Outsourcing of Patent Preparation: PTO Says Beware

In a recent notice, the PTO has indicated that it may be illegal to outsource invention information to a foreign county for the purposes preparing a US patent application.

  1. A foreign filing license from the USPTO does not authorize the exporting of subject matter abroad for the preparation of patent applications to be filed in the United States.
  2. Applicants who are considering exporting subject matter abroad for the preparation of patent applications to be filed in the United States should contact the Bureau of Industry and Security (BIS) at the Department of Commerce for the appropriate clearances.

The full notice reads as follows:

The USPTO has become aware that a number of law firms or service provider companies located in foreign countries are sending solicitations to U.S. registered patent practitioners offering their services in connection with the preparation of patent applications to be filed in the United States. Applicants and registered patent practitioners are reminded that the export of subject matter abroad pursuant to a license from the USPTO, such as a foreign filing license, is limited to purposes related to the filing of foreign patent applications. Applicants who are considering exporting subject matter abroad for the preparation of patent applications to be filed in the United States should contact the Bureau of Industry and Security (BIS) at the Department of Commerce for the appropriate clearances. See MPEP Sec.  140 (8th ed., Rev. 5, Aug. 2006). The BIS has promulgated the Export Administration Regulations (EAR) governing exports of dual-use commodities, software, and technology, including technical data, which are codified at 15 CFR Parts 730-774. Furthermore, if the invention was made in the United States, technical data in the form of a patent application, or in any form, can only be exported for purposes related to the preparation, filing or possible filing and prosecution of a foreign patent application, after compliance with the EAR or following the appropriate USPTO foreign filing license procedure. See 37 CFR 5.11(c). A foreign filing license from the USPTO does not authorize the exporting of subject matter abroad for the preparation of patent applications to be filed in the United States.

The Commissioner for Patents has been delegated the authority for controlling exports of technology for purposes of the filing of patent applications in foreign countries. See 15 CFR 734.3(b)(1)(v) and 734.10(b) and 35 U.S.C. 184. The USPTO grants foreign filing licenses in accordance with USPTO regulations. See 37 CFR Part 5. The scope of a foreign filing license granted by the USPTO is set forth in 37 CFR 5.15. Applicants and registered patent practitioners are also advised that foreign filing licenses (for the filing of a patent application in a foreign country) do not authorize the export of any technology that is not specifically submitted to the USPTO as part of a U.S. patent application or a petition for a foreign filing license. For example, the USPTO has received short abstracts, PowerPoint[supreg] slides and even titles of inventions as the disclosure for which a foreign filing license is requested. Although the USPTO will usually process such requests, any foreign filing license granted under 37 CFR 5.15(a) or 5.15(b) on such short description may not authorize filing abroad the ultimate resulting patent applications and may not authorize any additional material added after the initial foreign filing license request. Such additional material that was not submitted to the USPTO for its review may be deemed to have altered “the general nature of the invention in a manner which would require such application to be made available for inspection under such section 181.’ See 35 U.S.C. 184.

The USPTO has established a Licensing and Review Web page on its Web site that includes frequently asked questions regarding foreign filing licenses and related matters. This Web page is located at http://www.uspto.gov/web/offices/pac/dapp/opla/lr/licensing_review.htm. [DDC NOTE: This web address is apparently not working]

This notice does not change existing law or regulations. Thus, while the notice is effective on July 23, 2008, this notice does not excuse or otherwise affect the legal consequence of a failure to comply with existing law or regulations that occurred prior to July 23, 2008.

Information regarding the EAR may be obtained from the BIS Web site at http://www.bis.doc.gov. Questions regarding the EAR should be directed to the BIS’s Outreach and Educational Services Division at (202) 482-4811.

Dated: July 16, 2008.
Jon W. Dudas,
Under Secretary of Commerce for Intellectual Property and Director of
the United States Patent and Trademark Office.
[FR Doc. E8-16830 Filed 7-22-08; 8:45 am]

Notes:

  • Has anyone drafted a legal analysis of this issue that they would be willing to share? dcrouch@patentlyo.com.

