RESTRICTED
WORLD TRADE IP/C/W/68
21May1997
ORGANIZATION(97-2116)
Original: English Council forTrade-Related Aspects
ofIntellectual Property Rights
REVIEW OFLEGISLATION INTHE FIELDS OFPATENTS, LAYOUT-DESIGNS
(TOPOGRAPHIES) OFINTEGRATED CIRCUITS, PROTECTION OF
UNDISCLOSED INFORMATION AND CONTROL OF
ANTI-COMPETITIVE PRACTICES IN
CONTRACTUAL LICENCES
Replies from theUnited States toquestions posed bytheEuropean Communities
andtheirMember States, Japan andNewZealand
Thefollowing communication, dated 13May1997, hasbeenreceived fromtheOffice ofthe
United States Trade Representative.
_______________
REPLIES TOQUESTIONS POSED BYTHE EUROPEAN COMMUNITIES AND THEIR
MEMBER STATES
Patents
1. 35U.S.C. 102(a) states thataperson isentitled toapatent unless (a)“theinvention wasknown
orusedbyothers inthiscountry ...before theinvention thereof bytheapplicant forpatent. ”Knowledge
oruseoutside theUnited States isnotsufficient forthese purposes. Please explain howthisprovision
complies withTRIPS Article 27.1which provides, interalia,thatinventions mustbe“new[and] involve
aninventive step”before patents shall issue andthat“patent rights shall beenjoyable without
discrimination astotheplace ofinvention. ”Furthermore, please explain howthisprovision complies
withU.S.national treatment obligations under TRIPS Article 3andGATT Article III,given thatit
affords rights withrespect toU.S.invention thatitdoesnotafford toothers andthatthese rights
overwhelmingly rebound tothebenefit ofU.S.nationals?
Section 102(a) oftheUnited States patent statute defines aspartoftheprior artapplicable to
anyapplication foraUnited States patent certain types ofinformation thatarenottypically captured
inprinted form. Specifically, theeffect ofsection 102(a) isthataninvention claimed inanapplication
foraUnited States patent willnotbetreated asbeing novel iftheinvention hasbeendisclosed orknown
toothers intheUnited States.
Thefirstelement ofquestion oneaskshowthisdefinition ofnovelty complies withArticle
27.1oftheTRIPS insofarthatArticle 27.1specifies thatpatents shallbeavailable forinventions
thatarenewandinvolve aninventive step. Afootnote tothispartoftheTRIPS Agreement notes
thattheterms “inventive stepandnonobvious ”aretobetreated asbeing equivalent. There isno
definition oftheterm“new”intheTRIPS Agreement orintheParis Convention. Inaddition, Article
1.1oftheTRIPS Agreement states that“Members shallbefreetodetermine theappropriate method
ofimplementing theprovisions ofthisAgreement within theirownlegalsystem andpractice ”.InIP/C/W/68
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viewofthese facts, there isnoproscription astohowWTO Members define whatinventions areto
beconsidered “new”within theirdomestic systems. Ifthispartofthequestion isasking theUnited
States tojustify howtheU.S.definition ofnovelty asprovided insection 102(a) isconsidered consistent
withobligations oftheTRIPS Agreement, theanswer isitisperfectly consistent withtheprovisions
oftheTRIPS Agreement thatgovern howaMember maydefine thescope oftheprior artthatcan
defeat thenovelty ofaninvention.
Thesecond element ofthisquestion askshowsection 102(a) complies withtheobligations
ofArticle 27.1tonotdiscriminate inthegranting orenjoyment ofrights withregard totheplace of
invention. Section 102(a) doesnotdistinguish between applications claiming inventions made inthe
United States versus those made outside theUnited States; anyapplication forpatent thatfailstopossess
novelty through operation ofsection 102(a) istreated asunpatentable subject matter. Because the
application ofsection 102(a) ismade inanidentical fashion toapplications forinventions developed
intheUnited States andthose thataremade outside theUnited States, thisprovision isperfectly
consistentwiththenon-discriminationobligationsofArticle27.1oftheTRIPSAgreement.Furthermore,
since nopatents aregranted onthose applications towhich section 102(a) oftheUnited States patent
statute issuccessfully applied, there isnoissueregarding enjoyment ofpatent rights tobeaddressed.
Thethirdelement ofquestion oneaskshowsection 102(a) complies withU.S.obligations under
thenationaltreatmentprovisionsinArticle3oftheTRIPSAgreement.Thenationaltreatmentobligations
ofArticle 3oftheTRIPS Agreement serve toensure thatforeign nationals willreceive “treatment
nolessfavourable …withregard totheprotection ofintellectual property ”thanisafforded toU.S.
nationals. Because section 102(a) applies withequal force topatent applications filedbynationals of
theUnited States asitdoestopatent applications filedbynationals ofanyother WTO Member, it
fullycomplies withthenational treatment obligations ofArticle 3oftheTRIPS Agreement.
Thefourth element ofquestion oneaskshowsection 102(a) complies U.S.obligations under
Article IIIoftheGATT (1994). Therelevant partofArticle IIIoftheGATT --paragraph 4--requires
thatproducts oftheterritory ofacontracting party imported intotheterritory ofanother contracting
party beaccorded treatment nolessfavorable thanthataccorded tolikeproducts ofnational origin
inrespect ofalllaws, regulations andrequirements affecting theirinternal sale,offering forsale,
purchase, transportation, distribution oruse.These obligations havenorelevance totheissue ofthe
effect onpatentability ofpublic knowledge orpublic useofaproduct forwhich patent protection is
being sought. Public knowledge oruseofaproduct, regardless ofwhether thatismade orimported
intheUnited States, istheoperative factor intheapplication ofsection 102(a). Thus, aproduct that
isimported andbecomes known tothepublic through useoftheimported product willhaveprecisely
thesame capacity todefeat thenovelty ofaninvention claimed inapatent application asaproduct
thatismade within theUnited States. Section 102(a), therefore, conforms fullytoU.S.obligations
under Article III.4oftheGATT.
Asuggestion ismade inthequestion thattheoperation ofsection 102(a) produces aneffect
thatfavors nationals oftheUnited States. There isnobasis forthissuggestion. Asnoted above, if
section 102(a) issuccessfully applied toanapplication, theapplication willnever mature intoapatent.
Norights areprejudiced because norights aregranted inthose cases where section 102(a) isanissue.
2. 35U.S.C. §102(e) states thataperson isentitled toapatent unless “theinvention wasdescribed
inapatent granted onanapplication forpatent byanother filedintheUnited States before theinvention
thereof. ”Thesection further provides thataninternational application doesnotbecome prior artuntil
itsU.S.filing date. Please explain howthisprovision complies withTRIPS Article 27.1which provides,
interalia,thatinventions mustbe“new[and] involve aninventive step”before patents shallissueand
that“patent rights shallbeenjoyable without discrimination astotheplace ofinvention. ”Please explain
howU.S.lawcomplies withTRIPS Article 27,given thatthestandards forobtaining a“Section 102(e) ”IP/C/W/68
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dateforapplications thatoriginate primarily fromU.S.nationals (via35U.S.C. §111)differ from
those thatoriginate under thePatent Cooperation Treaty (i.e.,those affecting primarily international
applicants). Furthermore, please explain howthisprovision complies withU.S.national treatment
obligations under TRIPS Article 3andGATT Article III,given thatitaffords rights withrespect to
U.S.invention thatitdoesnotafford toothers andthatthese rights overwhelmingly rebound tothe
benefit ofU.S.nationals?
Abriefreview ofthePatent Cooperation Treaty (PCT) maybeuseful inproviding agreater
understanding ofthebasic aspects ofinternational patent procedure. Under thenormal practice of
thePCT--whose membership isnotrequired bytheTRIPS Agreement --anapplicant willfirstfile
anational application inhiscountry oforigin ortotheoffice ofhischoice. Formany European
inventors, thechoice ismade tofileanapplication attheEuropean Patent Office (EPO) orintheir
national patent office. Within ayearofthisoriginal filing, theapplicant canelecttofilean“international
application ”under thePCT. Ifthisisdone, theapplicant isabletodefer thedecision topursue patent
protection inthose countries which weredesignated inthePCT“international application ”forcertain
fixed amounts oftime.
Ultimately, attheexpiration oftherelevant PCTdeadline, theapplicant mustfileanapplication
ineachnational system inwhich theapplicant wishes toobtain patent protection. Using theexample
provided above, ifaFrench applicant wished toobtain aUnited States patent onthebasisofthePCT
“international application, ”thatapplicant would filea“national stage”application withtheUnited
States Patent andTrademark Office (USPTO) andproceed through the“national stage”ofthePCT
process. Once aPCT“international application ”enters thePCT“national stage, ”theapplication is
subject tothedomestic examination process ofthatcountry. ThisisthebasisofthePCTsystem, and
hasbeenaccepted assuchbyallPCTMembers (e.g.including the15member states oftheEuropean
Community, butnottheEuropean Commission ortheEuropean Patent Organization which arenot
eligible tobecome party tothePCT).
