Magazine article National Defense

Unexpected Pitfalls in Offshore Patent Preparation

Magazine article National Defense

Unexpected Pitfalls in Offshore Patent Preparation

Article excerpt

When contemplating the ethical risks facing contractors complying with myriad regulatory requirements, intellectual property often is overlooked.

Apart from accounting abuses--such as using corporate research and development funds to shelter and indirectly recapture cost overruns on government contracts--intellectual property presents potential risks.

For example, certain practices growing in popularity among cost-conscious patent applicants and large-volume patent filers have created an outsourcing boom.

Industrious, imaginative firms offer U.S. companies the opportunity to have their patent applications drafted by engineers and patent agents in countries such as India and Philippines, where wages are low but the pool of engineering talent is considerable. With e-mail as a convenient mechanism for transferring invention disclosures, business managers and in-house counsel pressured to reduce outside costs logically might turn to one of several off-shore vendors to draft patent applications for filing in the U.S. Patent and Trademark Office (USPTO).

The development of these services is a relatively new phenomenon as globalization and outsourcing of all forms reach new heights. However, use of such services can run afoul of regulatory compliance requirements.

Traditionally, the U.S. company that created an invention would initiate patent protection by filing an application in the U.S. and, to the extent international protection was desired, would file under the Patent Cooperation Treaty an application that eventually could be nationalized in those countries where protection was desired. Before filing the domestic U.S. application internationally, a foreign filing license must be obtained.

The foreign filing license does not authorize any offshore technology transfer that takes place between a U.S. inventor and the foreign firm that drafts the patent application. Rather, that technology transfer must be reviewed in advance to ensure that the subject technology does not require authorization pursuant to either the International Traffic in Arms Regulations (ITAR) or the Export Administration Regulations (EAR) for the export.

If the underlying technology is of U.S. …

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