IP: The Hobson’s Choice of conflicting national security laws in international patent filings

Inventions developed in multiple countries face compliance conundrum

Over the last generation research and development has become truly global. Scientists in London are collaborating in the course of a single business day with counterparts in Guanzhou, Bangalore, Stuttgart, Sao Paulo and Sunnyvale. Together these scientists generate brilliant new ideas that lead to wonderful new products and services and, of course, patent filings—in at least some of the countries in which collaboration is taking place and frequently in many other countries. And that is where the neat modern system of global R&D ceases to be neat, modern or global. At the intersection of patent and national security law there is a conundrum affecting anyone relying on global research and development: where to file an initial patent application for an invention derived from multinational resources? This question deserves serious consideration by any entity engaged in cross-border invention.

The root of the problem lies in the balkanized global regulatory environment of patent law, with the laws of multiple countries each requiring the filing of affected patent applications first in that country. Protective patent filing laws are easy enough to comply with when only one jurisdiction is implicated. But in the case of inventions developed in various places or by various inventors working together, these protective provisions can quickly come into direct conflict with one another. Indeed, these competing provisions can make filing a patent application in any country a violation of at least one other country’s laws.

Unfortunately, the consequences of violating various country-first-filing laws can be severe. Penalties range from loss of patent rights to large fines and even prison sentences. Merely hoping the problem won't arise may have sufficed in previous generations—where it was relatively rare that co-inventors would be working at great distances—but is increasingly risky in modern practice.

The U.S., Russia, China, the U.K., South Korea, India, Malaysia, Singapore, New Zealand, France, Germany and Canada have each enacted some version of a protective foreign patent application law. The impetus for such legislation is to safeguard against exposing, via the patent application process, technology that might implicate defense considerations or betray state secrets. While most of these laws make reference to national security, they do not, by their language, specifically exempt non-sensitive inventions from their purview. Thus any invention—no matter how seemingly benign—created in one or more of the above countries is subject to protective filing requirements.

The applicability of a country’s national-first patent filing law to a specific patent application will turn on either the place of invention or the residency of the inventor (or, in the interpretation of some, the residency of the applicant).

The relevant U.S. law, for example, applies only to inventions “made in this country.” Similar language appears in the patent laws of Russia and China. In determining the locus of invention, relevant criteria may include the physical site of facilities and labor, where the invention was conceived and the location of scientists with background knowledge indispensable to the invention.

The relevant U.K. law, by contrast, applies to any “person resident” in the country and thus applies broadly to any invention made by a U.K. resident anywhere in the world. “Person resident” language appears in the patent laws of India, Malaysia, Singapore, South Korea, New Zealand and France. The potential for expansive interpretation of resident status necessitates careful scrutiny of development teams. Singapore, for example, broadly defines “person resident” to include any person “residing in Singapore by virtue of a valid pass.” Especially problematic is the Indian measure, which does not provide any definition of “person resident” in its patent law—some practitioners report relying on the expansive definition provided in Indian tax law, which could apply to the citizen of any country who has spent a certain amount of time in India.

In one bit of good news, the relevant laws of Germany and Canada, unlike the others, will seldom apply to the majority of multinational development teams. The German law is limited to patents containing state secrets and the Canadian law is limited to inventions by government agents.

So what lessons can be drawn from a review of protective national-first patent application filing requirements? Regrettably, there is little in the way of widely applicable guidance. The clearest common notion among these requirements is “file here first or else.” This, of course, is of little practical value when the conditions for mandatory domestic first filing are triggered in more than one jurisdiction. While there is leniency in some countries for violations that are not willful (the U.S., for example, provides retroactive license grants for applications filed abroad through error) this appears to be the exception rather than the rule, and in any event would seem to be of little value in cases where an affirmative decision is made to meet the requirements of some other country's laws at the expense of U.S. laws. Combine this with a dearth of precedent defining “willful” violation and what remains is a murky situation that warrants a conservative approach.

Speed is key when applying for patent protection. Understanding this, most countries with protective national-first filing laws provide an avenue for obtaining permission to file abroad that does not necessitate filing a domestic patent application. This may help expedite the process, especially in countries that allow initiation of the approval procedure sufficiently in advance of readying a patent application. Yet such a procedure still risks disclosure that may violate another country’s protective requirements and therefore demands caution.

Any entity engaged in cross-border invention is best advised to consult legal counsel in each of the countries whose protective national-first filing requirements might be implicated, and to get all of them collaborating in advance of their technical counterparts creating inventions. This in turn may save all involved from facing a rather insoluble Hobson's choice.

Contributing Author

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David J. Kappos

David J. Kappos is a partner at Cravath, Swaine & Moore LLP. He is widely recognized as one of the world's foremost leaders in the...

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