Harmonization of Patent Law for Effective Utilization of Intellectual Assets

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Harmonization of Patent Law for Effective Utilization of Intellectual Assets

Pinaki Ghosh | June 2015

Idea. Asset. Patents. Globally, valuable utilization of Intellectual Assets hasbeen a challenge for the industry professionals to maze through and takecritical business decisions. However, harmonization of Patent Law alsoplays a major role in the whole value chain. This is a continuation of theseries that started in May 2015 by Pinaki Ghosh, AVP, IP Department,Reliance Industries Ltd., a vanguard in this domain. The next issue shall bethe concluding part of the series.

EXPLANATION OF THE ROADMAP (AREAS OFWORK)

Aims marked with a tentative schedule forJanuary 2010 need immediate nationalaction. Other requirements need adiscussion with the member states alongwith various opinions.

Compliance and Consistency: It requiresall offices acting as InternationalAuthorities that international searchescarried out by them from January 1, 2010will not be repeated by them as designatedOffice if the international application entersthe national phase. Each ISA should, to thegreatest extent possible, do the work onlyonce, during the international phase, andfully integrate that work into its nationalgranting procedure when the sameapplication later enters the national phasebefore the same Office acting as adesignated Office.

Further contracting states and offices haveto seek to eliminate the inconsistenciesarising out of the reservations, notices,declarations and incompatibilities1 providedunder Article 64 of the PCT. Article 64(1)(a)provides that any State may declare itselfto not be bound by Chapter II (InternationalPreliminary Examination) of PCT. Variouscountries have opted for differentreservations, notices, declarations andincompatibilities of the PCT Articles andPCT Rules.

Making International ExaminationMore Complete, Relevant and Useful: Itrequires for all International PreliminaryExamining Authorities to agree that at leastone written opinion will be issued inChapter II proceedings prior to issue of anegative international preliminary reporton patentability, beginning from January2010 and being followed up byamendments to the PCT Regulations toguarantee that right.
Eliminating Unnecessary Processing: Itrequires applications to be published as“defensive” by January 2011. In this way,ISAs would avoid the burden of carryingout a search on an application which isonly being pursued in order to keep it aliveto be published, even though the applicanthas already decided not to pursue theapplication to grant in any State.
Collaborative International Search andPreliminary Examination: Contractingstates and Offices are required to discusshow sufficient interaction betweenexaminers in different Offices would permitthe establishment of a commoninternational search report, based onsearches by at least three examiners indifferent Offices with different languagespecialties following discussion to ensure acommon understanding of the inventionand the required scope of search. It is oneof the aims to have a virtual InternationalAuthority available by October 2012 whichoffered a collaborative international searchbased on interaction between examiners inthree different International Authorities toestablish a commonly agreed search report.
Fees and Other National Measures: Theofficial fees due upon national phase entrycollectively greatly exceed the official feespayable to the International Bureau. Eventhough these fees are themselves oftenexceeded by the cost of translations andprofessional representation, nationalOffices, notably those also acting asInternational Authorities, must give carefulconsideration to whether they provide theappropriate incentives for applicants toensure that the international application isprocessed as efficiently as possible, usuallymeaning that defects and potentialpatentability issues are dealt with once,during the international phase.

3.1.3 PROPOSALS BY MEMBER STATES

The PCT working group had held recentlyits second session at Geneva from May 4,2009 to May 9, 2009) where PCT/WG/2/12contains the proposal of PCT reform asproposed by the USPTO. The proposed PCTII system would, in brief have the followingfeatures:

A combined national and international processing (search and examination) toreduce the redundancy of the nationaloffices and increase the quality of the work.Presently these reports are persuasive anddo not have any binding effect on themember states. However, under the presentproposal these reports will be binding onthe parties unless the parties reject thesame.
Prior-art submissions by third parties
Provision of a national patent grantupon receiving a positive examinationreport. PCT II includes three search authorities toconduct the search. Under the proposedplan the applicant can file application andprior art to the receiving office (RO) whichforwards the search copy to authority 1(ISA), authority 2 (second ISA) and toauthority 3 (third ISA). Authority 1 andauthority 2 will forward their search reportto authority 3 that would perform combined international/nationalexamination using their own search results.The examination done by authority 3 is acomplete examination. Applications receiving a positive patentability reportwould get protection in national patentoffices.

The proposal by USPTO states that thenational patent grant would be like theinternational systems such as Hague.Currently, in the Hague System, upon aninternational grant, the national officeshave a period of about six months tooppose/refuse the registration of theapplication. It is assumed that there is apossibility of bringing in a parallel systemunder the PCT II.

