completely resolved. For one, can communications between co-inventors fall under �2(f)? Second, what amount of disclosure between the parties needs to be disclosed to the USPTO in order to comply with the applicant抯 duty of disclosure under 37 C.F.R. �56. Unfortunately, the court in Oddzon chose not to address that issue due to the relative confusion in the law.

Looking forward, an Act of Congress (See Cooperative Research and Technology Enhancement (CREATE) Act of 2003) may be the only way to fix this dilemma. In the meantime, one way to avoid these problems is to arrange the initial development agreement so that any prior subject matter is owned by the same entity that will own the subject matter that is created from the funding. An exclusive license could then be crafted to give the rights of the prior subject matter back to the funding organization. Nonetheless, even with such common ownership in place the secret prior art and the ownership agreement may still need to be disclosed during prosecution to avoid allegations of unenforceability for inequitable conduct when any resulting patents are enforced.

Please feel free to contact the author, Chris Smyth (chris.smyth@tkhr.com), at Thomas, Kayden, Horstemeyer & Risley in Atlanta, Georgia USA to discuss your thoughts on this topic.

The information contained in this email is provided for informational purposes only and does not represent legal advice. Neither the APLF nor the author intends to create an attorney client relationship by providing this information to you through this message.