Regulatory: Patent office secrecy orders for commercial inventions may stifle development

Some may argue secrecy orders are protecting national security

In 1999, Congress passed the American Inventors Protection Act (AIPA), which provided, among other provisions, that U.S. patent applications would be published 18 months after filing. This provision was designed to bring the U.S. patent process into harmonization with patent procedures in other major world markets, including Europe and Japan. It was also said to be necessary in order to prevent inventors from intentionally delaying issuance of patents until markets developed, a scheme often described as “submarine” patenting.

One issue that has arisen as a result of the 18 month publication provision is that inventions are published long before enforceable patents are issued by the U.S. Patent Office (PTO). The average pendency of a U.S. patent application was 33.7 months in 2011. As a result, on average, there was a 15.7 month gap between worldwide disclosure of the invention and the issuance of enforceable patent rights protecting that invention.

Last year a congressional committee directed the PTO to study the possibility of special treatment for patents that potentially affect “economic security.” Congress’ stated purpose was to “ensure that the United States receives the first benefits of innovations conceived within this country, so as to promote domestic development, further innovation and continued economic expansion.”

The suggested mechanism is similar to that used to control publication of patent applications for sensitive defense and nuclear technology. Patent applications which may include such sensitive information are reviewed by a panel of military and defense agencies. If it is determined the patent application includes sensitive material, the PTO issues a “secrecy order.” The secrecy order prevents publication of the application and tightly restricts an applicants’ right to file for patents in foreign countries. Secrecy orders also work hand-in-hand with other export control mechanisms, preventing sale and commercialization of inventions that have defense implications, especially outside the U.S.

Secrecy orders are indefinite in length. A patent does not issue while a secrecy order is in effect. There are currently about 5,000 patent applications under secrecy order. Since 2000, fewer than 100 secrecy orders have been rescinded in any one year. As a practical matter, most of the applications under secrecy order are likely owned by defense contractors whose sole customer is the U.S. government. Therefore, the existence of a secrecy order is not a significant detriment to patent owners in those cases.

But what would happen if secrecy orders were expanded to include economic security. Which inventions would be determined to affect economic security? Would they include Apple’s next i-device, a biotech cure for a form of cancer or perhaps new energy development technology? Could the PTO arbitrarily issue secrecy orders, perhaps to hamper the development of technologies not favored by the government?

On April 20, 2012, the PTO requested comments on the proposal to screen patent applications for economic security effects. Industry organizations, patent attorney organizations, companies and universities responded. The comments were overwhelmingly negative, although there were some supporters of the concept. It was pointed out that economic secrecy orders would significantly impair the commercialization of the product. Such rules would have the perverse effect of more seriously impacting the most valuable and widespread technologies. Multiple commentators pointed out the rules would hamstring U.S. interests in the global marketplace because patent filing and disclosure outside the U.S. would be prevented or limited.

One purpose of the patent system is to encourage disclosure of inventions in exchange for the issuance of patent rights which are limited in time. Inventors faced with the possibility of having valuable rights locked up by a secrecy order would be more likely to simply maintain their technology as a trade secret. This would be a detriment to technology development and undercut a key purpose of the patent system.

It was also pointed out a secrecy order regime would work against the original purpose of the AIPA, namely global harmonization. This proposed procedure is out of the global mainstream. A Japanese group raised the specter of a return of submarine patents, this time caused by placing patents under secrecy order for a period of time and then allowing them to issue when a market is fully developed.

There are already in place procedures to avoid patent publication. This proposal would replace a strategic choice by the inventor with a determination by government agencies, all to the detriment of commercialization of the invention.  

The most thorough comment in support of the proposal was by “Anonymous.” This commentator believes economic security is just as important as national security and expressed a belief that controlling export of technology is key.

As pointed out by multiple commentators, the stated problem could be solved if the PTO could issue patents closer to the 18-month publication date. It was suggested that perhaps resources should be spent in increasing PTO effectiveness rather than imposing another regulatory scheme on the technology community.

The PTO continues to “study” the issue.

Contributing Author

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Craig Metcalf

Craig Metcalf is a Shareholder with Kirton McConkie. His practice emphasizes asserting legal, regulatory and constitutional rights before government agencies and the courts. He has...

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