92 thoughts on “Outsourcing of Patent Preparation: PTO Says Beware

  1. 92

    To be safe, simply use a US-based search firm, and have your IP attorney (in-house or outside counsel) to request the search. There will be less room for a party to argue that the attorney-client privilege was waived if your confidential materials remain in the United States, and if they were sent by an attorney on your behalf for the patent prosecution related matters. Patent prosecution falls within the scope of “legal advice” for the purposes of attorney client privilege.

    Jeffrey Holden

    Search Manager
    Envision IP, Inc.
    11710 Plaza America Drive Suite 2000
    Reston, Virginia 20190

    jeff.holden@envisionip.com

    http://www.envisionip.com
    Toll Free | (800) 218-1298
    Fax | (641) 795-5351

  2. 91

    Hi, this is Amana,It is very interesting, There are several compelling reasons, however, that should prevent organizations from becoming overly discouraged with the consequences of potential export violations. First, only information that is unpublished (not in the public domain) is restricted by U.S. export controls.7 This means that many patent services can be freely outsourced, even if the invention in question falls within the scope of the ITAR or EAR. In practice, only patent application drafting and early-stage prosecution matters are limited by export controls, because only these services require a full enabling disclosure to be sent abroad. Second, the vast majority of inventions that enter the patent system are entirely unrelated to the sensitive technologies protected by the export laws. In FY 2007, only 128 secrecy orders were issued out of 362,227 applications examined that year.8 Additional research shows that the majority of patents granted each year fall into classifications that do not relate to the restricted items in the CCL or U.S. Munitions List.9 Therefore, while the general concept of patent outsourcing may not sit well with every U.S. attorney, it is hard to argue that the practice of doing so is an unacceptable risk in light of U.S. export controls.

    Avuna
    outsourcing uk jobs

  3. 88

    Hi all:

    There are many patent agents and patent attorneys working in the US who are not US citizens. Some of them are not even permanent residents (not green card holders) who are just working in the US on a work visa.

    Assuming there is no concern related to EAR or ITAR regulations, would these 2 categories of people run into problems with the PTO regulations based on 35 USC 181 et al (i.e. Invention Secrecy Act of 1951)?

    As you know, the PTO (link to uspto.gov) allows aliens to take the Patent Bar and to work in the US to represent US clients in preparing and prosecuting patents. So, does that imply that these people are free from secrecy issues under the PTO’s jurisidctions (35 USC 181 et. al; 37 CFR)?

    Thanks!

    JT

  4. 87

    Hi US Domain or anybody:

    Can you point me to a document (from BIS?) that says that information disclosure to foreign nationals is “Deemed Export” for the purpose of obtaining an EAR license?

    Also, does any of you know about ITAR and
    OFAC regulations which might affect patent attorneys/agents from the above 4 categories who are working for US law firms?

    JT

  5. 86

    Hi US Domain:

    Thanks for the quick response.

    So, the workers of the 4 categories will not run into problems with 35 USC 184?

    However, they will have a problem with the EAR regulations?

    To deal with EAR regulations affecting the foreign nationals of the above 4 categories, here are my questions:

    1. The firm does not always need to obtain EAR license/clearances for the foreign nationals to work on matters since not all technologies are controlled?

    2. How can the firm ensure that the particular technologies that the foreign national will work on are not controlled, not requiring an export license?

    3. Can you get a blanket license for each of the foreign nationals of the law firm physically in the US?

    4. How much does a typical EAR cost?

    5. How long does it take for the BIS to grant a license for the controlled technologies that the foreign national of a US law firm will work on?

    Thanks,

    JT

  6. 85

    JT,

    In other words, valid working visas and green cards allow people to work in this country. They do NOT provide an open invitation as to “what” people can work on.

    Export includes “Deemed Export”, thus whether the information actually leaves the country or not is immaterial.

  7. 84

    JT,
    1. – yes
    2. – yes
    3. – yes
    4. – yes

    Go by the simple BIS definition of what it means to “export”. Each of these situations fall into the “export” category and clearances must be obtained prior to the individuals seeing the matter(s) under development.

    To simply equate “export” with “OUT OF THE COUNTRY” would misunderstand that “export” includes divulging information that may never leave the country – your four situations are examples of such.

  8. 83

    Hello all. A quick question for you. I am just curious.