Itistobenoted thatproceeding through thePCTsystem isonlyonepathavailable toanentity
wishing toobtain aUnited States Patent; theentity canalways electtofiledirectly withtheUSPTO
atanypointaftertheinvention hasbeenmade. Inthisregard, aforeign applicant caneventakeadvantage
oftheU.S. provisional application procedure, inwhich formalities arevirtually eliminated andthe
costcanbeaslowasUS$75.00.
Section 102(e) provides thatifanindividual elects toproceed through thePCTsystem (i.e.,
tofileabroad first,thentofileaPCTapplication, andfinally, toenter theU.S.national stage onthe
basis ofthePCT“international application ”),theprior arteffect ofthecontents ofapatent issued
onthe“national stage”application willbemeasured asofthedateofthattheapplicant hasfulfilled
theprovisions of371(c)(1), (2)and(4).These elements ofsection 371(c) require thepayment ofthe
feeforentering thenational stage intheUnited States under thePCT, theprovision ofacopyofthe
international application, andtheprovision ofanoathordeclaration. Onthedatethattheserequirements
arefulfilled, theapplication willenjoy aprior arteffect under section 102(e). Obviously, anentity
wishing toobtain anearlier priorarteffective dateforitspatent caneither filedirectly withtheUSPTO,
rather thanproceeding through thePCT system, orcaneven elect tofulfill thethree procedural
requirements ofthePCToption atadateearlier thanthelastdatemandated under thePCTsystem.
Given thatmembership inthePatent Cooperation Treaty isnotmandated bytheTRIPS
Agreement,itisunclearwhytheEuropeanCommunityanditsMemberStatesareinterestedinevaluating
thisoptional filing procedure inrelation totheobligations oftheUnited States under theTRIPS
Agreement. However, regardless ofthefactthatthePCTroute forobtaining aUnited States patent
isanoptional procedure, theoperation ofsection 102(e) caninnowaybeconsidered prejudicial inIP/C/W/68
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itseffect onthebasisoftheplace oftheinvention. Aswasthecasewiththeoperation ofsection 102(a),
anapplication concerning aninvention made inside oroutside theUnited States willbesubject inan
identical fashion totheeffects ofsection 102(e). Ifitisfound thattheapplication lacks novelty under
section 102(e) because theinvention claimed intheapplication waspreviously disclosed inanearlier
United States patent, theapplication willberejected andnopatent willissue. Theplace where the
invention wasmade, thatisclaimed inthepatent application, hasabsolutely nosignificance inthe
application ofsection 102(e). And, asnoted above inouranswer toquestion one,ifnopatent rights
aregranted because ofafailure ofnovelty, there cannot beanydiscrimination intheenjoyment of
patent rights.
Answers given inrespect tothose aspects ofquestion onepertaining tonational treatment apply,
mutatis mutandis ,tothequestions posed inthisquestion.
3. 35U.S.C. §102(g) states thataperson isentitled toapatent unless “before theapplicant ’s
invention thereof theinvention wasmade inthiscountry byanother whohadnotabandoned, suppressed,
orconcealed it.”Please explain howthisprovision complies withTRIPS Article 27.1which provides,
interalia,thatinventions mustbe“new[and] involve aninventive step”before patents shallissueand
that“patent rights shallbeenjoyable without discrimination astotheplace ofinvention. ”Furthermore,
please explain howthisprovision complies withU.S.national treatment obligations under TRIPS Article
3andGATT Article III,given thatitaffords rights withrespect toU.S.invention thatitdoesnotafford
toothers andthatthese rights overwhelmingly rebound tothebenefit ofU.S.nationals ”?
Section 102(g) addresses athirdbasisupon which anapplication forpatent canbedenied due
toalackofnovelty; namely, where aninvention claimed byanapplicant wasmade intheUnited States
byaparty other thantheapplicant whodidnotabandon, suppress orconceal itprior tothedatethat
theinvention wasmade bytheapplicant. Aswasthecaseforsections 102(a) and102(e), thepatent
defeating effect ofsection 102(g) operates inanidentical fashion onanapplication regardless ofthe
location where theinvention claimed intheapplication wasmade. Thus, aninvention made inBonn,
Germany thatisthebasisofaUnited States patent application willbesubject tosection 102(g) inthe
identical fashion asaninvention made inHouston, Texas. Ifeither application failstosatisfy thetest
ofsection 102(g), itwillberejected; thelocation ofwhere theinvention claimed intheapplication
wasmade isnotconsidered inapplication ofsection 102(g). Aswasnoted withregard tosections
102(a) and(e),ifitisfound thatanapplication lacks novelty under section 102(g), nopatent rights
willbeforthcoming. Ifnopatent rights aregranted because ofafailure ofnovelty, there cannot be
anydiscrimination intheenjoyment ofpatent rights. Inviewofthese considerations, itisclearthat
section 102(g) complies perfectly withboththenon-discrimination provisions ofArticle 27.1.
Answers given inrespect tothose aspects ofquestion onepertaining tonational treatment apply,
mutatis mutandis ,tothequestions posed inthisquestion.
4. Please explain howtheprovisions oftheAtomic Energy Act(42U.S.C. §2183) concerning
useofapatent “affected withthepublic interest ”comply withtheTRIPS Agreement, notably Article
31.
Question 4,asframed, failstoreflect theactual nature oftheauthority vested withtheNuclear
Regulatory Commission (theCommission) under 42U.S.C. §2183 andtheconditions under which
thisauthority maybeexercised. Under section 2183, theCommission maydeclare apatent tobe
“affected withthepublic interest ”onlyif(1)theinvention ordiscovery claimed bythepatent isofIP/C/W/68
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primary importance intheproduction orutilization ofspecial nuclear material1oratomic energy2;and
(2)thelicensing ofsuchinvention ordiscovery under section 2183isofprimary importance toeffectuate
thepolicies andpurposes oftheAtomic Energy Act. Prior tomaking adetermination thatapatent
meeting those criteria is“affected withthepublic interest, ”theCommission must givethepatentee
anopportunity forahearing.
Thequestion alsofailstonotethatthesection establishes:
(1) thequalifications anythirdparty musthavetoapply totheCommission foralicense
tousetheinvention3;
(2) thefactthatthethirdparty mustspecify initsapplication thestepsithastaken toobtain
alicense from thepatent owner andtheapplicant ’sestimate oftheeffects onthe
activities forwhich alicense isrequested bothifthelicense isnotobtained, andif
thelicense isobtained;
(3) thefactthattheCommission mustholdahearing aftergiving thepatentee notice and
allinformation intheapplication; and
(4) thefactthat,should theCommission grant alicense forthepurpose requested inthe
application, orshould theCommission usetheinvention ordiscovery, thepatent owner
mustbepaidareasonable royalty (theamount determined bytheCommission ifthe
parties cannot agree), taking specified factors intoconsideration, including the
importance oftheinvention ordiscovery andthecostofitsdevelopment oracquisition.
TheCommission ’sdecisions inthesematters aresubject toindependent judicial appeal under theU.S.
Administrative Procedure Act.Inviewoftheseprovisions, theUnited States believes thattheprovision
inquestion complies fullywiththeobligations ofArticle 31oftheTRIPS Agreement.
Inaddition, theUnited States notes thatArticle 73(b)(i) oftheTRIPS Agreement specifies
thatnothing intheTRIPS Agreement shallprevent aMember fromtaking anyaction which itconsiders
necessary fortheprotection ofitsessential security interests ...relating tofissionable materials orthe
materials fromwhich theyarederived. Thereferenced provision oftheAtomic Energy Actrepresent
stepsthattheUnited States ofAmerica consider necessary toprotect itsessential security interests with
regard totheuseoffissionable materials andthematerials from which theyarederived.
5. TheClean AirAct(at42U.S.C. §7608) provides thattheAttorney General oftheUnited States
mayprocure acourt order requiring apatent owner tolicense to“anyperson ”apatented invention
deemed “necessary ”toenable thatperson tocomply withairpollution emission laws, including laws
regulatingemissionsfromautomobilesorstationarysources.Pleaseexplainhowtheseprovisionscomply
withTRIPS (notably Article 31).
1“Special nuclear material ”isdefined as
(1)plutonium, uranium enriched intheisotope 233orintheisotope 235,andanyother
material, except source material, which theCommissioner, under itsstatutory authority,
determines toinclude inthedefinition, or
(2)anymaterial artificially enriched byanyoftheforegoing, butnotsource material.
2“Atomic energy ”isdefined asallforms ofenergy released inthecourse ofnuclear fission
ornuclear transformation.
3Theapplicant musthaveapplied fororholdalicense, permit, lease, oractivities controlled
bytheCommission under theAtomic Energy Act,asamended.IP/C/W/68
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Aswithquestion 4,question 5failstoreflect accurately theauthorization ofthecitedsection
oflawandtheconditions under which theauthority canbeexercised.
