Cooperative R&D with a University. If you enter a cooperative research agreement with a university, the law may not protect your right to file a patent application. This is an area of the law that can trap you and the university. Either party to a cooperative research agreement should include in that agreement specific provisions to ensure that cooperative work will not invalidate any patent that either party may apply for sometime in the future.

Rejection of Patent Applications. Non-public information may be used as prior art to disqualify an application under certain circumstances. This is based on the legal prohibition that one may not obtain a patent on that which is obtained from someone else. This includes information developed by others cooperating in research.

Legal Requirements. The good news is that the Cooperative Research and Technology Enhancement Act (CREATE Act) of 2004 was signed into law on December 10, 2004 to help you overcome the perils of rejection of an application by prior art created by the researchers involved to a cooperative agreement. The law applies to any type of cooperative research agreement or grant. However, the cooperative agreement and the patent application must have certain provisions and the agreement must be in existence before the inventions in order to gain the protection of the law. Generally, these provisions relate to common ownership and disclosure in the patent application of the identities of the parties to the joint research agreement.

Regulations. The Patent and Trademark Office issued final regulations on these on September 14, 2005 and they apply to patents granted after December 9, 2005. Essentially, the regulations: (1) Advise applicants on how to amend an application to name the parties to a joint research agreement; (2) permit a terminal disclaimer by a party who does not also own the application or patent forming the basis of a double patenting rejection; and (3) provide for the recordation of a joint research agreement in the Office’s assignment records.

Re-filing & Amendments. Pending patent applications filed prior to November 29, 1999 should consider re-filing the application if there is a possibility of rejection based on the work of others in a cooperative arrangement. Amendments to other applications to invoke the provisions of the CREATE Act should also be considered.

Infringement by the University and its Cooperative Partner. Universities once had a broad "experimental use" exemption from liability for patent infringement. Not any more. In 2002 the Court of Appeals of the Federal Circuit (Madey v Duke University, 307 F.3d 1351) narrowed the exemption to research solely for "amusement . . . to satisfy idle curiosity . . . [or a] strictly philosophical inquiry" and excluded completely, research for business objectives, which includes licensing and development of research activities, and even attracting students, faculty and grants. The Supreme Court decided on June 13, 2005 in Merck v Integra, No. 03-1237, 545 U. S. ____ (2005), 125 S. Ct. 2372, 162 L. Ed. 2d 160 that the statutory exemption for drug related research [35 U. S. C. §271(e)(1)] provides a wide berth for the use of patented drugs in activities related to the federal regulatory process, including uses reasonably related to the development and submission of any information under the Federal Food, Drug, and Cosmetic Act. However, beyond drug research, what is left of the exemption is not clear, but any company involved in such cooperation must be very careful because it could be the deep pockets sought for patent infringement.

Agreement Provisions and Review of Liability Potential. Your cooperative agreement may need to include provisions to ensure that partner liability potential is minimized. The Law Firm of Louis Ventre, Jr. can include an independent assessment of potential infringement of patents for work to be undertaken in the cooperative agreement.

Why Retain a Patent Attorney? Three reasons:

(1) As discussed above, you will greatly increase the potential that what you cooperatively develop can be patented by you.

(2) It is important to remember that use of a patented product or process, may also infringe more than one patent, and one may not be able to practice the invention protected by an improvement patent unless one is authorized under the basic patent. This is a vital point to consider in any cooperative research and development agreement as the fruits of the investment may be entirely dependent upon licensability of other patents. Full knowledge of the patent landscape in advance of a cooperative agreement is essential because it weighs on the decision to enter the agreement.

(3) The results of a costly investment in research and development could be devalued by an unexpected need to make royalty payments to a third-party patent owner, by treble damages for willful infringement, or even an injunction against commercially utilizing the improvement resulting from the research.

Conclusion. It all comes down to prudence. Your potential cooperative research and development activities could be a very large investment. Due diligence will help ensure that you are making an investment that has the potential to culminate in the value you anticipate. You can obtain services on an hourly basis. Or, if you need more certitude on costs, ask for a fixed price quote for specified work.

This file last modified 05/19/20.
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