RESTRICTEDWORLD TRADE
ORGANIZATIONIP/Q3/USA/1
1 May 1998
(98-1763)
Council for Trade-Related Aspects
of Intellectual Property RightsOriginal:  English
REVIEW OF LEGISLATION IN THE FIELDS OF PATENTS, LAYOUT-DESIGNS
(TOPOGRAPHIES) OF INTEGRATED CIRCUITS, PROTECTION OF
UNDISCLOSED INFORMATION AND CONTROL OF
ANTI-COMPETITIVE PRACTICES IN
CONTRACTUAL LICENCES
United States1
The present document reproduces the questions put to the delegation of the United States and
the responses2 given in the review of legislation on patents, layout-designs (topographies) of
integrated circuits, protection of undisclosed information and control of anti-competitive practices in
contractual licences at the Council's meeting of 26-30 May 1997.3
_______________
I. REPLY TO THE GENERAL QUESTION ON PRIORITY RIGHTS4
Does your country recognize a right of priority on the basis of an earlier patent
application filed in any other WTO Member by a national of a WTO Member?
Pursuant to 35 U.S.C. 119, an application for patent for an invention in the United States filed
by any person who has previously filed an application for a patent for the same invention in a foreigncountry which affords similar privileges in the case of applications filed in the United States or to
citizens of the United States shall have the same effect as the same application would have if filed in
this country on the date on which the application for patent for the same invention was first filed in
such foreign country.  Historically, the United Stat es has recognized either membership in the Paris
Union or a bilateral understanding as being a sufficient basis to demonstrate that similar privileges are
being extended to US applications or to citizens of the United States.  The United States also
recognizes that membership in the Agreement Es tablishing the World Trade Agreement will yield
equivalent treatment in all WTO Members for United States nationals and in respect of applications
filed in the United States.  Accordingly, the United States can confirm that it will recognize priority
                                                     
1As regards laws and regulations relevant to the areas under review and notified by the United States
under Article 63.2 of the Agreement, reference is made to documents IP/N/1/USA/1, IP/N/1/USA/P/1-4,IP/N/1/USA/L/1-2, IP/N/1/USA/U/1.
2The United States has informed the Secretariat that the responses to the follow-up questions from
Japan to its initial questions 9, 10 and 11 will be provided in due course.
3The minutes of the meeting have been circulated in document IP/C/M/13.
4At the meeting of the TRIPS Council of 27 February 1997, Members agreed to respond to this
question in the context of the present review (document IP/C/M/12, paragraph 18).IP/Q3/USA/1
Page 2
claims made in a United States application for patent by nationals of any WTO Member on the basis
of an application earlier filed in a WTO Member.
II. REPLIES TO QUESTIONS POSED BY NEW ZEALAND
1. Please explain the scope of the prot est procedure provided for in 37 CFR 1.291, in
particular whether it can result in an otherwise valid application being refused grant?
The protest procedure established by 37 CFR 1.291 is a means for an interested member of
the public to bring to the attention of the US Pa tent and Trademark Office (USPTO) information that
may make the grant of a patent improper.  37 CFR 1.291(a)(1996). The protest procedure is not a
formal opposition; once a protester has provided information pursuant to §1.291, he will receive no
further information other than a written notice that the information has been received and whether it
conforms to the requirements of §1.291.  A protester, thus, does not participate in the evaluation of the
information provided or to appeal a finding by the USPTO that the information offered does not
preclude the issuance of a patent.
To be considered on the merits, a protest must include: (1) a listing of patents, publications, or
other information that the protester believes is relevant to the patentability of the invention; (2) a
statement explaining the relevance of each item relied upon; (3) a copy of each listed items or relevant
portions thereof; and (4) an English language translation of pertinent parts of non-English language
documents relied upon.  37 CFR 1.291(b)(1996).  All protests submitted in compliance with 37 CFR1.291(b) will be forwarded to the examiner in charge  of the pending application for consideration of
all issues raised by the protester.  Manual of Patent Examining Procedure (MPEP) 1901.06(1996).
Any written action by the examiner treating the merits of a proper protest must specifically consider
and make evident by detailed reasoning for the examiner’s position as to the points raised by the
protester.  MPEP 1901.06(1996).
Because the protest procedure has the sole purpose of bringing information to the attention of
a USPTO examiner information that may bear on the patentability of an invention, it is neutral in
terms of its relationship to the patent examination and granting process.  A properly filed protest may
contain information, such as prior art documents a nd evidence of prior public use, for example, that
may be a basis for finding a claimed invention unpatentable.  The protest procedure itself cannotcause invalidation of an allowable patent applicatio n, as it can only bring information to the attention
of an examiner.  If the information is evaluated by the examiner and found not to be a bar to
patentability, the protest will have no effect on the issuance of a patent.
2. Under United States law, what exceptions ex ist in respect to patentees’ exclusive rights
(Article 30 of the TRIPS Agreement refers)?
In the United States, very few exceptions to the exclusive rights of a patent are recognized,
either through the patent statute or through common law.
In Title 35, exceptions that fall within the meaning of Article 30 are found in:
- section 271(e), concerning acts in relation to certain types of patented products that
are conducted solely for the purpose of developing data for subsequent use after the
expiration of the patent to obtain regulatory approval for such products; and
- section 287(c), concerning certain medical acts practiced by a medical practitioner.IP/Q3/USA/1
Page 3
In addition, courts in the United States have recognized a limited defence to a charge of patent
infringement based on use of the patented tec hnology for non-commercial experimental purposes.
This defence, informally referred to as the experimental use defence, has been raised infrequently, and
when considered has been construed very narrowly.  There are few cases elaborating the nature of the
defence, primarily because patent rights are not frequently enforced against members of the public
that use the patented technology for purely experimental purposes.  In these cases, the courts have notrecognized the defence where the accused infringer has engaged in use of the patented invention for
purposes of commercially exploiting the invention, rather than for increasing their understanding of
the invention.  In cases where the defence has been raised successfully, the experimental use in
question was to ascertain how the invention functioned or for purely philosophical or academic
reasons.  This defence is not codified in the United States patent statutes, other than to the extent
represented in section 271(e).
3. Please confirm whether in an application for a process patent, claims drafted in the
form of "the use of X to do Y" (for example, the use of aspirin to treat headaches) are allowable
consistent with Articles 27 and 29 of the TRIPS Agreement?
Claims drafted in the form of "the use of X to do Y" are typically rejected under section 101
of title 35 of the United States Code, as non-st atutory subject matter.  Section 101 provides that
"whoever invents or discovers any new and useful process, machine, manufacture, or composition ofmatter, or any new and useful improvement thereof, may obtain a patent therefor ..."  A process is
defined as a series of acts performed upon subject matter that result in some transformation of that
subject matter.  Claims merely reciting the use of a product, absent a series of steps defining the
transformation process, are improper under section 101.
The exclusion of certain forms of process claims described above does not mean that process
inventions cannot be patented in the United States.  Instead, any process that consists of a series of
discrete steps and that satisfies the criteria of being novel, nonobvious and useful can be patented.
Thus, a claim drawn to a method of treating a person with condition Y utilizing compound X would
be allowable in the United States, assuming the claimed process is novel and nonobvious.
United States patent law, therefore, while not permitting mere "use of" language in claims, doespermit patenting of any new and useful process to be based on the method of use of a product.
[Follow-up questions from New-Zealand]
Would the United States please clarify if "typically rejected" (see the first sentence of
the response to question No. 3, means an applicat ion of this type is always rejected or if some
applications are accepted in some circumstances in the terms described in paragraph 2 of theresponse?
In its response, the United States indicated that claims in the form "the use of X to do Y" are
typically rejected under section 101 of the United States law.  The first follow-up question from
New Zealand seeks to clarify whether this answer means that claims of this form are patentable in
certain circumstances.  The answer is provided in the last sentence of the first paragraph of the answer
to original question No. 3, namely, that claims merely reciting the use of a product, absent a series of
steps defining the transformation process, are improper under section 101.  The use of the term"typically" in the original answer indicates that a rejection on the ground of section 101 is applied by
examiners when a claim in this form is presented by an applicant, and that additional rejections may
be imposed under section 112, first or second paragraphs, depending on the particular circumstances
of the application.
Paragraph 2 of the response to question No. 3 indicates that process claims are
acceptable if they satisfy the criteria of being novel, non-obvious and useful and the apparentIP/Q3/USA/1
Page 4
additional criterion of being a "series of discre te steps".  How is this additional criterion
reconciled with Article 27 of the TRIPS Agre ement which has no such requirement for a
process claim to be accepted?
The follow-up question seeks to obtain a clarification of the definition of a "process"  as being
a "series of discrete steps" and whether US law in respect of patent eligibility of processes complies
with Article 27.
The reference to a process as being a series of discrete steps was intended to convey an
informal definition of the term "process".  A process under US law must consist of at least one step or
action that is taken and has the effect of causing some physical transformation.  This definition, while
expansive, must be recognized as being necessa ry to distinguish a "process" semantically from
"products" such as machines, manufactures or compositions.  The definition in no way limits
eligibility of processes that may be patented in the United States, and thus, does not raise any issue in
relation to compliance with Article 27 of the TRIPS Agreement.