Section 7608 oftitle42oftheUnited States Code authorizes theAdministrator ofthe
Environmental Protection Agency toapply totheAttorney General oftheUnited States fora
determination that:
(a) theinvention claimed inaU.S.patent that
1. isused, orisintended forpublic commercial use,
2. isnototherwise reasonably available, and
3. isnecessary toenable anyperson required tocomply withrequirements for
controls inconnection withhazardous airpollutants fromstationary sources4
orinconnection withtheproduction ofnewmotor vehicles, and
(b) there arenoreasonable alternative methods toaccomplish thepurpose, and
(c) theinability tousetheclaimed invention would result inasubstantial lessening of
competition oratendency tocreate amonopoly inanylineofcommerce inanysection
ofthecountry.
IftheAttorney General determines thatallthese conditions exist, theAttorney General maycertify
thesame toaFederal district court inthedistrict inwhich thepatent owner resides, doesbusiness,
orisfound andtheCourt may, afterahearing inwhich thepatent owner hasanopportunity toappear
andbeheard, order thepatent owner tolicense theinvention onreasonable terms andconditions.
Thedecision oftheCourt isappealable.
Thelicensing authority specified under section 7608 fallswithin thescope ofArticle 31(k)
oftheTRIPS Agreement. Thus, theauthority isusedonlyinthecontext ofremedying actsthathave
beenfound through judicial oradministrative proceedings tobeanti-competitive. Assuch, theprovision
must comply withsections (a),(c)to(e),(g)to(j)and(l)ofArticle 31.Thefollowing points are
implicit intheprocess described above fortheissuance ofalicense:
- eachsituation would beevaluated onitsownmerits;
- noprocess would beinitiated untilaftertheDepartment ofEnergy hassought tosatisfy
itsneeds foruseofthepatented invention through normal commercial channels (e.g.,
including byseeking avoluntary license from thepatent owner);
- therequirement foranylicense tobeissued onreasonable terms andconditions would
ensure thatanylicense granted would benon-exclusive, non-assignable, canbe
terminated insituations where theoriginal justification forissuing thelicense areno
longer experienced; andwould provide adequate remuneration tothepatent owner;
and
- anydecision oraspect thereof imposed byacourt incident totheprocess specified in
section 7608 could beappealed toahigher court forreview and/or modification.
4Buildings, structures, facilities, orinstallations.IP/C/W/68
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Finally, itshould benoted thattheauthority ofsection 7608 hasnever beenexercised bytheUnited
States .Inviewoftheseconsiderations, theUnited States believes thattheprovision inquestion complies
fullywiththeobligations ofArticle 31oftheTRIPS Agreement.
6. 28U.S.C. §1498provides thataremedy against theUnited States Government ’sinfringement
ofapatented invention maybehadviaalawsuit brought intheUnited States Court ofFederal Claims.
U.S.Courts donotpermit patent owners “adequate ”remuneration, denying, forexample, theaward
oflostprofits.Furthermore,thereexistssubstantialevidencethatsuchinfringementsoftengoundetected,
astheyoccur inthecontext ofclassified orotherwise secret U.S.programs. Please explain howthese
circumstances, including theprovisions of28U.S.C. §1498, comply withTRIPS (notably Article 31).
Inparticular, please explain howthese provisions comply withtherequirement ofTRIPS Article 31
(h)thatrightholders shallbepaid“adequate remuneration ...taking intoaccount theeconomic value
oftheauthorization ”?
Article 44.2oftheTRIPS Agreement authorizes Members tolimittheremedies available against
non-commercial useofaright bythegovernment topayment ofremuneration inaccordance with
subparagraph (h)ofArticle 31.TheUnited States doeslimitremedies inthismanner.
Theassertion bytheCommission oftheEuropean Communities, however, thatU.S.courts
donotpermit patent owners “adequate" remuneration because theydeny, forexample, theaward of
lostprofits, isnotaccurate. Asillustrated inarecent case,Gargoyles, Inc.andPro-Tec, Inc.v.United
States ,United States Court ofFederal Claims, 37Fed.Cl.95(No.342-88C), January 2,1997), several
factors areconsidered indetermining whether apatentee isentitled tolostprofits. Assummarized
bythecourt:
Inorder torecover lostprofits generally, anaggrieved patent owner must prove:
1. demand forthepatented product,
2. absence ofacceptable noninfringing substitutes,
3. hismanufacturing andmarketing capability toexploit demand, and
4. theamount oftheprofit thepatentee would havemade.
See,Panduit Corp. v.Stahlin Bros. Fibre Works ,575F.2d1152, 1156(6thCir.1978) (Markey,
C.J., sitting bydesignation).
Thecourt further pointed outthatifaplaintiff failstomeettheburden ofproof forestablishing
aclaim forlostprofits ,thecourt willaward areasonable royalty. Ifthere arenoexisting
licenses thatcanbeusedasabasisfordetermining whatareasonable royalty would havebeen,
thecourt considers thefollowing fifteen factors (assetforth inthecaseofGeorgia-Pacific
Corporation v.United States ,318F.Supp.1116, at1120 (S.D.N.Y. 1970), modified and
affirmed, 446F.2d295(2d Cir.), cert.denied, 404U.S.870,30L.Ed.2d114,92S.Ct.
105(1971).
1. Theroyalties received bythepatentee forlicensing ofthepatent insuit,proving or
tending toprove anestablished royalty.
2. Theratespaidbythelicensee fortheuseofother patents comparable tothepatent
insuit.IP/C/W/68
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3. Thenature andscope ofthelicense, asexclusive ornon-exclusive; orasrestricted
ornon-restricted interms ofterritory orwithrespect towhom themanufactured product
maybesold.
4. Thelicensor'sestablishedpolicyandmarketingprogramtomaintainhispatentmonopoly
bynotlicensing others tousetheinvention orbygranting licenses under special
conditions designed topreserve thatmonopoly.
5. Thecommercial relationship between thelicensor andlicensee, suchas,whether they
arecompetitors inthesame territory inthesame lineofbusiness; orwhether theyare
inventor andpromotor.
6. Theeffect ofselling thepatented specialty inpromoting salesofother products ofthe
licensee; theexisting value oftheinvention tothelicensor asagenerator ofsalesof
hisnon-patented items; andtheextent ofsuchderivative orconvoyed sales.
7. Theduration ofthepatent andthetermofthelicense.
8. Theestablished profitability oftheproduct made under thepatent; itscommercial
success; anditscurrent popularity.
9. Theutility andadvantages ofthepatent property overtheoldmodes ordevices, if
any,thathadbeenusedforworking outsimilar results.
10. Thenature ofthepatented invention; thecharacter ofthecommercial embodiment of
itasowned andproduced bythelicensor; andthebenefits tothose whohaveused
theinvention.
11. Theextent towhich theinfringer hasmade useoftheinvention; andanyevidence
probative ofthevalue ofthatuse.
12. Theportion oftheprofit oroftheselling pricethatmaybecustomary intheparticular
business orcomparable businesses toallow fortheuseoftheinvention oranalogous
inventions.
13. Theportion oftherealizable profit thatshould becredited totheinvention as
distinguished fromnon-patented elements, themanufacturing process, business risks,
orsignificant features orimprovements added bytheinfringer.
14. Theopinion testimony ofqualified experts.
15. Theamount thatalicensor (such asthepatentee) andalicensee (such astheinfringer)
would haveagreed upon(atthetimetheinfringement began) ifbothhadbeenreasonably
andvoluntarily trying toreach anagreement; thatis,theamount which aprudent
licensee-who desired, asabusiness proposition, toobtain alicense tomanufacture and
sellaparticular article embodying thepatented invention-would havebeenwilling to
payasaroyalty andyetbeabletomake areasonable profit andwhich amount would
havebeenacceptable byaprudent patentee whowaswilling togrant alicense.
These factors, usedbytheCourt ofFederal Claims onacase-by-case basis, assure thatright
holders arepaidadequate remuneration, taking intoaccount theeconomic value ofthe
authorization andthecircumstances ofeachcase.IP/C/W/68
Page9
Inthisquestion, theEuropean Commission further asserts thatthereexists substantial evidence
thatgovernment usesoften goundetected, astheyoccur inthecontext ofclassified orotherwise secret
U.S.programs. Despite thisassertion, theCommission hasnotprovided anyoftheevidence ofthe
activities itrefers toinitsquestion. Asaresult, itisimpossible fortheUnited States toevaluate the
assertion anddetermine whether aspecific response isappropriate. Itshould benoted, however, that
Article 73oftheTRIPS Agreement explicitly recognizes thatWTO Members maytakecertain actions
inrelation touseofprotected subject matter, including patented inventions, thattheMember deems
necessary toprotect itsnational security interests.
7. 28U.S.C. §1498 provides thatprivate parties whoinfringe third-party patents inthecourse
ofperforming work under contract withtheUnited States Government areimmune from patent
infringement liability andmaynotbeenjoined. Apatent holder ’ssoleremedy isviaalawsuit against
theU.S.Government, assetforthintheprior question. Please explain howthese provisions comply
withTRIPS (notably Article 31).
