(1) UNPATENTABLE SUBJECT MATTER.—A patent may not be obtained for a tax
planning method.

(2) DEFINITIONS.—For purposes of paragraph (1)—
(A) the term ‘tax planning method’ means a plan, strategy, technique, or scheme that is designed to reduce, minimize, or defer, or has, when implemented, the effect of reducing, minimizing, or deferring, a taxpayer’s tax liability, but does not include the use of tax preparation software or other tools used solely to perform or model mathematical calculations or prepare tax or information returns;

* * *

(b) APPLICABILITY.—The amendments made by this section—
(1) shall take effect on the date of the enactment of this Act;
(2) shall apply to any application for patent or application for a reissue patent that is—
(A) filed on or after the date of the enactment of this Act; or
(B) filed before that date if a patent or reissue patent has not been issued pursuant to the application as of that date; and
(3) shall not be construed as validating any patent issued before the date of the enactment of this Act for an invention described in section 101(b) of title 35, United States Code, as amended by this section.

Prof. Duffy, noting his background in administrative law, suggested that Ms. Knowles would not be happy if the Supreme Court ever got their hands on the case. When Ms. Knowles stated that she thought the Supreme Court would provide a more favorable ruling for GSK than the Federal Circuit did, Prof. Duffy jokingly advised her to hire some new attorneys. When asked about his Supreme Court prediction after the session, Prof. Duffy indicated that the Supreme Court (where he once clerked) was not as familiar with patent law as it was with administrative law, and therefore, the Court would likely defer to the USPTO with respect to its interpretation of 35 U.S.C. § 120, and thus find the rule limiting continuations to be consistent with that section.

Interestingly, Judge Newman, who dissented from the Abbott majority, wrote the opinion in In re Thorpe, 777 F.2d 695 (Fed. Cir. 1985), where it was stated that

Product-by-process claims are not specifically discussed in the patent statute. The practice and governing law have developed in response to the need to enable an applicant to claim an otherwise patentable product that resists definition by other than the process by which it is made. For this reason, even though product-by-process claims are limited by and defined by the process, determination of patentability is based on the product itself. In re Brown, 459 F.2d 531, 535, 173 USPQ 685, 688 (CCPA 1972); In re Pilkington, 411 F.2d 1345, 1348, 162 USPQ 145, 147 (CCPA 1969); Buono v. Yankee Maid Dress Corp., 77 F.2d 274, 279, 26 USPQ 57, 61 (2d Cir.1935).

The patentability of a product does not depend on its method of production. In re Pilkington, 411 F.2d 1345, 1348, 162 USPQ 145, 147 (CCPA 1969). If the product in a product-by-process claim is the same as or obvious from a product of the prior art, the claim is unpatentable even though the prior product was made by a different process. In re Marosi, 710 F.2s 799, 803, 218 USPQ 289, 292-93 (Fed.Cir.1983); Johnson & Johnson v. W.L. Gore, 436 F.Supp. 704, 726, 195 USPQ 487, 506 (D.Del.1977); see also In re Fessman, 489 F.2d 742, 180 USPQ 324 (CCPA 1974).

While not stated in Thorpe, it is generally known that, when the process steps "confer a structure or characteristic of the product which distinguishes it from products made by other processes, the process steps should be considered." In re Garnero, 412 F.2d 276, 279 (CCPA 1979).

While the CAFC majority commented that the Abbott ruling "follows this court’s clear statement in In re Thorpe that 'product by process claims are limited by and defined by the process'" (slip op. p. 18), it appears this quote is taken out of context, as the full quote (highlighted above) states that "even though product-by-process claims are limited by and defined by the process, determination of patentability is based on the product itself" - which appears to mean something different from from the majority interpretation.

In fact, Judge Newman, author of In re Thorpe, called the majority out on this in the Abbott dissent:

My colleagues are mistaken in stating that Thorpe held that all such claims are to be construed as process claims, even when the product is new and the rule of necessity justifies this mode of describing the invention. In Thorpe the product was not new; it was a known color developer for carbonless paper copy systems, and this court held that the PTO correctly rejected the claim to “the product of the process of claim 1,” explaining that since the product was old it could not be claimed as a product, whether or not process steps are recited in the claim. (slip op. p. 18)

Indeed, the USPTO has been tacking its rejection of product-by-process claims using Judge Newman's interpretation of Thorpe - since the beginning of this year, the BPAI has issued roughly 35 rejections of product-by-process claims using Thorpe, and they don't appear to be construing the claims pursuant to the Abbott majority.

Yikes . . .

[T]he Supreme Court has reiterated the broad principle that "[e]ach element contained in a patent claim is deemed material to defining the scope of the patented invention." Warner-Jenkinson, 520 U.S. at 19. Although Warner-Jenkinson specifically addressed the doctrine of equivalents, this rule applies to claim construction overall. As applied to product-by-process claims, Warner-Jenkinson thus reinforces the basic rule that the process terms limit product-by-process claims. To the extent that Scripps Clinic is inconsistent with this rule, this court hereby expressly overrules Scripps Clinic.

The dissenting opinions lament the loss of a "right" that has never existed in practice or precedent – the right to assert a product-by-process claim against a defendant who does not practice the express limitations of the claim. This court’s en banc decision in no way abridges an inventor’s right to stake claims in product-by- process terms. Instead this decision merely restates the rule that the defining limitations of a claim – in this case process terms – are also the terms that show infringement.

Thus this court does not question at all whether product-by-process claims are legitimate as a matter of form. The legitimacy of this claim form was indeed a relevant issue in the nineteenth century . . . However, this court need not address that settled issue. The issue here is only whether such a claim is infringed by products made by processes other than the one claimed. This court holds that it is not.

Product-by-process claims, especially for those rare situations when products were difficult or impossible to describe, historically presented a concern that the Patent Office might deny all product protection to such claims. See In re Butler, 17 C.C.P.A. 810, 813 (CCPA 1930) ("Process claims are valuable, and appellant thinks he is entitled to them; but it is submitted that he should not be limited to control of the process when the article which that process produces is new and useful."). In the modern context, however, if an inventor invents a product whose structure is either not fully known or too complex to analyze (the subject of this case – a product defined by sophisticated PXRD technology – suggests that these concerns may no longer in reality exist), this court clarifies that the inventor is absolutely free to use process steps to define this product. The patent will issue subject to the ordinary requirements of patentability. The inventor will not be denied protection. Because the inventor chose to claim the product in terms of its process, however, that definition also governs the enforcement of the bounds of the patent right. This court cannot simply ignore as verbiage the only definition supplied by the inventor.

Heretofore a new product whose structure was not fully known or not readily described could be patented as a product by including in the product description sufficient reference to how it can be made, to distinguish the new product from prior art products. Patentability was determined as a product, independent of any process reference in the claim, and validity and infringement were based on the product itself. This expedient for patenting products whose structure was not fully known at the time of filing the patent application has been called the "rule of necessity." It was pragmatic, fair, and just, for it attuned patent law and practice to the realities of invention.

Today the court rejects this expedient and discards this practice, ruling that all claims containing a process term under the rule of necessity now must be construed, for purposes of infringement, as limited to use of any process term that was used to assist in defining the product. That is, such a product is not patented as a product, however it is produced, but is limited to the process by which it was obtained. This is a new restraint on patents for new products, particularly today’s complex chemical and biological products whose structure may be difficult to analyze with precision. It is a change of law with unknown consequences for patent-based innovation.

The court acts sua sponte, without explanation of what policy is intended to be served by this change, without consideration of the technologies that may be adversely affected by elimination of this expedient, without notice to those whose property rights may be diminished. In so doing, the court departs from statute, precedent, and practice. This change is as unnecessary as it is flawed, gratuitously affecting inventions past, present, and future. I respectfully dissent.

An application data sheet (ADS) is a document that provides the bibliographic data for an application to the USPTO.  The USPTO prefers, but does not require, the use of an ADS.  An ADS can be advantageous, however, because it tends to reduce errors in the conversion/recordation of application data into the  USPTO’s official electronic  data record.  While electronic filing via the USPTO’s EFS-Web has certainly reduced some errors, the USPTO relies on the uploaded documents (e.g., declaration, specification), rather than a user’s input, to create its official electronic record.  For example, in a national stage application filed under 35 USC § 371, the USPTO might look to the publication of the international application for the title and to other documents for the listing of inventors and the correspondence address.   The use of an ADS, because it provides this information in a single document and in a specified format, improves the accuracy of this conversion and the resulting electronic record.

