Intellectual Property (IP) for the Entrepreneur

Patent Laws' Fall from Grace-Part II-A Foreign Lack of Grace

2012-01-20T12:22:00.000-08:00

The one year grace period provided in U.S. patent law for at least the past half century never coincided with foreign patent law. In short, there is, and remains, a lack of a clear foreign grace period. Some countries provide the same one year grace period (prior to the most recent change in September 2011), but for different activities, other than offer for sale or public use. Some countries offer a grace period for offers for sale or public use, but for a shorter time period. Some countries offer no grace period. Keeping up with all the different countries and their differing, or nonexistent, grace periods can be a momentous task---among other things, other countries pass and modify laws the same as our country--so to a certain extent, a moving target aspect exists.

This complexity was somewhat mitigated, but also exacerbated, by the international treaty that provided that filing a foreign patent application within one year of filing a domestic patent application (and claiming priority to the domestic patent application) allowed the foreign application to have the effective date of the domestic patent application, i.e., one year earlier.

The result of that treaty was the creation of two one year bars. The US public use/offer for sale one year bar, and the foreign patent filing claiming prior to the US patent application one year bar. but the foreign patent application may not have the same grace periods that the US patent application enjoyed, so even though the foreign patent application was filed within one year of the US patent application (and claimed priority to it), the foreign application may still be invalid if the inventor engaged in public use or offers for sale within the one year prior to filing the US patent application, even though the US patent application would not be invalid. Confused enough? It's like a bizarre Rube Goldberg machine.

As a general rule, with many exceptions that your patent attorney will have to research, do NOT rely on the existence of any foreign grace period.

Patent Laws' Fall from Grace-Part I: The Golden Age

2012-01-14T12:08:00.000-08:00

For at least half a century, U.S. patent law provided a fairly clear one year grace period from public use of, or offer for sale of, a utility invention before a patent application on the invention was required to be filed. In other words, the inventor could publicly use and/or put the product for sale on the marketplace and not lose any domestic patent rights, so long as the patent application was filed within 365 days of the very first time the use was public or the product was offered for sale. The consequences for violating this grace period were lost of patent rights--the invention became dedicated to the public and free for all to use.

This strict grace period was enforced after-the-fact. The inventor was required to swear in a declaration, under penalty of Federal criminal law, that the inventor would disclose all material information to the patent office--public use or offers for sale more than year before filing the application being clear material information.

If the inventor didn't tell the patent office, no one was the wiser--until litigation erupted and the inventor tried to enforce the patent in an infringement suit. Then a well funded defendant with a competent legal team would investigate every nook and cranny, interview friends and relatives, and quite possibly turn up the undisclosed public use or offer for sale. The patent would likely be held invalid, and the inventor might even have to pay the defendant's gargantuan legal fees. Thus were the strictures of the one year grace period enforced.

That was then. The Leahy-Smith America Invents Act signed into law on September 16, 2011 changes all that, as discussed in the following posts.

Article on Innovation Financing Security published in Vancouver Business Journal

2011-02-24T13:17:00.001-08:00

http://www.mrpatents.com/Innovation_financing_security___Vancouver_Business_Journal[1].pdf

Search Me: IP Searches in Brief

2010-07-27T11:22:00.000-07:00

Intellectual property practice is rife with searches. We list below the more common searches that the entrepreneur will come into contact with or have occasion to use.

PATENT SEARCHES. There are different types of patent searches depending on what is being searched for.

Novelty or Patentability Searches. These searches help to answer the question: Can I get a patent on my invention. These searches encompass all prior art, whether dead, invalid, US or foreign. These searches typically only answer the first of the two main patentability questions, that is, whether the invention is novel in light of the prior art. The second question, much more murky, is whether the invention is obvious in light of the prior art. These searches cannot definitively answer that second question, but can give guidance to a patent professional, and perhaps suggest design around tactics.

Infringement Searches. Infringement searches are also called Right-to-Use Searches, Clearance Searches, or Freedom of Operation Searches. Whether you wish to get a patent or not, you will wish to know if producing and marketing your invention may infringe the claims of someone else’s patent. These searches are more narrow, because you don’t care about dead or expired patents, the relevant date range is the last 20 years, and if you are only interested in the US market, you don’t care about foreign patents. These searches are also more narrow than novelty and invalidity searches in that you only care about patents, not other types of prior art. Like invalidity searches, these searches focus on individual claims of patents.

