INVENTIVE STEP

A patent permits its owner to exclude others from making, using, selling, offering for sale, or importing the patented invention without his permission.  A patent is, however, unique to the country where it is granted.  Thus, if a patent owner does business in more than one country, it would be necessary to obtain a patent in each country to protect the invention.

Some countries have restrictions on what can be patented.  For example, some countries do not permit patenting software, business methods, drugs, or methods of treatment for humans.

PCT Applications

One way to obtain patent protection in multiple countries is to file an application under the Patent Cooperation Treaty (PCT).  A PCT application is an international application that is filed through the World Intellectual Property Office (WIPO), where an applicant can designate a large number of countries in which he desires to file his patent application.  Currently, 144 countries are members of the PCT.

A PCT application does not give the applicant an “international patent”, as all patents are national in nature (although certain organizations like the European Patent Office (EPO) issue a “European Patent” that must be registered in each member country where the applicant desires the patent to be in effect).  Instead, the PCT provides a mechanism that gives the applicant 30 or 31 months from the earliest filing date (the first filed patent application) to determine whether to file the patent application in various individual countries.  A PCT application can either be the first filed application for an invention or it must be filed within 12 months of the first filed application.

The PCT also provides an International Search Report and an examination, if desired, so that the applicant can get an early search performed to see if the invention is patentable.  The delay also permits the applicant to determine whether the invention is commercially valuable and whether it is worth spending the money to obtain a patent in each country.  While applicants may designate all 144 countries at the time of the PCT filing, they can decide later in which individual countries they would like to pursue patent protection.

A PCT application can also save money on translation costs early in the process.  While most individual countries require patent applications to be filed in the native language of that country, PCT applications permit applicants to delay the cost of translating the application into the various languages.

Once the 30 or 31 month period from the first filing date elapses, a PCT applicant must “enter the national stage” in each country where a patent is desired.  Otherwise, the application is abandoned and patent protection cannot be obtained.  It is at this stage where translations must be obtained and filing costs for the various countries must be paid.

Each country usually requires that the applicant work through an attorney or patent agent who is registered to practice before that country’s patent office.  Thus, to obtain a patent in Brazil, the applicant must work with a Brazilian patent attorney or agent.  These attorneys and agents charge fees for their services, further adding to the costs of obtaining patent protection in various countries.

If the PCT procedure is not utilized, applicants must file in each individual country within a year of the filing date of the first filed application.  The translation, filing, and agent costs are due at that time.  A primary advantage of the PCT is the 18 to 19 month delay for these costs.

While 142 countries are currently members of the PCT, there are several significant countries that are not members; these include Argentina, Paraguay, Uruguay, Venezuela, Taiwan, and the Middle East.  To obtain patents in these countries, a patent application must be filed in each within 12 months of the first filed application.

Patent Prosecution Highway

The United States PTO has entered into an agreement with 21 other patent offices called the Patent Prosecution Highway.  Under this program, once a patent claim is found to be allowable by the patent office where the application was first filed, the applicant may request that other patent offices fast track examination of the application.  This is a type of work-sharing program intended to cut reduce redundancy in examination.

One of the reasons that I tell inventors that we need to begin preparing a patent application well in advance of the deadline is the need for properly prepared drawings.

For provisional applications, just about any drawings will do.  Like other aspects of provisionals, the better prepared the provisional, the better chance of being able to properly rely on the provisional filing date.  Thus, even for provisionals, proper drawings are important.

For non-provisional patent applications, drawings are not an afterthought.  There are a number of very specific PTO rules that must be followed in the drawings.  The drawings must show every feature of the invention specified in the claims.  This means that it is not enough to simply discuss the idea of the invention generally in the specification; the invention must be discussed and the drawings described in detail.

When preparing the specification of a patent application, it is important to provide different levels of specificity.  The invention should be described broadly and generally, but also with increasing levels of detail.  This provides support for claims of varying breadth.

The drawings include reference numerals that point to various parts or elements in the drawings.  These numerals are referred to in the specification to describe the invention, including how it is made and used.  In this way, the drawings are not cluttered with a lot of words that make them difficult to read and understand.

Inventors sometimes think they can save money by preparing their own formal drawings.  There are also a number of specific requirements relating to margins, font size, and lead lines used in the drawings.  The rules for PCT applications are even more specific.  In a typical case, patent draftmen who specialize in preparing patent drawings only charge a couple hundred dollars to prepare the drawings for an application.  When I work with inventors who want to do the drawings themselves, I often go through multiple iterations that require a great deal of my time to correct and explain as the inventor works to comply with the drawing rules.  In these cases, the time involved costs a great deal more than a couple hundred dollars.