III. REPLIES TO QUESTIONS POSED BY THE EUROPEAN COMMUNITIES AND
THEIR MEMBER STATES
1. 35 U.S.C. 102(a) states that a person is entitled to a patent unless (a) "the invention was
known or used by others in this country  ... before the invention thereof by the applicant for
patent."  Knowledge or use outside the United States is not sufficient for these purposes.  Pleaseexplain how this provision complies with Ar ticle 27.1 of the TRIPS Agreement which provides,
inter alia , that inventions must be "new [and] involve an inventive step" before patents shall
issue and that "patent rights shall be enjoyab le without discrimination as to the place of
invention."  Furthermore, please explain how this provision complies with US national
treatment obligations under Article 3 of the TRIPS Agreement and GATT Article III, given thatit affords rights with respect to US inventions that it does not afford to others and that these
rights overwhelmingly rebound to the benefit of US nationals.
Section 102(a) of the United States patent statute defines as part of the prior art applicable to
any application for a United States patent certain types of information that are not typically captured
in printed form.  Specifically, the effect of section 102(a) is that an invention claimed in anapplication for a United States patent will not be treated as being novel if the invention has been
disclosed or known to others in the United States.
The first element of question No. 1 asks how this definition of novelty complies with
Article 27.1 of the TRIPS Agreement insofar that Article 27.1 specifies that patents shall be available
for inventions that are new and involve an inventive step.  A footnote to this part of the TRIPSAgreement notes that the terms "inventive step and nonobvious" are to be treated as being equivalent.
There is no definition of the term "new" in the TRIPS Agreement or in the Paris Convention.  In
addition, Article 1.1 of the TRIPS Agreement states that "Members shall be free to determine the
appropriate method of implementing the provisions of this Agreement within their own legal system
and practice".  In view of these facts, there is no prescription as to how WTO Members define what
inventions are to be considered "new" within their domestic systems.  If this part of the question is
asking the United States to justify how the US definition of novelty as provided in section 102(a) isconsidered consistent with obligations of the TRIPS Agreement, the answer is it is perfectly consistent
with the provisions of the TRIPS Agreement that govern how a Member may define the scope of the
prior art that can defeat the novelty of an invention.IP/Q3/USA/1
Page 5
The second element of this question asks how section 102(a) complies with the obligations  of
Article 27.1 not to discriminate in the granting or enjoyment of rights with regard to the place of
invention.  Section 102(a) does not distinguish between applications claiming inventions made in the
United States versus those made outside the United States; any application for patent that fails to
possess novelty through operation of section 102(a) is treated as unpatentable subject matter.  Because
the application of section 102(a) is made in an identical  fashion to applications for inventions
developed in the United States and those that are made outside the United States, this provision is
perfectly consistent with the non-discrimination obligations of Article 27.1 of the TRIPS Agreement.
Furthermore, since no patents are granted on those applications to which section 102(a) of the
United States patent statute is successfully applied, there is no issue regarding enjoyment of patent
rights to be addressed.
The third element of question No. 1 asks how section 102(a) complies with US obligations
under the national treatment provisions in Article 3 of the TRIPS Agreement.  The national treatmentobligations of Article 3 of the TRIPS Agreement serve to ensure that foreign nationals will receive
"treatment no less favourable … with regard to the protection of intellectual property" than is afforded
to US nationals.  Because section 102(a) applies with equal force to patent applications filed by
nationals of the United States as it does to patent applications filed by nationals of any other WTO
Member, it fully complies with the national treatment obligations of Article 3 of the TRIPSAgreement.
The fourth element of question No. 1 asks how  section 102(a) complies with US obligations
under Article III of the GATT (1994). The relevant part of Article III of the GATT - paragraph 4 -
requires that products of the territory of a contracting party imported into the territory  of another
contracting party be accorded treatment no less favorable than that accorded to like products of
national origin in respect of all laws, regulations and requirements affecting their internal sale,
offering for sale, purchase, transportation, distribution or use.  These obligations have no relevance to
the issue of the effect on patentability of public knowledge or public use of a product for which patent
protection is being sought.  Public knowledge or us e of a product, regardless of whether that is made
or imported in the United States, is the operative factor in the application of section 102(a).  Thus, aproduct that is imported and becomes known to the public through use of the imported product will
have precisely the same capacity to defeat the novelty of an invention claimed in a patent application
as a product that is made within the United States .  Section 102(a), therefore, conforms fully to US
obligations under Article III.4 of the GATT.
A suggestion is made in the question that the operation of section 102(a) produces an effect
that favors nationals of the United States.  There is no basis for this suggestion.  As noted above, if
section 102(a) is successfully applied to an application, the application will never mature into a patent.
No rights are prejudiced because no rights are granted in those cases where section 102(a) is an issue.
2. 35 U.S.C. § 102(e) states that a person is entitled to a patent unless "the invention was
described in a patent granted on an application for patent by another filed in the United States
before the invention thereof."  The section furthe r provides that an international application
does not become prior art until its US filing date.  Please explain how this provision complieswith Article 27.1 of the TRIPS Agreement which provides, inter alia , that inventions must be
"new [and] involve an inventive step" before pate nts shall issue and that "patent rights shall be
enjoyable without discrimination as to the pla ce of invention."  Please explain how US law
complies with  Article 27 of the TRIPS Agreeme nt, given that the standards for obtaining a
"Section 102(e)" date for applications that orig inate primarily from US nationals (via 35 U.S.C.
§ 111) differ from those that originate under the Pa tent Cooperation Treaty  (i.e., those affecting
primarily international applicants).  Furthermore, please explain how this provision complies
with US national treatment obligations under Article 3 of the TRIPS Agreement and GATT
Article III, given that it affords rights with resp ect to US inventions that it does not afford to
others and that these rights overwhelmingly rebound to the benefit of US nationals.IP/Q3/USA/1
Page 6
A brief review of the Patent Cooperation Treaty (PCT) may be useful in providing a greater
understanding of the basic aspects of international pa tent procedure.  Under the normal practice of the
PCT - whose membership is not required by the TRIPS Agreement - an applicant will first file a
national application in his country of origin or to the office of his choice.  For many European
inventors, the choice is made to file an applicati on at the European Patent Office (EPO) or in their
national patent office.  Within a year of this original filing, the applicant can elect to file an"international application" under the PCT.  If this is  done, the applicant is able to defer the decision to
pursue patent protection in those countries which were designated in the PCT "international
application" for certain fixed amounts of time.
Ultimately, at the expiration of the relevant PCT deadline, the applicant must file an
application in each national system in which the applicant wishes to obtain patent protection.  Using
the example provided above, if a French applicant wished to obtain a United States patent on the basis
of the PCT "international application," that applican t would file a "national stage" application with the
United States Patent and Trademark Office (USPTO) and proceed through the "national stage" of the
PCT process.  Once a PCT "international application" enters the PCT "national stage", the application
is subject to the domestic examination process of th at country.  This is the basis of the PCT system,
and has been accepted as such by all PCT Members (e.g. including the 15 member states of the
European Community, but not the European Commi ssion or the European Patent Organization which
are not eligible to become party to the PCT).
It is to be noted that proceeding through the PCT system is only one path available to an
entity wishing to obtain a United States patent; the entity can always elect to file directly with the
USPTO at any point after the invention has been made. In this regard, a foreign applicant can even
take advantage of the US provisional application procedure, in which formalities are virtuallyeliminated and the cost can be as low as US$75.00.
Section 102(e) provides that if an individual elects to proceed through the PCT system (i.e., to
file abroad first, then to file a PCT application, and finally, to enter the US national stage on the basis
of the PCT "international application"), the prior art effect of the contents of a patent issued on the
"national stage" application will be measured as of the date of that the applicant has fulfilled theprovisions of 371(c)(1), (2) and (4).  These elements of section 371(c) require the payment of the fee
for entering the national stage in the United States under the PCT, the provision of a copy of the
international application, and the provision of an oath or declaration.  On the date that these
requirements are fulfilled, the application will enjoy a prior art effect under section 102(e).
Obviously, an entity wishing to obtain an earlier prior art effective date for its patent can either filedirectly with the USPTO, rather than proceeding through the PCT system, or can even elect to fulfil
the three procedural requirements of the PCT option at a date earlier than the last date mandated under
the PCT system.
Given that membership in the Patent Cooperation Treaty is not mandated by the TRIPS
Agreement, it is unclear why the European Commun ities and their Member States are interested in
evaluating this optional filing procedure in relation to the obligations of the United States under the
TRIPS Agreement.  However, regardless of the fact that the PCT route for obtaining a United Statespatent is an optional procedure, the operation of section 102(e) can in no way be considered
prejudicial in its effect on the basis of the place of the invention.  As was the case with the operation
of section 102(a), an application concerning an invention made inside or outside the United States
will be subject in an identical  fashion to the effects of section 102(e).  If it is found that the
application lacks novelty under section 102(e) because the invention claimed in the application waspreviously disclosed in an earlier United States patent, the application will be rejected and no patent
will issue.  The place where the invention was made, that is claimed in the patent application, has
absolutely no significance in the application of se ction 102(e).  And, as noted above in our answer toIP/Q3/USA/1
Page 7
question No. 1, if no patent rights are granted because of a failure of novelty, there cannot be any
discrimination in the enjoyment of patent rights.
