Joint Development Inventions: Is Your Patent Strategy Exceptional?

Practical Law Legal Update 9-540-6585 (Approx. 4 pages)

Joint Development Inventions: Is Your Patent Strategy Exceptional?

by Practical Law Intellectual Property & Technology

Published on 15 Oct 2013 • USA (National/Federal)

Joint development arrangements may result in the creation of valuable inventions for one or more of the joint development partners. However, without proper planning, the parties could lose significant value in these inventions or their own patent portfolio. This Legal Update identifies key issues that counsel should consider when negotiating and drafting joint development agreements to maintain and enhance the value of the joint development inventions and their client's portfolios.

Joint development agreements typically set out the rights and responsibilities of the parties concerning ownership of joint development inventions (see Practice Note, Joint Development Agreements: Ownership of Joint Development Intellectual Property). An important consideration in the parties's joint development intellectual property ownership allocation is the scope of the prior art that the parties may have to address in joint development situations. Without a strategy that considers the unique prior art issues that may arise in joint development situations, the scope of any joint development patent or each party's patent portfolio could be compromised.

Prior Art Issues for Joint Development Intellectual Property

In certain circumstances, a party's background intellectual property may not be used as prior art when evaluating the patentability of certain joint development intellectual property. Understanding this issue is important when considering the scope of patent protection for joint development inventions and their potential effect on the joint development partners' patent portfolios.

Pre-AIA Prior Art

For patents applications, and patents issued from patent applications, filed on or after November 29, 1999, Section 103(c) of the Patent Act (35 U.S.C. § 103(c)) does not allow subject matter that otherwise qualifies as prior art under Sections 102(e), (f) or (g) (35 U.S.C. § 102(e)-(g)) from precluding the patentability of the claimed invention based on obviousness if the subject matter and the claimed invention were, at the time the claimed invention was made, owned by the same person or subject to an obligation of assignment to the same person. Generally, for patents granted on or after December 10, 2004, this common ownership provision also applies in joint development situations if:

The claimed invention was made by or on behalf of parties to a joint research agreement that was in effect on or before the date the claimed invention was made.
The claimed invention was made as a result of activities undertaken within the scope of the joint research agreement.
The patent application covering the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.

AIA Prior Art

For patent applications, and patents issued from patent applications, filed on or after March 16, 2013, when the first-inventor-to-file provisions of the Leahy-Smith America Invents Act (AIA) took effect, Section 102(b)(2)(C) creates a similar prior art exception. A disclosure appearing in a patent or patent application is not prior art to a claimed invention under Section 102(a)(2) for both novelty and obviousness purposes if the disclosure's subject matter and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person. This exception is therefore broader than the exception under pre-AIA law.

In joint development situations, the first-inventor-to-file common ownership prior art exception requires that:

The disclosed subject matter was developed and the claimed invention was made by, or on behalf of, one or more parties to a joint research agreement that was in effect on or before the claimed invention's effective filing date.
The claimed invention was made as a result of activities undertaken within the scope of the joint research agreement.
The patent application for the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.

For more information on the AIA, see Practice Note, Leahy-Smith America Invents Act: Overview.

Potential Pitfalls of the Statutory Prior Art Exception

Although parties to a joint development agreement typically wish to take full advantage of this prior art exception, in certain circumstances the exception may not be beneficial for one or more of the parties, for example, where:

One of the parties shares background information that is relevant to the joint development project.
That party will not control the other party's ownership rights to a patent on an improvement to that other party's intellectual property based on that background information.

To minimize this issue, the parties may consider including appropriate licensing terms or other restrictions to avoid losing control over potentially valuable intellectual property.

For more information on joint development agreements, see Practice Note, Joint Development Agreements. For a sample joint development agreement, see Standard Document, Joint Development Agreement. For a checklist of issues to consider when negotiating and drafting a joint development agreement, see Joint Development Agreement Checklist.

Joint Development Inventions: Is Your Patent Strategy Exceptional? | Practical Law