Invalidity Searches. Invalidity searches seek to answer the question: Was the patent issued erroneously such that it should be invalidated. These searches, which focus on individual claims in a patent, are typically more time consuming than a novelty search. The focus is on finding prior art that existed before the patent application was filed, and which was not cited to or considered by the Patent Office during the examination of the patent application. Just like novelty searches, invalidity searches are not limited to patents and patent applications, but anything which may be prior art, such as an industry report, or pre-existing apparatus, or trade journal article.

State-of-the-Art Searches. These are very different types of patent searches. The point of these searches is to allow researchers and developers to see what is the current state of development in a particular field of endeavor.

TRADEMARK SEARCHES. Also called Trademark Clearance Searches and Name Availability Searches, this type of search is performed to see if a name is appropriable for use as a trademark, both from the perspective of eligibility for registration and from the perspective of avoiding using someone else’s mark. These searches typically search not only State and Federal trademark and corporate name databases, but also yellow pages, phone books, and the Internet, among other sources.

COPYRIGHT SEARCHES. Copyright searches are often the hardest of all searches to be confident about. You can search titles and authors at the Copyright Office, and you can do Google, Google/Scholar, and Google/Book searches. There also exist specialty libraries for various types of artists that can and should be checked, such as for music and the visual arts. But any type of search will necessarily omit huge swaths of published material that simply (a) has not been registered for copyright (even though it is copyrighted) and/or (b) has never been put on the internet.

A Plethora of Patent Applications

2010-06-16T15:17:00.000-07:00

Many entrepreneurs, seeking knowledge and thrift in cost, research the patent process online. Invariably, they come away with spotty information and even that is usually wrong. One area of confusion is the type of patent applications that are available.

This entry provides a list of some of the types of patent applications that entrepreneurs can come across:

Provisional: these applications do not yield “provisional patents”. Instead, they are temporary patent applications that give a priority date for only so much as is actually disclosed and enabled in the application, and it is only good for one year. If a nonprovisional is not filed within that year, the priority date is blown. Many entrepreneurs seeking self-help damage or destroy whatever intellectual property rights they may have through ill-considered use of the provisional patent application procedure.
Nonprovisional: these are regular patent applications, whether utility, design, or plant, that are examined by the Patent Office.
International: these are various species of patent applications that can be Patent Cooperation Treating (PCT) applications filed at the World Intellectual Property Office (WIPO), or foreign applications, or regional applications.
PCT international: these are international patent applications filed under the PCT with a WIPO Receiving Office. They are useful for countries that are signatories to the PCT.
Foreign: these are applications filed in foreign countries.
Regional: these are applications filed in foreign regions that have set up regional reviewing authorities, such at the European Patent Organization (EPO).
Non-PCT international: these are foreign applications filed with Countries that re not signatories to the PCT.
Utility: these are what mot people think of when they think of inventions. These are regular patent applications that are not filed as design (ornamental) patent applications or plant patent applications.
Design: these are patent applications filed under the design patent application procedure and are for ornamental features of functional articles.
Plant: these are patent applications covering organic plants (as opposed to, for example, factories).
Continuation: these are applications that are filed during, and claiming priority to, a pending patent application.
Continuation-in-part: these are continuation applications that include additional new matter.
Divisional: these are continuation applications that essentially divide the original application into two different applications two cover two different inventions.
CPA: these are patent applications, no longer in use, which essentially continued examination of the original patent application.
Substitute: these are a misnomer in the sense that it is not a substitute patent application, but rather a substitute specification replacing the specification in a patent application.

Important note: This list is not comprehensive.

What's the bottom line?

2010-05-29T10:01:00.001-07:00

Clients invariably ask how much it will cost to patent an invention. Sometimes the question comes after a lengthy explanation of patent law and the patent prosecution process. Sometimes it comes insistently by a first time caller, reluctant to disclose even their name. People want an estimate, a flat price, a round figure, a budget. Something that they can metricize and hang their hat on.

The short answer is: we don't know for certain. Patent application drafting and patent prosecution have so many variables, many of which are not under the control of the patent attorney, that any estimate is a guess at most. The most a patent attorney can ever do, if they are not negotiating a flat fee (or maximum/minimum), which has its own hazards, is provide an estimate of what the average in a particular area of technology has historically been.

Entrepreneurs however have the ability to manage costs based on choices they make. To explain this, it is necessary to understand some of the factors that go into cost:

(1)Prior art search: whether a prior search is ordered, and how extensive; whether the client wants the patent attorney to evaluate the prior art search results; whether the prior art search results will require a design around; whether the client wishes the patent attorney to start drafting the patent application prior to the prior art search results being returned.