Section 1498 permits theUnited States Government toimmunize thirdparties from liability
forinfringement ofapatent where thatthirdparty performs theactions thatwould otherwise constitute
infringement onbehalf oftheUnited States Government. Therelevant section of28U.S.C.§ 1498
provides:
Forthepurposes ofthissection, theuseormanufacture ofaninvention described in
andcovered byapatent oftheUnited States byacontractor, asubcontractor, orany
person, firm, orcorporation fortheGovernment andwiththeauthorization orconsent
oftheGovernment ,shallbeconstrued asuseormanufacture fortheUnited States.
Inother words, theonlysituation inwhich athirdparty would beabletoescape fullliability forpatent
infringement through operation ofsection 1498 iswhere thatparty isperforming theinfringing acts
onbehalf oftheUnited States Government. Asaresult, thethirdparty referred tointhequestion
aboveisconstruedasbeingtherepresentativeoftheUnitedStatesGovernmentforpurposesofapplication
ofsection 1498. Theanswer provided tothepreceding question applies tothisquestion inanidentical
fashion.
8. Recentamendmentsto35U.S.C.287,viatheinclusionofnewsubsection(c),provideexemptions
frominfringement liability, andhence ineffect acompulsory androyalty-free license, tophysicians,
other licensed medical practitioners andrelated health careentities including hospitals, universities,
medical schools, nursing homes andclinics forthepractice ofpatented medical activities. Please explain
howthese provisions comply withTRIPS (notably Article 31).
Theterm“medicalactivity”asusedinsection287(c)isdefinedas“theperformanceofamedical
orsurgical procedure onabody5”Expressly excepted from thedefinition ofmedical activity isthe
useofapatented machine, manufacture, orcomposition ofmatter inviolation ofthepatent; thepractice
ofapatented useofacomposition ofmatter inviolation ofapatent; orthepractice ofaprocess in
violation ofabiotechnology patent. Theexception in287(c)(1) doesnotapply toactivities inconnection
withcommercial enterprises ofoperations. Theeffect oftheprovision, therefore, isverylimited, and
isdesigned toensure thatdoctors performing lifesaving orhealth enhancing medical orsurgical
procedures arenotinhibited byfearoflawsuits forpatent infringement.
5Section 287(c)(2)(E) defines theterm“body”tomean “ahuman body, organ, cadaver, or
nonhuman animal usedinmedical research related directly tothetreatment ofhumans. ”IP/C/W/68
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Article 30oftheTRIPS Agreement authorizes Members toprovide limited exceptions tothe
exclusive rights conferred byapatent solongasthose exceptions donotunreasonably conflict with
thenormal exploitation ofthepatent anddonotunreasonably prejudice thelegitimate interests ofthe
patent owner, taking account ofthelegitimate interests ofthirdparties. TheUnited States ofAmerica
believes thattheprovisions ofsection 287(c) fallwithin thelimited exception authorized byArticle
30oftheTRIPS Agreement.
9. 35U.S.C. §184requires applicants foraU.S.patent toapply foralicense tofileanapplication
inaforeign jurisdiction within 6months offiling intheU.S., under penalty oflossofU.S.patent rights.
Please explain howthisrequirement complies withTRIPS?
Theprovisions referred tointhequestion (35U.S.C.§ 184)concern procedures invoked for
nationalsecuritypurposesoftheUnitedStatesofAmerica.Theimplementationofthisstatutoryauthority
isfound inchapter 5oftitle37oftheCode ofFederal Regulations. Pursuant tothose regulations,
available intheUnited States notification oflaws, therequirement toobtain alicense from the
Commissioner forPatents andTrademarks prior tofiling abroad, ifthatfiling iswithin 6months of
theU.S.filing, applies onlytoinventions made intheUnited States .See37CFR5.11. Thepurpose
fortheprovisions istoprevent theunauthorized disclosure ofinformation concerning aninvention
thatwould violate theexport lawsandrelated measures designed toprotect thenational security of
theUnited States ofAmerica. Thesanction referred tointhequestion applies iftheapplicant failsto
obtain aforeign filing license prior tofiling inaforeign country.
Article 73oftheTRIPS provides thatnothing intheTRIPS Agreement shallbeconstrued to
require disclosure ofinformation which aMember considers contrary toitsessential security interests,
ortotakeanyaction thattheMember considers necessary fortheprotection ofitsessential security
interests inrespect todefined matters. Theprovisions governing foreign filing aremeasures within
themeaning ofArticle 73oftheTRIPS Agreement, andassucharefullyconsistent withtheobligations
oftheTRIPS Agreement.
10. Please explain howtheprovisions intheManual ofPatent Examining Procedure governing
acceleration ofexamination comply withtheobligation inArticle 27.1oftheTRIPS Agreement toavoid
discrimination onthebasis oftheplace oftheinvention.
TheManual ofPatent Examining Procedure (MPEP) serves asabasis fortheadministrative
practices andprocedures oftheUnited States Patent andTrademark Office. TheMPEP doesnothave
theforce oreffect oflaw,nordotheprovisions oftheMPEP havethestatus ofregulations.
Thesection oftheMPEP thatisreferred tocontains numerous justifications thatpermit the
acceleration ofexamination ofanapplication within theUSPTO. Oneofthemany grounds thatcan
beinvoked toaccelerate examination isthattheapplicant willbemanufacturing theinvention inthe
United States, andassuch, isinneedofadvancement ofexamination. Other grounds thatcanserve
asabasisforacceleration ofexamination include theageoftheinventor, whether theinvention concerns
environmentally important technology orwhether theinvention isinthefieldofbiotechnology. This
section alsoprovides anaccelerated examination procedure thatcanbeinvoked bypaying afeeand
adhering tocertain procedural considerations, regardless ofthenature oftheinvention orconditions
related tothepatent applicant.
Thequestion raised bytheEuropean Community anditsMember States iswhether theindicated
basis forrequesting acceleration ofexamination ofanapplication complies withtheobligation ofthe
TRIPS Agreement nottodiscriminate withrespect totheplace oftheinvention. Theplain answer
tothequestion isyes–theprovision isinfullcompliance because theUnited States doesnotdiscriminate
inthegrant ofpatents based ontheplace where theinvention wasmade. Theintent ofthesectionIP/C/W/68
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istopermit accelerated examination ofanapplication inorder toassist applicants whohavelocated
aprospective manufacturer intheUnited States thathassufficient capital andfacilities tomanufacture
theinvention butwillnotagree todosounless apatent hasbeengranted. Theprovisions allow an
applicant topetition tohavetheapplication made special, butonlyifthemanufacturer isprepared to
manufacture theproduct inquestion inquantity assoonasthepatent isgranted. Thelatter condition
isneeded toprevent abuse bythose whosimply wantapatent toissue earlier rather thanlater.
Furthermore, noting carefully thetextofthecited provision, itisapparent thatthecriteria
citedforrequesting acceleration ofexamination ofanapplication donotinclude where theinvention
wasmade. Anapplicant canusethisprovision toobtain acceleration ofexamination ofanapplication
concerning aninvention made inaforeign country withequal effect asanapplicant whohasmade
aninvention intheUnited States. Assuch, theacceleration request procedures complies fullywith
Article 27.1oftheTRIPS Agreement.
Layout Designs (Topographies) ofIntegrated Circuits
1. 17U.S.C. §906(a)(1) provides thatitisnotaninfringement for“aperson toreproduce the
mask work solely forthepurpose ofteaching, analyzing, orevaluating theconcepts ortechniques
embodied inthemask work. ”Itdoesnotcontain anexception forreproduction forprivate purposes.
Please explain howthisprovision isconsistent withtheTreaty onIntellectual Property inRespect of
Integrated Circuits (hereinafter “WIPO Treaty ”)Article 6,paragraph 2(a)asincorporated byTRIPS
Article 35.
Article 1.1oftheTRIPS Agreement specifies thataWTO Member may“implement intheir
lawmore extensive protection thanisrequired bythisAgreement, provided thatsuchprotection does
notcontravene theprovisions ofthisAgreement ”and“shallbefreetodetermine theappropriate method
ofimplementing theprovisions ofthisAgreement within theirownlegalsystem andpractice. ”Taking
bothofthese points intoconsideration, theUnited States hasconcluded thatitisnotnecessary to
implement inUnited States lawaspecific statutory exemption frominfringement tocover reproductions
ofamask work forprivate purposes.
Asapractical matter, noright holder islikely tobring alegal action against aparty for
reproducing amask work forprivate purposes, suchas,forhanging areproduction ofamask work
onthewallofahome oroffice asawork ofart.Itislikely that,were acasetobefiled, itwould
bedismissed bythecourt asfrivolous, since reproducing themask work insuchcircumstances would
havenoadverse consequences ontherightholder.
Asaresult, theUnited States ofAmerica hasimplemented Article 6(2)(a) oftheWashington
Treaty inrespect ofIntegrated Circuits, asincorporated intotheTRIPS Agreement byreference through
Article 35,inamanner thatisappropriate totheU.S.legalsystem andfullyconsistent withtheTRIPS
Agreement.