Answers given in respect to those aspects of question No. 1 pertaining to national treatment
apply, mutatis mutandis , to the questions posed in this question.
3. 35 U.S.C. § 102(g) states that a person is entitled to a patent unless "before the
applicant’s invention thereof the invention was made in this country by another who had notabandoned, suppressed, or concealed it."  Please explain how this provision complies with
Article 27.1 of the TRIPS Agreement which provides, inter alia , that inventions must be "new
[and] involve an inventive step" before patents shall issue and that "patent rights shall be
enjoyable without discrimination as to the place of invention."  Furthermore, please explain
how this provision complies with US national treatment obligations under Article 3 of the
TRIPS Agreement and GATT Article III, given that it affords rights with respect to US
inventions that it does not afford to others and that these rights overwhelmingly rebound to thebenefit of US nationals".
Section 102(g) addresses a third basis upon which an application for patent can be denied due
to a lack of novelty; namely, where an invention claimed by an applicant was made in the United
States by a party other than the applicant who did not abandon, suppress or conceal it prior to the date
that the invention was made by the applicant.  As was the case for sections 102(a) and 102(e), thepatent defeating effect of section 102(g) operates in an identical fashion on an application regardless
of the location where the invention claimed in the application was made.  Thus, an invention made in
Bonn, Germany that is the basis of a United States patent application will be subject to section 102(g)
in the identical fashion as an invention made in Hous ton, Texas.  If either application fails to satisfy
the test of section 102(g), it will be rejected;  the location of where the invention claimed in theapplication was made is not considered in application of section 102(g).  As was noted with regard to
sections 102(a) and (e), if it is found that an application lacks novelty under section 102(g), no patent
rights will be forthcoming.  If no patent rights are granted because of a failure of novelty, there cannot
be any discrimination in the enjoyment of patent rights.  In view of these considerations, it is clear
that section 102(g) complies perfectly with both the non-discrimination provisions of Article 27.1.
Answers given in respect to those aspects of question No. 1 pertaining to national treatment
apply, mutatis mutandis , to the questions posed in this question.
4. Please explain how the provisions of the Atomic Energy Act (42 U.S.C. § 2183)
concerning use of a patent "affected with the public interest" comply with the TRIPS
Agreement, notably Article 31.
Question No. 4, as framed, fails to reflect the actual nature of the authority vested with the
Nuclear Regulatory Commission (the Commission) under 42 U.S.C. § 2183 and the conditions under
which this authority may be exercised.  Under se ction 2183, the Commission may declare a patent to
be "affected with the public interest" only if (1) the invention or discovery claimed by the patent is of
primary importance in the production or utilization of special nuclear material
5 or atomic energy6; and
                                                     
5According to the US delegation, "speci al nuclear material" is defined as:
(1) plutonium, uranium enriched in the isotope 233 or in the isotope 235, and any other
material, except source material, which the Commissioner, under its statutoryauthority, determines to include in the definition;  or
(2) any material artificially enriched by an y of the foregoing, but not source material.
6The US delegation has informed that "atomic energy" is  defined as all forms of energy released in the
course of nuclear fission or nuclear transformation.IP/Q3/USA/1
Page 8
(2) the licensing of such invention or discovery under section 2183 is of primary importance to
effectuate the policies and purposes of the Atomic Energy Act.  Prior to making a determination that a
patent meeting those criteria is "affected with the public interest," the Commission must give the
patentee an opportunity for a hearing.
The question also fails to note that the section establishes:
(1) the qualifications any third party must have to apply to the Commission for a licence
to use the invention7 ;
(2) the fact that the third party must specif y in its application the steps it has taken to
obtain a licence from the patent owner and the applicant’s estimate of the effects on
the activities for which a licence is requested both if the licence is not obtained, and if
the licence is obtained;
(3) the fact that the Commission must hold a hearing after giving the patentee notice and
all information in the application; and
(4) the fact that, should the Commission grant a licence for the purpose requested in the
application, or should the Commission use the invention or discovery, the patent
owner must be paid a reasonable royalty (the amount determined by the Commission
if the parties cannot agree), taking specified factors into consideration, including the
importance of the invention or discovery and the cost of its development oracquisition.
The Commission’s decisions in these matters are subject to independent judicial appeal under
the US Administrative Procedure Act.  In view of th ese provisions, the United States believes that the
provision in question complies fully with the obligations of Article 31 of the TRIPS Agreement.
In addition, the United States notes that Article 73(b)(i) of  the TRIPS Agreement specifies
that nothing in the TRIPS Agreement shall prevent "a Member from taking any action which it
considers necessary for the protection of its essential security interests ... relating to fissionable
materials or the materials from which they are derived".  The referenced provision of the Atomic
Energy Act represents steps that the United States of America consider necessary to protect its
essential security interests with regard to the use of fissionable materials and the materials from whichthey are derived.
5. The Clean Air Act (at 42 U.S.C. § 7608) provides that the Attorney General of the
United States may procure a court order requiring a patent owner to license to "any person" a
patented invention deemed "necessary" to enable that person to comply with air pollution
emission laws, including laws regulating emi ssions from automobiles or stationary sources.
Please explain how these provisions comply wi th the TRIPS Agreement (notably Article 31).
As with question No. 4, question No. 5 fails to re flect accurately the authorization of the cited
section of law and the conditions under which the authority can be exercised.
                                                     
7According to the US delegation, the applicant must have applied for or hold a licence, permit, lease, or
activities controlled by the Commission under the Atomic Energy Act, as amended.IP/Q3/USA/1
Page 9
Section 7608 of title 42 of the United States Code authorizes the Administrator of the
Environmental Protection Agency to apply to the Attorney General of the United States for a
determination that:
(a) the invention claimed in a US patent that:
(1) is used, or is intended for public commercial use,
(2) is not otherwise reasonably available, and(3) is necessary to enable any person required to comply with requirements for
controls in connection with hazardous air pollutants from stationary sources
8
or in connection with the production of new motor vehicles;  and
(b) there are no reasonable alternative methods to accomplish the purpose;  and
(c) the inability to use the claimed invention would result in a substantial lessening of
competition or a tendency to create a monopoly  in any line of commerce in any
section of the country.
If the Attorney General determines that all these conditions exist, the Attorney General may
certify the same to a Federal district court in the district in which the patent owner resides, does
business, or is found and the Court may, after a hearing in which the patent owner has an opportunity
to appear and be heard, order the patent owner to license the invention on reasonable terms and
conditions.  The decision of the Court is appealable.
The licensing authority specified under section 7608 falls within the scope of Article 31(k) of
the TRIPS Agreement.  Thus, the authority is used only in the context of remedying acts that have
been found through judicial or administrative proceedings to be anti-competitive.  As such, the
provision must comply with sections (a), (c) to (e), (g) to (j) and (l) of Article 31.  The following
points are implicit in the process described above for the issuance of a licence:
- each situation would be evaluated on its own merits;
- no process would be initiated until after the Department of Energy has sought to
satisfy its needs for use of the patented invention through normal commercial
channels (e.g., including by seeking a voluntary licence from the patent owner);
- the requirement for any licence to be issued on reasonable terms and conditions
would ensure that any licence granted w ould be non-exclusive, non-assignable, can
be terminated in situations where the original justification for issuing the licence are
no longer experienced; and would provide adequate remuneration to the patent
owner; and
- any decision or aspect thereof imposed by a court incident to the process specified in
section 7608 could be appealed to a higher court for review and/or modification.
                                                     
8According to the US delegation, stationary sources are buildings, structures, facilities, or installations.IP/Q3/USA/1
Page 10
Finally, it should be noted that the authority of section 7608 has never been exercised by the
United States . In view of these considerations, the United States believes that the provision in
question complies fully with the obligations of Article 31 of the TRIPS Agreement.
6. 28 U.S.C. § 1498 provides that a remedy against the United States Government’s
infringement of a patented invention may be had via a lawsuit brought in the United States
Court of Federal Claims.  US Courts do not permit patent owners "adequate" remuneration,denying, for example, the award of lost profits.  Furthermore, there exists substantial evidence
that such infringements often go undetected, as they occur in the context of classified or
otherwise secret US programs.  Please explain how these circumstances, including the
provisions of 28 U.S.C. § 1498, comply with the TRIPS Agreement (notably Article 31).  In
particular, please explain how these provisions comply with the requirement of Article 31 (h) of
the TRIPS Agreement that right holders shall be  paid "adequate remuneration ... taking into
account the economic value of the authorization".
Article 44.2 of the TRIPS Agreement authorizes Members to limit the remedies available
against non-commercial use of a right by the government to payment of remuneration in accordance
with paragraph (h) of Article 31.  The United States does limit remedies in this manner.
