May 2005

Industry, academia and government can now pursue collaborative research and development programs while limiting the extent that the technological fruits of the collaboration can be used as prior art against an invention resulting from the collaboration.

On December 10, 2004, President Bush signed the Cooperative Research and Technology Enhancement Act (“CREATE Act”) into law. The CREATE Act was the response from Congress to a 1997 decision by the Federal Circuit in OddzOn Prods., Inc. v. Just Toys, Inc., 122 F.3d 1396 (Fed. Cir. 1997), which limited the disqualification of prior art information resulting from collaborative efforts to commonly-owned prior art. In OddzOn, the Federal Circuit held that an assignment of rights to a common owner is required to disqualify prior art information, which was shared among members of a collaborative effort, as a ground for finding an invention resulting from the collaboration unpatentable for obviousness.

The CREATE Act amended 35 U.S.C. § 103(c) of the patent laws to provide that subject matter developed by another person shall be treated as owned by the same person, or subject to an obligation of assignment to the same person, for purposes of determining obviousness of a claimed invention if the following three requirements are satisfied.

The claimed invention was made by or on behalf of a party to a joint research agreement in effect on or before the date the claimed invention was made;

The claimed invention resulted from activities undertaken within the scope of the joint research agreement; and

An application for patent for the claimed invention discloses, or is amended to disclose, the names of the parties to the joint research agreement.

A joint research agreement is defined as “a written contract, grant, or cooperative agreement entered into by two or more persons or entities for the performance of experimental, developmental, or research work in the field of the claimed invention.” 35 U.S.C. § 103(c)(3).

The CREATE Act cannot be relied upon to overcome an anticipatory rejection under 35 U.S.C. § 102 or an obviousness double patenting rejection. A patent applicant, however, can overcome a double patenting rejection based on a patent disqualified as prior art under the CREATE Act by filing a terminal disclaimer signed by the applicant and the owner of the disqualified patent. The applicant and the patent owner, both of whom must be parties to a joint research agreement, are required to state in the disclaimer that they: (i) waive the right to separately enforce and license the subject patents; (ii) agree that the subject patents are enforceable only during the period that the patents are not separately enforced or licensed; and (iii) agree that the waiver and agreement are binding upon the owners of the subject patents and their successors or assigns.

The CREATE Act applies to all patents granted on or after December 10, 2004.

To take advantage of the benefits of the CREATE Act, those seeking to collaborate in the development of technology should execute a written agreement setting forth the scope and subject matter of the work to be performed prior to the commencement of any work or exchange of information. Care should be taken to define the subject matter with sufficient breadth to ensure that new inventions arising from the collaboration are considered within the scope of the agreement, but not to define the subject matter so expansively that it would limit the opportunity for future collaboration with others.