2. 17U.S.C. §906(a)(2) provides thatitshallnotbeaninfringement toincorporate theresults
ofananalysis orevaluation ofaprotected mask workinto“anoriginal mask workwhich ismade to
bedistributed. ”Please explain howthatprovision complies withTRIPS Article 35andWIPO Treaty
Article '6(2)(b), which provide thatathirdparty whocreates anoriginal layout design based upon
theevaluation andanalysis ofaprotected design, mayincorporate thatdesign intoanintegrated circuit
without regard towhether thecircuit ismade tobedistributed.
Seetheresponse tothepreceding question.IP/C/W/68
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Protection ofUndisclosed Information
1. Please explain howtheUnited States ensures protection ofundisclosed information asrequired
byTRIPS Article 39,given thattrade secrets areaunique statelawdomain andthateachU.S.state
isfreetodevelop --andmany indeed havedeveloped --arange ofdifferent rules inthisarea.
Thelawsofthevarious states oftheUnited States ofAmerica protecting tradesecrets provide
theprotection required bytheTRIPS Agreement fortheprotection ofundisclosed information. Forty
states nowhaveadopted theUniform Trade Secret Actwithonlyminor variations. Theremaining
statesbasetheprotectionofundisclosedinformationontheRestatementofTortsuponwhichtheUniform
Trade Secret Actwasbased. Inaddition toprotection under states trade secret laws, protection is
provided forundisclosed information inmany cases through contract law,which isuniform throughout
theUnited States, andunder recently enacted Federal criminal legislation.
Article 1.1oftheTRIPS Agreement specifies clearly thataMember “shallbefreetodetermine
theappropriate method ofimplementing theprovisions ofthisAgreement within theirownlegalsystem
andpractice. ”IntheUnited States, theFederal Government hasnotsought todivest theStates of
theauthority toprovide protection forundisclosed information through Staterather thanFederal law.
Since theprotection required bytheTRIPS Agreement isavailable intheUnited States, theUnited
States fullycomplies withtheobligations ofArticle 39.
2. Please explain howtheUnited States ensure protection ofundisclosed information asrequired
byTRIPS Article 39,given thatU.S.states generally useanarrower definition of“secret ”thanset
forthinArticle 39.2(firstindent), which defines thetermasinformation thatisnot“generally known
among orreadily accessible topersons within thecircles thatnormally dealwiththekindofinformation
inquestion. ”
Thestandard usedbyUnited States courts indetermining what isorisnota“trade secret ”
iswhether theinformation isgenerally known to,orreadily ascertainable byproper means by,those
whocanobtain economic value fromitsdisclosure oruse.IntheviewoftheUnited States, thisstandard
isbroader thanthatrequired byArticle 39.2oftheTRIPS Agreement.
3. Please explain howtheUnited States ensure protection ofundisclosed information asrequired
byTRIPS Article 39,given thatanumber ofU.S.jurisdictions donotabide bytheculpability standard
setforth inTRIPS Article 39.2andfootnote 10thatrequires suchinformation maynotbetaken “in
amanner contrary tohonest commercial principles. ”
Thestandard usedtodetermine culpability formisappropriation ofundisclosed information
intheUnited States iswhether theinformation hasbeenappropriated through “improper means. ”
“Improper means ”includes, interalia,theft, bribery, misrepresentation, breach orinducement ofa
breach ofadutytomaintain secrecy, orespionage through electronic orother means. Assuch, the
United States standard isbroader thanthatreferred tointheTRIPS Agreement.
4. Please explain howtheUnited States ensure protection ofundisclosed information asrequired
byTRIPS Article 39.3, given thatmaterials provided toU.S.authorities asacondition ofapproving
themarketing ofpharmaceutical oragricultural chemical products which utilize newchemical entities
aresubject torelease under theU.S.Freedom ofInformation Act.
Trade secrets andcommercial orfinancial information thatisprivileged orconfidential, (i.e.,
information covered bythedefinition ofundisclosed information inArticle 39oftheTRIPS Agreement)
isexplicitly excepted from therequirements ofdisclosure under Section 552(b)(4) oftitle5,UnitedIP/C/W/68
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States Code (theU.S.Freedom ofInformation Act). Thus, asphrased, thequestion isbased onan
incorrect reading ofU.S.lawgoverning theFreedom ofInformation Act.
REPLIES TOQUESTIONS POSED BYJAPAN
Patents
PartA.Common Questions toallMembers
1. Inyourcountry, arethefollowing subject matters protectable bypatent: 1)Plants andanimals,
and2)plant andanimal varieties?
1) Yes
2) Yes
2. Inyourcountry, istheactofoffering forsaleincluded intheexclusive rights ofpatent?
Yes.
3. Inyourcountry, whatkinds ofactsarerecognized asexceptions totheexclusive rights conferred
byapatent right?
IntheUnited States, veryfewexceptions totheexclusive rights ofapatent arerecognized,
either through thepatent statute orthrough common law.
InTitle35,exceptions thatfallwithin themeaning ofArticle 30arefound in:
- section 271(e), concerning actsinrelation tocertain types ofpatented products that
areconducted solely forthepurpose ofdeveloping dataforsubsequent useafterthe
expiration ofthepatent toobtain regulatory approval forsuchproducts; and
- section 287(c), concerning certain medical actspracticed byamedical practitioner.
Inaddition, courts intheUnited States haverecognized alimited defense toacharge ofpatent
infringement based onuseofthepatented technology fornon-commercial experimental purposes. This
defense, informally referred toastheexperimental usedefense, hasbeenraised infrequently, andwhen
considered hasbeenconstrued verynarrowly. There arefewcaseselaborating thenature ofthedefense,
primarily because patent rights arenotfrequently enforced against members ofthepublic thatusethe
patented technology forpurely experimental purposes. Inthese cases, thecourts havenotrecognized
thedefense where theaccused infringer hasengaged inuseofthepatented invention forpurposes of
commercially exploiting theinvention, rather thanforincreasing theirunderstanding oftheinvention.
Incaseswhere thedefense hasbeenraised successfully, theexperimental useinquestion wastoascertain
howtheinvention functioned orforpurely philosophical oracademic reasons. Thisdefense isnot
codified intheUnited States patent statutes, other thantotheextent represented insection 271(e).
4. Inyourcountry, inwhich caseisusewithout theauthorization oftherightholder permitted,
including usebythegovernment orbythird parties authorized bygovernment?
IntheUnited States, veryfewgrounds existtopermit useofapatented invention without
authorization oftherightholder. These include thefollowing:
- 42U.S.C.§ 2183, which concerns theuseofapatented invention fortheuseor
production ofnuclear material oratomic energy;IP/C/W/68
Page14
- 42U.S.C. §7608, which concerns useofapatented invention concerning inventions
thatarenecessary tocomply withtheemission lawsunder theClean AirAct;and
- 28U.S.C. §1498, which concerns alimitation onremedies thatcanbeobtained from
theUnited States Government concerning useofapatented invention byitoraparty
authorized byit,forcertain purposes
5. Inyourcountry, howistheobligation under TRIPS Article 34(1)(2) regarding theshiftofthe
burden ofproof incivilproceedings forpatent infringement related toaprocess patent implemented?
Section 295oftitle35oftheUnited States Code expressly provides forsuchashiftintheburden
ofproof ininfringement actions based upon process patents.
PartB.Questions fortheUnited States
1. Isanapplicant forapatent, orapatentee, allowed toestablish adateofinvention under 35
U.S.C. 104byreference toknowledge orusethereof, orother activity withrespect thereto, inaWTO
Member country availing itself ofatransitional period under TRIPS Article 65(2)?
Yes.
2. According to35U.S.C. 104(a)(3), totheextent thatanyinformation inaWTO Member country
concerning knowledge, use,oranyother activity relevant toproving ordisproving adateofinvention
hasnotbeenmade available foruseinaPatent andTrademark Office proceeding, acourt, orany
other competent authority tothesameextent assuchinformation could bemade available intheUnited
States, theCommissioner, court, orsuchother authority shall draw appropriate inferences, ortake
other action permitted bystatute, ruleorregulations, infavor oftheparty thatrequested theinformation
intheproceedings. Thisprovision might leadtosituations where aforeign applicant orpatentee is
substantially obliged tofollow theU.S.discovery procedures. Please explain whether under such
situations, aforeign applicant orpatentee might betreated unfavorably compared toU.S.citizens,
given thatwaysofrecording inventions aredifferent andthatrighttorefusal oftestimony, etc.,which
isseenaslegitimate intheforeign country, isdifficult toexercise. Please explain therelations ofTRIPS
Article 27.(1) which prohibits discrimination against place ofinvention totheabove answer?