    Assuming that the PTO is right that the outsourcing of patent drafting violates the EAR and 35 USC 184 (from the Secrecy Act of 1951), would this affect the patent drafting (taking disclosures, meeting with inventor, etc…) and prosecution work of:

    1. Patent agents who are foreign nationals (non-US citizens with no green card/permanent residency) working within the US on a valid worker visa (e.g., H1B)

    2. Patent attorneys who are foreign nationals (non-US citizens with no green card) working within the US on a valid worker visa (e.g., H1B)

    3. Patent agents who are foreign nationals (non-US citizens with green card) working within the US

    4. Patent attorneys who are foreign nationals (non-US citizens with green card) working within the US

    What’s your view on this? I mean, the PTO is already broadly interpreting 35 USC 184 (which unquestionably bars formal foreign patent filing) as to include even disclosure-related activities abroad (e.g., patent drafting work done overseas). So maybe, if the information is disclosed to a foreign national at law firm inside the US, the same bar from Section 184 applies?

    Thanks,

    John

  9. 82

    Senthil

    Applicants who are considering exporting subject matter abroad for the preparation of patent applications to be filed in the United States should contact the Bureau of Industry and Security (BIS) at the Department of Commerce for the appropriate clearances.

  10. 81

    I have read all above comments. But, I propably could not able to see legal analysis or conculsion.

    The commerce control list provided in Bureau of Industry and Security (BIS) has the following technology where it requires necessary clearance from BIS.If the export clearance check reveals that the subject matter is a controlled item, the US companies must seek the necessary clearance from the BIS.

    Category 0 – Nuclear Materials, Facilities & Equipment (and Miscellaneous Items)
    Category 1 – Materials, Chemicals, Microorganisms, and Toxins
    Category 2 – Materials Processing
    Category 3 – Electronics
    Category 4 – Computers
    Category 5 (Part 1) – Telecommunications
    Category 5 (Part 2) – Information Security
    Category 6 – Sensors and Lasers
    Category 7 – Navigation and Avionics
    Category 8 – Marine
    Category 9 – Propulsion Systems, Space Vehicles and Related Equipment
    Supplement No. 2 to Part 774 – General Technology and Software Notes
    Supplement No. 3 to Part 774 – Statements of Understanding

    Without sending information disclosure [as already available in public], some of offshoring IP services will not be affected such as

    1. Invalidity search
    2. Infringement Analsysis
    3. Office action response
    4. Patent mapping and landscapping
    5. File wrapper analysis
    6. Patent Licensing support services
    7. Paralegal Services

    Kindly comment in case my understanding is wrong.

    Thanks

    Senthil

    http://indiapatents.blogspot.com

  11. 79

    “Its about information flow OUT OF THE COUNTRY without being reviewed by the Feds. You are getting all mixed up with s tu p id passport holder theory. You know, in certain countries, people are executed for illegally transmitting information out of country illegally.”

    THE RESPONSE QUOTED ABOVE as being posted by me (Xindiapat) WAS NOT, in fact, POSTED BY ME. I’d never post something so rude on a public forum.

    Something is wrong with the system… just wanted to clarify that.

  12. 78

    “Or huge multinational law firms with interconnected computer systems – any firm partner/associate/secretary (or whatever PC name they go by these days) can see files prior to any export license being issued by the USPTO”

    yes, that is a potential problem —

    maybe multinational law firms should restrict access to invention documents to only their US offices?

  13. 77

    Its about information flow OUT OF THE COUNTRY without being reviewed by the Feds. You are getting all mixed up with s tu p id passport holder theory. You know, in certain countries, people are executed for illegally transmitting information out of country illegally.

  14. 76

    Still waiting (or perhaps I missed it) for any commentary regarding patent drafting of US based R&D technology by expats (American passport holders) living in say – well – India? Kinda like me…

    The technology would obviously be exported to India but the person who receives such exported technology is an American. Is an export license by the USPTO required before such information can be sent to me? If so, then in my office, should I then be the only person to actually work on such an application (as I’d be the only American)?

    This is the opposite scenario from the nonAmerican passport holder (foreign national) living within the US or its territories who needs to have an export license before he/she can work on a patent application.

    Can’t one just apply for a provisional, get your foreign filing license and then draft the claims? Afterall, claims are not required for provisionals. But then I guess you’ll probably run into 112 issues…

    Am I getting all this right? Any comments on the legality of an American national actually drafting patents in foreign countries prior to obtaining a foreign filing license?

