by Dennis Crouch
While in UK this summer, UK patent attorney Jim Boff and I had an interesting discussion regarding the special treatment of US Universities in the America Invents Act (AIA) constitute a violation of the international agreement on Trade-Related Aspects of Intellectual Property (TRIPS). In the mid 1990's the US successfully pushed TRIPS as a required element of membership in the World Trade Organization (WTO). As such the vast majority of countries around the world are member nations. TRIPS sets down certain minimum standards for national intellectual property systems and also incorporates the national treatment requirements exemplified in the Paris Convention of 1883. TRIPS also includes a dispute resolution system allowing member nations to take action against a fellow members that is violating the agreement. The typical penalty is a trade-restriction such as a quota or tariff applied against goods from the guilty country.
National Treatment: non-US inventors are allowed to obtain and enforce US patents. In fact, most US patent applications come from foreign applicants. At least in the short-run, US consumers (voters) may well enjoy the potential lower prices associated with having those patents wholly rejected. However, the US has long agreed to allow foreign-owned patents as part of a quid-pro-quo that guarantees that US-owned inventions can be patented in nations around the word. The "national treatment" system worked out in the 1883 Paris Convention and continued in TRIPS essentially requires that each member-nation treat patent applicants from other member-nations at least as well as it treats its own citizens.
On two particular points, the America Invents Act provides benefits to US Universities that are not provided to foreign applicants.
- Not Subject to Prior User Rights: AIA-patents are subject to a prior commercial user defense that – as its name suggests – allows a prior commercial user of an invention to avoid infringement liability even if that prior commercial user cannot identify any prior art that sufficient to invalidate the patent. This is a defense to infringement and thus weakens the power of an individual patent. The AIA has a special provision for US universities stating that the defense does not apply to patents covering inventions that were owned by the US university (or subject to contractual obligation to assign to the university) at the time of the invention. The provision defines universities by reference to the US Higher Education Act of 1965 (20 U.S.C. 1001(a)). That provision includes only universities located within the United States.
- 75% reduction in Fees: The AIA also includes a micro-entity provision that allows qualified applicants to receive a 75% reduction in most patent office fees. US universities qualify for the fee reduction while foreign universities do not. (Foreign individuals (natural persons) can qualify for micro-entity status if they meet the requirements.)
It is pretty clear that these are two benefits given to US universities that are not enjoyed by their counterparts in other countries. Now, the fee reduction could still pass muster – especially if seen as a subsidy rather than merely a fee discount. See National Federation of Independent Business v. Sebelius, 567 U.S. ___ (2012) (a fine is a tax).
The greater problem stems from the prior user right that is clearly a legal benefit given to a particular US group and not extended to foreign applicants.
Resolving the Problem: Although the US as a country is bound by the TRIPS agreement, US courts do not treat the agreement as controlling. Thus, violations of TRIPS cannot normally be addressed by filing a lawsuit in US court. Rather, the resolution is conducted at the national level through the rather ineffective WTO dispute resolution procedures and other diplomatic channels.