Section 104oftitle35,United States Code, ensures thatthere willbenodiscrimination based
upon where aninvention wasmade injudicial oradministrative proceedings involving proof ofthe
dateofinvention. Theclause referred tointhequestion concerns apossible sanction thatcanbeapplied
insituations where meaningful access toevidence isnotprovided byaparty concerning activities by
thatpartyrelated tothedevelopment ofinvention thatoccurred outside theUnited States. Theprovision
doesnotmandate thatforeign jurisdictions implement U.S.discovery procedures. Rather, itsimply
ensures thatinjudicial orquasi-judicial proceedings intheUnited States, allparties intheproceeding
willbesubject tothesame orequivalent standards forproduction andevaluation ofevidence.
Furthermore, theprovision isfullyconsistent withtheTRIPS Agreement, asitconcerns ajudicial
andadministrative procedure within themeaning ofArticle 2oftheParis Convention.
3. Canaforeign applicant enjoy apriority right based onaprior application filedinaWTO
Member country which doesnotsatisfy thebestmode requirement asisprescribed in35U.S.C. 112?
Ifnot,please explain thelegalbasis andconsistency withtheArticle 4oftheParis Convention applied
byTRIPS Article 2(1).
Yes.IP/C/W/68
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4. Accordingto35U.S.C.102(e)or35U.S.C.103,anapplicationforaninventionshallberejected
if,atthetimeofinvention, itisidentical to,orobvious toaperson skilled intheartfrom, aninvention
byanother person described inapatent granted onanapplication made before theformer invention.
Insuchcase, ifanother person ’sapplication claims apriority right, doesthedefeating effect goback
tothepriority date? Ifthisisnotthecase(Hilmer I),please explain theconsistency withArticle 4B
oftheParis Convention applied inTRIPS Article 2(1)establishing thatthefiling ofathirdparty between
thepriority dateandtheactual datedoesnotgiverisetoanyrighttothesaidthirdparty. Furthermore,
ifthisisnotthecase, patented inventions which areobvious fromoneanother mayco-exist andexert
aninfluence ononeanother ’sexclusive rights inarestrictive way. Please explain whether thissituation
unreasonably prejudices theexclusive right conferred under TRIPS Article 28?
Section 102(e) cannot serve topreclude thegrant ofapatent onanapplication forwhich an
applicant hasestablished through avalid claim forpriority toaforeign filedapplication aneffective
filing datethatispriortothefiling dateofanissued United States patent. Onthisbasisalone, section
102(e) isconsistent withArticle 4BoftheParis Convention, asanyparty whohasmade aneffective
priority claim willnotloserights duetothefiling during thepriority yearbyanother ofanapplication
intheUnited States thatresults inapatent.
Thesecond issueraised inthequestion istheprior artdateofaUnited States patent inwhich
aclaim hasbeenmade forpriority toaforeign-filed application. Theeffective filing dateforpurposes
ofsection 102(e) ofsuchanapplication istheactual filing dateoftheUnited States application, not
thepriority dateclaimed insuchanapplication. Thedefinition oftheeffective dateasaprior art
reference under theso-called “Hilmer ”ruleisnotinconsistent withtheobligations ofArticle 4Bof
theParisConvention, asitwillnotaffect theability ofanapplicant toobtain apatent where theapplicant
hasmade apriority claim thatestablishes aneffective filing dateprior totheeffective prior artdate
ofthepatent.
Thefinalissueraised bythisquestion iswhether theexclusive rights guaranteed topatent owners
through Article 28oftheTRIPS Agreement areprejudiced because oftheeffect oftheHilmer rule.
Thebasis forthisquestion appears tobetheassumption thatanapplicant whohasobtained apatent
inwhich avalid priority claim hasbeenmade willnotbeabletopreclude theissuance ofasecond
patent onthesame invention, oranobvious variant thereof, through operation ofsection 102(e)/103
toaparty whohasfiledanapplication afterthefirstpatentee ’spriority datebutbefore hisU.S.filing
date. Asaresult, itisassumed thatpatents willbegranted thatareobvious inviewofeachother.
Thisassumption isincorrect, assection 102(e)/103 isnottheonlylegalgrounds governing
thetwoapplications inthesituation described above. Section 102(g) alsowillserve toensure thatonly
onepatent willissueononeinvention. Operation ofsection 102(g) inasituation where section 102(e),
standing alone, would notpreclude theissuance oftwopatents isillustrated inthefigure below.
[Seefigure inoriginal]
Thechanges implemented bytheUruguay Round Agreements Actof1994 permit nationals
from anyWTO Member toprove adateofinvention relying onevidence concerning theinvention
fromoutside theUnited States. Inviewofthese points, theanswer tothequestion ofwhether United
States patent lawduetothesituation described above “unreasonably prejudices theexclusive right
conferred under TRIPS Article 28”isclearly no.
5. According to35U.S.C. 102(g) or35U.S.C. 103,anapplication foraninvention shall be
rejected if,atthetimeofinventions, itisidentical to,orobvious toaperson skilled intheartfrom,
aninventionbyanotherpersonwhichwasmadebeforetheformerinventionandhadnotbeenabandoned.
Insuchcase, ifanother person ’sapplication claims apriority right, doesthedefeating effect gobackIP/C/W/68
Page16
tothepriority date? Ifnot(Hilmer II),please explain theconsistency withArticle 4BoftheParis
Convention applied inTRIPS Article 2(1)setting outthatthefiling ofathirdparty between thepriority
dateandtheactual datedoesnotgiverisetoanyrighttothesaidthirdparty. Furthermore, ifthis
isnotthecase, itmayhappen thatpatented inventions which areobvious fromoneanother mayco-exist
andexertaninfluence ononeanother ’sexclusive rights inarestrictive way. Please explain whether
thissituation unreasonably prejudices theexclusive right conferred under TRIPS Article 28?
Theissueaddressed bysection 102(g) isthedateofinvention. Theevidence thatcanberelied
upon toprove adateofinvention isnotlimited toevidence ofanearlier filing inanother country,
butcanbeanytypeevidence thatwillpersuasive inestablishing thedateofinvention bytheapplicant.
Taking intoaccount thechanges made to35U.S.C. 104through theUruguay Round Agreements Act,
ifanapplicant isabletodemonstrate adateofinvention thatisprior totheeffective filing date
established through aclaim topriority under 35U.S.C. 119,thatdateofinvention willbeusedin
thecontext ofapplication ofsection 102(g), rather thanthepriority date. Theissueraised inthesecond
partofthequestion, thus,doesnotariseunder U.S.lawasamended tocomply withU.S.obligations
under theTRIPS Agreement.
Theanswer provided inrelation toquestion 5regarding prejudice ofexclusive rights under
Article 28isequally applicable tothisquestion.
6. Whereas 35U.S.C. 154(c)(3) allows thirdparties tocontinue theexploitation ofaninvention
which began, orforwhich significant investment wasmade, before thedate6months following the
dateoftheenactment oftheUruguay Round Agreements Actsupon thepayment ofanequitable
remuneration tothepatentee, TRIPS Article 70(4) allows aWTOMember tolimittheremedies available
forsuchactscommenced onlybefore thedateofacceptance oftheWTO Agreement bytheMember.
Please explain whether thesetwoprovisions arethesame ornot.Ifnot,please explain theconsistency
between thetwoprovisions.
Article 70.4oftheTRIPS Agreement states:
Inrespect ofanyactsinrespect ofspecific objects embodying protected subject matter which
become infringing under theterms oflegislation inconformity withthisAgreement, andwhich
werecommenced, orinrespect ofwhich asignificant investment wasmade, before thedate
ofacceptanceoftheWTOAgreementbythatMember,anyMembermayprovideforalimitation
oftheremedies available totherightholder astothecontinued performance ofsuchactsafter
thedateofapplication ofthisAgreement forthatMember. Insuchcases theMember shall,
however, atleastprovide forthepayment ofequitable remuneration.
TheWTO Agreement became applicable totheUnited States, asitdidforalldeveloped countries,
onJanuary 1,1996. Thedateonwhich theUnited States “accepted ”theWTO Agreement wasthe
December 30,1994. Under theterms ofArticle 70(4), actsthatwere commenced orforwhich a
significant investment wasmade before thedateofacceptance oftheWTO Agreement bytheUnited
States canserve asabasis forenjoying limited liability inrespect ofinfringement ofapatent whose
termwasextended through operation ofArticle 70.2oftheTRIPS Agreement. Section 154(a)(3)
recognizes actsthatoccurred sixmonths afterthedateofpassage ofthelegislation- which isfivemonths
andninedaysaftertheWTO agreement wasaccepted bytheUnited States. Toourknowledge, this
grant ofaminimal amount ofaditional timehasnothadacommercial effect.
7. According to35U.S.C. 271(e)(1), themanufacture, use,orsale, within theUnited States,
ofapatented invention solely forusesreasonably related tothedevelopment andsubmission of
information under aFederal lawwhich regulate themanufacture, use,orsaleofdrugs orveterinary
biological products isnotanactofinfringement. What cases areenvisaged, inparticular, fortheIP/C/W/68
Page17
actofsale? Furthermore, dosuchexceptions forsalefallunder theexceptions permitted asnot
unreasonably prejudicial fortheright holder inTRIPS Article 30?