(2)Stage of invention and production: whether the client has built a prototype or is working off unproven sketches; whether the client has made a production model; how complete is development of the invention; whether the client has a business plan.

(3)Complexity of invention and technology: what art area is the invention in—mechanical, electrical, computer science, material science, chemical, etc.; does it have multiple embodiments; how key is the invention to the business plan.

(4)The attorney fees per hour or per embodiment.

(5)How many inventors are there and are their relative contributions known.

(6)Whether the client is defensively applying for a patent application or offensively.

(7)Whether the client wishes to pursue foreign patent rights.

(8)Whether the invention is on the market now or has it otherwise been publicly used or made known to others not under a duty of confidentiality.

(9)Whether the client wishes to file a provisional or nonprovisional patent application.

(10)Whether other government agencies need to be involved (such as the FDA or the Department of Agriculture).

(11)Whether the invention implicates national security.

(12)Whether the invention is partially funded with Federal money.

(13)Whether the client is a small entity or a large entity.

This is not a complete list, but it does provide the entrepreneur with factors which can be used to help manage costs. Looking at the list, it should be obvious that entrepreneurs have a significant ability to manage patent costs especially in categories 1, 2, 3, 7, and 9. In short, if there is a prior art search, it will cost more. If there are multiple embodiments, it will cost more. If the client keeps adding to the invention, improving, and making changes, after the patent drafting has started, it will cost more. If the client wishes to pursue foreign patent rights, it will cost more. If the invention is incipient instead of developed, it will cost more.

One scenario frustrating both for the client and the patent attorney, is the client who comes in, very enthusiastic, who wants an estimate, but has not thought through any of these factors, and then makes multiple changes and adds embodiments after patent application drafting has started. The estimates then bear no relation to the work being done and the client gets a significantly higher bill.

Wise entrepreneurs, as mentioned in previous blogs, will make a comprehensive business plan. That plan should certainly include consideration of the above factors, at a minimum.

The Entrepeneur's Beginning Startup Checklist

2010-01-12T23:21:00.001-08:00

Many beginning entrepreneurs find that having a checklist to work from helps organize the tasks that need to be accomplished. Basic checklists like the following are used to help get the ball rolling. Note this is not a comprehensive list and there is some item overlap. The inclusions in the list, and the substantive acts and contents of each document on the list, can change depending on the jurisdiction. Also, while this list is enumerated, the enumeration is for convenience only. Different individuals will reach different starting points depending on the moment of inspiration.

Comprehensive Business Plan (how will you make money)
IP Protection in place, including some or all of, trademark(s) registrations applied for, proper trademark marking of goods and services, name availability search(es), copyright registration(s) applied for, patent application(s) filed, work for hire and assignment agreements for employees and contractors executed, assignments on record at the appropriate recording agency, patentability search and freedom of operation opinion
Nondisclosure agreements ready for investors, evaluators, consultants, and other third-parties to sign
Business formation documents in place, usually including incorporation/certificate of formation, articles of incorporation/membership agreement, first organizational meeting and adoption of bylaws, issue certificates of ownership/share certificates and update register shareholders agreement/membership agreement(including clauses for assigning intellectual property, work for hire, nondisclosure, noncompetition, and, among others, buy sell), buy-sale and valuation agreement, technology transfer agreement
Employment agreements in place (including clauses for assigning intellectual property, work for hire, nondisclosure, noncompetition)
Asset listing (an IP audit)

New Years Day 2010

2010-01-01T09:31:00.000-08:00

Gross mass misconceptions underline the need for detailed and well written legal documents. Take for example the "new" decade of 2010-2019. In fact, we are not yet in the new decade, which does not begin until 2011. This is because there was no year "0". Before the year "1" AD there is the year "1" BC. Thus, the first year in the modern calendar is year "1". Which means the first decade, the first ten years, ended at the end of year "10", and the second decade did not begin until the year "11". Accordingly, the second millennium did not begin until 2001, and the second decade in the second millennium does not begin until "2011". Nevertheless, largely because of the ignorance of the media, everybody believes the second decade has begun.

What is the significance of this? That errors in dates and deadlines are extremely common and constant vigilance in drafting legal documents is required.