The assertion by the Commission of the European Communities, however, that US courts do
not permit patent owners "adequate" remuneration because they deny, for example, the award of lostprofits, is not accurate.  As illustrated in a recent case, Gargoyles, Inc. and Pro-Tec, Inc. v. United
States , United States Court of Federal Claims, 37 Fed. Cl. 95 (No. 342-88C, January 2, 1997), several
factors are considered in determining whether a patentee is entitled to lost profits.  As summarized by
the court:
In order to recover lost profits generally, an aggrieved patent owner must prove:(1) demand for the patented product,
(2) absence of acceptable noninfringing substitutes,
(3) his manufacturing and marketing capability to exploit demand, and
(4) the amount of the profit the patentee would have made.
See, Panduit Corp. v. Stahlin Bros. Fibre Works , 575 F.2d 1152, 1156 (6th Cir. 1978)
(Markey, C.J., sitting by designation).
The court further pointed out that if a plaintiff fails to meet the burden of proof for
establishing a claim for lost profits , the court will award a reasonable royalty.  If there are no existing
licences that can be used as a basis for determining what a reasonable royalty would have been, the
court considers the following fifteen factors (as set forth in the case of Georgia-Pacific Corporation v.
United States , 318 F. Supp.1116, at 1120 (S.D.N.Y. 1970), modified and affirmed , 446 F.2d 295(2d
Cir.), cert. denied , 404 US 870, 30 L. Ed. 2d 114, 92 S. Ct. 105 (1971):
(1) The royalties received by the patentee for licensing of the patent in suit, proving or
tending to prove an established royalty.
(2) The rates paid by the licensee for the use of other patents comparable to the patent in
suit.IP/Q3/USA/1
Page 11
(3) The nature and scope of the licence, as exclusive or non-exclusive; or as restricted or
non-restricted in terms of territory or with respect to whom the manufactured product
may be sold.
(4) The licensor's established policy and marketing program to maintain his patent
monopoly by not licensing others to use the invention or by granting licences under
special conditions designed to preserve that monopoly.
(5) The commercial relationship between the licensor and the licensee, such as, whether
they are competitors in the same territory in the same line of business; or whether
they are inventor and promotor.
(6) The effect of selling the patented specialty in promoting sales of other products of the
licensee; the existing value of the inventi on to the licensor as a generator of sales of
his non-patented items; and the extent of such derivative or convoyed sales.
(7) The duration of the patent and the term of the licence.(8) The established profitability of the product made under the patent; its commercial
success; and its current popularity.
(9) The utility and advantages of the patent property over the old modes or devices, if
any, that had been used for working out similar results.
(10) The nature of the patented invention; the character of the commercial embodiment of
it as owned and produced by the licensor; and the benefits to those who have used the
invention.
(11) The extent to which the infringer has made use of the invention; and any evidence
probative of the value of that use.
(12) The portion of the profit or of the selling price that may be customary in the particular
business or comparable businesses to allow for the use of the invention or analogous
inventions.
(13) The portion of the realizable profit that should be credited to the invention as
distinguished from non-patented elements, the manufacturing process, business risks,
or significant features or improvements added by the infringer.
(14) The opinion testimony of qualified experts.
(15) The amount that a licensor (such as the patentee) and a licensee (such as the infringer)
would have agreed upon (at the time the infringement began) if both had been
reasonably and voluntarily trying to reach an agreement; that is, the amount which a
prudent licensee - who desired, as a business proposition, to obtain a licence tomanufacture and sell a particular article embodying the patented invention - would
have been willing to pay as a royalty and yet be able to make a reasonable profit and
which amount would have been acceptable by a prudent patentee who was willing to
grant a licence.
These factors, used by the Court of Federal Claims on a case-by-case basis, assure that right
holders are paid adequate remuneration, taking into account the economic value of the authorization
and the circumstances of each case.IP/Q3/USA/1
Page 12
In this question, the European Commission further asserts that there exists substantial
evidence that government uses often go undetected, as they occur in the context of classified or
otherwise secret US programmes.  Despite this as sertion, the Commission has not provided any of the
evidence of the activities it refers to in its question.  As a result, it is impossible for the United States
to evaluate the assertion and determine whether a specific response is appropriate.  It should be noted,
however, that Article 73 of the TRIPS Agreement explicitly recognizes that WTO Members may takecertain actions in relation to use of protected subject matter, including patented inventions, that the
Member deems necessary to protect its national security interests.
[Follow-up questions from the EC]
Are the criteria for establishing "lost profits" under 28 USC § 1498 and the standards of
evidence identical to those applied in an ordinary patent infringement suit in District or Circuit
court?  If differences exist, how are they justified?
The criteria for demonstrating "lost profits"
9  used by the United States Court of Federal
Claims in Gargoyles, Inc. and Pro-Tec, inc,, v. United States , cited in answer to the EC's
question No. 6, are the same as those used in cases involving private parties.  The criteria are
contained in a decision of an appellate court (the 6th Circuit) in an infringement action between
private parties.  The criteria from the Panduit  case have also been referenced by the Court of Appeals
for the Federal Circuit, in recent appeals from decisi ons in infringement suits between private parties,
in discussing the "but for" test for demonstrating "lost profits".
Does 28 USC, § 1498 apply to activities outside the national security sector?  If so, what
are these sectors?  Are, for example, public bu ildings, roads, airports or harbours covered?
Does it apply to sub-federal entities?
As is permitted by Articles 31(h) and 44.2 of the TRIPS Agreement, section 1498 of title 28,
United States Code, limits the remedy available to owners of patents, copyrights, or plant variety
protection certificates to an action in the United States Court of Federal Claims for "reasonable and
entire compensation" in the event of non-commercial use of those rights by or for the United States.
"Sectors" are not established in connection with the application of the provision.  The provision
applies only to non-commercial use by or for the United States Government.
Please explain whether under USC § 1498 and Federal Acquisition Regulations
paragraphs 27.1 and 27.2 the Government of the United States is able to issue blanket
authorizations to contractors to use patented  inventions without the consent of the patent
holders in performing Government contracts, or whether authorization is only issued in respect
of specified patents.  If it is the former, please explain how the requirement of TRIPSArticle 31(a) that each authorization shall be considered on its individual merits is met.
Similarly, if the Government indemnifies a co ntractor against patent infringement for the
purposes of performing a Government contract th en is the Government obliged to specify the
                                                     
9The US delegation has informed that, in order to recover lost profits generally, an aggrieved patent
owner must prove:
(1) demand for the patented product;
(2) absence of acceptable non-infringing substitutes;(3) his manufacturing and marketing capability to exploit demand;  and(4) the amount of the profit the patentee would have made.
Panduit Corp. v. Stahlin Bros. Fibre Works,  575 F.2d 1152, 1156 (6th Cir.  1978) (Markey, C.j., sitting
by designation).IP/Q3/USA/1
Page 13
patent to which the indemnity will apply.  If not, then how is the requirement of Article 31(a) of
the TRIPS Agreement that each authorization shall be considered on its individual merits
met?10
Please refer to the responses to the follow-up questions related to question No. 6 above.  In
addition, please note that § 27.209 of the Federal Acquisition Regulations refers contracting officers
to consult legal counsel for instructions when developing contracts involving unlicensed non-commercial use by or on behalf of the US Govern ment of patented technology owned by a national of
a WTO country.  Legal counsel would be responsi ble for ensuring compliance with the requirements
of Article 31 of the TRIPS Agreement.
7. 28 U.S.C. § 1498 provides that private parties who infringe third-party patents in the
course of performing work under contract wi th the United States Government are immune
from patent infringement liability and may not be enjoined.  A patent holder’s sole remedy is
via a lawsuit against the US Government, as set forth in the prior question.  Please explain howthese provisions comply with the TR IPS Agreement (notably Article 31).
Section 1498 permits the United States Government to immunize third parties from liability
for infringement of a patent where that third party performs the actions that would otherwise
constitute infringement on behalf of the United States Government.  The relevant section of
28 U.S.C.§ 1498 provides:
For the purposes of this section, the use or manufacture of an invention described in
and covered by a patent of the United States by a contractor, a subcontractor, or any
person, firm, or corporation for the Government and with the authorization or consent
of the Government , shall be construed as use or manufacture for the United States.
In other words, the only situation in which a th ird party would be able to escape full liability
for patent infringement through operation of section 1498 is where that party is performing the
infringing acts on behalf of the United States Government.  As a result, the third party referred to in
the question above is construed as being the representative of the United States Government for
purposes of application of section 1498.  The answer provided to the preceding question applies to
this question in an identical fashion.
8. Recent amendments to 35 U.S.C. 287, via the inclusion of new subsection (c), provide
exemptions from infringement liability, and hence in effect a compulsory and royalty-free
licence, to physicians, other licensed medical practitioners and related health care entities
including hospitals, universities, medical schools, nursing homes and clinics for the practice of
patented medical activities.  Please explain how these provisions comply with the TRIPSAgreement (notably Article 31).
The term "medical activity" as used in section 287(c) is defined as "the performance of a
medical or surgical procedure on a body".
11  Expressly excepted from the definition of medical
activity is the use of a patented machine, manufacture, or composition of matter in violation of the
patent; the practice of a patented use of a composition of matter in violation of a patent; or the practice
of a process in violation of a biotechnology patent.  The exception in 287(c)(1) does not apply to
activities in connection with commercial enterprises of operations.  The effect of the provision,
                                                     
10The EC delegation has indicated that this follow-up question also applies to question No. 7.