Examples of What Can Happen Without an ADS
The USPTO’s procedures for converting the application data of paper applications and for recording electronic data into its official data record are surprisingly accurate, in view of the number of application data records it must create.  Nonetheless, as with any system, errors do occur.  And, even when they are remedied early in the prosecution process, they still take time and can cause processing delays.  Worse yet, sometimes errors in the USPTO data records are not corrected.  Consider the following U.S. patents, which could have benefited from an ADS:

1. U.S. Patent Nos. 6,112,451, 6,631,400, and 6,637,044, each for a “Statement Regarding Federally Sponsored Research or Development”;
2. U.S. Patent No. 7,263,562 for a “Method and System for Describing Uploaded Files Statement Regarding Federally Sponsored Research or Development”; and
3. U.S. Patent No. 6,389,215 for “Low Birefringent Polyimides for Optical Waveguides Statement Regarding Federally Sponsored Research or Development”.

And then there are:

1. U.S. Patent No. 6,930,045 for “Cross Reference to Related Application”;
2. U.S. Patent No. 6,829,526 for a “Train Detection System and a Train Detection Method Cross Reference to Related Application”; and
3. U.S. Patent No.  6,786,734 for an “Electrical Adapter With a Foldable Housing Cross-Reference to Related Application”.

Clearly, there are instances when an ADS would have helped the USPTO more accurately convert bibliographic information into an official data record.

The Requirements for an ADS
37 CFR § 1.76 governs application data sheets and sets forth specific requirements for each ADS.  The following are some of the more noteworthy.

1.  An ADS may be used in provisional and nonprovisional applications.  37 CFR § 1.37(a).

2.  The USPTO offers a fillable pdf form (Form PTO/SB/14) on its website here.  CAUTION - The USPTO ADS fillable form must be submitted as a text-based PDF file. A scanned version of the ADS fillable form will be rejected via EFS-Web because EFS-Web will not be able to auto-load scanned in data into backend systems.   (Answer to USPTO.GOV EFS-Web Help FAQ # 252).

3.  An ADS must be in a specific format.  An ADS must be titled “Application Data Sheet” and must contain all of the following section headings, with any appropriate data for each section heading:

1. Applicant information (i.e., the name, residence, mailing address, and citizenship of each applicant);
2. Correspondence information (i.e., the correspondence address, which may be indicated by reference to a customer number);
3. Application information (i.e., the title of the invention, a suggested classification, by class and subclass, the Technology Center to which the subject matter of the invention is assigned, the total number of drawing sheets, any docket number assigned to the application, the type of application);
4. Representative information (i.e., the registration number of each practitioner having a power of attorney in the application);
5. Domestic priority information (i.e., the application number, the filing date, the status, and relationship of each application for which a benefit is claimed under 35 U.S.C. 119(e), 120, 121, or 365(c));
6. Foreign priority information (i.e., the application number, country, and filing date of each foreign application for which priority is claimed) (NOTE - providing this information in the application data sheet constitutes the claim for priority as required by 35 U.S.C. 119(b) and § 1.55(a); and
7. Assignee information.

37 CFR §§ 1.76 (a) and (b).

4.  Providing domestic priority information in an ADS constitutes the specific reference required by 35 USC § 119(e) or 120, and 37 CFR §§ 1.78(a)(2) or 1.78(a)(5), such that this information need not otherwise be made part of the specification.  37 CFR 1.76 (b)(5).

5.  The USPTO will interpret any blank section in an ADS to mean that there is no corresponding data for that label anywhere in the application.  37 CFR § 1.76(a).

6.  In the event of an inconsistency between the ADS and other submitted documents, the timing of the submission of the conflicting information controls.

• When the conflicting information is submitted at different times - the latest submitted information governs regardless of how it is supplied, except that an oath or declaration governs inconsistencies in the naming of inventors or their citizenship.
•  When the conflicting information is submitted at the same time - the ADS will govern when the inconsistent information is supplied at the same time, except that an oath or declaration governs inconsistencies in the naming of inventors or their citizenship.

37 CFR 1.76 (d)

But I suggest that as we move forward . . . that it's worth pausing to consider for just a minute what do we really mean when we're talking about more patent quality. Certainly lay people and maybe some lawyers could be forgiven if they take that as a suggestion that a very large number of patents are just flat-out invalid. That is, the entire patent is a piece of junk, worth nothing, illicitly granted.

I've been on the court for twenty years and eight months, and I cannot ever remember seeing a single patent, I'm sure they're out there, but I can't remember seeing one where every single claim was invalid. I've seen innumerable patents where some of the broader claims either were indefinitely broader or were damn close, but in all of those cases, the narrower claims seemed to me equally clearly to be plainly valid. So what we really have is a problem of some over-broad claims getting through the system, slipping through the sieve that in the ideal world would catch them.

I keep hearing that we have a ‘litigation explosion’ in patent infringement cases. I keep hearing that we have lots of ‘wasteful litigation.’ I keep hearing we have excesses and abuses of certain types of defendants or maybe plaintiffs in some of these cases. I also read that for quite a number of decades now, the percentage of extant patents sued on has remained almost exactly the same, at about percent, so if you have a lot more patents out there, you would expect more lawsuits, and that's exactly what you get.

 

Now, of course you can say, yeah, but they're all bad patents. Well, maybe or maybe they're partly bad and partly good, so a little hard to be sure. I'm a skeptic about whether we have an excess amount of wasteful litigation or a crisis or a patent litigation explosion.

 

Now, as you may have heard me already throw out the number, about 3,000 patent suits filed a year, but the more interesting numbers that start to reduce that is that about 90 percent settle voluntarily. Now, of course now you may say, but yeah, only under coercion and under threats, under a gun at your head. All those kind of arguments. Well, maybe. Maybe. But 90 percent never go to trial, so when we're talking about trial expense, trial delay, not minor matters, we're not talking about 90 percent of the lawsuits. We're talking about 10 percent of the lawsuits. What happens to the 300 that don't fall out on voluntary settlements between the parties?

 

Well, over two-thirds of them get resolved on summary judgment. Now, summary judgment isn't cheap. I'm not trying to make that argument, but it's a lot less expensive than a full trial, lots less, and much faster almost always, not in every case, but normally.

 

So now we're down to about a hundred trials per year, ball park figure. (All these figures are just ball park figures). If we step back and we say, all right, we're a nation, highly developed, high technological, fully industrialized advanced nation of 300 million people. We have something like a million and a half patents in force, and we have what, 30,000 companies in the marketplace? I don't even know the exact number, but accept the notion that it may be somewhere like 30,000 players. Are a hundred trials excessive in a country of that size and that vitality with that many patents extant? And what happens when there are trials? Most of them get affirmed on appeal. Of course, that also means some get reversed, but the numbers again are kind of instructive.

So, of course, the magic bullet is a new kind of reexamination in the Patent Office. That's what everybody says will solve the problem. Why? It will be faster and cheaper than court trials. Well, maybe. In the real world, we've got a Patent Office that struggles to keep up with its current work. What basis would we have for confidence, particularly if it doesn't have a tripled budget, that it can run in-house what amounts to a court system with cross examination and discovery rules and a Judge presiding and making fact findings or Administrative Patent Judges even trained for this? How hard would it be to get them up to speed to function just the way District Court Judges do or ITC administrative judges in patent cases? I think these are hard questions, and I don't think the answers are too obvious, but they certainly give me a lot of pause.

* * *

Now, certainly the existing reexamination process has been less than a stellar success, and it certainly doesn't look faster than the courts, as slow as the courts are, compared to how they should be. I can't testify about how much cheaper it is, but the stories I've heard don't sound too encouraging, and then there's a big question of: Is it adequately accurate? Is it more accurate than what would happen in a well-run district courtroom? I'm not sure.

* * *

I'm told that the average examiner has been in the corps less than three years. Less than three years! That's a horrible fact in this country, even for our ongoing system of ex parte examination. If you try to lay on top of that a new beefed up litigation-like re-exam process, are there people there who can do it? Can the examiners do it? Can the supervisors do it? Even the board is also drowning in cases. They've greatly expanded in recent years. I think it's somewhere up to in the neighborhood now of 80 Administrative Patent Judges. What do they need, 160, 390? No one even knows what they would need to run these trials.

Now, of course when you talk about the courts, their awards, people talk about excess damages. Everyone can cite some example of what they consider a horrendously excess damage award. A fair number of what I've read in print turn out to be nonexistent cases. I kept reading about the windshield wiper case where the cost of the car was used as the metric of damages, but I haven't been able to find such a case.