Because thecostsofclinical trialstodevelop information necessary toobtain marketing approval
intheUnited States isconsiderable, parties sometimes needtorecoup some oftheinvestment byselling
theproduct tothose taking partinthetrials. Theleading caseonpoint isEliLillyandCo. v.
Medtronics (496U.S.661;15USPQ. 2d1121(1990)). TheCourt inthatcaseemphasized thatbecause
theactivities ofthedefendant, including thesaleofanimplantable cardiac device, wereforthepurpose
ofdeveloping andsubmitting information necessary toobtain marketing approval fromafederal agency,
those activities didnotconstitute infringement. Under theterms ofthe271(e)(1), any“sale”referred
towould beofademinimis economic significance tothepatent owner. Assuch, theexception falls
within theexceptions defined under TRIPS Article 30.
8. Please explain theconsistency between TRIPS Article 28(b) [28.1(b)] andthelatter partof
35U.S.C. 271(g) which provides that“Inanaction forinfringement ofaprocess patent, noremedy
maybegranted forinfringement onaccount ofthenon-commercial useorretail saleofaproduct unless
there isnoadequate remedy under thistitleforinfringement onaccount oftheimportation orother
use,offertosell,orsaleofthatproduct ”.
Article 28.1(b) defines theactsthatmustberecognized aspartoftheexclusive rights granted
byaprocess patent under thelawofaWTO Member inrespect ofproducts thataremade bythepatented
process. Article 30oftheTRIPS Agreement specifies thatMembers maymake limited exceptions
toanyoftheexclusive rights asdefined bytheTRIPS Agreement. Article 30,thus, permits aWTO
Member toimpose limited exceptions totheexclusive rights defined inArticle 28.1(a) or(b),provided
theexceptions “donotunreasonably conflict withanormal exploitation ofthepatent anddonot
unreasonably prejudice thelegitimate interests ofthepatent owner, taking account ofthelegitimate
interests ofthirdparties. ”
Section 271(g) provides theexclusive rights required byArticle 28.1(b) forholders ofUnited
States patents. Thesentence ofsection 271(g) referred tointhequestion specifies thatincases ofnon-
commercial orretail saleofaproduct produced through theunauthorized practice ofaprocess, the
patent owner willnotbeabletorecover from theentities involved inthatnon-commercial orretail
activity ifthere isanadequate remedy available tothepatent owner through anaction against other
parties involved inmanufacture, importation orotheraspects ofmaking theinfringing product available
totheUnited States market. Inother words, ifthepatent owner isabletoenforce rights against the
party thatmanufactured orimported theproducts, orthewholesaler whosupplied theproduct toretail
outlets, thepatent owner willnotbeabletoenforce the271(g) rights against parties thatwereinvolved
intheretail saleoftheproduct, orinthenon-commercial (e.g., personal) useoftheproduct. Ifno
suchremedy isavailable, these provisions ofsection 271(g) donotapply.
Because theterms of271(g) donotexclude possible actions bythepatent owner toenforce
theexclusive rights specified inArticle 28.1(b) inrespect ofthetypes ofactsspecified therein, and
because thissection exempts actsthatwould beotherwise infringing onlyinsituations where anadequate
remedy doesexistforthepatent owner, section 271(g) fallsclearly within themeaning ofArticle 30
oftheTRIPS Agreement.
9. According to35U.S.C. 272,theexception ofinfringement ofanyuseofpatent inanyvessel,
aircraft orvehicle oftheUnited States, entering theUnited States temporarily oraccidentally, applies
tocountries which afford similar privileges tovessels oftheUnited States. Please explain theconsistency
withtheMost Favored Nation clause ofTRIPS Article 4.IP/C/W/68
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Inevaluating itsdomestic legislation forchanges needed toconform tothissection oftheTRIPS
Agreement, theUnited States concluded thatnochanges were infactnecessary. Thisconclusion is
based onthefollowing observations. First, asaMember oftheParis Convention, thisclause applies
automatically toallWTO Members whoarealsomembers oftheParis Convention. Second, ithas
beentheexperience oftheUnited States thatmostifnotallWTO Members afford intheirdomestic
regime equivalent treatment forU.S.vessels. Third, thisclause, intheexperience oftheUnited States,
hasnotbeeninvoked inrecent memory. Theresult isthattheUnited States isnotaware ofanyWTO
Member whowould, infact,beprejudiced inrespect ofenjoying thetreatment specified bytheclause.
Thisrecognition ledtheUnited States toconclude thatachange tothisprovision ofUnited States was
notnecessary asapractical matter. Ifitbecomes clearthatmodifications oftheprovision arewarranted
toaddress specific concerns ofother WTO Members, theUnited States would work toward
implementation ofasuitable legislative change through anappropriate legislative vehicle.
10. Please explain theseries ofprocedures foraninvoluntary license provided in“TheDevelopment
andControl ofAtomic Energy Act”(42U.S.C. 2183) and“TheAirPollution andControl Act”(42
U.S.C. 7608). Furthermore please explain theconsistency between eachofthese procedures andthe
each(sic.) paragraph ofTRIPS Article 31,inparticular, Article 31(b)(d)(e)(i).
Procedures Under 42U.S.C. 2183
Under section 2183, theNuclear Regulatory Commission maydeclare apatent tobe“affected
withthepublic interest ”onlyif(1)theinvention ordiscovery claimed bythepatent isofprimary
importance intheproduction orutilization ofspecial nuclear material6oratomic energy7;and(2)the
licensing ofsuchinvention ordiscovery under section 2183isofprimary importance toeffectuate the
policies andpurposes oftheAtomic Energy Act.Prior tomaking adetermination thatapatent meeting
thosecriteriais“affectedwiththepublicinterest,”theCommissionmustgivethepatenteeanopportunity
forahearing.
Under theprocedures oftheNRC:
(1) anythirdparty mustpossess specific qualifications andmustapply totheCommission
foralicense tousetheinvention8;
(2) thethirdparty mustspecify initsapplication thestepsithastaken toobtain alicense
from thepatent owner andtheapplicant ’sestimate oftheeffects ontheactivities for
which alicense isrequested bothifthelicense isnotobtained, andifthelicense is
obtained;
(3) theCommission mustholdahearing aftergiving thepatentee notice andallinformation
intheapplication; and
6“Special nuclear material ”isdefined as
(1) plutonium, uranium enriched intheisotope 233orintheisotope 235,andanyother
material, except source material, which theCommissioner, under itsstatutory authority, determines
toinclude inthedefinition, or
(2) anymaterial artificially enriched byanyoftheforegoing, butnotsource material.
7“Atomic energy ”isdefined asallforms ofenergy released inthecourse ofnuclear fission
ornuclear transformation.
8Theapplicant musthaveapplied fororholdalicense, permit, lease, oractivities controlled
bytheCommission under theAtomic Energy Act,asamended.IP/C/W/68
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(4) should theCommission grant alicense forthepurpose requested intheapplication,
orshould theCommission usetheinvention ordiscovery, thepatent owner mustbe
paidareasonable royalty (theamount determined bytheCommission iftheparties
cannot agree), taking specified factors intoconsideration, including theimportance
oftheinvention ordiscovery andthecostofitsdevelopment oracquisition.
TheCommission ’sdecisions inthesematters aresubject toindependent judicial appeal under theU.S.
Administrative Procedure Act.Inviewoftheseprovisions, theUnited States believes thattheprovision
inquestion complies fullywiththeobligations ofArticle 31oftheTRIPS Agreement.
Inaddition, theUnited States notes thatArticle 73(b)(i) oftheTRIPS Agreement specifies
thatnothing intheTRIPS Agreement shallprevent aMember fromtaking anyaction which itconsiders
necessary fortheprotection ofitsessential security interests ...relating tofissionable materials orthe
materials fromwhich theyarederived. Thereferenced provision oftheAtomic Energy Actrepresent
stepsthattheUnited States ofAmerica consider necessary toprotect itsessential security interests with
regard totheuseoffissionable materials andthematerials from which theyarederived.
Procedures Under 42U.S.C. 7608
Section 7608 oftitle42oftheUnited States Code authorizes theAdministrator ofthe
Environmental Protection Agency toapply totheAttorney General oftheUnited States fora
determination that:
(a) theinvention claimed inaU.S.patent that
1. isused, orisintended forpublic commercial use,
2. isnototherwise reasonably available, and
3. isnecessary toenable anyperson required tocomply withrequirements for
controls inconnection withhazardous airpollutants fromstationary sources9
orinconnection withtheproduction ofnewmotor vehicles, and
(b) there arenoreasonable alternative methods toaccomplish thepurpose, and
(c) theinability tousetheclaimed invention would result inasubstantial lessening of
competition oratendency tocreate amonopoly inanylineofcommerce inanysection
ofthecountry.