11According to the US delegation, section 287(c)(2)(E) defines the term "body" to mean "a human
body, organ, cadaver, or nonhuman animal used in medical research related directly to the treatment of
humans."IP/Q3/USA/1
Page 14
therefore, is very limited, and is designed to ensure that doctors performing life saving or health
enhancing medical or surgical procedures are not inhibited by fear of lawsuits for patent infringement.
Article 30 of the TRIPS Agreement authorizes Members to provide limited exceptions to the
exclusive rights conferred by a patent so long as those exceptions do not unreasonably conflict with
the normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the
patent owner, taking account of the legitimate interests of third parties.  The United States of Americabelieves that the provisions of section 287(c) fall within the limited exception authorized by Article 30
of the TRIPS Agreement.
9. 35 U.S.C. § 184 requires applicants for a US patent to apply for a licence to file an
application in a foreign jurisdiction within 6 months of filing in the US, under penalty of loss of
US patent rights.  Please explain how this requirement complies with the TRIPS Agreement?
The provisions referred to in the question (35 U.S.C.§ 184) concern procedures invoked for
national security purposes of the United States of America.  The implementation of this statutoryauthority is found in chapter 5 of title 37 of the Code of Federal Regulations.  Pursuant to those
regulations, available in the United States notification of laws, the requirement to obtain a licence
from the Commissioner for Patents and Trademarks prior to filing abroad, if that filing is within six
months of the US filing, applies only to inventions made in the United States .  See 37 CFR 5.11.  The
purpose for the provisions is to prevent the unauthorized disclosure of information concerning aninvention that would violate the export laws and related measures designed to protect the national
security of the United States of America. The sanction referred to in the question applies if the
applicant fails to obtain a foreign filing licence prior to filing in a foreign country.
Article 73 of the TRIPS Agreement provides th at nothing in the TRIPS Agreement shall be
construed to require disclosure of information which a Member considers contrary to its essentialsecurity interests, or to take any action that the Member considers necessary for the protection of its
essential security interests in respect to defined matters.  The provisions governing foreign filing are
measures within the meaning of Article 73 of the TRIPS Agreement, and as such are fully consistent
with the obligations of the TRIPS Agreement.
10. Please explain how the provisions in the Manual of Patent Examining Procedure
governing acceleration of examination comply wi th the obligation in Article 27.1 of the TRIPS
Agreement to avoid discrimination on th e basis of the place of the invention.
The Manual of Patent Examining Procedure (MPEP) serves as a basis for the administrative
practices and procedures of the United States Pa tent and Trademark Office.  The MPEP does not have
the force or effect of law, nor do the provisions of the MPEP have the status of regulations.
The section of the MPEP that is referred to contains numerous justifications that permit the
acceleration of examination of an application within the USPTO.  One of the many grounds that can
be invoked to accelerate examination is that the ap plicant will be manufacturing the invention in the
United States, and as such, is in need of advancement of examination.  Other grounds that can serve as
a basis for acceleration of examination include the age of the inventor, whether the invention concerns
environmentally important technology or whether the invention is in the field of biotechnology.  This
section also provides an accelerated examination procedure that can be invoked by paying a fee andadhering to certain procedural considerations, regardless of the nature of the invention or conditions
related to the patent applicant.
The question raised by the European Community and its Member States is whether the
indicated basis for requesting acceleration of examination of an application complies with theIP/Q3/USA/1
Page 15
obligation of the TRIPS Agreement not to discriminate with respect to the place of the invention.  The
plain answer to the question is yes - the provision is in full compliance because the United States does
not discriminate in the grant of patents based on the place where the invention was made.  The intent
of the section is to permit accelerated examination of an application in order to assist applicants who
have located a prospective manufacturer in the United States that has sufficient capital and facilities to
manufacture the invention but will not agree to do so unless a patent has been granted.  The provisionsallow an applicant to petition to have the application made special, but only if the manufacturer is
prepared to manufacture the product in question in quantity as soon as the patent is granted.  The latter
condition is needed to prevent abuse by those who simply want a patent to issue earlier rather than
later.
Furthermore, noting carefully the text of the cited provision, it is apparent that the criteria
cited for requesting acceleration of examination of an application do not include where the invention
was made.  An applicant can use this provision to obtain acceleration of examination of an application
concerning an invention made in a foreign country with equal effect as an applicant who has made an
invention in the United States.  As such, the acceleration request procedures complies fully with
Article 27.1 of the TRIPS Agreement.
[Follow-up question from the EC]
Please explain how the provisions in the Manual of Patent Examining Procedure
governing acceleration of examination comply with Article 27 (1) to the effect that patents shall
be available without discrimination as to whether products are imported or locally produced.
The United States makes patents available without discrimination as to whether products are
imported or domestically produced.  The single circumstance, of the ten discussed in the US Manual
of Patent Examining Procedures (MPEP) for petitioning for accellerated examination, to which theEC referred in question No. 10, is that aimed at as sisting applicants, whether US or foreign nationals,
who have located a prospective manufacturer in the United States that has sufficient capital and
facilities to begin manufacture of the invention but will not agree to do so unless a US patent has been
granted.  The provision is aimed at enabling production of products that are not yet available in the
United States.  The implication of the EC question that Article 27.1 requires that no differentiation bemade between prospective production  of products, domestic or foreign, in connection with petitions
for acceleration is unwarranted.
11. 17 U.S.C. § 906(a)(1) provides that it is not an infringement for "a person to reproduce
the mask work solely for the purpose of teaching, analyzing, or evaluating the concepts or
techniques embodied in the mask work."  It do es not contain an exception for reproduction for
private purposes.  Please explain how this provision is consistent with the Treaty on Intellectual
Property in Respect of Integrated Circu its (hereinafter "WIPO Treaty") Article 6,
paragraph 2(a) as incorporated by Article 35 of the TRIPS Agreement.
Article 1.1 of the TRIPS Agreement specifies that a WTO Member may "implement in their
law more extensive protection than is required by this Agreement, provided that such protection does
not contravene the provisions of this Agreement" and "shall be free to determine the appropriate
method of implementing the provisions of this Agreement within their own legal system andpractice."  Taking both of these points into consideration, the United States has concluded that it is not
necessary to implement in United States law a sp ecific statutory exemption from infringement to
cover reproductions of a mask work for private purposes.
As a practical matter, no right holder is likely to bring a legal action against a party for
reproducing a mask work for private purposes, such as, for hanging a reproduction of a mask work onthe wall of a home or office as a work of art.  It is likely that, were a case to be filed, it would beIP/Q3/USA/1
Page 16
dismissed by the court as frivolous, since reproducing the mask work in such circumstances would
have no adverse consequences on the right holder.
As a result, the United States of America has implemented Article 6(2)(a) of the Washington
Treaty in respect of Integrated Circuits, as incorporated into the TRIPS Agreement by reference
through Article 35, in a manner that is appropriate to the US legal system and fully consistent with the
TRIPS Agreement.
12. 17 U.S.C. § 906(a)(2) provides that it shall not be an infringement to incorporate the
results of an analysis or evaluation of a pr otected mask work into "an original mask work
which is made to be distributed".  Please expl ain how that provision complies with Article 35 of
the TRIPS Agreement and WIPO Treaty Article 6( 2)(b), which provide that a third party who
creates an original layout design based upon the evaluation and analysis of a protected design,
may incorporate that design into an integrated  circuit without regard to whether the circuit is
made to be distributed.
See the response to the preceding question.
13. Please explain how the United States ensures protection of undisclosed information as
required by Article 39 of the TRIPS Agreement, given that trade secrets are a unique state law
domain and that each US state is free to develop - and many indeed have developed - a range of
different rules in this area.
The laws of the various states of the United States of America protecting trade secrets provide
the protection required by the TRIPS Agreement for the protection of undisclosed information.  Forty
states now have adopted the Uniform Trade Secret Act with only minor variations.  The remaining
states base the protection of undisclosed information on the Restatement of Torts upon which the
Uniform Trade Secret Act was based.  In addition to protection under states trade secret laws,protection is provided for undisclosed information in many cases through contract law, which is
uniform throughout the United States, and under recently enacted Federal criminal legislation.
Article 1.1 of the TRIPS Agreement specifies clearly that a Member "shall be free to
determine the appropriate method of implementing the provisions of this Agreement within their own
legal system and practice."  In the United States, the Federal Government has not sought to divest theStates of the authority to provide protection for undisclosed information through State rather than
Federal law.  Since the protection required by the TRIPS Agreement is available in the United States,
the United States fully complies with the obligations of Article 39.
14. Please explain how the United States ensures protection of undisclosed information as
required by Article 39 of the TRIPS Agreement, given that US states generally use a narrowerdefinition of "secret" than set forth in Article 39.2 (first indent), which defines the term as
information that is not "generally known amon g or readily accessible to persons within the
circles that normally deal with the kind of information in question".
The standard used by United States courts in determining what is or is not a "trade secret" is
whether the information is generally known to, or  readily ascertainable by proper means by, those
who can obtain economic value from its disclosure or  use.  In the view of the United States, this
standard is broader than that required by Article 39.2 of the TRIPS Agreement.