Law is beset by legal deadlines and drop dead dates. Intellectual property law is no exception, and in fact has more than the average number of kill dates, with very dire consequences. Just by way of a few examples, for patents there is the one year statutory bar deadline, the one year conversion from provisional to nonprovisional deadline, the one year foreign application filing deadline, the 20 and 30 month national stage filing deadlines, the six month response deadlines, etc. (By the way, the large number of myriad kill dates in patent law are a good reason why inventors should not go it alone). A particularly knotty deadline is appealing de novo a BPAI decision, which must be done within two months. Many practitioners assume that "two months" means 60 days, with 30 days a month. But in fact, the two months means two actual months. Thus, if the two months after the decision include a month that has 31 days, then the appeal can be, for example, in 61 or 62 days (if there are two months sequentially of 31 days each, like July and August).

Divorce and Intellectual Property

2009-06-17T14:37:00.000-07:00

A recent opinion highlights the ugliness of intellectual property when divorce occurs. The beloved Johnathan Livingstone Seagull was the rope in a tug of war between the author Richard Bach, and his ex, Ms. Parrish, in the Washington Court of Appeals case Bach v. Parrish,
60406-6-I (2008). Ms. Parrish had helped Mr. Bach out by buying the copyright rights to the book when Mr. Bach went through bankruptcy shortly after they were married, using her separate funds. She then granted him 50% of the rights. They then divorced and agreed as part of the divorce to share the rights to the book as tenants in common. They then executed a comprehensive settlement dividing up the rights including rights to accrued causes of action such as copyright infringement. There was an infringer. It resulted in a monetary settlement. Bach and Parrish fought over who got what. Ultimately, Bach won because the divorce agreement was comprehensive and clearly gave him the accrued causes of action. It also required resolution by arbitration before a specific judge. All of which the Court of Appeals agreed to.

Reading this case displays only some of the bizarre tangles that occur when divorce enters the world of intellectual property. Washington is a community property state. Thus, Ms. Parrish was able to purchase and own because of her separate funds. Would she have been unable to get individual rights in a non-community property state. There are numerous questions of who owns what in a marriage, depending on the State and the type of intellectual property.

One clear result from the case that entrepreneurs should take away, Bach was definitely benefited by having a well drafted agreement that contained an arbitration clause.

Rescue Me

2009-04-22T09:44:00.000-07:00

Businesses seeking search engine optimization through use of keywords were dealt a blow by the US Court of Appeals for the Second Circuit on April 3, 2009. In Rescuecom Corp. v Google, Inc., the Second Circuit reversed the lower court’s dismissal of Rescuecom's suit against Google for Google's use of the term “Rescuecom” to trigger sponsored links through Google's Adwords and keyword suggestion programs. The lower court had dismissed the suit ruling that the Google programs use of the terms was not "use in commerce". The Second Circuit reversed, and in doing so, joined the other courts, notably the Ninth Circuit, that have ruled that use of keywords can be “use in commerce” for purposes of liability for infringement under the Federal Lanham Act.

What are the implications? First, given the wide spectrum of trademark protectabilty, from no-protection generic terms to highly protectable fanciful or arbitrary terms, the business using keywords must navigate a minefield. How do you know if a term is claimed as a trademark by someone else? Certainly a search on the Federal register can yield those marks for which someone has sought Federal registration, but the Lanham Act allows suit for unregistered marks, such as State registered marks or common law marks. Searching for common law marks can be an unwieldy and expensive beast, and if the business owner has to do it for every term it wishes to use as a Google Adword, then marketing costs for internet advertising will quickly add up.

Second, the decision ruling keyword use to be "use in commerce" seems at odds with the Federal Trademark Office interpretation of "use in commerce". To get a mark registered, the applicant needs to show that the mark has been "used in commerce" for the particular class of goods or service for which registration is sought. The Trademark Office does not accept keyword use as acceptable proof of use. But how can the Trademark Office continue to take this position when the Federal Courts of Appeals rule that keyword advertising is "use in commerce". This conflict is ripe for resolution, which doesn't currently appear anywhere near.
Due diligence before use of a term in advertising that is even remotely suspected as being a possible trademark of another now seems to be the order of the day. What constitutes due diligence, however, is a topic for another day.

Who you gonna call? Part I-Patents

2009-02-14T19:44:00.000-08:00

People frequently ask what factors should go into evaluating and choosing a patent counsel. Patent work can be broken down into several areas, including licensing, prosecution, and litigation, among others. A deep technical understanding of the underlying art may be less necessary for licensing and litigation, assuming people familiar with the technology are accessible.

For this post, we will deal with choosing a patent prosecution counsel.

