Comments on the application of Grace Period provisions in Chile, in light of the FTA between Chile and USA

The FTA between Chile and the US entered into force on 1 January 2004. Patent-related Art. 17.9, within the IP section, essentially established a special rule, under which disclosures “made or authorized by, or derived from” the applicant, occurred within 12 months prior to the filing date, could be not cited as prior art.

These are usually known as “Innocuous Disclosures” and commonly fall into two categories: 1) made by the applicant, over which the applicant has control; and 2) unauthorized disclosures of third parties that gain access to the invention, which the applicant usually has no knowledge of.

The Chilean law incorporated both provisions into Art. 42 of the 2005 amendments, particularly specifying the second conditions as a disclosure that has “been made or arises from abuse or unfair practices of which has been an object the applicant or the inventor”.

Although the Law is in accordance with the FTA, the Rules drafted by the Executive afterwards completely changed the spirit of it, by placing a burden over applicants that, over time, has proven to be unbearable in some cases, in view of technological advances. In fact, the Law Rules have always strictly required, even after the 2022 law amendments, that all disclosures must be provided together with the filing of the application.

By the time the 2005 Law amendments came in force, there were few such cases and, for a long time, it appeared as if the rules were correctly set. However, with the rising popularity of social networks, it became apparent the risk for well-known manufacturers, particularly American, which were being constantly spied upon by influencers, media and incumbents; all of them are eager to be the first to leverage their privileged knowledge to increase their audience numbers. On top of that, the fact that publications can go viral has made the problem much worse. Although the applicant  have taken all reasonable measures and exercised due diligence to identify and declare the disclosures that could be identified as non-prejudicial, it’s sometimes practically impossible to find them all.

In the US, this has rarely been a problem, for the application of the Grace Period has historically been very favourable to the applicant. The applicant, for example, may cite those disclosures inside the specification upon filing, or file a statement long after, during examination even, if needed.

Indeed, looking beyond the FTA, we note that the approach adopted by the current Law and Regulations has strayed from its intended objective, as becomes apparent when comparing with the solution adopted by the EPC to address this problem. In fact, although the EPC provides for a much narrower Grace Period (called in Art. 55 as “non-prejudicial disclosures”, only for 6 months prior to the filing date, and only to disclosures resulting from an abuse or when made at an international exhibition), its approach to the point i.e., disclosures resulting from third parties, is particularly interesting. In cases involving evident abuse, applicants are not required to comply with any formal declaration requirement. Instead, when the EPO identifies the relevant document, it assesses the circumstances and gives the applicant an opportunity to submit evidence in support of the exception.

However, more and more often, there have been in Chile cases where, despite the due diligence exercised by the applicant, only at the Examination did the applicant become aware of unauthorized disclosures made in popular networks such as X, Instagram, Facebook or TikTok, or even some pages that blatantly declare their intent to be the first to disclose new products.

To be fair, in some cases, the Chilean PTO has been flexible enough to interpret the Rules to benefit the applicant, for instance, by regarding a Grace Period request to include all disclosures made thereafter that derive from the original one. But there is a growing number of cases where it was the Examiners that have found disclosures even earlier than those previously declared (if done), thus forcing the local PTO to strictly apply the Law and consider those to be novelty-destroying, even if it was impossible for the applicant to find those in the first place, by being outside the term for doing it, making this novelty-related benefit impracticable for certain types of applicants.

By drafting and approving said Rules, Chile has made it in practice most difficult for applicants, particularly the most famous ones, from benefitting from the FTA provisions, thus placing an unequal burden over big companies, as opposed to less-known applicants, which are much less prone to be exposed to this risk.

Further, the current situation not only poses serious legal issues when considered in view of Art. 707 of the Chilean Civil Codex, which presumes good faith unless the contrary is stated by Law, but also constitutional ones, given that the Rules are placing an unequal burden over applicants, depending on their popularity.

What the Law Rules are practically requiring for big companies is then to perform a network-wide scan (practically, to create a special department for that or developing new automated technologies that continuously monitor online media), in the hope of finding all prior disclosures, and in the hope that the Examiners do not find more during Examination, long after the application has been filed.

As such, it is apparent that the Executive Branch, when drafting the Law Rules in 2005, did not foresee the consequences of creating such a rigid procedure, yet there is no reason why it did not learn from related foreign legislations that were already in force at the time, which were more flexible in adapting to new scenarios such as these ones.

Regarding this last aspect, considering that Chilean IP law and practice have been largely shaped by the EPC framework, it is hard to understand why the Executive drafted such a restrictive approach, which has proven to be an unfair and, for certain cases, a completely unapplicable rule.

Therefore, there is considerable room for improvement in Chile to bring the mentioned Law Rules into closer alignment with the underlying purpose of the FTA provisions governing “Innocuous Disclosures” / “Non-prejudicial disclosures”. The good news is that it doesn’t require an amendment to the Law, which would require congressional approval, since the Executive Branch may amend the Rules without touching the Law. It is hoped that this is finished before the non-compliance of Chile in relation to this point exposes the country to unintended consequences.