15. Please explain how the United States ensures protection of undisclosed information as
required by Article 39 of the TRIPS Agreement, given that a number of US jurisdictions do not
abide by the culpability sta ndard set forth in Article 39.2 of the TRIPS Agreement andIP/Q3/USA/1
Page 17
footnote 10 that requires such information may not be taken "in a manner contrary to honest
commercial principles".
The standard used to determine culpability for misappropriation of undisclosed information in
the United States is whether the information has been appropriated through "improper means."
"Improper means" includes, inter alia , theft, bribery, misrepresentation, breach or inducement of a
breach of a duty to maintain secrecy, or espionage through electronic or other means. As such, theUnited States standard is broader than th at referred to in the TRIPS Agreement.
16. Please explain how the United States ensures protection of undisclosed information as
required by Article 39.3 of the TRIPS Agreem ent, given that materials provided to US
authorities as a condition of approving the marketing of pharmaceutical or agricultural
chemical products which utilize new chemical entities are subject to release under the US
Freedom of Information Act.
Trade secrets and commercial or financial inform ation that is privileged or confidential,
(i.e. information covered by the definition of undisclosed information in Article 39 of the TRIPS
Agreement) is explicitly excepted from the requirements of disclosure under Section 552(b)(4) of
title 5, United States Code (the US Freedom of Information Act).  Thus, as phrased, the question is
based on an incorrect reading of US law governing the Freedom of Information Act.
IV. REPLIES TO QUESTIONS POSED BY JAPAN
1. In your country, are the following subject matters protectable by patent: (1) plants and
animals, and (2) plant and animal varieties?
(1) Yes.
(2) Yes.
2. In your country, is the act of offering for sale included in the exclusive rights of patent?
Yes.
3. In your country, what kinds of acts are rec ognized as exceptions to the exclusive rights
conferred by a patent right?
In the United States, very few exceptions to the exclusive rights of a patent are recognized,
either through the patent statute or through common law.
In Title 35, exceptions that fall within the meaning of Article 30 are found in:
- section 271(e), concerning acts in relation to certain types of patented products that
are conducted solely for the purpose of developing data for subsequent use after the
expiration of the patent to obtain regulatory approval for such products;  and
- section 287(c), concerning certain medical acts practiced by a medical practitioner.In addition, courts in the United States have recognized a limited defence to a charge of patent
infringement based on use of the patented tec hnology for non-commercial experimental purposes.
This defence, informally referred to as the experimental use defence, has been raised infrequently, and
when considered has been construed very narrowly.  There are few cases elaborating the nature of theIP/Q3/USA/1
Page 18
defence, primarily because patent rights are not frequently enforced against members of the public
that use the patented technology for purely experimental purposes.  In these cases, the courts have not
recognized the defence where the accused infringer has engaged in use of the patented invention for
purposes of commercially exploiting the invention, rather than for increasing their understanding of
the invention.  In cases where the defence has been raised successfully, the experimental use in
question was to ascertain how the invention functioned or for purely philosophical or academicreasons.  This defence is not codified in the United States patent statutes, other than to the extent
represented in section 271(e).
4. In your country, in which case is use wi thout the authorization of the right holder
permitted, including use by the government or by third parties authorized by government?
In the United States, very few grounds exist to permit use of a patented invention without
authorization of the right holder.  These include the following:
- 42 U.S.C.§ 2183, which concerns the use of a patented invention for the use or
production of nuclear material or atomic energy;
- 42 U.S.C. § 7608, which concerns use of a patented invention concerning inventions
that are necessary to comply with the emission laws under the Clean Air Act;  and
- 28 U.S.C. § 1498, which concerns a limitation on remedies that can be obtained from
the United States Government concerning use of a patented invention by it or a partyauthorized by it, for certain purposes.
5. In your country, how is the obligation under Articles 34.1 and 34.2 of the TRIPS
Agreement regarding the shift of the burden of proof in civil proceedings for patent
infringement related to a process patent implemented?
Section 295 of title 35 of the United States Code expressly provides for such a shift in the
burden of proof in infringement actions based upon process patents.
6. Is an applicant for a patent, or a patentee, allowed to establish a date of invention under
35 U.S.C. 104 by reference to knowledge or use thereof, or other activity with respect thereto, in
a WTO Member country availing itself of a transitional period under Article 65.2 of the TRIPS
Agreement?
Yes.
7. According to 35 U.S.C. 104(a)(3), to the ex tent that any information in a WTO Member
country concerning knowledge, use, or any other activity relevant to proving or disproving a
date of invention has not been made available for use in a Patent and Trademark Office
proceeding, a court, or any other competent author ity to the same extent as such information
could be made available in the United States, th e Commissioner, court, or such other authority
shall draw appropriate inferences, or take other ac tion permitted by statute, rule or regulations,
in favor of the party that requested the information in the proceedings.  This provision might
lead to situations where a foreign applicant or patentee is substantially obliged to follow the US
discovery procedures.  Please explain whether under such situations, a foreign applicant or
patentee might be treated unfavorably compared to US citizens, given that ways of recording
inventions are different and that right to refusal of  testimony, etc., which is seen as legitimate in
the foreign country, is difficult to exercise.  Please explain the relations of Article 27.1 of the
TRIPS Agreement which prohibits discriminati on against place of invention to the above
answer.IP/Q3/USA/1
Page 19
Section 104 of title 35, United States Code, ensures that there will be no discrimination based
upon where an invention was made in judicial or administrative proceedings involving proof of the
date of invention.  The clause referred to in the question concerns a possible sanction that can be
applied in situations where meaningful access to evidence is not provided by a party concerning
activities by that party related to the development of invention that occurred outside the United States.
The provision does not mandate that foreign jurisdictions implement US discovery procedures.Rather, it simply ensures that in judicial or quasi-judicial proceedings in the United States, all parties
in the proceeding will be subject to the same or equivalent standards for production and evaluation of
evidence.  Furthermore, the provision is fully consistent with the TRIPS Agreement, as it concerns a
judicial and administrative procedure within the meaning of Article 2 of the Paris Convention.
8. Can a foreign applicant enjoy a priority right based on a prior application filed in a
WTO Member country which does not satisfy the best mode requirement as is prescribed in
35 U.S.C. 112?  If not, please explain the legal basis and consistency with the Article 4 of theParis Convention applied by Article 2.1 of the TRIPS Agreement.
Yes.
9. According to 35 U.S.C. 102(e) or 35 U.S.C. 103, an application for an invention shall be
rejected if, at the time of invention, it is identi cal to, or obvious to a person skilled in the art
from, an invention by another person describe d in a patent granted on an application made
before the former invention.  In such case, if another person’s application claims a priority
right, does the defeating effect go back to the prio rity date?  If this is not the case (Hilmer I),
please explain the consistency with Article 4B of the Paris Convention applied in Article 2.1 of
the TRIPS Agreement establishing that the filing of a third party between the priority date and
the actual date does not give rise to any right to the said third party.  Furthermore, if this is not
the case, patented inventions which are obvious from one another may co-exist and exert an
influence on one another’s exclusive rights in a restrictive way.  Please explain whether this
situation unreasonably prejudices the exclusive right conferred under Article 28 of the TRIPS
Agreement.
Section 102(e) cannot serve to preclude the grant of a patent on an application for which an
applicant has established through a valid claim for priority to a foreign filed application an effective
filing date that is prior to the filing date of an issued United States patent.  On this basis alone, section
102(e) is consistent with Article 4B of the Paris Convention, as any party who has made an effective
priority claim will not lose rights due to the filing dur ing the priority year by another of an application
in the United States that results in a patent.
The second issue raised in the question is the prior art date of a United States patent in which
a claim has been made for priority to a foreign-filed application.  The effective filing date for
purposes of section 102(e) of such an applicati on is the actual filing date of the United States
application, not the priority date claimed in such an application.  The definition of the effective date as
a prior art reference under the so-called "Hilmer" rule is not inconsistent with the obligations of
Article 4B of the Paris Convention, as it will not affect the ability of an applicant to obtain a patent
where the applicant has made a priority claim that establishes an effective filing date prior to the
effective prior art date of the patent.
The final issue raised by this question is whether the exclusive rights guaranteed to patent
owners through Article 28 of the TRIPS Agreement are prejudiced because of the effect of the Hilmer
rule.  The basis for this question appears to be the assumption that an applicant who has obtained a
patent in which a valid priority claim has been made will not be able to preclude the issuance of asecond patent on the same invention, or an obvious variant thereof, through operation of
section 102(e)/103 to a party who has filed an application after the first patentee’s priority date butIP/Q3/USA/1
Page 20
before his US filing date.  As a result, it is assumed that patents will be granted that are obvious in
view of each other.
This assumption is incorrect, as section 102(e)/103 is not the only legal grounds governing the
two applications in the situation described above. Se ction 102(g) also will serve to ensure that only
one patent will issue on one invention.  Operation of section 102(g) in a situation where section
102(e), standing alone, would not preclude the issu ance of two patents is illustrated in the figure
below.
