ASEAN and India – National Security Restrictions And Requirements Prior To Patent Filings By MNC Applicants

In this day and age, more and more multi-national companies are expanding their businesses and research and development operations overseas, hoping to take advantage of the accessibility of diverse ideas and the globalization of human capital by setting up research facilities and conducting R&D in multiple countries. Management of innovations and intellectual property derived from these global R&D operations can be challenging and requires that the IP manager/attorney be familiar with the relevant national laws governing the protection of the invention.

For example, issues may arise when it comes to patenting inventions developed in countries away from the home office. Even greater issues can arise when inventions are jointly conceived by inventors in several countries or by non-native inventors residing in the country where the invention was developed. It is critical to know the laws of those countries which have national security restrictions and provisions requiring that inventions made within their territory and/or inventions made by residents of their country are first filed locally or separately obtaining a security clearance before filing outside the country.

The consequences of failing to comply with the applicable national security requirements can be severe, ranging from fines, loss of local patent rights, through to criminal penalties including imprisonment. In this article we will examine the national security requirements in general and look in detail at the requirements in India, China and the Southeast Asia region, all of which are enjoying an influx of R&D activities from MNCs.

National Security Provisions – In General

National security provisions in patent laws are not new. Many countries have similar laws to protect their national security interests. For example, the United States has had a requirement for patent applicants to obtain security clearance before filing patents outside the US for many years. Title 35 of the United States Code 184 states

“Except when authorized by a license obtained from the Commissioner of Patents a person shall not file or cause or authorize to be filed in any foreign country prior to six months after filing in the United States an application for patent or for the registration of a utility model, industrial design, or model in respect of an invention made in this country.”

The penalty for filing outside the US without obtaining a “foreign filing license” from the USPTO is the loss of US patent rights. Title 35 of the United States Code 185 states:

“Notwithstanding any other provisions of law any person, and his successors, assigns, or legal representatives, shall not receive a United States patent for an invention if that person, or his successors, assigns, or legal representatives shall, without procuring the license prescribed in section 184, have made, or consented to or assisted another’s making, application in a foreign country for a patent or for the registration of a utility model, industrial design, or model in respect of the invention.”

However, if a foreign filing is made without a Section 184 license in error and without deceptive intent, a retroactive license may be obtained.

It is interesting to note that the US restriction relates only to inventions “made in this country [i.e. US].” As such, the restriction does not apply if the invention is made overseas by inventor who is a US citizen or resident. China and Russia also have similar provisions and are only concerned with inventions made within their respective countries (see Article 20.1 of Chinese Patent Law and Article 35 of the Russian Patent Law respectively).

Other countries, however, impose their requirements not on where the invention is made, but based on the residency status of the inventor and/or applicant of the patent. While the residency requirement will generally be applicable for all inventions made in those countries, the laws may also extend to patent applications for inventions made by residents of that country, anywhere in the world.

For example, in the United Kingdom, Section 23 of the Patent Act 1977 provides such provisions for inventions filed by UK residents containing information about military technology or if publication of the invention would be detrimental to national security. However, the UK statute essentially leaves the decision regarding if the invention contains such information or if publication would be detrimental to the applicant. Article 41 of the Patent Act of the Republic of Korea appears similar to the UK provisions. In South Korea, there is no mandatory first filing for a security review required, but there are provisions for a security “hold” to be put on an application as well as procedures for obtaining permission to file abroad for inventions relating to national security. Again, the decision on whether such permission is required appears to be left to the applicant. Section 50, et seq. of the German Patent Act is comparable to the UK and South Korean provisions is also leaving the decision on whether to first file or seek permission to file abroad to the applicant. The German law does, however, give some non-specific guidance by defining what will constitute a “state secret” in Section 93 of the Criminal Code.

These examples show the wide variety of requirements related to national security provisions in global patent laws. With researchers and inventors easily travelling around the globe in pursuit of research opportunities, and with the ease of collaboration between inventors in different countries leading to a single invention, it is a daunting task to keep track and ensure full compliance with the provisions of all the applicable national security requirements.

National Security Provisions in China, India and the ASEAN Countries

China, India and the ASEAN countries are some of the fastest growing countries in terms of R&D activity. Not only are MNCs increasingly setting up their R&D centers in these countries, personnel who may be considered residents of these countries may find themselves contributing to inventions in other countries. For example, it is now common to find that a company employee resident in India, Singapore or Malaysia is the sole or joint inventor of an invention made in China or the US, or a graduate research student resident in one of these countries may contribute to a patentable invention while doing research at a cooperating foreign university. These practical situations again raise important questions regarding how to best protect an invention while at the same time ensuring compliance with national security laws.