 

And Professors Jaffee and Lerner, who are very highly qualified economists, wrote in their book, which many of you read, that the courts often give double damages and actually cited a case that I was involved in as an example of double damages, and they said that I gave both lost profit damage and reasonable royalty damages to the winning patentee. Well, yeah, the Court did. Of course it did, because it was for different products and different time ranges, two different forms of damages, but they weren't -- but that's not double payment. That's paying once, so there's a lot of misunderstanding out there.

 

There are a lot of apocryphal cases that turn out to not really exist, and there are certainly some very large damage numbers; no question about that. On the other hand, most of those large damage amounts involve very large markets, very large profits, so we shouldn't be surprised, I wouldn't think. In any event, a few examples, if they're not very representative, hardly prove that excesses are common, but that's the charge, that half the time the damages are wildly out of proportion to anything that would be sustainable in common sense. It's easy to use words like ‘appropriate.’ The FTC talks about whether damages are ‘appropriate.’ Well, it's a little bit in the eye of the beholder. What you might think was appropriate I might think was way too little or way too much, but it's a pretty inexact yardstick.

Then the argument keeps shifting. Well, it's not so much the number of infringement suits filed every year, it's who's filing. Well, why should we assume that a non-manufacturing patent owner shouldn't be allowed to enforce its patent? What is wrong with a university owning patents based on research of its faculty scientists or research institutes or small inventors or small innovative companies that either can or don't want to try to manufacture products themselves but license their inventions so others can make them?

 

Well, are these patentees really illegitimate somehow? I mean, after all, at least up until now a patent has given its owner the right to exclude, not the obligation to make. Then some say, well, it's not so much the non-practicing entities, it's certain companies that don't invent at all, but merely acquire and enforce patents, and of course calling them ‘trolls’ just confuses the analysis because obviously a troll is a bad thing.

It's a pejorative label. (Some people who used to complain about trolls allegedly have become trolls). But I don't think that it's helpful -- it's a slogan. It's a label. It's an excuse to not think carefully about the problem, as far as I'm concerned. It's like talking about ‘questionable patents.’ It's an excuse to not think carefully about the problem as far as I'm concerned. It's like talking about questionable patents. It's not helpful if we're going to try to diagnose the real illness and prescribe a useful medicine.

Besides, patents, like any other form of property, the essential element of property is it is alienable. You can sell it. You can sell it to anybody you want to for whatever price you want to sell it. Why should that be prohibited? Why should I be prohibited from buying patents if that's what I want to do, whether I invented them or not, whether I am going to practice them or not, whether I'm a research institution or a university or not? There might be some reasons. Maybe some of them are good, but it's not self-evident, at least not to me.

 

Then there's certainly the debate about motives. Well, they just want to acquire patents so they can squeeze royalties out of infringers. Well, yeah. Hey, this is commerce. This is about money. This is not an altruistic system. The whole constitutional idea was that the incentive of monetary gains would motivate innovation at a greater rate and to better ends than if the lure of money wasn't there, so I'm a little dismayed when I see it even creep into footnotes of Supreme Court opinions, that certain patentees were just trying to squeeze money out of the accused infringer. Well, all kinds of patentees are trying to squeeze money out of the accused infringer. That's what the lawsuit is all about, so come on. Let's be a little more adult about it than to worry about the greedy motive of the patentee. Of course the patentee is greedy.

Wyers v. Master Lock Co., 1-06-cv-00619 (COD May 12, 2009, Order)

Plaintiff successfully asserted that Master Lock infringed four patents relating to barbell-shaped locks with removable sleeves, and the jury awarded $5.35M in damages as a reasonable royalty. Master Lock motioned the court for Remittitur, arguing that the jury misapplied the Georgia-Pacific factors.

One issue was that the damage amount appeared to have been reached by awarding Wyers approximately half of the profits they would have received had Master Lock sold the offending locks under the private label agreement they formerly had with Wyers. Despite this, the court viewed that plaintiff's substantial evidence (e.g., reliance on the patented features, non-infringing alternatives, commercial success, etc.) was sufficient to support the jury’s verdict.


Master Lock also argued that $5.35 million—which represented 24% of Master Lock’s
proceeds from the sales of the infringing locks—exceeded its profit margin of 15%. Here, the court responded that,

At trial, [] Wyers presented evidence showing Master Lock’s profits were closer to 60%—a number similar to Wyers’s own profits. As shown by the $5.35 million amount, the jury implicitly found the actual profit margin to be higher than the 15% claimed by Master Lock. The jury was not obligated to believe Master Lock’s expert any more that it was obligated to believe Mr. Wyers. It would be inappropriate, therefore, to override the jury’s verdict based on such a credibility question. The jury could reasonably conclude hypothetical parties in the position of Wyers and Master Lock would negotiate a royalty of 24% in light of an anticipated 60% profit margin. See Rite-Hite Corp. v. Kelley Co., 56 F.3d 1539, 1555 (Fed. Cir. 1995) (holding it was “not unreasonable for the district court to find that an unwilling patentee would
only license for one-half of its expected lost profits and that such an amount was a reasonable royalty”).

As noted by Wyers, however, Federal Circuit authority holds that—for purposes of calculating a reasonable royalty—a patentee may recover a royalty based on the value of the entire infringing apparatus so long as the patented feature provides the basis for consumer demand. See Rite-Hite, 56 F.3d at 1549. Evidence presented at trial—including Master Lock’s marketing materials, product packaging, and sales figures, as well as Mr. Wyers’s testimony—showed the sleeve and external seal drove the market demand for the hitch pin locks Master Lock sold. Although Master Lock presented testimony suggesting that customer service, quality, and brand recognition were more important to driving sales than the claimed inventions, the jury was not obligated to find this testimony persuasive over the documentary evidence or Mr. Wyers’s testimony.

Wednesday, May 13, 2009

Everything You Ever Wanted to Know About the Current State of Patents and Patent Law

Imagine a "who's who" list of patent scholars, practitioners, in-house counsel, government officials, IP brokers and policy makers - who were all placed in a single room with a microphone for 6 full days to speak individually about their experiences and opinions on various aspects of patent law. A transcript of the speeches/discussions would surely be a valuable asset to anyone looking to learn from the practices and observations of others.

The Federal Trade Commission (FTC), who recently completed a whirlwind tour of public hearings in California and Washington DC has now begun publishing transcripts of these meetings and has made many of them available, along with the presentation material provided with each session. While some of the transcripts are missing from the FTC site, the 271 Blog has done some sleuthing and has located copies elsewhere, with the exception of the May 4-5 hearings.


FTC HEARING ON THE EVOLVING IP MARKETPLACE


DECEMBER 5th (2008) HEARING
Panel 1: Developing Business Models
Panel 2: Recent and Proposed Changes in Remedies Law
Panel 3: Legal Doctrines That Affect the Value and Licensing of Patents

TRANSCRIPT (link)

Panelist Presentations:
• Thomas Cotter, Remedies for Patent Infringement: Theory and Practice
• Peter N. Detkin, To Promote the Progress…of Useful Arts: Investing in Invention
• Q. Todd Dickinson, Federal Trade Commission Workshop: Recent and Proposed Changes in Remedies Law
• Brian Kahin, The Patent Ecosystem in IT: Business Practice and Arbitrage [Written Version]
• Daniel P. McCurdy, Unique Operating Companies Involved in Patent Litigation with NPEs; Patent Litigation Involving NPEs and Operating Companies
• Roderick R. McKelvie, Seagate Plus One: How the District Courts are Implementing Seagate; Seagate Plus One (Article)
• Joseph Scott Miller, Testimony of Professor Joseph Scott Miller, Lewis & Clark Law School - Legal Doctrines That Affect the Value and Licensing of Patents (Panel 3)
• Raymond Millien, The IP Marketplace Players
• John A. Squires, Patent Remedies: Can Quanta Finish What eBay Started? [Written Version]
• Jay Thomas, Patent Damages: Principles and Current Problems
• Duane R. Valz, Yahoo! Inc- FTC Hearing on The Evolving IP Marketplace
• Mallun Yen, Cisco Systems, Inc. FTC Hearing on the Evolving IP Marketplace [Written Version]

--------------------------------------------------------------------------

FEBRUARY 11th - 12th HEARING, WASHINGTON DC
February 11 - The Evolution of Remedies (Damages)
Panel 1: Patent Damages
Panel 2: Industry Roundtable discussion


TRANSCRIPT (link)


February 12 - The Evolution of Remedies (Damages)
Panel 1: Changes in Injunction Law
Panel 2: Industry Roundtable discussion

TRANSCRIPT (link)

The FTC page for these hearings may be viewed here (link), which contains much of the aforementioned material, with the exception of some of the transcripts listed above.