Invention
Date (A)Priority
Date102(e)
Date
Applicant A     | ---  |                |                                                  ------ Patent
Applicant B       | - - - - --- |-------------------------------- x-----------------------------------No Patent
Invention US Filing
  Date(B)   Date
The changes implemented by the Uruguay Round Agreements Act of 1994 permit nationals
from any WTO Member to prove a date of invention relying on evidence concerning the invention
from outside the United States.  In view of thes e points, the answer to the question of whether
United States patent law due to the situation described above "unreasonably prejudices the exclusive
right conferred under TRIPS Article 28" is clearly no.
[Follow-up question from Japan]
The US answer appears to apply only to a case where the claims of the two applications
are found interfering and the first inventor is granted a patent right through the interfering
proceeding.  This does not apply to the case where application A with priority claim describes
two inventions X and Y and claims only X, whereas application B filed between the priority dateand actual date of the application A claims invention Y.  The interference proceeding may not
be declared and a patent right might be granted to both X and Y according to Hilmer rule.
Please explain the consistency of such a practice  with Article 4B of the Paris Convention, which
stipulates that any acts accompli shed in the interval cannot give rise to any third-party right or
any right of personal possession.  Even though the applicant of application A does not claim
invention Y, he should have the right to exclude  any third-party from obtaining a patent right
with regard to invention Y because he has disclosed the invention Y.  Further please explain theconsistency with Article 28 of the TRIPS Agreeme nt in the case where the exploitation of X is
unreasonably prejudiced due to the existence of Y which has economical relation with X
(example:  X and Y are complementary components for one and the same device).
12
[ ... ]13
10. According to 35 U.S.C. 102(g) or 35 U.S.C. 103, an application for an invention shall be
rejected if, at the time of invention, it is identi cal to, or obvious to a person skilled in the art
from, an invention by another person which was made before the former invention and had not
been abandoned.  In such case, if another person ’s application claims a priority right, does the
defeating effect go back to the priority date?  If not (Hilmer II), please explain the consistency
                                                     
12The delegation of Japan has indicated that this follow-up question also applies to its original
question No. 10.
13See footnote 2 above.IP/Q3/USA/1
Page 21
with Article 4B of the Paris Convention applie d in Article 2.1 of the TRIPS Agreement setting
out that the filing of a third party between the priority date and the actual date does not give
rise to any right to the said third party.  Furthermore, if this is not the case, it may happen that
patented inventions which are obvious from one another may co-exist and exert an influence on
one another’s exclusive rights in a restrictive way.  Please explain whether this situation
unreasonably prejudices the exclusive right conferred under TRIPS Article 28.
The issue addressed by section 102(g) is the date of invention.  The evidence that can be
relied upon to prove a date of invention is not lim ited to evidence of an earlier filing in another
country, but can be any type evidence that will persuasive in establishing the date of invention by the
applicant.  Taking into account the changes made to 35 U.S.C. 104 through the Uruguay Round
Agreements Act, if an applicant is able to demonstrat e a date of invention that is prior to the effective
filing date established through a claim to priority under 35 U.S.C. 119, that date of invention will be
used in the context of application of section 102(g), rather than the priority date.  The issue raised inthe second part of the question, thus, does not arise under US law as amended to comply with US
obligations under the TRIPS Agreement.
The answer provided in relation to question No. 9 regarding prejudice of exclusive rights
under Article 28 is equally applicable to this question.
[Follow-up question from Japan]
According to the US answer, the date of  invention in another WTO Member country
can be used in the context of application of section 102(g).  Does this mean that such an
invention is qualified for prior art even if it is neither claimed for a patent in a US patent
application nor subjected in an interference proceeding?  If so, please explain how this
understanding conforms to the text of 102(g) which limits the prior art effect of invention to theone "in this country" (i.e. the United States of America).
[ ... ]
14
11. Whereas 35 U.S.C. 154(c)(3) allows third parties to continue the exploitation of an
invention which began, or for which significant investment was made, before the date 6 months
following the date of the enactment of the Uruguay Round Agreements Acts upon the paymentof an equitable remuneration to the patentee, Article 70.4 of the TRIPS Agreement allows a
WTO Member to limit the remedies available for such acts commenced only before the date of
acceptance of the WTO Agreement by the Me mber.  Please explain whether these two
provisions are the same or not.  If not, please explain the consistency between the two
provisions.
Article 70.4 of the TRIPS Agreement states:
"In respect of any acts in respect of specific objects embodying protected subject
matter which become infringing under the terms of legislation in conformity
with this Agreement, and which were commenced, or in respect of which a
significant investment was made, before the date of acceptance of the WTO
Agreement by that Member, any Member may provide for a limitation of the
remedies available to the right holder as to the continued performance of suchacts after the date of application of this Agreement for that Member. In such
                                                     
14See footnote 2 above.IP/Q3/USA/1
Page 22
cases the Member shall, however, at least provide for the payment of equitable
remuneration."
The WTO Agreement became applicable to the United States, as it did for all developed
countries, on January 1, 1996.  The date on which the United States "accepted" the WTO Agreement
was the December 30, 1994.  Under the terms of Article 70.4, acts that were commenced or for which
a significant investment was made before the date of acceptance of the WTO Agreement by theUnited States can serve as a basis for enjoying limited liability in respect of infringement of a patent
whose term was extended through operation of Article 70.2 of the TRIPS Agreement.  Section
154(a)(3) recognizes acts that occurred six months after the date of passage of the legislation - which
is five months and nine days after the WTO agreement was accepted by the United States.  To our
knowledge, this grant of a minimal amount of additional time has not had a commercial effect.
[Follow-up question from  Japan]
With respect to Article 70.4 of the TRIPS Agreement, the US Government recognizes
the time period which is longer than that as pr ovided for in Article 70.4 just because acts in such
an extended period have not had a commercial ef fect.  Please explain whether Article 70.4 which
specifies the exception to a pate nt right should be applied superior to the general provision of
Article 30.  If so, please explain whether such an extension is consistent with Article 70.4.
[ ... ]
15
12. According to 35 U.S.C. 271(e)(1), the manufactur e, use, or sale, within the United States,
of a patented invention solely for uses reasonably related to the development and submission of
information under a Federal law which regulate the manufacture, use, or sale of drugs or
veterinary biological products is not an act of infringement.  What cases are envisaged, in
particular, for the act of sale?  Furthermore, do such exceptions for sale fall under theexceptions permitted as not unreasonably prejudicial for the right holder in Article 30 of the
TRIPS Agreement?
Because the costs of clinical trials to develop information necessary to obtain marketing
approval in the United States is considerable , parties sometimes need to recoup some of the
investment by selling the product to those taking part in the trials.  The leading case on point is Eli
Lilly and Co.  v.  Medtronics  (496 U.S. 661; 15 USPQ.  2d 1121 (1990)).  The Court in that case
emphasized that because the activities of the defendant, including the sale of an implantable cardiac
device, were for the purpose of developing and s ubmitting information necessary to obtain marketing
approval from a federal agency, those activities did not constitute infringement.  Under the terms of
the 271(e)(1), any "sale" referred to would be of a de minimis  economic significance to the patent
owner.  As such, the exception falls within the exceptions defined under Article 30 of the TRIPS
Agreement.
13. Please explain the consistency between TRIPS Article 28.1(b) and the latter part of
35 U.S.C. 271(g) which provides that "In an action for infringement of a process patent, no
remedy may be granted for infringement on acco unt of the non-commercial use or retail sale of
a product unless there is no adequate remedy under this title for infringement on account of the
importation or other use, offer to sell, or sale of that product".
Article 28.1(b) defines the acts that must be recognized as part of the exclusive rights granted
by a process patent under the law of a WTO Member in respect of products that are made by the
patented process.  Article 30 of the TRIPS Agreement specifies that Members may make limited
                                                     
15Please see footnote 2 above.IP/Q3/USA/1
Page 23
exceptions to any of the exclusive rights as defined by the TRIPS Agreement.  Article 30, thus,
permits a WTO Member to impose limited exceptions to the exclusive rights defined in Article
28.1(a) or (b), provided the exceptions "do not unreasonably conflict with a normal exploitation of the
patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account
of the legitimate interests of third parties".
Section 271(g) provides the exclusive rights required by Article 28.1(b) for holders of
United States patents.  The sentence of section 271(g) referred to in the question specifies that in cases
of non-commercial or retail sale of a product produced through the unauthorized practice of a process,
the patent owner will not be able to recover from the entities involved in that non-commercial or retail
activity if there is an adequate remedy available to the patent owner through an action against other
parties involved in manufacture, importation or other aspects of making the infringing product
available to the United States market.  In other words, if the patent owner is able to enforce rights
against the party that manufactured or imported the products, or the wholesaler who supplied theproduct to retail outlets, the patent owner will not be able to enforce the 271(g) rights against parties
that were involved in the retail sale of the product, or in the non-commercial (e.g., personal) use of the
product.  If no such remedy is available, these provisions of section 271(g) do not apply.
Because the terms of 271(g) do not exclude  possible actions by the patent owner to enforce
the exclusive rights specified in Article 28.1(b) in respect of the types of acts specified therein, andbecause this section exempts acts that would be otherwise infringing only in situations where an
adequate remedy does exist for the patent owner, section 271(g) falls clearly within the meaning of
Article 30 of the TRIPS Agreement.
