Patents and SR&ED – Public Disclosure?

July 21, 2020 SRED

Updated to Reflect New Policies (2022)

* Some of the policies referenced were updated 2021-08-13. This article has been updated and is accurate as of 2022. *

Patents and SR&ED - Public Disclosure? — Are SR&ED filings considered public disclosure for patents?

One question we have received from clients is, “Does my technical narrative for my SR&ED claim count as public disclosure for patents?” The short answer is no, it does not! In this post, we will explain why it does not count as public disclosure.

Scientific research and experimental development (SR&ED) work often goes hand in hand with patentable work. SR&ED focuses on advancing science and technology. These advancements can lead to the development of a new product or idea which may be eligible for a patent.

Patent Eligibility

According to the Canadian Intellectual Property Office:

To be eligible for patent protection, your invention must be:

new—first in the world

useful—functional and operative

inventive—showing ingenuity and not obvious to someone of average skill who works in the field of your invention¹

In Canada, “the first applicant to file a patent application for an invention is entitled to obtain the patent.”² The Canadian Intellectual Property Office explains, “Publicly disclosing your invention before applying for a patent may make it impossible to obtain a valid patent. It will jeopardize the possibility of you receiving similar rights in other countries.”³ They inform applicants on their Patents Factsheet that they have 12 months from disclosure to file.

Public disclosure does not include discussions of the invention to those with a non-disclosure agreement. Under these circumstances, the one year grace period is not triggered. There are other circumstances where the design of an invention must be disclosed, such as in a technical narrative for SR&ED investment tax credits (ITCs).

SR&ED Technical Narratives

SR&ED submissions require a technical narrative (Form T661) to describe the uncertainties, work performed, and advancements made in no more than 1400 words.

Line 242 states “What scientific or technological uncertainties did you attempt to overcome?”

Line 244 states “What work did you perform in the tax year to overcome the scientific or technological uncertainties described in line 242? (Summarize the systematic investigation or search)”

Line 246 states “What scientific or technological advancements did you achieve or attempt to achieve as a result of the work described in line 244?”

By answering these questions, one will also be disclosing information provided in the patent. The question remains: Is this public disclosure and start the one year grace period? Fortunately, the answer is no.

Disclosure of Patents and SR&ED

Disclosures made on tax forms to the Canada Revenue Agency (CRA) are protected by the Privacy Act. SR&ED submissions are included in this protection.

The Privacy Act defines a government institution as:

government institution means

(a) any department or ministry of state of the Government of Canada, or any body or office, listed in the schedule, and

(b) any parent Crown corporation, and any wholly-owned subsidiary of such a corporation, within the meaning of section 83 of the Financial Administration Act; (institution fédérale)⁴

Additionally, protected information is defined:

Protected information — patents and trademarks

27.1 The head of a government institution may refuse to disclose any personal information requested under subsection 12(1) that is subject to the privilege set out in section 16.1 of the Patent Act or section 51.13 of the Trademarks Act.⁵

According to these definitions, information disclosed to a government institution regarding patents is protected information and is not considered a public disclosure. The CRA and the SR&ED program are obligated to safeguard all personal and protected information. In order to protect personal information, the CRA has developed a Privacy Management Framework to ensure that the Privacy Act is followed by all employees.