CREATE Act encourages collaborative research

The Cooperative Research and Tech-nology Enhancement – or CREATE — Act of 2004 is a welcome change for businesses and institutions that conduct research in cooperation with external partners by removing a major disincentive from doing so.

The act, enacted on Dec. 10, 2004, extends the safe harbor provision of federal law to inventions resulting from collaborative efforts of workers from different entities or organizations collaborating under a joint research agreement.

That means collaborations among multiple parties — be they individuals, corporations or other business entities, universities or government agencies, among others — are given the same protections previously afforded only to collaborations taking place between workers within the same organization, provided that an appropriate joint development agreement between the parties is in place.

Traditionally, when an invention was derived from subject matter developed by another, the original subject matter constitutes “prior art” — that is, prior knowledge predating an invention in question. By qualifying as prior art, the original subject matter may be relied upon to preclude the patenting of the invention in question, on the basis that the invention either lacks novelty or is an obvious variant of the original subject matter.

Section 103(c) excludes this type of prior art for determining the obviousness of later derived inventions in certain situations.

Prior art exclusion

Federal law was originally enacted to allow collaborators to freely share information without fear of creating this type of patent-precluding prior art, so long as the subject matter and the later derived invention were “commonly owned” at the time the invention was made.

The typical common ownership scenario involves employees working for a common employer who owns the rights in the employees’ inventions.

The CREATE Act expanded that prior art exclusion in response to a federal court’s decision in OddzOn Products Inc. v. Just Toys Inc., in which the beneficial prior art exclusion was held to be inapplicable to the collaborative efforts of workers of different entities who collaborate under a joint research or development agreement.

Under OddzOn, the disclosure of information between separate entities could be used as prior art to reject or invalidate a subsequent patent or patent application, even where the disclosure was made in confidence and pursuant to a joint research or development agreement.

The CREATE Act provides the same prior art exclusion benefit by legislatively deeming that the requisite common ownership exists, provided that the invention was made pursuant to a joint research agreement that meets certain criteria:

• The joint research agreement must be in writing.

• The joint research agreement must have been in effect on or before the date the claimed invention was made.

• The inventive activities must be within the scope of the joint research agreement.

• The patent application claiming an invention developed pursuant to such an agreement must disclose or be amended to disclose the names of the parties to the agreement.

So long as the joint research agreement meets the statutory criteria, the original subject matter and a later claimed invention are “deemed” to be commonly owned, even if the originally developed subject matter and the later derived invention are, in fact, separately owned.

Potential pitfall

But this discrepancy between “deemed” common ownership and actual ownership creates a potential pitfall if both the original subject matter and the claimed invention are the subject of separate patent applications.

As noted, the prior art exclusion applies only to obviousness determinations. All other grounds for rejection remain available, including the judicially created doctrine known as “obviousness-type double patenting.” The rationale underlying the doctrine of obviousness-type double patenting is that patentees should not be allowed to effectively extend their original patent by filing subsequent applications for obvious or trivial modifications.

An obviousness-type double patenting rejection may be overcome by filing a “terminal disclaimer” in the subsequent patents of any portion of the patent term that would extend beyond the term of the first patent. By disclaiming the terminal portion of the patent term, any concern over patent term extension is eliminated.

Heretofore, the filing of a terminal disclaimer had little prejudicial effect, but the terminal disclaimer requirements have been changed to implement the CREATE Act.

A terminal disclaimer in a joint development scenario must be signed by the owners of both the first and second patents or patent applications and must include provisions wherein both parties: waive the right to separately enforce or license their respective patents; agree that both applications shall become unenforceable if either is separately enforced or separately licensed; and agree that the waiver and agreement are binding on the owners of the patents and their successors and assigns.

Under the CREATE Act, the filing of a terminal disclaimer to overcome a double patenting rejection would result in a substantial loss of right for both parties in that neither party would be able to separately enforce or license its respective patent.

Thus, the patent practitioner must be mindful of the actual ownership and should consider whether one of the several alternatives to filing a terminal disclaimer is warranted under the specific circumstances.

While the CREATE Act provides additional incentive for collaborative research and development efforts, extra care must be taken not only when drafting or amending joint research agreements to ensure that the safe harbor benefits will apply, but also when drafting and prosecuting patent applications resulting from any ensuing joint research and development efforts.

Scott Rand, a senior patent attorney in the intellectual property group of the McLane Law Firm in Manchester, is a former patent examiner in the U.S. Patent & Trademark Office. He can be reached at

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