[A] surprisingly large share of applications is kept pending without request for examination, in 20% of all filings even for the maximum period of seven years. For applications with low value or low probability of grant, this creates insecurity for competitors and is thus preferable to an early withdrawal or an early, and likely negative, decision by the examiner. Second, a longer pendency period gives the applicant more time to assess the value of requesting examination. We find that for 17% of all GPTO direct filings, a request for examination is made with delay, that is, after publication of the application.

Evidence from interviews suggests that firms strongly benefit from maintaining pendency of patent applications that cover rather abstract technologies whose market is considered strategically important as a whole, but which are not yet embodied in concrete products. It seems that in such cases a pending patent application offers enough protection while at the same time involving lower cost (e.g. no examination fee, no prosecution cost). As soon as “full” protection is required (e.g. when a product will be launched soon), the applicant can easily induce examination of the patent. Our data shows that this strategy is mostly used by firms (in contrast to individuals): 90.4% of all patents that were pending for seven years before examination started were filed for by corporations or institutions.

Our interviews further suggest that individual applicants who keep their filings pending do so in order to save examination cost while searching for licensees. A majority of 54.8% (which is far above average) of all early lapsed patent applications is filed by individuals suggesting low commercial value of the underlying inventions. The remaining 41.6% (more than 2 % of all filings) are early lapsed corporate or institutional filings. They are strong candidates for being DPs [defensive publications], or in any case for having a large value component related to creating FTO. While we can currently not exclude that the applicants did file initially with the intention of obtaining a patent grant, and within two years realized that a request for examination would be of little value (because of a low probability of grant, or a low value of the resulting patent, if granted), interpreting these filings as DPs is very plausible. First, this interpretation is suggested by qualitative evidence. Second, a survey among EPO applicants found that preserving FTO, after preventing imitation, is the second most important motive for patenting.

[W]ould result in an extremely high quality final work product that should be able to be heavily relied on, if not accepted, by national offices due to the fact that it is the result of a comprehensive search of multiple offices that incorporates prior art submissions by the applicant and third parties. It will have the additional confidence factor of being prepared in conjunction with the processing of the national application [in the issuing search office], thus resulting in either a patent grant or a final rejection in that office.

The USPTO recently published a Notice to applicants filing applications under the PCT in the United States Receiving Office (RO/US) to exercise care in selecting a competent International Searching Authority (ISA) for claimed subject matter.  The USPTO reminds applicants that:  (1)  the EPO will not act as an ISA/IPEA for applications with one or more business method claims; and (2)  the AU-IPO will not act as an ISA/IPEA for applications with one or more claims drawn to certain fields of technology specified in Annex A of the Arrangement between IP Australia and the United States Patent and Trademark Office, which was published in the USPTO’s Official Gazette at 1337 OG 263.

From the USPTO’s website …

Limited Competency of Certain International Searching
Authorities With Respect to Applications Filed in the USPTO

The USPTO has noticed a significant number of international applications filed in the United States receiving Office (RO/US) under the Patent Cooperation Treaty (PCT) where the applicant has chosen an International Searching Authority (ISA) which is not competent for the subject matter of the claimed invention.  This can result in significant delays in the issuance of the International Search Report and Written Opinion of the International Searching Authority.  When such an application is filed it is forwarded by the RO/US to the ISA selected by applicant.  After processing the application, the ISA will return the application to the RO/US with an indication that it is drawn to subject matter for which the ISA is not competent to act. The RO/US will then notify applicant of such and invite applicant to select a competent ISA.  Once the RO/US receives a new indication from applicant as to a new ISA, the RO/US will forward the application to the newly selected ISA where it will undergo further processing and will eventually receive a search in accordance with Chapter I of the PCT.

Applicants are hereby reminded that certain ISAs have limited their competency for applications filed with the RO/US.  Specifically, the European Patent Office (EPO) will not act as an ISA/IPEA for applications with one or more claims to a business method (citation omitted).  Further, the Australian Patent Office (IP Australia) has declared that it is not competent for applications with one or more claims drawn to subject matter set forth in Annex A of the Arrangement between IP Australia and the United States Patent and Trademark Office (see 1337 OG 263).  To avoid significant processing delays, applicants filing international applications naming either the EPO or IP Australia as the ISA should take care to ensure that the application does not contain any claims for which the selected ISA is not competent.

The relevant portion of Annex A is reproduced below.

Annex A of the Arrangement between IP Australia and the USPTO

Subject matter for which the Australian Patent Office is NOT a competent International Search Authority or International Preliminary Examination Authority for international applications filed with the RO/US by International Patent Classification (8th edition):

A01-AGRICULTURE; FORESTRY; ANIMAL HUSBANDRY; HUNTING; TRAPPING; FISHING, all classes except:  A01H, A01N, A01P(i.e. new plants or processes of obtaining them thereof, Preservation of human, animals bodies or plants, biocidal, pest repellent, pest attractant or plant growth regulatory activity of chemical compounds or preparations)
A21-BAKING; EQUIPMENT FOR MAKING OR PROCESSING DOUGHS; DOUGHS FOR BAKING all classes except:  A21D, (i.e. Treatment of flour or dough for baking)
A22-BUTCHERING; MEAT TREATMENT; PROCESSING POULTRY OR FISH
A23N-MACHINES OR APPARATUS FOR TREATING HARVESTED FRUIT, VEGETABLES OR FLOWER BULBS IN BULK
A23P-SHAPING OR WORKING OF FOODSTUFFS
A24-TOBACCO; CIGARS; CIGARETTES
A41-47 PERSONAL AND DOMESTIC ARTICLES (eg. headgear (A42), footwear(A43),
haberdashery (A44))
A61-MEDICAL OR VETERINARY SCIENCE, all classes except:  A61K, A61L, A61P and A61Q (i.e. preparations for medical, dental or toilet purposes, methods, apparatus for sterilising materials or objects, chemical aspects of bandages, dressings, absorbent pads, or surgical articles, therapeutic activity of chemical compounds, use of cosmetics or similar toilet preparations)
A62-LIFE-SAVING all classes except:  A62D (i.e. chemical means for extinguishing fires, processes for making harmful chemical substances harmless, or less harmful, by effecting a chemical change, composition of materials for coverings or clothing for protecting against harmful chemical agents; composition of materials for transparent parts of gas-masks, respirators, breathing bags or helmets; composition of chemical materials for use in breathing apparatus)
A63-SPORTS; GAMES; AMUSEMENTS

B06-GENERATING OR TRANSMITTING MECHANICAL VIBRATIONS IN GENERAL
B21, B23-B27 all except: B23K (i.e. soldering or unsoldering; welding; cladding or plating by soldering or welding; cutting by applying heat locally, e.g. flame cutting; working by laser beam)
B31-MAKING PAPER ARTICLE WORKING PAPER
B60-B68 all except: B60L, B60M and B60Q (i.e. electric equipment or propulsion of electrically-propelled vehicles; magnetic suspension or levitation for vehicles; electrodynamic brake systems for vehicles, in general, power supply lines, or devices along rails, for electrically-propelled vehicles, arrangement of signalling or lighting devices, the mounting or supporting thereof or circuits therefor, for vehicles in general)

D01-D07 Textiles all except:  D06L, D06M, D06N,  D06P, D06Q (i.e. bleaching, treatment of fabrics, dyeing or printing textiles, decorating textiles)

E01-E06 FIXED CONSTRUCTION
E21-EARTH OR ROCK DRILLING; MINING

F01-F04 MACHINES
F15-F17 ENGINEERING ELEMENTS, ACTUATORS, STORAGE OR DISTRIBUTION OF GASES OR LIQUIDS
F41-F42 WEAPONS, AMMUNITION

G04-HOR0LOGY
GO6-COMPUTING; Calculating; Counting
G10-MUSICAL INSTRUMENTS
G11-INFORMATION STORAGE

The UPSTO’s announcement can be read here.

1. A method for implementing an on-line incentive system, said method comprising the steps of:

providing, at a merchant's web site, means for a consumer to participate in an earning activity to earn value from a merchant; and . . .