14. According to 35 U.S.C. 272, the exception of infringement of any use of patent in any
vessel, aircraft or vehicle of the United Stat es, entering the United States temporarily or
accidentally, applies to countries which afford simi lar privileges to vessels of the United States.
Please explain the consistency with the Most-Fav oured-Nation clause of Article 4 of the TRIPS
Agreement.
In evaluating its domestic legislation for changes needed to conform to this section of the
TRIPS Agreement, the United States concluded that no changes were in fact necessary.  Thisconclusion is based on the following observations.  First, as a Member of the Paris Convention, this
clause applies automatically to all WTO Members who are also members of the Paris Convention.
Second, it has been the experience of the United States that most if not all WTO Members afford in
their domestic regime equivalent treatment for US vesse ls.  Third, this clause, in the experience of the
United States, has not been invoked in recent memory.  The result is that the United States is notaware of any WTO Member who would, in fact, be prejudiced in respect of enjoying the treatment
specified by the clause.  This recognition led the United States to conclude that a change to this
provision of United States was not necessary as a practical matter.  If it becomes clear that
modifications of the provision are warranted to address specific concerns of other WTO Members, the
United States would work toward implementation of a suitable legislative change through an
appropriate legislative vehicle.
15. Please explain the series of procedures for an involuntary licence provided in "The
Development and Control of Atomic Energy Act" (42 U.S.C. 2183) and "The Air Pollution and
Control Act" (42 U.S.C. 7608).  Furthermore please explain the consistency between each of
these procedures and each paragraph of Article 31 of the TRIPS Agreement, in particular,
Article 31(b)(d)(e)(i).IP/Q3/USA/1
Page 24
Procedures Under 42 U.S.C. 2183
Under section 2183, the Nuclear Regulatory Commission may declare a patent to be "affected
with the public interest" only if (1) the invention or discovery claimed by the patent is of primaryimportance in the production or utilization of special nuclear material
16 or atomic energy17;  and
(2) the licensing of such invention or discovery under section 2183 is of primary importance toeffectuate the policies and purposes of the Atomic Energy Act.  Prior to making a determination that a
patent meeting those criteria is "affected with the public interest," the Commission must give the
patentee an opportunity for a hearing.
Under the procedures of the NRC:
(1) any third party must possess specific qualifications and must apply to the
Commission for a licence to use the invention
18;
(2) the third party must specify in its application the steps it has taken to obtain a licence
from the patent owner and the applicant’s estimate of the effects on the activities forwhich a licence is requested both if the licence is not obtained, and if the licence is
obtained;
(3) the Commission must hold a hearing after giving the patentee notice and all
information in the application; and
(4) should the Commission grant a licence for the purpose requested in the application, or
should the Commission use the invention or discovery, the patent owner must be paida reasonable royalty (the amount determined by the Commission if the parties cannot
agree), taking specified factors into consideration, including the importance of the
invention or discovery and the cost of its development or acquisition.
The Commission’s decisions in these matters are subject to independent judicial appeal under
the US Administrative Procedure Act.  In view of th ese provisions, the United States believes that the
provision in question complies fully with the obligations of Article 31 of the TRIPS Agreement.
In addition, the United States notes that Article 73(b)(i) of  the TRIPS Agreement specifies
that nothing in the TRIPS Agreement shall prevent a Member from taking any action which itconsiders necessary for the protection of its essential security interests ... relating to fissionable
materials or the materials from which they are derived.  The referenced provision of the Atomic
Energy Act represents steps that the United States of America consider necessary to protect its
essential security interests with regard to the use of fissionable materials and the materials from whichthey are derived.
                                                     
16 The US delegation has informed that "s pecial nuclear material" is defined as:
(1) plutonium, uranium enriched in the isotope 233 or in the isotope 235, and any other material,
except source material, which the Commissioner, under its statutory authority, determines toinclude in the definition, or
(2) any material artificially enriched by an y of the foregoing, but not source material.
17 According to the US delegation, "atomic energy" is  defined as all forms of energy released in the
course of nuclear fission or nuclear transformation.
18 According to the delegation of the United States, the applicant must have applied for or hold a
licence, permit, lease, or activities controlled by the Commission under the Atomic Energy Act, as amended.IP/Q3/USA/1
Page 25
Procedures Under 42 U.S.C. 7608
Section 7608 of title 42 of the United States Code authorizes the Administrator of the
Environmental Protection Agency to apply to the Attorney General of the United States for a
determination that:
(a) the invention claimed in a US patent that:
(1) is used, or is intended for public commercial use,
(2) is not otherwise reasonably available, and
(3) is necessary to enable any person required to comply with requirements for
controls in connection with hazardous air pollutants from stationary sources19
or in connection with the production of new motor vehicles;  and
(b) there are no reasonable alternative methods to accomplish the purpose;  and
(c) the inability to use the claimed invention would result in a substantial lessening of
competition or a tendency to create a monopoly  in any line of commerce in any
section of the country.
If the Attorney General determines that all these conditions exist, the Attorney General may
certify the same to a Federal district court in the district in which the patent owner resides, does
business, or is found and the Court may, after a hearing in which the patent owner has an opportunity
to appear and be heard, order the patent owner to license the invention on reasonable terms and
conditions.  The decision of the Court is appealable.
The licensing authority specified under section 7608 falls within the scope of Article 31(k) of
the TRIPS Agreement.  Thus, the authority is used only in the context of remedying acts that have
been found through judicial or administrative proceedings to be anti-competitive.  As such, the
provision must comply with sections (a), (c) to (e), (g) to (j) and (l) of Article 31.  The followingpoints are implicit in the process described above for the issuance of a licence:
- each situation would be evaluated on its own merits;
- no process would be initiated until after the Department of Energy has sought to
satisfy its needs for use of the patented invention through normal commercial
channels (e.g. including by seeking a voluntary licence from the patent owner);
- the requirement for any licence to be issued on reasonable terms and conditions
would ensure that any licence granted w ould be non-exclusive, non-assignable, can
be terminated in situations where the original justification for issuing the licence are
no longer experienced; and would provide adequate remuneration to the patent
owner; and
- any decision or aspect thereof imposed by a court incident to the process specified in
section 7608 could be appealed to a higher court for review and/or modification.
Finally, it should be noted that the authority of section 7608 has never been exercised by the
United States .
                                                     
19 According to the US delegation, stationary sources are buildings, structures, facilities, or
installations.IP/Q3/USA/1
Page 26
In view of these considerations, the United States believes that the provision in question
complies fully with the obligations of Article 31 of the TRIPS Agreement.
16. Please explain how a right holder is informed promptly about government use of his
patent under United States law, and how the United  States law is consistent with Article 31(b) of
the TRIPS Agreement.
It would be rare that an agency would know or have demonstrable grounds to know that a
patent is or will be used in connection with procurement of goods or services or the performance of
government functions.  If, however, an agency were  so aware, it would notify the right holder by
letter.
17. Please explain whether and how 35 U.S.C.  202(a)(i) and 204 are consistent with the
obligations of national treatment as required by Article 3 of the TRIPS Agreement.
The chapter of the US patent law which contains the provisions referred to in the question is
entitled "Patent Rights in Inventions Made with Federal Assistance."  Section 202(a)(i) concernsretention by universities, other non-profit organizations, and small businesses of title to inventions
developed through research or experiments funded, in whole or in part, by the United States
Government.  The clause in the subsection referred to  merely states that a funding agreement with a
contractor which is not located in the United States, does not have a place of business located in the
United States, or is subject to the control of a foreign government, may provide that retention of title
to an invention developed under that agreement is no t authorized.  This permissive section is included
because funding agreements impose obligations on contractors to disclose inventions developed under
the agreement, to file a patent application in the United States before the statutory bars would prevent
patentability, etc. and a funding agency might wish to include such a provision to ensure that the
agency itself would retain title to inventions developed with its funds so that the agency could ensurethat appropriate applications for patent rights were filed.  Because the provision is permissive, it is not
inconsistent with Article 3 of the TRIPS Agreement.
V. REPLIES TO QUESTIONS POSED BY INDIA
1. Does the United States Code, Title 35 - Patents, contain any specific provisions relating
to compulsory licences?
No. Title 35, United States Code, has no provisions concerning compulsory licences of
patents.
If not, can compulsory licences be granted under the US law?
Yes, in theory.  See answers to questions 4 and 5 from the European Community, and
questions 4 and 10 from Japan.  No compulsory licences have been granted under the provisionsspecified in the US answer.
2. What are the conditions under which compulsory licences have been granted in the
USA?  Give an illustrative list of statutory provision and/or judicial pronouncements granting
compulsory licences, particularly after 1990.
The answer to the first part of this question can  be found in the US answers to question Nos. 4
and 5 from the European Communities and to question Nos. 4 and 15 from Japan.IP/Q3/USA/1
Page 27
The US is not able to provide an illustrative list of examples of compulsory licences granted
since 1990 since the two statutory authorities that pe rmit the grant of a compulsory licence have never
been exercised.
__________