How to Prevent Grant Proposals from Undermining Patent Protection
By Jeff Myers and Ann Roberson. Copyright 1998, The Society of Research Administrators, Inc. Reprinted with permission from the SRA Journal, Winter 1997/Spring 1998. Reproduction without permission is prohibited.
Grant proposals are often submitted at the very last minute with a rush to get the documents in overnight mail or transmitted electronically. Seldom (if ever) is any thought given to the potential impact of the grant proposal on patentability of an invention which might be developed in the course of subsequent research. However, proposal developers and faculty members should keep in mind that an invention is not patentable in the United States and most other countries if it was described in a printed publication more than one year prior to the filling date of a U.S. patent application. Furthermore, foreign patent rights are lost immediately upon publication if a priority filing date has not already been established (via a U.S. or foreign application). What does this have to do with the submission of grant proposals? After all, grant proposals are not publications, are they? In the past, the answer might have been "no." Grant proposals have usually not been treated as "printed publications" because of the belief that they are not generally accessible to the public. As a result, the submission of grant proposals to federal agencies traditionally has not been taken into account in determining the patent bar date, i.e., the last date for filing a valid patent application.
However, in a case between DuPont and Cetus, a federal court in northern California held that a National Science Foundation (NSF) grant proposal did constitute a publication because it was "sufficiently accessible" to interested persons who exercised "reasonable diligence." In this case, the grant proposal was determined to be publicly accessible because it had been "filed, indexed by title, author, institution and grant number in the NSF's published indices" and could be obtained through a request under the Freedom of Information Act (FOIA). As this apparent act of publication (i.e., inclusion of the grant proposal in NSF's published indices) took place more than one year prior to the filing of the patent application, the court held that the grant proposal constituted a bar to the award of a patent.
What is the impact of this ruling in the university setting? For example consider a hypothetical case of Dr. Smith, a respected faculty member at a research university. Dr. Smith submits a grant application to the National Science Foundation in which he summarizes the current state of the art, formulates a research plan, and speculates on the anticipated results of that research. NSF later notifies Dr. Smith that his research will be funded for a period of five years. Dr. Smith begins the research several months after submission of the grant proposal. Anticipating a major breakthrough in his research, Dr. Smith is very careful not to publish any manuscripts or make any presentations at scientific meetings which would constitute a public disclosure and start the running of the one-year period. The anticipated breakthrough materializes, and Dr. Smith submits an invention disclosure to the university. By this time it has been almost four years since Dr. Smith submitted his research proposal to NSF and approximately three and a half years since it was first included in NSF's published indices.
In the ruling in DuPont v. Cetus, because Dr. Smith's proposal has been publicly available for more than one year, it is considered to be a printed publication which constitutes prior art for the purpose of determining whether or not Dr. Smith's invention is really new. Dr. Smith may argue that the new technology that he wants to patent was not even invented at the time he wrote the research proposal and could not possibly have been disclosed at that time. Dr. Smith has forgotten that even though he had no research data when he submitted the grant proposal, he correctly predicted the invention. This type of speculation, even by the inventor himself and without any supporting research data, may be sufficient to bar patentability if it is published more than one year prior to the filing of a patent application. Ironically, if the holding in DuPont v. Cetus is followed, Dr. Smith may have forfeited all patentability by the submission of the very research proposal that enabled him to do the work which ultimately resulted in the invention. This ruling is not binding on all jurisdictions but has not yet been contradicted by any other case law.
An effective way of dealing with this unfortunate situation is to prevent it from occurring in the first place. Presumably, if a grant proposal were protected from disclosure under the Freedom of Information Act, then it would not be "accessible to the public" and would not constitute a printed publication which could preclude patent protection. Universities can accomplish this goal by exercising rights available under the Freedom of Information Act, which exempts from disclosure trade secrets and privileged or confidential commercial and financial information. In order to bring a grant proposal with the provisions of the FOIA exemption, each individual page should be stamped "Confidential," and the following legend should be stamped on the front of the grant proposal at the time of submission:
CONFIDENTIAL
This document, or portions of it, contains confidential information that is or may become the subject of a United States patent application and that is important to future commercial efforts based on such confidential information. Accordingly, this document and the confidential information is exempt from disclosure under the Freedom of Information Act, Sections 552(b)(3) and (b)(4) of Title 5 of the United States Code and corresponding regulations of United States Government agencies.
In addition, to emphasize the need for treating a specific proposal as confidential, a cover letter should accompany each grant proposal which is submitted to an agency of the federal government. The following letter* provides a rationale for keeping the proposal confidential and requests that the university and investigators be notified of all requests the agency receives for copies of the proposal under the FOIA.
Dear:
The accompanying grant proposal contains information that is or may become the subject of a United States patent application and that is important to future commercial efforts based on such confidential information. Disclosure of this document and the information it contains may cause substantial harm to such commercial efforts. Accordingly, this grant proposal and the confidential information contained in it are exempt from disclosure under the Freedom of Information Act, Sections 552(b)(3) and (b)(4) of Title 5 of the United States Code and the corresponding regulations of [the Agency]. If any person or entity should request a copy of this document or any portion of it, [University and Applicant] ask that notices of such requests be provided to [Applicant and Designated Official at University] as provided in Executive Order No. 12,600. Thank you for your consideration.
Sincerely,
[Research Officer or other appropriate University official]
In many instances, however, the faculty member may be reluctant to include such a statement. Some faculty (and research administrators as well) feel that to include such a cover letter may reduce the likelihood of receiving funding. Others just feel that it is an inappropriate condition or obligation to include with a basic research proposal. The belief is that placing conditions such as this on the proposal makes it less attractive to reviewers and the agency. Universities may want to use the "stamp" of confidentiality in conjunction with their standard cover or transmittal letter and fully inform their faculty as to the potential for proposals constituting a publication bar date.
Occasionally RFP's will prohibit the inclusion of proprietary information, precipitating a number of problems. Consider the situation that surrounds another hypothetical faculty member. Dr. Jones is a highly productive up-and-coming tenure track assistant professor. Dr. Jones discloses an early-stage invention to the University and then seeks research funding to further explore one expected field of use. Naturally, this is encouraged. However, the federal agency program identified as the one for the highest likelihood of success will not accept proprietary information in proposals and all proposals will be publicly available. Development staff is surprised considering the agency and the nature of the program. With two weeks lead time before the proposal deadline, the University is apparently forced to either refuse to allow the proposal submission (and really upset Dr. Jones), allow the proposal to go forward, possibly losing foreign patent rights and starting the running of the one year period, or quickly file a patent application before fully evaluating the invention's viability. According to some patent attorneys**, changes in language that may seem relatively minor could help protect future patentability. If possible, avoid direct and definite predictions as to the research results. Statements in a proposal that a research plan "should lead to outcomes such as..." or "I believe the research will result in..." may constitute a public disclosure of a potential invention. In any case, a great deal of cooperation among faculty, proposal developers, and intellectual property administrators is required to reduce the likelihood that such a situation may jeopardize a patent position.
In The Journal of NIH Research (November, 1996) Robert Charrow wrote that grant applications and manuscripts may be protected as trade secrets. However, others feel that the commercial nature and requirements of trade secret law may preclude universities from being able to make this claim. There is no clear case law in this area yet.
In conclusion, universities should take steps to protect potential future inventions sooner rather than later. The possibility for public disclosure in proposals is significant, especially with the growing practice of on-line posting of funded proposals or proposal abstracts on the Internet. Universities should be diligent in protecting this information and encourage a high degree of cooperation between intellectual property and research administrators.