    Or huge multinational law firms with interconnected computer systems – any firm partner/associate/secretary (or whatever PC name they go by these days) can see files prior to any export license being issued by the USPTO?

  15. 75

    Max,

    Until the government tells me otherwise (and Just Visiting is right, it will be some agency other than the PTO) yes. There are restrictions on technology exporting, but those are separate from PTO foreign filing license decisions.

    As far as homemade explosives go, that information is on the web, just as it’s still in public libraries.

    If I were to post detailed security schematics for the white house, I would probably be picked up, but for most of the technological stuff like encryption software. I would probably receive an official notice telling me to take it down or else.

  16. 74

    “That’s quite a bombshell Lionel. It can’t be right, can it?”

    Yes it’s right as far as it goes. The PTO would not be the particular group of feds that would be after you for violating EAR by posting stuff on your web page.

  17. 73

    The USPTO can provide an expedited foreign filing license if one petitions (and presumably pays a fee). This takes a few days and can be had for information disclosed or an complete patent disclosure. Although the license is restricted to foreign filing (that is providing associates in foreign countries to draft and publicize) I would assume it logically means that the invention has “clearance” i.e. is not a state secret. In this instance why can that foreign associate not provide a US attorney with a copy of what he drafts for filing in the US as well?
    I understand that the foreign filing license is not inclusive of certain activities, however does that mean that it is exclusive to them?

  18. 72

    That’s quite a bombshell Lionel. It can’t be right, can it? Is there not in the USA what there is in the UK, namely a “National Security” constraint on publishing “whatever” (your word) technological information I please? What about an enabling disclosure of a new and clever way of making explosive devices from raw materials available from the shelves of any branch of Wal-mart? Anybody?

  19. 71

    Millard Duckworth is correct. The foreign filing license only applies to filed applications. I can post whatever technological information I want on my webpage until asked to remove it. There is no issue from the USPTO perspective with having Indian patent practitioners prepare the application.

  20. 69

    The shooting war with the greatest number of DEAD this year is Afghanistan. Period. The war is in both Afghanistan and Iraq.
    Hey Millard, how do you “loot” a map. Guess English spelling is over rated too. Your ignorance of spelliing indicates you may be a PTO examiner, but your ignorance of current events and geography indicates you are a product of American public schools.

  21. 68

    “So, why does anyone think that having a patent application for an invention developed in the US can be prepared (or for that matter filed) abroad before securing a foreign filing license”

    First, you don’t need permission to export technology for making a golf swing trainer out of PVC piping and glue to India.

    Second, the PTO says that they’ve been getting stuff like power point slides and similar to review for a foreign filing license and that they have reviewed those things. Apparently the PTO has been getting information disclosure stuff that will be sent out for outsourcing and have been granting foreign filing licenses on that basis.

    The PTO is simply saying that using a foreign filing license for the purpose of outsourcing drafting of a US application isn’t appropriate even though that would give the opportunity for the US to review the material for a secrecy order.

  22. 67

    “Any useful specific thoughtful commentary on the above would be appreciated.”

    The USPTO doesn’t enter the picture until I file for a US patent. I invent some doomsday weapon and post it on the web for all to see, who’s going to come after me? The USPTO or some export control agency? Why should the PTO suddenly become the export police if I merely intend to file a US patent?

  23. 66

    CORRECTION OF TYPOS IN FIRST SENTENCE

    It seems to me that the reason a foreign filing license is required is to give the USPTO Licensing and Review section time to determine that the application does NOT contain subject matter that should be protected by a Secrecy Order.

  24. 65

    It seems to me that the reason a foreign filing license is to give the USPTO Licensing and Review section to determine that the application does NOT contain subject matter that should be protected by a Secrecy Order.

    The requirement for the foreign filing license applies to inventions developed in the US and its territories.

    It would seem that by sending information for preparation of a patent application (for an invention developed in the US) to India so that the application prepared abroad is suitable for filing before the USPTO — presumably — satisfies the written description, enablement and best mode requirements of 35 USC 112, first paragraph.

    At the point that such patent application prepared abroad (for the invention developed in the US or its territories) would be in the hands of an Indian patent application preparer BEFORE the USPTO — ever would have had a chance to complete its review at its Licensing and Review section because the application has yet to be filed first in the US.