China

For inventions developed in China, knowledge of the law regarding national security should provide sufficient guidance so as to avoid problems. As mentioned above, China has a national security law similar to the US. If the invention was developed in China, clearance to file outside China must be obtained before any foreign filings are made. Clearance can be obtained either by filing a domestic patent application along with a request for clearance, or by filing an international (Patent Cooperation Treaty) application in the Chinese Receiving Office. Additionally, a request for clearance may be made without filing a patent application. A domestic patent application filing and a request for clearance without a domestic patent filing must be made in the Chinese language. An international application can be filed in the Chinese Receiving Office in either Chinese or English. If the applicant has not received notification that the application is undergoing a security examination within four months of the request or filing, then the applicant is free to file outside China. Similarly, if a decision on a security examination is not issued within six months of the request or filing, by either issuing a permanent security hold or granting clearance, the applicant is also free to file outside China. It generally takes two to three months to receive security clearance based on a request for clearance. The penalty for failure to comply with the law is loss of Chinese patent rights. If the application is considered to disclose Chinese state secrets, the penalties may range from disciplinary sanctions up to criminal prosecution.

India, Malaysia and Singapore

India, Malaysia and Singapore all have national security restrictions based on the residency of the inventor or applicant, regardless of where the inventive activity occurred (see India, Section 39 of the Patents Act 1970; Malaysia, Section 23A of the Patent Act 1983; Singapore, Section 34 of the Patents Act 1994). The laws and procedures in all three countries are similar, as are the penalties for failure to comply with the security requirements. Security clearance can be obtained by filing a patent application locally and then waiting the specified time period before making any foreign filings. The time period varies by country: six weeks for India and two months for Malaysia and Singapore. Security clearance can also be obtained by applying for permission to file abroad (foreign filing license) in the absence of filing a local patent application. Following an application, a foreign filing license will be issued in approximately 21 days in India (although it has been known to take up to a month), one to two days in Singapore and three to five working days in Malaysia. The penalties for failing to comply with the law include a fine and up to two years imprisonment in all three countries. India, like China and the US, further considers the patent application for the invention to be abandoned.

Other Countries in Southeast Asia

Indonesia, Vietnam, Thailand and the Philippines do not have such provisions in their laws and there are no issues regarding inventions developed in these countries or with residents of these countries inventing elsewhere.

Discussion

When an applicant has to be in compliance with a number of national security laws, determining how best to proceed can be difficult. Fortunately, each of these countries has provisions for obtaining security clearance without first filing a patent application. Some of these clearance procedures are quick (Singapore and Malaysia) while others can delay the time needed before the first filing can be made (India and China). Careful planning and allowing adequate time, is necessary to ensure filings are made in sufficient time so that there is no public exposure or other novelty destroying event prior to the actual first filing date.

In addition to planning for the additional time to comply with national requirements (and in some cases translation), the position of each country’s national law regarding seeking security clearance from another country must be determined. Since these laws are designed to keep state secrets from entering the public domain, the applicant must ensure that the act of petitioning for clearance, with the disclosure of the invention, in one country does not inadvertently put the applicant in violation of the law in another country.

Finally, for countries establishing their requirements on the residency of the inventors or applicants, a clear definition on who will be considered a “resident” is needed. In India, the term “resident” is not defined in the Patent Act. Some people have turned to the Indian tax statutes for a definition of residency (i.e. person living in India for more than 182 days in the preceding year). It is unclear whether such an approach to defining “resident” is acceptable under patent law. Under Singapore law, the definition of “resident” is very broad and encompasses people who are residing in Singapore with a valid pass issued under the Immigration Act, to enter and remain in Singapore for any purpose regardless of the nature of the stay. As obtaining a foreign filing license in these countries is relatively quick and easy, taking a very conservative view of whether an inventor or applicant could be considered a resident seems to be the best practice.

It is always best to work closely with your local qualified patent agents in each of the countries to help pre-empt and resolve any issues associated with national security requirements and help to set up a standard procedure to ensure compliance with all relevant national security laws when inventions are made by residents of one of the countries having their requirements based on residency and in cases where R&D occur in multiple countries. As most countries outside of the US do not have provisions for retroactively obtaining a foreign filing license after a filing has been made and in view of the severe consequences of contravening the security law, therefore, it is most important to ensure that the correct actions are taken in the first instance prior to filing your invention anywhere in the world.

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