House Judiciary Committee Approves CREATE Act to Promote Collaborative Research

January 21, 2004. The House Judiciary Committee amended and approved HR 2391, the "Cooperative Research and Technology Enhancement (CREATE) Act of 2003", which amends Section 103(c) of the Patent Act.

Rep. Lamar Smith (R-TX), the Chairman of the Courts, Internet and Intellectual Property Subcommittee, introduced HR 2361 on June 9, 2003. See, bill as introduced. The Subcommittee also held a hearing on the bill on June 10, 2003. See, story titled "Representatives Introduce Patent Bill to Encourage Collaborative Research" in TLJ Daily E-Mail Alert No. 680, June 13, 2003. The Subcommittee amended and approved the bill on July 22, 2003.

The full Committee approved an amendment in the nature of a substitute offered by Rep. Smith, and then the bill, as amended. The Committee's consideration of the bill was brief, and without controversy. The amendment and the bill as amended passed by unanimous voice vote. Rep. Smith explained and spoke in support of the bill.

Rep. Lamar SmithRep. Smith (at right) stated that the bill addresses the August 8, 1997 opinion of the U.S. Court of Appeals for the Federal Circuit in OddzOn Products, Inc. v. Just Toys, Inc., which ruled that derived prior art may serve as evidence of obviousness. It is also reported at 122 F.3d 1396.

Section 103(c) currently provides a safe harbor for inventions that are the product of collaboration involving co-inventors within a single company. The problem is that scientific research is increasingly being conducted jointly by multiple companies, universities, government labs, and/or other entities.

The holding in the OddsOn case threatens to discourage collaborative research, where the scientists involved are not employed by the same company or entity. Basically, the Court interpreted Section 103(c) to mean that prior art under Sections 102(f) or 102(g) could be used to determine the obviousness of an invention where there is no common ownership or assignment of the invention and information being shared among the collaborators, and the information exchanged is not publicly known. The bill amends Section 103 to provide that patentability is not precluded in the case of research conducted across entities pursuant to a joint research agreement.

Section 103(c), codified at 35 U.S.C.  103, pertains to conditions for patentability, and non-obviousness. It currently provides that "Subject matter developed by another person, which qualifies as prior art only under one or more of subsections (e), (f), and (g) of section 102 of this title, shall not preclude patentability under this section where the subject matter and the claimed invention were, at the time the invention was made, owned by the same person or subject to an obligation of assignment to the same person."

The bill, as approved by the Committee, provides that 35 U.S.C. 103(c) is amended to read as follows:

The bill adds that "The amendments made by this Act shall not affect any final decision of a court or the United States Patent and Trademark Office rendered before the date of the enactment of this Act, and shall not affect the right of any party in any action pending before the United States Patent and Trademark Office or a court on the date of the enactment of this Act to have that party's rights determined on the basis of the provisions of title 35, United States Code, in effect on the day before the date of enactment of this Act."