For a patentee to claim a means for performing a particular function and then to disclose only a general purpose computer as the structure designed to perform that function amounts to pure functional claiming. Because general purpose computers can be programmed to perform very different tasks in very different ways, simply disclosing a computer as the structure designated to perform a particular function does not limit the scope of the claim to "the corresponding structure, material, or acts" that perform the function, as required by section 112 paragraph 6.

* * *

[A] general purpose computer programmed to carry out a particular algorithm creates a "new machine" because a general purpose computer "in effect becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software.". . . The instructions of the software program in effect "create a special purpose machine for carrying out the particular algorithm." . . . Thus, in a means plus function claim "in which the disclosed structure is a computer, or microprocessor, programmed to carry out an algorithm, the disclosed structure is not the general purpose computer, but rather the special purpose computer programmed to perform the disclosed algorithm."

Appellants' Specification describes generally that the consumer can access an earning activity through the merchant's web site. The merchant's web site itself cannot be the means or structure corresponding to the function of the claims, because the claims recite providing "at a merchant's web site" means for a consumer to participate in an earning activity and earn value. It is clear from the claims that the merchant's web site is merely the location, through which the software that enables the consumer to participate in the earning activity and earn value, is provided. The Specification does not provide, however, an algorithm by which the consumer is able to participate in an earning activity and earn value.

Gene Quinn of IPWATCHDOG.COM has a troubling an interesting post about the USPTO from the inside.  For anyone curious as to why the allowance rate has dropped below 50% (it is presently at 42%), and why the quality of examination has declined so much in recent years, I recommend taking a few minutes to read Mr. Quinn’s post entitled “Perspective of an Anonymous Patent Examiner“.  A few nuggets from the anonymous Examiner:

 [The USPTO’s] “reject, reject, reject now” policy is encouraged by management’s policy of issuing a written warning on an examiner’s permanent file for allowance error percentage above 10%.

Additionally, there is a lack of motivation to get cases allowed, because there is no incentive for the examiner to do the extra work required to arrive at claim language which can be allowed.

Over the years, I too have heard many of the same views from multiple Examiners.  It is little wonder why morale at the USPTO is so low.  I leave you with Mr. Quinn’s final question from his post, which I second:

With so many Czars and hundreds of billions of dollars being thrown around Washington, DC, can’t we get just a little attention at the agency that is tasked with promoting the progress of science and useful arts?  I don’t think that is too much to ask for, is it?

The Law Office of Michael E. Kondoudis, PC
Washington DC Patent Attorney
www.mekiplaw.com

The USPTO recently published a Notice to applicants filing applications under the PCT in the United States Receiving Office (RO/US) to exercise care in selecting a competent International Searching Authority (ISA) for claimed subject matter.  The USPTO reminds applicants that:  (1)  the EPO will not act as an ISA/IPEA for applications with one or more business method claims; and (2)  the AU-IPO will not act as an ISA/IPEA for applications with one or more claims drawn to certain fields of technology specified in Annex A of the Arrangement between IP Australia and the United States Patent and Trademark Office, which was published in the USPTO’s Official Gazette at 1337 OG 263.

From the USPTO’s website …

Limited Competency of Certain International Searching
Authorities With Respect to Applications Filed in the USPTO

The USPTO has noticed a significant number of international applications filed in the United States receiving Office (RO/US) under the Patent Cooperation Treaty (PCT) where the applicant has chosen an International Searching Authority (ISA) which is not competent for the subject matter of the claimed invention.  This can result in significant delays in the issuance of the International Search Report and Written Opinion of the International Searching Authority.  When such an application is filed it is forwarded by the RO/US to the ISA selected by applicant.  After processing the application, the ISA will return the application to the RO/US with an indication that it is drawn to subject matter for which the ISA is not competent to act. The RO/US will then notify applicant of such and invite applicant to select a competent ISA.  Once the RO/US receives a new indication from applicant as to a new ISA, the RO/US will forward the application to the newly selected ISA where it will undergo further processing and will eventually receive a search in accordance with Chapter I of the PCT.

Applicants are hereby reminded that certain ISAs have limited their competency for applications filed with the RO/US.  Specifically, the European Patent Office (EPO) will not act as an ISA/IPEA for applications with one or more claims to a business method (citation omitted).  Further, the Australian Patent Office (IP Australia) has declared that it is not competent for applications with one or more claims drawn to subject matter set forth in Annex A of the Arrangement between IP Australia and the United States Patent and Trademark Office (see 1337 OG 263).  To avoid significant processing delays, applicants filing international applications naming either the EPO or IP Australia as the ISA should take care to ensure that the application does not contain any claims for which the selected ISA is not competent.

The relevant portion of Annex A is reproduced below.

Annex A of the Arrangement between IP Australia and the USPTO

Subject matter for which the Australian Patent Office is NOT a competent International Search Authority or International Preliminary Examination Authority for international applications filed with the RO/US by International Patent Classification (8th edition):

A01-AGRICULTURE; FORESTRY; ANIMAL HUSBANDRY; HUNTING; TRAPPING; FISHING, all classes except:  A01H, A01N, A01P(i.e. new plants or processes of obtaining them thereof, Preservation of human, animals bodies or plants, biocidal, pest repellent, pest attractant or plant growth regulatory activity of chemical compounds or preparations)
A21-BAKING; EQUIPMENT FOR MAKING OR PROCESSING DOUGHS; DOUGHS FOR BAKING all classes except:  A21D, (i.e. Treatment of flour or dough for baking)
A22-BUTCHERING; MEAT TREATMENT; PROCESSING POULTRY OR FISH
A23N-MACHINES OR APPARATUS FOR TREATING HARVESTED FRUIT, VEGETABLES OR FLOWER BULBS IN BULK
A23P-SHAPING OR WORKING OF FOODSTUFFS
A24-TOBACCO; CIGARS; CIGARETTES
A41-47 PERSONAL AND DOMESTIC ARTICLES (eg. headgear (A42), footwear(A43),
haberdashery (A44))
A61-MEDICAL OR VETERINARY SCIENCE, all classes except:  A61K, A61L, A61P and A61Q (i.e. preparations for medical, dental or toilet purposes, methods, apparatus for sterilising materials or objects, chemical aspects of bandages, dressings, absorbent pads, or surgical articles, therapeutic activity of chemical compounds, use of cosmetics or similar toilet preparations)
A62-LIFE-SAVING all classes except:  A62D (i.e. chemical means for extinguishing fires, processes for making harmful chemical substances harmless, or less harmful, by effecting a chemical change, composition of materials for coverings or clothing for protecting against harmful chemical agents; composition of materials for transparent parts of gas-masks, respirators, breathing bags or helmets; composition of chemical materials for use in breathing apparatus)
A63-SPORTS; GAMES; AMUSEMENTS

B06-GENERATING OR TRANSMITTING MECHANICAL VIBRATIONS IN GENERAL
B21, B23-B27 all except: B23K (i.e. soldering or unsoldering; welding; cladding or plating by soldering or welding; cutting by applying heat locally, e.g. flame cutting; working by laser beam)
B31-MAKING PAPER ARTICLE WORKING PAPER
B60-B68 all except: B60L, B60M and B60Q (i.e. electric equipment or propulsion of electrically-propelled vehicles; magnetic suspension or levitation for vehicles; electrodynamic brake systems for vehicles, in general, power supply lines, or devices along rails, for electrically-propelled vehicles, arrangement of signalling or lighting devices, the mounting or supporting thereof or circuits therefor, for vehicles in general)

D01-D07 Textiles all except:  D06L, D06M, D06N,  D06P, D06Q (i.e. bleaching, treatment of fabrics, dyeing or printing textiles, decorating textiles)

E01-E06 FIXED CONSTRUCTION
E21-EARTH OR ROCK DRILLING; MINING

F01-F04 MACHINES
F15-F17 ENGINEERING ELEMENTS, ACTUATORS, STORAGE OR DISTRIBUTION OF GASES OR LIQUIDS
F41-F42 WEAPONS, AMMUNITION

G04-HOR0LOGY
GO6-COMPUTING; Calculating; Counting
G10-MUSICAL INSTRUMENTS
G11-INFORMATION STORAGE

The UPSTO’s announcement can be read here.

The Law Office of Michael E. Kondoudis, PC
Washington DC Patent Attorney
www.mekiplaw.com

This result is surprising since particularly the management who frequently asks to be informed about the potential value contribution of their patents will find it difficult to infer it from this method. It is also surprising in the light of the importance of value-oriented innovation management . . . The path from a currently dominating risk and cost approach in patent portfolio management and patent valuation to an at least application dependent opportunity and market or income based approach still seems to be steep and breathtaking for Europe’s top enterprises.