Like most aspects of patent preparation and prosecution, a patent attorney can easily provide advice and guidance on the preparation of drawings for a patent application.

A question that is often asked by new inventors is:  should I do a prior art search before filing a patent application?  The answer, as in most areas of law and life in general, is that it depends.

For individual inventors and smaller companies including start-ups, in most circumstances, I would suggest that yes you should do a prior art search.  Many larger companies have a number of scientists and technologists who are familiar with the technology and what their competitors are doing.  They can also absorb the potential risks of not doing a prior art search.  Most small entities and start-ups do not and can not.

Many, if not most, new inventors are convinced that they are the only ones that have thought of the idea that they seek to patent.  They believe that they have had a flash of insight that no one else has had.  They may even do a bit of Internet research to convince themselves that they are in the clear and that there is no need to do a prior art search.  They are often surprised by the results when they do have a search conducted.

The risks of not doing a search are several.  First, and most importantly, if you plan to commercialize or market the invention as a product or service, you don’t want to get slapped with an infringement lawsuit right out of the gate.  These suits are extremely expensive even if you don’t get hit with a large damage award.  There is a risk that you will not be able to afford to defend such a suit and that all of your hard work in developing the invention, getting it through the prototype stage, and getting it to market would be wasted.  Usually, there is a significant monetary and time investment involved with these steps.  There is also a risk that a court could issue an injunction that would prohibit you from making, using, selling, or offering the invention for sale.

Second, conducting a prior art search prior to preparing a patent application may make prosecution of the application more efficient and cost-effective.  By knowing the closest prior art, the patent application and the claims may be prepared more strategically to take advantage of areas of patentability.  Claims may be prepared that get close to the prior art without encroaching on it.  It may be possible to develop arguments and strategies for convincing the patent examiner that the invention is non-obvious vis-a-vis the prior art. 

You may find that the invention needs to be reconfigured to “design around” patents that are found.  This could add to the value of the invention and potentially give you a competitive advantage.  You may find, however, that someone else has a patent that directly prevents you from patenting your invention.  In such a case, you may determine whether to abandon your endeavor or seek to partner with or secure a license from the patent holder.

The main disadvantages of conducting a prior art search are that it will cost some money and that any material prior art that is uncovered must be disclosed to the Patent Office during prosecution of any patent application that is filed for your invention.  The cost is usually not significant in the overall scheme of bringing a new product or service to market and preparing and prosecuting a patent application.  In fact, a good prior art search can make these endeavors more efficient.  Most patent applicants are looking for strong patent protection in which case it is not a disadvantage to bring prior art to the patent examiner’s attention.  This will permit the patent to be “vetted” over that prior art.

Mechanics

A patent attorney can assist you in having a prior art search performed.  A brief written description and possibly a few drawings or sketches of the invention should be prepared.  This information is provided on a confidential basis to a professional patent search firm that will conduct the patent search.  These firms are usually located in Northern Virginia near the PTO and are staffed with engineers and scientists, at least some of whom may be former patent examiners.  The search firm provides the information to a person with skill in searching the subject matter of the invention who conducts the search.

A good “freedom to operate” and patentability search takes a couple of weeks to complete and usually costs less than $2,000, often less than $1,000.  For a “freedom to operate search,” the searchers will search that claims of US patents that are currently in effect.  For a patentability search, the searchers will also search for older US patents, foreign patents, and non-patent literature that may disclose the invention.

The results will typically include a stack of the closest 20-30 patents and other prior art references.  My practice is to provide these results to the inventor with instructions to review them in detail and to bring any that the inventor believes warrant further review by me to my attention, in any event the closest 3-4.  This saves on attorney time of having to review the entire stack.  The inventor is usually in the best position to determine any differences or similarities between the references and the invention.  At that point, we determine how best to proceed with the matter based on the search results.

One might reasonably ask why the inventor or the attorney cannot themselves conduct the prior art search on Google, the PTO website, or another search engine.  One answer is that it is far more efficient for these experts to perform the search than for the attorney to do so.  Their hourly rates are typically much less.  Second, I am always amazed that the professional searchers find prior art that I or the inventors have not been able to find.

In sum, I almost always advise a new inventor, small company, or start-up to have a prior art search done prior to marketing the invention or preparing a patent application.  In my opinion, the advantages of such a search far outweigh the risks or costs of doing so.

Utility patents get all of the publicity in when discussing innovation.  Another option that an inventor may want to consider is a design patent.  Utility patents cover structural and functional aspects of an invention, while design patents cover the asthetic features.

Design patents differ from utility patents in a number of basic ways.  A design patent is granted to cover the ornamental design of an object that has practical utility.  For example, a design patent may be obtained for a new shape of a beverage container, the particular shape and features of the tread of a shoe, computer icons, and other items that have practical utility. 