    Now, if that scenario is permissible, then that completely DEFEATS the purpose of requiring an Applicant to secure a foreign filing license before filing in countries outside of the US.

    So, why does anyone think that having a patent application for an invention developed in the US can be prepared (or for that matter filed) abroad before securing a foreign filing license.

    Also, with regard to filing abroad first for an invention developed in the US is likely to run afoul of the provisions of 35 USC 102(d).

    So, it seems OUTSOURCING preparation of such patent applications for US developed inventions – would violate 35 USC 184.

    Any useful specific thoughtful commentary on the above would be appreciated.

  25. 63

    english is overrated

    and to eric in cleveland: the war is in IRAQ. loot at a map.

  26. 62

    Exporting patent application drafting overseas for examination by a PTO examiner who speaks little or no English. McCain-Bush globalization

  27. 61

    There seems to be an underlying assumption that for those cases where the technical material requires it, that it is difficult to get EAR approval or that getting approval cannot be done economically. Is that true? I suspect that those US corps that are having their applications drafted by attorneys in one of their foreing office have this situation covered.

  28. 60

    There are several good law review articles about this on LEXIS, one particular from U of Texas. There are oursourcing issues of compromising atty-client privlege by disclosure to a third party outsourcer. Most importantly, India is next to Afghanistan and Pakistan where there is a WAR GOING ON!!!! Sending the company crown jewels to a terrorist ridden WAR ZONE, I believe this is called “malpractice”.

  29. 59

    Noname: Beats me too. Given that the “quality” is so “very poor” and the price “isn’t very cheap either” it is indeed a puzzle, how come India and China are making so many “tons of” things to sell to North America and Western Europe. Why, there are plenty of practitioners in Western Europe too, that can make high quality cameras, furniture and textiles, yet those ignorant customers keep on going back to China and India with their repeat orders. Except when they want a German car. May I ask: have you met any Chinese patent attorneys recently. The ones I have met are very smart. They know European patent law (and so how to draft for Europe) almost as well as I do. Competition is good, right, and not just for German car manufacturers. Your customers like to see you compete, I take it?

  30. 58

    The quality of most patent applications drafted in India is very poor and the process isn’t very cheap either (specially if you add the cost of export license, etc.). I bet you can find tons of solo US patent agents/attorneys who could be willing do draft patent apps for less and provide much better quality. I am trying to understand why people try to look outside while they could get the work done right here (that too, without putting themselves or their companies at risk of prosecution or malpractice)?

  31. 57

    “Civil penalties – $250,000 fine per violation
    Criminal penalties – $1 million fine and possible prison time”

    LOL. Meanwhile, the execs at those lending institutions who handed out billions of dollars in bad loans and raked in tens of millions of dollars a year in salaries? Government bailout at taxpayer expense.

  32. 56

    “Alan- then you would be in breach of the export rules!? Not sure what the penalty is….”

    Civil penalties – $250,000 fine per violation
    Criminal penalties – $1 million fine and possible prison time

  33. 55

    “Alan- then you would be in breach of the export rules!? Not sure what the penalty is….”

    *Only if* the specific technology is controlled with respect to that specific foreign country and you hadn’t obtained an export license. Most stuff is not controlled. It doesn’t take that long to search the categories of the EAR. As for penalties, I’ve heard various accounts of companies being fined hundreds of thousands US dollars or more.

  34. 52

    “OK. So multi-national company has all US provisionals for project X prepared by attorneys based in their London office. Project X is based at the US site. Therefore one would have to contact the Bureau of Industry and Security (BIS) at the Department of Commerce for the appropriate clearances every time the London site need to draft a patent application?”

    Either that, or get the applications drafted in the US. Of course, they may still need clearance if any company personnel with access to information about project X are “non-US people”. If this proves to be too much of a hassle, they could avoid the issue by basing future projects at non-US sites. Thus, the export controls could ultimately end up backfiring by providing further incentives for outsourcing R&D.

  35. 51

    …..which might be why the UK some years ago abandoned its “blanket” prohibition on flow of potentially patentable info out of the UK, and limited it to info relevant to national security. The surviving provisions accord with common sense, and are decidedly enforceable.