THE ABOVE PROPOSAL BY THE USPTO MAYFACE CERTAIN INCOMPATIBILITIES IN TERMSOF THE FOLLOWING:

The 20th month deadline proposed forthe issuance of an ISR by the third ISR (i.eafter issuance of the ISR from the first andsecond ISR) may not always be met henceleading to a possible delay in the nationalstage entry at the end of thirty-six months.
A few international searching andexamination authorities would have moredominance if their decisions are binding onnational patent offices of other country.2
Under Article 27(2) and Article 27(3) ofTRIPS discretion is granted to member states regarding the patentability criteria.Moreover, Article 1.1 of TRIPS specifically mentions that Members shall be free todetermine the appropriate method ofimplementing the provisions of thisAgreement within their own legal systemand practice. Under these circumstances ithas to be noted there is a greater chancethat the developed countries domesticpolicy will be imposed on other countriesand their economic benefits will besafeguarded.3
Although the proposed system has third party observation to assist in uncovering other prior art but the same may not betaken into account by the patent offices.However, in the third party opposition system the same information must be takeninto account by patent offices.4

OPEN INNOVATION

Knowledge today is the fundamental driverof sustainable competitive andcollaborative advantage. Innovation can bedefined as the outcome of a set of activitiesthat use knowledge to create new value tothose benefiting from its use.5 Sustainableinnovation can only be assured throughboth competitive and collaborativeadvantage. In order to incorporate externalcapabilities and knowledge into acompany’s innovation process, theorganization needs to be adaptive and openfor change. Innovation can be of two types– Open and Closed.

DIFFERENCE BETWEEN OPEN AND CLOSEDINNOVATION

Open innovation is a paradigm thatassumes that firms can and should useexternal and internal ideas, and externaland internal paths to market. The OpenInnovation model can be compared withthe traditional, closed model in whichenterprises generate, develop and markettheir own ideas, usually organized in aninternal R&D department. This closedmodel has become outdated due toincreased mobility of workers, bettereducation, and growing presence of venturecapital, increasingly shortened product lifecycles, growing competition, and wideavailability of knowledge from multiplesources. 6The reason for open innovation isto make the R&D more productive. Openinnovation is not limited to a firm level. Ina closed innovation system, efforts forinnovation are within the firm. It ispracticed within the context of a given setof political and economic institutions,including regulations, intellectual property(IP) law and industry structure.

OPEN INNOVATION IS PRACTICED BYORGANIZATIONS IN ONE OF SEVERAL WAYS WHICH INCLUDE:7

Networking
Collaboration
Corporate Entrepreneurship
Intellectual Property (IP) Management
R&D

IMPACT OF OPEN INNOVATION IN PATENTSYSTEMS

Open innovation implies that valuable ideascan come from inside or outside theorganization, but also that these ideas canbe marketed via internal or externalpathways. As a result of these in- andoutflows of ideas, intellectual property (IP)plays a crucial role in Open Innovation. Inthe closed paradigm enterprises wouldcontrol their Intellectual Property (IP) insuch a way that competitors could notbenefit. Prior theories of innovation treatedIntellectual Property (IP) as a byproduct ofinnovation, and its use was primarilydefensive. This would enable enterprises topractice their internal technologies withoutbeing blocked or held up by external IP,and to prevent their rivals from benefitingfrom their innovative efforts.In the open model enterprises manage theirIntellectual Property (IP) proactively. Theyneed to access external IntellectualProperty (IP) to speed up and nurture theirown research engine. At the same time,they also profit from their own, unused Intellectual Property (IP) when otherenterprises with different business modelsfind profitable, external paths to the marketfor ideas.

IMPACT OF OPEN INNOVATION IN TRIPS

The open innovation trend is driven up twomajor factors, globalization and increasingcompetitive pressure and reduction ofproduct life-cycles demand quickerinnovation processes at a reduced cost.Diversification along with verticalintegration from research and developmentthrough distribution can provide firms withcompetitive advantage over smaller andnewer rivals through economies of scaleand scope. 8As collaboration has beenadvanced in otherindustries in differentbusiness activities throughparticipation in platformsknown as innovationplatforms, one of which isopen innovation platformswhich can function withinor even outside a nation.Collaboration has beendiversified throughassociations with industrialpartners as well asacademic representatives.Under the given scenario,following articles of theTRIPS play a role in thetechnology transactionsbetween nations (firm tofirm, firm to governmentetc). The objectives ofTRIPS are set down inArticle 7 states:

“The protection andenforcement of intellectualproperty rights shouldcontribute to thepromotion of technologicalinnovation and to the transfer and disseminationof technology to the mutual advantage ofproducers and users of technologicalknowledge and in a manner conducive tosocial and economic welfare, and to abalance of rights and obligations.”

FURTHER, ARTICLE 8.2 OF TRIPS STATES:

“Appropriate measures, provided they areconsistent with the provisions of theAgreement, may be needed to prevent theabuse of intellectual property rights byright holders or the resort to practiceswhich unreasonably restrain trade oradversely affect the international transferof technology.

About Author

Pinaki Ghosh

Pinaki Ghosh, AVP, IP Department, Reliance Industries Ltd.,