A design patent is not permitted for something that exists for purely aesthetic reasons, such as a work of art.  A painting, sculpture, or other work of fine art would be protectable by copyright and possibly other intellectual property rights, but would not be eligible for design patent protection.

An invention may be entitled to both a utility patent and a design patent since a utility patent protects the structure of an article and the way it is used and works; a design patent protects the way an article looks.  If the design–the way the article looks–is dictated primarily by the article’s function, it would not properly be the subject of a design patent.  An example may be the shape of a gear that is designed primarily to fit with other gears and not for aesthetic purposes.

The requirements for obtaining a design patent are similar to that for utility patents.  The design must be novel and non-obvious; the examiner will perform a search of the prior art to be certain that the design meets these requirements.  Furthermore, the drawings must clearly show the features sought to be protected by patent.  The drawings will typically be more detailed than in a utility application as they will often show more views of the invention.  The drawings contitute the claims of the design patent.  Because they don’t require a detailed specification like a utility patent, design patents are also less costly to prepare and file.

Design patent protection lasts for 14 years from the date the patent issues compared to 20 years from the earliest filing date for a utility patent.  No maintenance fees are required for design patents.

Another advantage of design patents over utility patents is that they seem to be much easier to obtain.  In recent years, design patents have had an allowance rate of about 90% over the last few years, compared to utility patent allowance rates of under 50%.  Over 80% of design patent applications are allowed without rejection; only 1.2% are rejected based on prior art with a larger number rejected on formality grounds.

In an era of increasing backlog and pendency of utility applications, more than half of design patents are pending for less than a year, with the average pendency being about 16 months.

For an invention where design and utility patent protection are both appropriate, I would not skip the utility patent.  An inventor should at least file a utility application for its broadder scope of coverage and should also consider a design patent.  A design patent would provide some protection while waiting for a utility patent to issue.  They are also cheap since they don’t involve a great deal of preparation and prosecution.  Inventors should always consider whether their inventions are eligible for design and utility patent protection.

Advanced Strategies for Innovative Growth Companies

Edited by David B. Orange

http://www.logos-press.com/books/great-patents.php

Great Patents is a collection of essays on patent strategy and valuation.  As Orange notes in the Introduction, there is a gap between simple patent primers, aimed at those who know little or nothing about patents, and detailed expositions of patent theory, aimed more at patent academics.  Great Patents “aims to inform executives on how best to improve their competitiveness.”  Just getting patents is not enough.  Figuring out how and when to use your patents is the key to successfully utilizing IP for a competitve advantage.

The first seven essays focus on patent strategies, while the last four focus on patent valuation.  Orange acknowledges some overlap between the two, but this seems like a good break down.

“How a Young Company can Build and Manage its Intellectual Property” is written by Lawrence Rozsnyai, Senior Director of Intellectual Property and Legal Affairs at a clinical-stage pharmaceutical startup company in the San Francisco Bay Area.  Rozsnyai’s chapter deals with many of the issues facing a young company determining how to protect its technology.  Topics that are covered include how to select IP counsel, when and how to decide to file provisional applications vs. non-provisional applications, tips for writing the first few patent applications, how to train R&D staff to properly protect the IP, and even some next steps.

Rozsnyai’s chapter contains some valuable information and strategies including how patent applications may differ depending on the goal of broad coverage vs. quick issuance, avoiding disclosing too much in patent applications about nascent technology, claim drafting, defining terms, and providing sufficient examples.  He briefly covers how R&D personnel should be trained to document and maintain IP as it is developed, how they should work with IP counsel, and how to keep notebooks and invention disclosure forms.  Finally, he provides recommendations to keep business goals in mind when crafting an IP strategy, be certain you have a freedom to operate in the area of innovation, and when and how to proceed to international patent protection.

“Present Patenting for Future Business Strategies” is written by Oscar Llorin, a patent attorney in Maryland.  Llorin’s chapter provides a bit more of a primer on the parts of a patent and the potential purposes of patents.  Next, for technology within the company’s main areas, he advises keeping patent applications pending so that it can be focused on competitors’ later-developed technology.  He also covers how post-grant proceedings, such as re-issue and re-examination applications, can be used to meet long term goals.

“The Tension Between Academic Authorship and Patent Inventorship” is written by John Evans, a patent attorney in Washington, DC.  Evans reviews the rather interesting fact pattern from a 1998 Federal Circuit case to demonstrate how authorship conventions in the scientific research community do not necessarily track actual contribution to conception of inventive concepts disclosed in the articles.  Thus, patent attorneys must investigate actual inventorship regardless of who is listed as an article’s author or risk losing the validity or ownership of the patent.