IftheAttorney General determines thatallthese conditions exist, theAttorney General maycertify
thesame toaFederal district court inthedistrict inwhich thepatent owner resides, doesbusiness,
orisfound andtheCourt may, afterahearing inwhich thepatent owner hasanopportunity toappear
andbeheard, order thepatent owner tolicense theinvention onreasonable terms andconditions.
Thedecision oftheCourt isappealable.
Thelicensing authority specified under section 7608 fallwithin thescope ofArticle 31(k) of
theTRIPS Agreement. Thus, theauthority isusedonlyinthecontext ofremedying actsthathave
beenfound through judicial oradministrative proceedings tobeanti-competitive. Assuch, theprovision
must comply withsections (a),(c)to(e),(g)to(j)and(l)ofArticle 31.Thefollowing points are
implicit intheprocess described above fortheissuance ofalicense:
9Buildings, structures, facilities, orinstallations.IP/C/W/68
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- eachsituation would beevaluated onitsownmerits;
- noprocess would beinitiated untilaftertheDepartment ofEnergy hassought tosatisfy
itsneeds foruseofthepatented invention through normal commercial channels (e.g.,
including byseeking avoluntary license from thepatent owner);
- therequirement foranylicense tobeissued onreasonable terms andconditions would
ensure thatanylicense granted would benon-exclusive, non-assignable, canbe
terminated insituations where theoriginal justification forissuing thelicense areno
longer experienced; andwould provide adequate remuneration tothepatent owner;
and
- anydecision oraspect thereof imposed byacourt incident totheprocess specified in
section 7608 could beappealed toahigher court forreview and/or modification.
Finally, itshould benoted thattheauthority ofsection 7608 hasnever beenexercised bytheUnited
States .
Inviewoftheseconsiderations,theUnitedStatesbelievesthattheprovisioninquestioncomplies
fullywiththeobligations ofArticle 31oftheTRIPS Agreement.
11. Please explain howaright holder are(sic.) informed promptly about government useofhis
patent under United States law,andhowtheUnited States lawisconsistent withTRIPS Article 3(b).
Itwould berarethatanagency would know orhavedemonstrable grounds toknow thatapatent
isorwillbeusedinconnection withprocurement ofgoods orservices ortheperformance ofgovernment
functions. If,however, anagency were soaware, itwould notify therightholder byletter.
12. Please explain whether andhow35U.S.C. 202(a)(i) and204isconsistent withtheobligations
ofnational treatment asrequired byTRIPS Article 3.
Thechapter oftheU.S.patent lawwhich contains theprovisions referred tointhequestion
isentitled “Patent Rights inInventions Made withFederal Assistance. ”Section 202(a)(i) concerns
retention byuniversities, other non-profit organizations, andsmall businesses oftitletoinventions
developedthroughresearchorexperimentsfunded,inwholeorinpart,bytheUnitedStatesGovernment.
Theclause inthesubsection referred tomerely states thatafunding agreement withacontractor which
isnotlocated intheUnited States, doesnothaveaplace ofbusiness located intheUnited States, or
issubject tothecontrol ofaforeign government, mayprovide thatretention oftitletoaninvention
developed under thatagreement isnotauthorized. Thispermissive section isincluded because funding
agreements impose obligations oncontractors todisclose inventions developed under theagreement,
tofileapatent application intheUnited States before thestatutory barswould prevent patentability,
etc.andafunding agency might wishtoinclude suchaprovision toensure thattheagency itselfwould
retain titletoinventions developed withitsfunds sothattheagency could ensure thatappropriate
applications forpatent rights were filed. Because theprovision ispermissive, itisnotinconsistent
withArticle 3oftheTRIPS Agreement.
REPLIES TOQUESTIONS POSED BYNEW ZEALAND
1. Please explain thescope oftheprotest procedure provided forin37CFR1.291, inparticular
whether itcanresult inanotherwise valid application being refused grant?
Theprotest procedure established by37CFR 1.291 isameans foraninterested member of
thepublic tobring totheattention oftheU.S. Patent andTrademark Office (USPTO) information
thatmaymake thegrant ofapatent improper. 37CFR1.291(a)(1996). Theprotest procedure isnot
aformal opposition; onceaprotester hasprovided information pursuant to§1.291, hewillreceiveIP/C/W/68
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nofurther information other thanawritten notice thattheinformation hasbeenreceived andwhether
itconforms totherequirements of§1.291. Aprotester, thus, doesnotparticipate intheevaluation
oftheinformation provided ortoappeal afinding bytheUSPTO thattheinformation offered does
notpreclude theissuance ofapatent.
Tobeconsidered onthemerits, aprotest mustinclude: (1)alisting ofpatents, publications,
orother information thattheprotester believes isrelevant tothepatentability oftheinvention; (2)a
statement explaining therelevance ofeachitemrelied upon; (3)acopyofeachlisted items orrelevant
portions thereof; and(4)anEnglish language translation ofpertinent parts ofnon-English language
documents relied upon. 37CFR1.291(b)(1996). Allprotests submitted incompliance with37CFR
1.291(b) willbeforwarded totheexaminer incharge ofthepending application forconsideration of
allissues raised bytheprotester. Manual ofPatent Examining Procedure (MPEP) 1901.06(1996).
Anywritten action bytheexaminer treating themerits ofaproper protest mustspecifically consider
andmake evident bydetailed reasoning fortheexaminer ’sposition astothepoints raised bythe
protester. MPEP 1901.06(1996).
Because theprotest procedure hasthesolepurpose ofbringing information totheattention
ofaUSPTO examiner information thatmaybearonthepatentability ofaninvention, itisneutral in
terms ofitsrelationship tothepatent examination andgranting process. Aproperly filedprotest may
contain information, suchasprior artdocuments andevidence ofprior public use,forexample, that
maybeabasisforfinding aclaimed invention unpatentable. Theprotest procedure itselfcannot cause
invalidation ofanallowable patent application, asitcanonlybring information totheattention ofan
examiner. Iftheinformation isevaluated bytheexaminer andfound nottobeabartopatentability,
theprotest willhavenoeffect ontheissuance ofapatent.
2. Under United States law,whatexceptions existinrespect topatentees ’exclusive rights (Article
30oftheTRIPS Agreement refers)?
IntheUnited States, veryfewexceptions totheexclusive rights ofapatent arerecognized,
either through thepatent statute orthrough common law.
InTitle35,exceptions thatfallwithin themeaning ofArticle 30arefound in:
- section 271(e), concerning actsinrelation tocertain types ofpatented products that
areconducted solely forthepurpose ofdeveloping dataforsubsequent useafterthe
expiration ofthepatent toobtain regulatory approval forsuchproducts; and
- section 287(c), concerning certain medical actspracticed byamedical practitioner.
Inaddition, courts intheUnited States haverecognized alimited defense toacharge ofpatent
infringement based onuseofthepatented technology fornon-commercial experimental purposes. This
defense, informally referred toastheexperimental usedefense, hasbeenraised infrequently, andwhen
considered hasbeenconstrued verynarrowly. There arefewcaseselaborating thenature ofthedefense,
primarily because patent rights arenotfrequently enforced against members ofthepublic thatusethe
patented technology forpurely experimental purposes. Inthese cases, thecourts havenotrecognized
thedefense where theaccused infringer hasengaged inuseofthepatented invention forpurposes of
commercially exploiting theinvention, rather thanforincreasing theirunderstanding oftheinvention.
Incaseswhere thedefense hasbeenraised successfully, theexperimental useinquestion wastoascertain
howtheinvention functioned orforpurely philosophical oracademic reasons. Thisdefense isnot
codified intheUnited States patent statutes, other thantotheextent represented insection 271(e).IP/C/W/68
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3. Please confirm whether inanapplication foraprocess patent, claims drafted intheformof
“theuseofXtodoY”(forexample, theuseofaspirin totreatheadaches) areallowable consistent
withArticles 27and29oftheTRIPS Agreement?
Claims drafted intheformof“theuseofXtodoY”aretypically rejected under section 101
oftitle35oftheUnitedStatesCode,asnon-statutorysubjectmatter.Section101providesthat“whoever
invents ordiscovers anynewanduseful process, machine, manufacture, orcomposition ofmatter,
oranynewanduseful improvement thereof, mayobtain apatent therefor ...”Aprocess isdefined
asaseries ofactsperformed upon subject matter thatresult insome transformation ofthatsubject
matter. Claims merely reciting theuseofaproduct, absent aseries ofstepsdefining thetransformation
process, areimproper under section 101.
Theexclusion ofcertain forms ofprocess claims described above doesnotmean thatprocess
inventions cannot bepatented intheUnited States. Instead, anyprocess thatconsists ofaseries of
discrete steps andthatsatisfies thecriteria ofbeing novel, nonobvious anduseful canbepatented.
Thus, aclaim drawn toamethod oftreating aperson withcondition Yutilizing compound Xwould
beallowable intheUnited States, assuming theclaimed process isnovel andnonobvious. United States
patent law,therefore, while notpermitting mere “useof”language inclaims, doespermit patenting
ofanynewanduseful process tobebased onthemethod ofuseofaproduct.