US PTO Releases Guidelines on AI Assisted Inventions

The United States Patent Office has issued Guidelines on AI Assisted Inventions.  The press release concerning the guidelines provides:

To incentivize, protect, and encourage investment in innovations made possible through the use of artificial intelligence (AI), and to provide the clarity to the public and United States Patent and Trademark Office (USPTO) employees on the patentability of AI-assisted inventions, the USPTO has published guidance in the Federal Register. This guidance delivers on the USPTO’s obligations under the Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.

“The patent system was developed to incentivize and protect human ingenuity and the investments needed to translate that ingenuity into marketable products and solutions,” said Kathi Vidal, Under Secretary of Commerce for Intellectual Property and Director of the USPTO. “The patent system also incentivizes the sharing of ideas and solutions so that others may build on them. The guidance strikes a balance between awarding patent protection to promote human ingenuity and investment for AI-assisted inventions while not unnecessarily locking up innovation for future developments. The guidance does that by embracing the use of AI in innovation and focusing on the human contribution.”

The guidance, which goes into effect February 13, makes clear that AI-assisted inventions are not categorically unpatentable. The guidance provides instructions to examiners and stakeholders on how to determine whether the human contribution to an innovation is significant enough to qualify for a patent when AI also contributed. It builds on the existing inventorship framework by providing instructions to examiners and applicants on determining the correct inventor(s) to be named in a patent or patent application for inventions created by humans with the assistance of one or more AI systems. It states that patent protection may be sought for inventions in which a human provided a significant contribution to the invention.

Additionally, in order to further assist our examiners and applicants in their understanding of this guidance, examples of hypothetical situations of how the guidance would apply are available on our AI-related resources webpage.

To learn more about what the guidance is and is not, and to get your questions answered and provide feedback, we invite you to attend our upcoming public webinar on March 5 from 1-2 p.m. ET. We also invite you to read the Director’s Blog on AI and inventorship guidance: Incentivizing human ingenuity and investment in AI-assisted inventions.

The full text of the inventorship guidance for AI-assisted inventions and the corresponding examples are available on our AI-related resources webpage. The USPTO will accept public comments on the inventorship guidance and the examples until May 13, 2024. Please see the Federal Register Notice for instructions on submitting comments.

The Guidelines provide a nonexhaustive list of principles to use when analyzing ai-assisted inventorship:

1. A natural person's use of an AI system in creating an AI-assisted invention does not negate the person's contributions as an inventor.^[53] The natural person can be listed as the inventor or joint inventor if the natural person contributes significantly to the AI-assisted invention.

2. Merely recognizing a problem or having a general goal or research plan to pursue does not rise to the level of conception.^[54] A natural person who only presents a problem to an AI system may not be a proper inventor or joint inventor of an invention identified from the output of the AI system. However, a significant contribution could be shown by the way the person constructs the prompt in view of a specific problem to elicit a particular solution from the AI system.

3. Reducing an invention to practice alone is not a significant contribution that rises to the level of inventorship.^[55] Therefore, a natural person who merely recognizes and appreciates the output of an AI system as an invention, particularly when the properties and utility of the output are apparent to those of ordinary skill, is not necessarily an inventor.^[56] However, a person who takes the output of an AI system and makes a significant contribution to the output to create an invention may be a proper inventor. Alternatively, in certain situations, a person who conducts a successful experiment using the AI system's output could demonstrate that the person provided a significant contribution to the invention even if that person is unable to establish conception until the invention has been reduced to practice.^[57]

4. A natural person who develops an essential building block from which the claimed invention is derived may be considered to have provided a significant contribution to the conception of the claimed invention even though the person was not present for or a participant in each activity that led to the conception of the claimed invention.^[58] In some situations, the natural person(s) who designs, builds, or trains an AI system in view of a specific problem to elicit a particular solution could be an inventor, where the designing, building, or training of the AI system is a significant contribution to the invention created with the AI system.

5. Maintaining “intellectual domination” over an AI system does not, on its own, make a person an inventor of any inventions created through the use of the AI system.^[59] Therefore, a person simply owning or overseeing an AI system that is used in the creation of an invention, without providing a significant contribution to the conception of the invention, does not make that person an inventor.

Additionally, the guidelines, related to the duty of candor and reasonable inquiry, state:

For example, patent practitioners who are preparing and prosecuting an application should inquire about the proper inventorship.^[74] Given the ubiquitous nature of AI, this inventorship inquiry could include questions about whether and how AI is being used in the invention creation process. In making inventorship determinations, it is appropriate to assess whether the contributions made by natural persons rise to the level of inventorship as discussed in section IV above.