“Obtaining Patents and Trade Secrets for Health Technology Companies” is written by Kevin McCabe, an IP attorney in Washington, DC.  McCabe stresses the value of IP to a health technology company and contrasts this with the value to an electronics company, based on the number of patents covering key technology, investment timeframes, and barriers to market entry.  McCabe then spends a great deal of time providing a patent primer focusing specifically on issues that arise in the health technology field such as inherency, written description, and enablement.  Finally, he briefly addresses trade secrets and how they can be applied to health technology.

“Small Business Intellectual Property Considerations When Doing Business With the Federal Government” is written by William Bainbridge, a government contracts attorney in Washington, DC.  Bainbridge goes through the various opportunities for funding from the federal government that are available to small businesses.  He stresses the importance of preparing and understanding the contract with the government so as not to lose any rights in your property.  Finally, Bainbridge provides information on protecting technical data when transacting with the government.

“Standard Setting Organizations” is written by Marlin Blizinsky, a government relations officer near Seattle.  This chapter provides a primer on standard setting, including the purpose of standards, reasons that companies would or would not want to participate in standard setting organizations (SSOs), how SSOs operate and develop standards, and obligations of membership in SSOs.  Blizinsky gives special treatment to patent issues including licensing obligations and terms and how some SSOs seem to shun or avoid patented technology.  He provides guidance on antitrust issues within SSOs, as well as how standards are implemented and marketed by SSOs.  Blizinsky provides a great deal of information that may be helpful to an executive in deciding whether to participate in an SSO.

“A Patent Judge’s Perspective” is written by Luann Battersby, a patent attorney in Pennsylvania.  Battersby interviewed Neal Abrams who spent 17 years as an ALJ on the BPAI from 1987-2004.  Abrams provides tips on which cases to appeal, strategies for writing briefs, and best practices for oral argument before the Board.

“Patent Disputes” is written by Eric Fudo, an accountant and consultant who advises clients on economic damage issues in patent infringement matters.  Fudo provides an overview of damage calculation in patent cases, reviewing the standards for lost profits and reasonable royalty damges.  He provides a great amount of detail on what goes into such calculations and how the courts are requiring more detailed analyses from experts.  Issues regarding lost profits include calculating lost revenue and incremental expenses, and focusing not only on past profits, but also on future projected profits, taking the infringement into account.  Fudo also covers the elements of the hypothetical negotiation used to determine the reasonable royalty in patent cases.

“Developing and Evaluating Intellectual Property Assets” is written by Leo Jennings, an IP attorney in Virginia.  Jennings describes how to promote a culture within an organization that encourages innovation, such as how to encourage employees to participate in the process and how to document invention disclosures.  He covers other issues including international patenting, patent maintenance, enforcement, and how to determine whether to protect a particular invention.  Jennings then turns to monetary valuation of IP.  Various approaches are described, such as a cost approach, income approach, market approach, and hybrid methods.  Strengths and weaknesses of each method are reviewed, and he provides some advise on how to select the best method.

“Patent Sales” is written by David O’Steen, President of an IP boutique and patent brokerage firm.  O’Steen reviews ways to monetize patents, including litigation, licensing, and sales.  He focuses his chapter on how to sell a patent or patent portfolio.  He reviews how to determine what assets to sell, which assets may have potential buyers, who those buyers might be, and how to determine the value of a patent portfolio.  O’Steen reviews how a patent’s history or future potential of infringement, licensing, and litigation may affect its value and the potential buyers for the property.

O’Steen next reviews the three typical platforms for selling patents:  online, auction, or private sale.  He reviews the pros and cons of each platform, including the speed, number of buyers, and sales price potential for each, including who performs the sale.  Next, he reviews the due diligence to be performed on a patent portfolio, both by the buyer and by the seller.  This includes determining whether the patents have a clear chain of title and whether there is a potential income stream in the form of licensing revenue or infringement damages.

“Patently Ridiculous” is written by Gerry Langeler, Managing Director of a venture capital firm in Oregon.  Lengeler provides insight on whether and how venture capitalists choose to invest in patented technology.  He reveals that having a patent is less important than having the ability to execute the patent.  Lengeler provides a few stories that demonstrate why venture capitalists are hesitant to fund new endeavors:  uncertainty.  A mistake in the patent or a judge who rules in an unexpected way are several examples of such uncertainty.

Like most books that are compilations of writings, some of the essays in Great Patents are much better than others.  Some violate Orange’s statement of not providing a patent primer.  Overall, however, there is some good information and some inside or expert advise from different players in the field that are not always considered when making decisions regarding patents.  Great Patents is a worthwhile read.