  36. 50

    I totally get that this notice changes nothing. IMHO this notice will have brought to some peoples attention something that they will have passed then by. I know for a fact may companies do what I desribed above and wouldn’t have realised this was an issue. In a global environment it is totally unrealistic that non-published patentable info won’t be disclosed to a non-US person during the normal course of business or during patent preparation.

  37. 49

    This is not new. The export control regs. have been in place for many years, but in recent years there has been increased emphasis on “deemed exports” (of information) to non-US people (people who are not US citizens and do not have a green card). But this isn’t Dudas’ doing. Note that this notice changes nothing. It just seems to be a reminder or clarification of what people should be doing anyway when it comes to export of information as well as goods. If you look at the introduction to export controls at /media/docs/2008/07/07-1.licensing/exportingbasics.htm , you’ll see that a whole lot of stuff is not controlled, such as published information. You can find what technology categories are controlled for what countries via the links at link to access.gpo.gov As for searches, patentability searches are seriously crippled, and drafting is out of the question, if the technology area is controlled, unless you go through the bother of applying for an export license. General state of the art searches and competitive analyses, even for touchy areas, would not require any license as long as you don’t disclose anything confidential, so the non-US person would be dealing totally with open, published information.

    It’s really not as bad as it sounds.

  38. 48

    This is nothing new. I ran into this issue as a corporate counsel, particularly with joint inventorship in US and France. Some judgement needs to be made as to whether the invention and supporting information fall under US export controls.

  39. 47

    OK. So multi-national company has all US provisionals for project X prepared by attorneys based in their London office. Project X is based at the US site. Therefore one would have to contact the Bureau of Industry and Security (BIS) at the Department of Commerce for the appropriate clearances every time the London site need to draft a patent application?

    Sounds like a ‘jobs for the boys’ type policy.

  40. 42

    This is probably the first thing out the Dudasss administration that doesn’t bother me, although I admit that’s just out of my own self interest.

  41. 41

    “Mooney, to you everything is “st[u]pid” or “garbage” or obvious.”

    You forgot “hilarious” and “vile.” And yes those are all commentaries.

  42. 40

    Mooney, to you everything is “st[u]pid” or “garbage” or obvious.

    That is not really commentary.

  43. 39

    Alun,

    It’s called a “deemed export” and it particularly drives universities that have many, many non-US researchers nuts. Give the info to one of these, and the export control rules treat it as if you sent the info to that person’s county. And the question is not will you be punished (that’s a given), but how badly you’ll be punished (including whether you were pro-active in reporting the “goof” that occurred as a mitigating factor on the punishment). Yep, EAR (Commerce), ITAR (State) and OFAC (Treasury), the great “triple threat” to exporting sensitive tech info.

  44. 38

    I’m trying to think if I’ve encountered any stupider laws than that EAR garbage. Also, there’s something about it that really bugs my First Amendment sensibilities.

    But I suppose someone will be here shortly to inform me that ignoring this arcane baloney is “career death,” even if I am careful not to risk the client’s IP rights in the US or abroad.

  45. 37

    Thanks for the mention of the Danish Office. Yet another national Office in Europe short of work. Where’s it all going, I wonder?

  46. 36

    Mark, point taken.

    11 Angry: liked the Occam point. Here’s my variant. PTO bent on constraining app filings. Everything subservient to that. Making apps more expensive would help. Chances of getting a dubious measure approved go up in proportion with the relevance of N_tional S_curity. So, management, bring forward your crazy ideas for throttling back filing numbers. The more they involve NS, the better our chances of getting them implemented.

  47. 35

    Recently, representatives of the Danish Patent Office came for a visit to promote their services. In particular they were suggesting we send them patentability studies, prior art searches, etc. This could put a wrench in their plans for another revenue stream.

  48. 33

    “Sending a disclosure to an EP assoc and instructing them to conduct a search in the EPO” writes “Question”. Amazing. Never heard of it. What’s that then? What fun. Calling all EP associates. Have you ever done that then? How?

  49. 32

    On this blog there is no shortage of entertainment. Compliments to Dennis. Now we read that it’s safe to instruct a searcher in India to search patentability of “the next big thing”, or even “the mext mega thing” before you write the app, but only so long as the disclosure you beam out to India isn’t “fully enabling”. What about a disclosure that’s “almost, but not quite enabling” of some pin point within the scope of your soon to be drafted claim then Mark?