Maintenance of patent (3.8)

Compensation of employee (3.6)

Control of R&D (3.0)

Distribution of budgets (3.3)

Cross-licensing (2.8)

Strategic alliances (3.1)

Purchase/ Sale of company (2.6)

External reporting (2.5)

Compensation for damages (2.5)

Loan Collateral (1.4)

Voluntary information (2.1)

Debt / Equity financing (2.0)

Liquidation, insolvency(1.3)

Transfer pricing (2.5)

Transfer of functions (2.0)

1. A door section for an overhead garage door comprising :

a sheet metal layer having a finished height of substantially twenty-eight inches; and

support members coupled to first and second lateral edges of said sheet metal layer.

The claimed finished door section height is no more than the result of the substitution of one element (three twenty-eight inch door panel sections) for another known in the field (four twenty-one inch door panel sections) to yield a predictable result (a door section with a finished height of substantially twenty-eight inches).

Evidence of commercial success for a claimed invention of a utility patent application cannot be shown, however, by industry reaction to the aesthetic appearance of the claimed invention. Such evidence is too subjective to serve as reliable objective evidence of secondary considerations of non-obviousness. Further, the ornamental appearance of a product is the purview of the design patent law. Were we to allow secondary considerations of non-obviousness to be based on the industry's reaction to the ornamental appearance of the claimed invention, we would be blurring the distinction between design and utility patent protection. Objective evidence of secondary considerations of non-obviousness should be tied to the functional aspects of the claimed invention for a utility patent application . . . we hold that unexpected results for the claimed invention of a utility patent application cannot be based on enhanced aesthetic appearance, which is a subjective factor and one more properly reserved for the confines of design patent protection.

The Appellant's evidence of gross sales as an indication of commercial success is weak, at best. The Appellant's proof of unit sales does not indicate whether the numbers sold were a substantial quantity in the relevant market In re Huang, 100 F.3d 135, 140 (Fed. Cir. 1996) (without evidence that the sales are a substantial quantity in the relevant market, "bare sales numbers" are a "weak showing" of commercial success, if any); In re Baxter Travenol Labs., 952 F.2d 388, 392 (Fed. Cir. 1991) ("[I]nformation solely on numbers of units sold is insufficient to establish commercial success."); Kansas Jack, Inc. v. Kuhn, 719 F.2d 1144, 1150-51 (Fed. Cir. 1983) ("The evidence of commercial success consisted solely of the number of units sold. There was no evidence of market share, of growth in market share, of replacing earlier units sold by others or of dollar amounts, and no evidence of a nexus between sales and the merits of the invention. Under such circumstances, consideration of the totality of the evidence, including that relating to commercial success, does not require a holding that the invention would have been nonobvious at the time it was made to one skilled in the art.")

Establishing long-felt need requires objective evidence that an art-recognized problem existed in the art for a long period of time without solution. In particular, the evidence must show that the need was a persistent one that was recognized by those of ordinary skill in the art. In re Gershon, 372 F.2d 535, 539 (CCPA 1967). The declarations submitted by the Appellant do not show that the need for a different looking door was a persistent one or that others tried to meet the need and failed. While the need for a new look to garage doors may have been a market pressure that existed at the time of the invention, the declarants fail to state how long the need existed in the industry and whether any attempts to meet the need were made by others in the industry.

What Do You Need To Know About It?

If you look at the cover sheet of a patent you will notice that many of them have inventors listed and also an assignee. So what does patent assignment mean? I am going to describe it for the United States rules.

A patent has many of the attributes of personal property. So the owner can assign the legal rights of the patent to another. This is done with a formal legal document.

For U.S. citizens this is normally accompanied by a certificate of acknowledgment by a person authorized to administer oaths - i.e., a notary public. This assignment should then be recorded in the US Patent and Trademark office. The requirements may be slightly different in various foreign countries.

Legal Rights

So what are these legal rights of the patent that are assigned? You may recall from our articles on the rights of a patent that ownership of a patent gives the patent owner the right to exclude others from making, using, offering for sale, selling, or importing into the United States the invention claimed in the patent. But ownership of the patent does not automatically give the owner the right to make, use, offer for sale, sell, or import the claimed invention because there may be for example, a dominating patent or other legal constraint that prevents that. It is only the right to exclude that is the patent right.

This then is what is transferred in a patent assignment - this right to exclude.

A patent assignment can get complicated. It can be the transfer of a your entire ownership interest or a percentage of your ownership interest in the patent or application.

So How Does This Differ From Licensing?

Unlike a patent assignment, the licensing of a patent transfers a bundle of rights which is less than the entire ownership interest. These rights may be limited as to time, geographical area, or field of use. A patent license is a contractual agreement that the patent owner will not sue the licensee for patent infringement if the licensee makes, uses, offers for sale, sells, or imports the claimed invention, as long as the licensee fulfills its obligations and operates within the bounds delineated by the license agreement. Licensing agreements can get very complicated and you should use an experienced licensing attorney to draft it.

An exclusive license may be granted by the patent owner to a licensee. The exclusive license prevents the patent owner (or any other party to whom the patent owner might wish to sell a license) from competing with the exclusive licensee, as to the geographic region, the length of time, and/or the field of use defined in the license agreement.

A license is not an assignment of the patent. Even if the license is an exclusive license.

What About Joint vs. Individual Ownership.

This can also get complicated. Either an individual or joint entities may own the entire right, title and interest of the patent . There are at least three possibilities - 1) there can be multiple inventors; 2) there can be multiple partial assignees; or 3) there may be a combination of 1) and 2). Each individual inventor may only assign the interest he or she holds; thus, assignment by one joint inventor renders the assignee a partial assignee. A partial assignee likewise may only assign the interest it holds; thus, assignment by a partial assignee renders a subsequent assignee a partial assignee. All parties having any portion of the ownership in the patent property must act together as a composite entity in patent matters before the Office.

The cleanest agreement is of course when all inventors jointly assign their patent rights to one entity. The options more complicated than that can lead to "Excedrin" assignments. Again - you need a good contract attorney to handle that.

Recording the Assignment

There are two ways to record the assignment of a patent with the US Patent Office. The first is to record it in the assignment record of the US Patent Office. This is straightforward and can be done online with the payment of a fee. This is strictly what is known as a ministerial act; it is not an Office determination of the validity of the assignment document. The second approach is to make the assignment of record in the file of a patent application - this is necessary to permit the assignee to take action in the patent proceeding.

Disclaimer

Let me remind you - do not use the above for formal legal advice. If you have a complex assignment question you should get the advice of a contract attorney experienced in patent matters. 

http://www.the business-of-patents.com

...And How Should You Use It?

In my first post on this subject I mentioned before that I have changed my views on the provisional patent application over time. When used in the context of your business strategy it can be an effective intellectual property tool.

So what does that mean....

There are some compelling reasons for using this form of intellectual property - let's talk about some of the advantages first. Note that the advantages are situation specific.

The business world I work in is the great world of small businesses and individual inventors. Many of my clients in that space sometimes come to me with a very clever and inventive concept but are not yet sure it can be made into a reliable and affordable product. They often also are not sure about the market. This situation leads to the first characteristic of the provisional. It is lower in cost to file and once you file the provisional patent application, you have a year before you must file for a regular patent. This year gives you time to better assess both the market and the product. If you conclude during that year that the product and/or the market are just not there you can then decide that the cost and trouble of filing a full non-provisional patent is not worth it. The savings are in the thousands and sometimes tens of thousands of dollars (U.S.).

Special note

Before you get too excited about the cost savings - note this cost savings is only if you never get a patent! If you do file a regular patent within 12 months there is the cost of that comes into play. In my experience the total cost once you do that is at least the same as if you had filed a regular patent from the get-go. And it may be slightly higher.

A second advantage - you stake a claim on the invention at a reasonable cost. Once you file the provisional you are completely entitled to use a "Patent Pending" notice on a product or product announcement. This can (sometimes) be very useful if you need to go public with the invention during that year. As an aside I often hear people say that a Patent Pending is useless without a patent. I completely disagree. My experience has been that most companies are reluctant to make a large investment in copying an invention once they hear that there is a patent pending. On the other hand many small companies and inventors need that entire year to evaluate their product and market and do not announce that they have a patent pending - preferring to keep it a trade secret.

Related to staking a claim on the invention at a reasonable cost - you also stake a claim on a "priority date".