National Academy of Inventors 2023 World-Wide University U.S. Utility Patent Rankings

The National Academy of Inventors has released its 2023 university rankings for U.S. granted utility patents.  The top 10 include: “1) The Regents of the University of California -- 546; 2) Massachusetts Institute of Technology – 365; 3) The University of Texas System –235; 4) King Fahd University of Petroleum and Minerals –216; 5) Stanford University –199; 6) Purdue University – 198; 7) Harvard University – 186; 8) Zhejiang University –185; 9) Arizona State University –170; 10) California Institute of Technology –156.  Zhejiang University (2022, 16) passed Tsinghua University (2022, 5) as the highest ranked university based in China for 2023.  The list of the top 100 is available, here: 2023-Top-100-Worldwide.pdf (academyofinventors.org).

Discovering or Setting Aggregate Royalties and FRAND Rates for SEP Portfolios?

The European Parliament (EP) is due to vote on the European Commission’s proposed legislation for Fair, Reasonable and Non-Discriminatory (FRAND) licensing of Standard-Essential Patents (SEPs) on 27th or 28th February 2024. Stated objectives include increasing transparency and predictability while reducing transaction costs. Measures include (1) the setting up of a mandatory register for SEPs with essentiality checks of selected and representative random samples of SEPs, (2) a process for determining a non-binding aggregate royalty rate, and (3) a mandatory pre-litigation conciliation procedure for FRAND royalty determination, combined with (4) voluntary guidance on SEP licensing. A new competence centre within the European Intellectual Property Office (EUIPO) will be responsible for these tasks. 

The US and Europe are heading in different directions on how to determine FRAND licensing charges for SEPs. While the US has shunned rate-setting regulation by withdrawing guidance from government agencies including the USPTO, NIST and DoJ and is diminishing proposed law-making, the Commission's interventionist approach prescribes a valuation methodology which a Chinese court has recently used to drastically and defectively undercut established rates.

Whether the EP broadly accepts the Commission's proposed legislation as is, makes significant amendments, rejects some or all of it outright with demands for a radical rethink and do over, the need for sound institutional governance, fit-for purpose methods and quality standards in patent checking and for determining aggregate and individual royalties looms large.

My paper about much of the above has just been published by George Mason University Antonin Scalia Law School’s Journal of Law & Economics. In this, I compare US and European approaches to determining FRAND rates for SEPs when parties are in dispute. I also critically examine how aggregate royalties might be derived, together with the mechanics of “top-down approach” royalty rate setting. The paper with citation "Keith Mallinson, Discovering or Setting Aggregate Royalties and FRAND Rates for SEP Portfolios, 19 J.L. Econ. & Pol’y 1 (2024)" can be downloaded from SSRN, here.

U.S. FTC Supports March-in Rights Guidelines

The U.S. Federal Trade Commission has released a comment in support of the NIST’s guidelines concerning the exercise of march-in rights under the Bayh-Dole Act.  The Press Release states:

Today the Federal Trade Commission issued a comment in response to the National Institute of Standards and Technology’s (NIST) request for information on its Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights under the Bayh-Dole Act.

Under the Bayh-Dole Act, the federal government has the right to “march in” on patents on inventions created using taxpayer funds—to require the patent holder to license the federally funded patent to other applicants. The draft interagency framework provides guidance outlining when the government should exercise its march-in rights, which have never before been utilized. The draft framework makes clear that high price is an appropriate basis for exercising march-in rights. 

In the comment, the FTC applauds NIST, which is part of the U.S. Department of Commerce, and the Interagency Working Group for Bayh-Dole, which includes the U.S. Department of Health and Human Services, for their efforts to reactivate march-in rights as an important check on companies charging Americans inflated prices for drugs developed with taxpayer-funded research. In the comment, the FTC expressed support for an expansive and flexible approach to march-in rights, including providing that agencies can march in on the basis of high prices.

The FTC’s comment draws on its experience in promoting competition and combatting anticompetitive practices in the pharmaceuticals industry. Lack of competition in pharmaceutical markets can lead to inflated pricing, rendering some lifesaving treatments out of reach for many Americans. Nearly three in 10 Americans report rationing or skipping their medications due to high costs. Contrary to industry claims that high drug prices are necessary to fund research and development (R&D), drug prices often depend more on whether the drug faces competition than the drug’s R&D costs. At the same time, pharmaceutical firms enjoy hundreds of billions of dollars of taxpayer investment in R&D. March-in rights are an essential check to ensure that taxpayer-funded inventions are affordable and accessible to the public.

The FTC’s comment further explains that although march-in rights can be a valuable tool to address potential harms in the pharmaceutical industry, broader challenges requiring government-wide solutions remain. For example, dense “patent thickets” result from pharmaceutical companies using increasingly large patent portfolios to protect a single treatment. This may weaken the utility of march-in rights to provide affordable public access to drugs  because some pharmaceuticals may be protected by patent thickets that include privately funded blocking patents in addition to government-funded patents subject to march-in rights. In its comment, the FTC  urges agencies to work collaboratively to also address such patent thickets.

The Commission voted 3-0 to approve filing of the comment.