  50. 31

    Sending an invention disclosure to an EP associate and instructing them to conduct a patentability search in the EPO presents problems?

  51. 30

    “Under the EAR, any contact between the technology, and a foreign national, becomes an “export” of the technology, even if that contact occurs in the United States.”

    I am a foreign national registered to practice in, and residing in, the US. This means that every time I prepare a new application it counts as an export. Fascinating.

  52. 28

    One issue that hasn’t yet been raised here: possible waiver of privilege. “Outsourcing” as used in this thread seems to mean giving work to a non-US-licensed person (or even to someone who isn’t a licensed patent practitioner in their home country either); I think this may implicate waiver of privilege down the road, depending on the circumstances.

  53. 27

    Mark, regarding patent searching. The issue is whether transmission of information regarding the invention is allowed. You confuse the issue by focusing on the documents being searched. The invention itself is presumably still a secret, and thus not publicly available.

    Technological Know How is within the scope of Export Administration regulations.

  54. 26

    Ok, in response to the short post above about patent searching, if you are searching “publicly available” information,there is no issue. BTW, the Notice released today does nothing to change existing law.

    – patent searching would be covered by the below section from PART 734
    SCOPE OF THE EXPORT ADMINISTRATION REGULATIONS

    Question H(1): Is the export or reexport of
    information subject to the EAR if it is available in
    a library and sold through an electronic or print
    service?
    Answer: Electronic and print services for the
    distribution of information may be relatively
    expensive in the marketplace because of the
    value vendors add in retrieving and organizing
    information in a useful way. If such
    information is also available in a library — itself
    accessible to the public — or has been published
    in any way, that information is “publicly
    available” for those reasons, and the
    information itself continues not to be subject to
    the EAR even though you access the
    information through an electronic or print
    service for which you or your employer pay a
    substantial fee.

  55. 25

    So what about US-licensed practioners living abroad?
    I don’t think Scott Harris’ comments relate to this.
    PLEASE ADVISE

  56. 24

    “Has anyone drafted a legal analysis of this issue that they would be willing to share? dcrouch@patentlyo.com. ”

    Never fear – I’m sure e6k will show up soon to provide his insightful legal analysis. He’s always willing to share.

  57. 23

    What about patent searching? I know of a firm that sends all of their patent searches to India. That’s got to be crazy in light of what I’ve read so far.

  58. 22

    Whoops, my analysis was off-base. At most, the only thing really being stopped here is using a foreign filing license from the PTO. There are of course other ways of complying with EAR/ITAR.

  59. 20

    I have cut and paste the following section from an article posted on my blog months ago that you may find interesting: link to blog.law-scribe.com

    There are several compelling reasons, however, that should prevent organizations from becoming overly discouraged with the consequences of potential export violations. First, only information that is unpublished (not in the public domain) is restricted by U.S. export controls.7 This means that many patent services can be freely outsourced, even if the invention in question falls within the scope of the ITAR or EAR. In practice, only patent application drafting and early-stage prosecution matters are limited by export controls, because only these services require a full enabling disclosure to be sent abroad. Second, the vast majority of inventions that enter the patent system are entirely unrelated to the sensitive technologies protected by the export laws. In FY 2007, only 128 secrecy orders were issued out of 362,227 applications examined that year.8 Additional research shows that the majority of patents granted each year fall into classifications that do not relate to the restricted items in the CCL or U.S. Munitions List.9 Therefore, while the general concept of patent outsourcing may not sit well with every U.S. attorney, it is hard to argue that the practice of doing so is an unacceptable risk in light of U.S. export controls.

  60. 19

    “The patent office itself has export control rules that cover export of patent applications. These apply only when the technical information has been written into patent application form.”

    I think this is the real issue. The portions of the PTOs rules regarding the limited function of the foreign license appear less likely correct, as the CFR 734.3(b)(1)(v) seems to exempt materials from EAR without limitation to filing abroad once a foreign license is granted.

    However, doesn’t requiring the information to be exported in the form of a patent application pretty much eliminate outsourcing?

  61. 17

    Can anyone say “Occam’s razor”? The PTO “leadership” supports anything that makes applying for patents more expensive, in order to reduce the number of patents. End of story. That explains the CC rules, the IDS rules, the appeal rules, support for A “Q” S, and this too.