You establish a “date of invention.” The US Patent Office follows a “first to invent” rule. If there is a dispute between you and another inventor, the person with the earliest “date of invention” gets the patent. Because not all inventors can afford to create working prototypes and build and test their inventions, and not all inventors are diligent about maintaining witnessed notebooks to evidence the date of conception, filing a provisional patent application is often the easiest or even only way to establish the date of invention. Also, if your patent is later granted, the provisional patent application date (rather than the later date of the regular patent application) is the date from which your rights commence.

In summary there are some obvious advantages to using this approach for protecting your business - and I use them a lot more than I did before.

Caveat - go back and read my first post about the dangers of  a provisional. It it not done well it can lead to a disaster.

Muniauction did establish a new data point on the continuum between an arms-length relationship and vicarious liability for determining direction or control. In BMC Resources, as discussed supra, the court’s reasoning left open the possibility that evidence of direction or control might be found from the provision of “instructions or directions” regarding the use of the data the defendant provided to the debit networks. 498 F.3d at 1381. It similarly suggested that the lack of a contractual relationship between the defendant and the financial institutions was relevant in finding a lack of direction or control of the latter’s actions by the former . . . Muniauction establishes that direction or control requires something more than merely a contractual agreement to pay for a defendant’s services and instructions or directions on how to utilize those services.

* * *

I find no material difference between Limelight’s interaction with its customers and that of Thompson in Muniauction. There is no suggestion that the agreements between Limelight and its customers for content delivery services were other than the result of an arms-length contract negotiation. Akamai has identified no legal theory under which Limelight might be vicariously liable for the actions of the content providers. The first step of claim 19 of the ’703 patent, serving the initial web page from the content provider’s domain, is performed by the content provider whether it subscribes to Limelight’s services or not. Limelight’s customers, following Limelight’s instructions, do modify the embedded objects of their web pages or alter their DNS records so that requests for the objects resolve to the content delivery service domain, rather than the content provider domain, in order to take advantage of Limelight’s service. However, this step is performed by Limelight’s customers not because they are contractually obligated to do so; rather, they do so because they wish to avail themselves of Limelight’s service. Under Muniauction, this is insufficient to establish the requisite direction or control by Limelight of its customers necessary to find it liable for direct infringement.

1. Build an outward-facing IP and licensing culture within the company;
2. Play a leading role in the global IP debates;
3. Develop closer coordination between the IP group and the technical development teams in the business units to help guide innovation strategy;
4. Better protect technologies by becoming a top-10 patentee;
5. Maximize the utilization of IP assets to support the companies business goals, standards efforts, and relations with open source and other firms; and
6. Use licensing revenue and cost optimization to fund IP&L's expanded efforts.

Although the PTO reports that the average pendency of an inter partes reexamination is 28.5 months, if the patent holder decides to defend its rights, the process is likely to require an average of 43.5 months. Id. (citing Institute for Progress, Reexamining Inter partes Reexam (2008)). If the decision is appealed, it is estimated that the entire process will require an average of 78.4 months, although this estimate may be subject to change since there has never been an inter partes reexamination that has gone through the entire reexamination process, including appeal, and made it to completion. Id. BarTex argues that granting the stay would prevent BarTex from licensing the ‘377 patent for 6.5 years and eviscerate BarTex’s right to exclusivity until at least 2016.

* * *

The Court finds that BarTex would be unduly prejudiced if the Court were to grant a stay. A stay could potentially prevent BarTex from enforcing its rights for 6.5 years. This extreme delay, which has been exacerbated by FedEx’s delay in requesting reexamination, could allow for a loss of critical evidence as witnesses could become unavailable, their memories may fade, and evidence may be lost.

BarTex may still be entitled to a permanent injunction, even though it does not practice its patent. See Ebay Inc. v. MercExchange, LLC, 547 U.S. 388, 393 (2006) (declining to adopt a categorical rule that non-practicing patent-holders cannot receive injunctive relief); see, e.g., Commonwealth Sci. and Indus. Research Org. v. Buffalo Tech. Inc., 492 F. Supp. 2d 600, 607-08 (E.D. Tex. 2007) (granting permanent injunction to a non-practicing patent owner). While BarTex will be able to collect damages for infringement occurring during the stay, BarTex may still suffer from irreparable harm during that time. Should FedEx be found to infringe the asserted patent in this litigation, damages alone may not fully compensate BarTex for a lengthy delay resulting from reexamination. The right to exclude, even for a non-practicing entity, may be the only way to fully vindicate the patentee’s ownership in the patent.

While FedEx’s concerns over ownership of the ‘377 patent may offer some explanation as to its delay in seeking reexamination, the Court is not persuaded by FedEx’s arguments. A compelling argument can be made that FedEx had ample opportunity to seek reexamination prior to the ownership issue even being raised in this Court. Moreover, when the ownership issue was raised in this Court, it was dealt with in some detail over a period of multiple months. FedEx did not request a stay of this litigation while the ownership issue was pending nor did FedEx take a position on the issue. Missing from FedEx’s assessment of the timing of the reexamination request is an acknowledgment of the fact that it was accused of infringement in August of 2007. Irrespective of the ownership issue arising thereafter, FedEx had every reason to, as promptly as possible, seek reexamination and a stay if that is the option it chose. In sum, the Court cannot conclude that FedEx has acted with requisite diligence in seeking reexamination and a stay.

For the U.S. Patent Office - Part I

Let's Talk About It

The subject of the proper use of a provisional patent application is an important one and we will spend a little time on it. As a disclaimer - my views on this have changed several times during my practice. At first I was very skeptical about ever using this vehicle. Although I still have reservations about improper use and how to write them, I have come around to the view that the proper strategic use of this type of application can be very effective. I will get into all of those considerations - but let's first talk some background and define what a provisional patent application is.

Background

The US Patent and Trademark Office (USPTO) has offered this option since 1995 (June 8th). It was designed to give patent applicants a lower-cost initial filing in the United States. Notice I said initial filing. There is no assurance the overall cost of obtaining a final patent will be lower. In fact it could be slightly higher. But in many cases it has resulted in cost savings because the applicant has decided later, for either market or technical reasons, to not file a follow-up regular application and thus did save overall cost. This is the "poker" approach to filing a patent - ante up a smaller fee for a provisional and then you get to look at a few more cards before you make you decision to file the more expensive non-provisional.

Here is the way you file one:

The applicant files an application under 35 U.S.C. 111(b) - which defines the rules. 35 U.S.C. 111 allows a filing without a formal patent claim, without an oath or declaration, and without any information disclosure statement (IDS). It allows the applicant to use the term patent pending immediately after filing.

Once you have filed it you then have a maximum of 12 months to file a standard non-provisional application for patent. When you do that you can then claim the "benefit" of the earlier filing, meaning you can claim the provisional filing date as your priority date.

As a result of this the non-provisional patent application is evaluated by the examiner as though filed on the earlier date, thus eliminating any prior art that was published during that 12 months; in addition the twenty-year patent term is measured from the later non-provisional application so the applicant is on an equal footing with foreign applicants with respect to patent term.

Important

An important consideration is that the although a claim is not required in a provisional patent application, the written description and any drawing(s) of the provisional patent application must adequately support the subject matter claimed in the later-filed non-provisional application in order for the later-filed non-provisional application to benefit from the earlier application filing date.

This means that great care should be taken to ensure that the disclosure filed in the first application adequately provides a written description of the full scope of the subject matter regarded as the invention and desired to be claimed in the later filed non-provisional application. There is danger here. Too many applicant's have assumed that they can take full advantage of the less exacting requirements of provisional applications and quickly file what i call a "skimpy" provisional. A real issue here is the possibility that the description of the invention is insufficient to support the eventual claims that may accompany a non-provisional application. The danger is that two filing dates may be assigned: one for the incomplete provisional, and another for the added material that was necessary to complete the disclosure. This may lead to losing foreign filing rights and/or invalidating the US patent, dependent on the exact timeline.

The other danger is that the applicant may have the mistaken belief that they are fully protected by an incomplete first filing. Their marketing program may begin to tell potential customers about the new development, they may begin shopping the idea around for licensing, or they begin strategizing how they can exercise the patent against a competitor. The applicant begins to act like they have patent protection that they can rely on.

There is no requirement that the written description and any drawings filed in the provisional patent application and a later-filed application be identical, however, the later-filed application is only entitled to the benefit of the common subject matter disclosed in the corresponding non-provisional application filed not later than 12 months after the provisional patent application filing date.

A good patent practitioner will ensure that the specification written for the provisional patent application complies with 35 U.S.C 112 so that the specification discloses the manner and process of making and using the invention, in such full, clear, concise and exact terms as to enable any person skilled in the art to which the invention pertains to make and use the invention and set forth the best mode contemplated for carrying out the invention. That's right out of 35 U.S.C. § 112, 1st paragraph.

From Magistrate Judge Noel's report and recommendation:

The above referenced case was filed on May 9, 2006. After it had been pending for over a year, the parties stipulated to a stay pending the resolution of a "Reissue Application," that had been filed with the United States Patent and Trademark Office (USPTO) in June of 2007. It now appears that the USPTO did nothing with the Reissue Application for nearly a year and half. It did not substantively address the application in any way until October, 2008. Following a case management conference, the parties filed a "Joint Statement Regarding Status of Case" on April 8, 2009, one month shy of three years since the case was filed. In that status report the parties state that the USPTO has notified the parties that it intends to review the Plaintiff's responses to the USPTO's office action within the next sixty days. After that, the parties report, Plaintiff should know the likely time-line for completing the review of the reissue application.

As the case has been pending for nearly three years in this Court, and as there is no clear end in sight for the administrative process begun in the USPTO nearly two years ago, it is recommended that the instant case be dismissed without prejudice while the parties complete their administrative proceedings before the USPTO. If at the end of that process there are still issues to litigate, Plaintiff is free to file the lawsuit anew.

Read the report here (link)

(1) San Francisco/Silicon Valley
(2) Tokyo
(3) Boston
(4) Los Angeles
(5) San Diego
(6) Minneapolis/St. Paul
(7) Boise
(8) Seattle
(9) Portland
(10) Houston
(11) New York
(12) Osaka (JP)
(13) Washington DC
(14) Philadelphia
(15) Hokkaido (JP)
(16) Kyushu (JP)
(17) Chicago
(18) Dallas/Ft. Worth
(19) Denver/Boulder
(20) Kita Kanto (JP)
(21) Austin
(22) Seoul (KR)
(23) Nagoya (JP
(24) New Haven
(25) Hokuriku (JP)

In the past, this Court has noted the findings of the Institute for Progress, an independent organization that has analyzed the inter partes reexamination process. See ESN, LLC v. Cisco Systems, Inc., No. 5:08-CV-20-DF (E.D. Tex. Nov. 20, 2008). On average, inter partes reexaminations in which a patentee defends its rights may take anywhere from thirty-four to fifty-three months without an appeal. Id. at 4. If the PTO’s finding is appealed the process may take between five to eight years. Id. Because Defendants’ reexamination requests were filed a little over six months ago, a stay in this case would, at a likely minimum, last another twenty-eight months.

* * *

The Court is not convinced that reexamination will simplify the issues for trial in this case. It is difficult to gauge, at this early stage in the reexamination process, how likely it is that any of RGB’s patent claims will be cancelled or modified through amendment. Furthermore, it is this Court’s experience that the reexamination process may actually complicate a case by creating additional prosecution history estoppel and disavowal arguments that must be addressed during claim construction. To convince this Court that a stay will actually simplify a case, the requesting party must do more than merely proffer oft-cited reexamination statistics and generic judicial efficiency arguments. This Defendants have not done. Accordingly, this factor weighs against granting the stay.

In Cornell University v. Hewlett-Packard Company, No. 01-CV-1974 (N.D.N.Y. Mar. 30, 2009) (Ex. 1), the Honorable Randall R. Radar, sitting by designation from the United States Court of Appeals for the Federal Circuit, issued a significant ruling limiting the scope of the royalty base for damages in patent infringement cases, and made clear that Star’s pie-in-the-sky damages theory in this case should be stricken.

[T]he decision in Cornell bears directly on three of the fatal flaws in Star’s damages theory, as addressed in RJR’s pending motions in limine on damages (see Dkt. Nos. 603 and 749): (1) Star seeks a royalty base derived from cigarette sales, even though the output of the patented proces sends with tobacco, not with the cigarettes that only result many steps later; (2) there is no nexus between the farmers’ alleged use of the patented process and cigarette sales sufficient to invoke application of the entire market value rule; and (3) Star improperly aggregates license agreements under an A + B + C + D formula, even though only A – a license agreement setting forth a royalty base tied to pounds of tobacco – is related to Star’s patents. If Star is permitted to mislead the jury with its seriously flawed damages theory, the decision in Cornell demonstrates why the resulting award could not withstand review.

• Make Hay" effect: Once a drug is introduced to the market, an innovator has a short time to recoup its development costs -- upwards of $1 billion over 12 years -- before a competitor enters the market. Faced with patent protection of limited duration, innovator companies must maximize their revenues in the short period before generics are introduced. To do this, they generally raise prices and invest more in marketing the drug, tactics that run counter to Hatch-Waxman, the intent of which was to lower prices.

• "Blockbuster" effect: Facing increased drug development costs and a limited period of time before generics can compete, innovators typically focus only on those drugs that promise huge returns on investment. To recoup the amount of time and money an innovator spends on a new drug, experts have shown that to break even, a drug would have to achieve annual revenue of roughly $150 million, which is impossible unless a drug targets a large population, or charges a high price per treatment. This blockbuster effect has led pharma companies generally to focus development efforts on only the largest potential indications.

• "No Man's Land" effect: As soon as a company receives a patent for a compound, the clock for commercialization begins ticking. Each year a patented drug spends in development is another year of lost revenue. If enough time elapses, there comes a point where the compound will never be able to earn sufficient return on investment. This could lead to promising compounds being dropped from development, including those for critical diseases like cancer, Parkinson's, Alzheimer's and others, because there is no way to fund the research once the compound has crossed into this "no man's land." Deloitte estimates this can occur within as little as one year of achieving a patent.

The Obama administration's selection of a Patent and Trademark Office director cannot come soon enough, according to officials inside the agency. They cite serious cash-flow problems, internal cutbacks and a downturn in the number of applications filed and patents granted amid continued U.S. economic gloom . . . If fee collection trends continue, PTO will take in $100 million below its projected year-end amount, according to a memo sent to employees Monday.

The PTO . . . recently instituted a hiring freeze for virtually all of the agency's divisions . . . Officials have curtailed bonuses for all noncontractual awards, which affected those who do not belong to bargaining units, and they have slashed paid overtime for examiners starting this week.

[T]he PTO has told employees that furloughs and layoffs would be a last resort. The office has also significantly slowed its $250 million per year plan to install servers and energy-efficient equipment. The existing system has not been upgraded in almost a decade, and Budens said some are worried the agency's IT network is "hanging on by bubble gum and bailing wire."

Laszlo Pasztor, the honorary chairman of the National Federation of American Hungarians, has spent the last few decades, he says, working for the "liberation of communist and oppressed countries." Last month though, Pasztor joined a somewhat different cause: opposing patent reform.

"It was in Chicago or Detroit, I can't remember," the octogenarian Pasztor said, apologizing for his failing memory in old age. The meeting, also attended by three congressmen and Senator James Inhofe (R-Oklahoma), included discussion on patent reform. "Somebody brought this up, I don't know for what reason," said Pasztor.

He heard the issues and felt the bill might harm the competitiveness of the U.S. economy. "So I gave them permission to use my name," Pasztor said.

The novel legal question in this case asks if later-developed alternative processes are relevant in the product-process "patentably distinct" inquiry. The PTO contends that the date of invention, in this case December 19, 1974, governs the relevance of products and processes in the double patenting context. Thus, the PTO submits that the date of invention governs the timing of double patenting analyses because other issues relating to patentability are judged from the date of invention . . . In the alternative, the PTO posits that alternative processes must at least appear before issuance of the primary patent application.

Takeda, on the other hand, argues that the PTO’s approach is too limited. In its view, processes developed after the date of invention deserve a role in the double patenting calculus.

The secondary application (in this case, the process application of January 8, 1990) actually triggers the potential of an "unjustified extension of patent term." When filing the secondary application, the applicant essentially avers that the product and process are "patentably distinct." Thus, the relevant time frame for determining whether a product and process are "patentably distinct" should be at the filing date of the secondary application. In this case, Takeda filed the ’216 process patent application on January 8, 1990. This approach allows an applicant to rely on some later-developed methods to show that the product and process are "patentably distinct," even though the alternative processes for making that product may not have been known at the filing date of the primary application. This rule gives the applicant the benefit of future developments in the art. At the same time, however, it prevents the inequitable situation that arises when an applicant attempts to rely on developments occurring decades after the filing date of the secondary application.