    Now, the Dud might actually have a legal point this time, but I’ll bet that if labor in India were 10 times as expensive as in the US, he probably would have posted a notice suggesting that all applications should be written in India.

  62. 16

    Scott Harris (who is famous on Patently-O) wrote the following explanation of the law while a partner at FR.

    Export control
    Perhaps the most difficult and poorly-understood issue confronting offshoring is export control. There are two distinct bodies of export control laws.
    The patent office itself has export control rules that cover export of patent applications. These apply only when the technical information has been written into patent application form. The patent office’s rules about export control do not restrict export of raw technology or information about that technology.

    The Commerce Department has completely separate rules that restrict export control, titled the Export Administration Regulations (EAR) rules. The EAR rules define “technology” as specific information necessary for the development, production, or use of a product. EAR extensively regulates any export of “controlled technology.” Many kinds of technologies, including “computer-related technology” are subject to EAR based export control. As a national security regulation, its violation can lead to criminal penalties.

    The list of export controlled technology is sufficiently comprehensive to control virtually any high-tech item.

    Under the EAR, any contact between the technology, and a foreign national, becomes an “export” of the technology, even if that contact occurs in the United States. Under EAR, a description of export controlled technology cannot be “exported”, that is, it cannot be sent outside the U.S. Under the “deemed export rule”, an export is deemed to have taken place when technology is released or shown to a foreign national, even if that foreign national is in the U.S. Technology is released for export when it is available for foreign nationals for visual inspection, when exchanged orally, or when made available under the guidance of persons with knowledge of the technology. Therefore, technology can be “exported” without the technology even leaving the country.

    The Commerce Department will grant export waivers for technology, including blanket export waivers. Many multinational companies have blanket export licenses covering all of their operations, mooting the effects of the EAR on offshoring. Otherwise, a determination of applicability of EAR will need to be made, and also possibly an export waiver will need to be obtained, prior to offshoring.

  63. 15

    Dennis:

    Looks like there are a number of good questions/issues above. Can you summarize them and send them to Dudas for his response?

    Thanks

  64. 14

    Ironically, one of the companies that has reportedly relied most heavily on outsourcing of patent preparation to India to save $$ is General Electric. Ironic because the head of GE’s patent dept. is none other than former commissioner Q. Todd Dickinson (who, unlike certain more recent commissioners, actually had years of experience in IP law before becoming commissioner). One would assume that someone of his experience and stature would have looked into this issue before outsourcing work to India just to satisfy corporate beancounters.

  65. 13

    The vast majority of filings in the United States are either based on foreign inventions or concern things which are not even remotely related to national security (e.g., pens, business methods, industrial designs etc.). Provided one limits ones outsourcing activities to such areas, what, in real terms, is the risk?

  66. 12

    What if a multi-office U.S. law firm has offices in foreign countries and the computers are networked such that an application being prepared in a U.S. office is accessible on a computer in a foreign office? Or maybe a U.S. practitioner resides at one of the foreign offices and prepares applications for U.S. clients?

  67. 9

    To Mike: Yes, especially if the application is related to DOD (Department of Defense) matters – then the ITAR regulations will likely need to be addressed.

  68. 8

    Realistically, I would be more concerned with the ramifications of SOX in the US if a publicly traded company is involved.

  69. 6

    You would have to be out of your mind to send confidential information regarding a valuable invention to India and making yourself and the information subject to the vagaries of the Indian legal system.

  70. 4

    I wonder whether the “legal consequence of a failure to comply with existing law or regulations” includes invalidity or unenforceability of a patent that had been “outsourced”.

  71. 3

    The question of “outsourcing” the preparation of U.S. patent applications to, for example, India, was brought up during, I believe, a committee meeting at the 2004 AIPLA. The issue of this being trouble relative to the 184 license requirement was mentioned fairly quickly.

  72. 2

    Thanks for the heads-up, Dennis. Does this mean that if I go abroad (say to attend an opposition hearing at the EPO), I have to remove materials from my laptop that pertain to an application I’m preparing? What if I’m a U.S.-licensed practitioner who lives abroad – does this preclude me from preparing applications for U.S.-based entities? If yes to either question, who do I need to address/lobby/buy to get these antiquated rules cast aside? We patent practitioners work on cutting-edge technologies; it’s time we worked under rules that themselves are suited for the 21st century, not the 19th.

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