Technical understanding. For patent prosecution counsel, the technical understanding becomes more important, but again dependent on the area. For mechanical inventions, being an expert in that field of mechanical endeavor is probably unnecessary so long as the patent attorney is qualified for mechanical patents. Specialized understanding gets to be more important depending on the sophistication of the art. Cryptological software inventions, for example, probably require a skilled CS person who also has qualification in upper level (i.e., beyond engineer level) mathematics. Pharmaceuticals require not only the biochemical understanding, but access to attorneys skilled in FDA approvals. Numerous examples of the different arts, some requiring only basic qualification, and others requiring specialized qualification, exist.

In regards to efficiency/billing, and also in regard to ability, other qualities than specialized knowledge can be equally or more important such as learning speed, wheel-spinning, and legal conceptual understanding. The speed of learning—there are electrical engineers who can learn quickly, and those who cannot. Since all inventions are by their essence new, novel, and nonobvious, there will be learning regardless of specialized knowledge. Wheel-spinning--there are highly technically qualified attorneys who can take forever to sit down and hammer out the applications. Some people need to take a break every twenty minutes for a water cooler chat. Some like to do an application a day. Legal conceptual understanding—if the highly qualified technician just does not get the fact that patents are ultimately read by non-patent attorneys, and non-lawyers, the product will suffer and may require redrafting requests.

Anyone looking to choose patent prosecution counsel should also determine whether the counsel they consider is stuck in the past or married to inflexible platforms for performance and billing. Is the counsel open to alternative billing structures. Is the counsel open to re-constituted staffing of projects. The old firm tradition of billing hourly, and then maximizing profit by staffing a case with junior level attorneys all answering up the chain to a senior attorney, may not always be the most optimum. Is the counsel open to billing structures that provide motivation for efficiency.

Thus, in terms of selecting counsel for patent prosecution, while some breakdown should be made for specialized arts, to maximize value and minimize unnecessary fees, the evaluator should design a selection process that includes: (a) identifying a pool of base qualified counsel; (b) winnow the most efficient by focusing selection not on degrees or industry experience, but instead on factors which identify and quantify learning curve speed, work energy and motivation, and availability of senior attorneys who are experienced not only in prosecution, but also who have done licensing and who have actually conducted jury trials; and (c) determining whether in this winnowed group the counsel understands, is open to, and able to provide different billing structures so that in-house counsel can price and budget prosecution work in perspective to its worth to the company.

Patently Ridiculous

2009-01-26T16:56:00.000-08:00

A series of more or less recent articles points to a troubling trend at the U.S. Patent Office. On January 5, 2009, PatentlyO reported a plummeting reversal rate at the Board of Patent Appeals and Interferences (BPAI). On January 8, 2009, PatentlyO reported a soaring appeal rate at the BPAI. The BPAI is the review board that reviews examiner rejections of patent application claims. Add to this state of affairs the troubling statistics, again reported at PatentlyO, showing a long wait time before the Examiner even gets to an office action. Similarly, the significant lag at the BPAI to even reach a decision on the merits, averaging 542 days (1 2/3 years), causes concern.

What does this mean? One conclusion is that there is a general belief that there are too many questionable Examiner rejections and that the only way to get a fair review is to appeal to the BPAI--hence, the soaring appeals. But because appeals are now sought more frequently, instead of after serious consideration, more questionable appeals are being filed--hence the plummeting reversal rate. And in both scenarios, it will be a long time before a decision because of the double lag times imposed upon Applicants by the Patent Office. The dedicated IP entrepreneur should increasingly expect to be "patent pending" for quite some time.

Naming your business

2009-01-19T10:16:00.001-08:00

Picking a business and/or product name can be tricky. The more a name describes the product/business the more the name is not protectable. Pick a generic name and get instant recognition--but anybody else can use the name also. Building a reputation into an unusual nondescriptive name takes time and effort, but usually yields a more protectable name. But don't choose a name chosen by somebody else because then you risk trademark infringement/dilution liability. These precepts making choosing a name difficult. Nolo recently published an article on "Picking a Winning Name for your Business" which discusses some of these issues, and others.

Would you care if someone copied you?

2008-12-17T17:26:00.000-08:00

Clients always downplay their product or their mark. It's not patentable, I didn't invent the wheel, anybody could do it. A simple question changes the mind: "Would you care if someone copied you? --copied your GUI (graphical user interface), your software engine, your product name or your company name." If you would care, then it is worth protecting. Whether talking about infringement, counterfeiting, misappropriation, et al., the normal term is "copying". When phrased that way, most people do care if their work is copied. That's where IP audits and business plans come in. IP audits review the business and see what IP protection may be needed, and the current state of the IP protection, among other things. It includes a review of employment agreements, shareholder agreements, vendor agreements, products and product names, websites and web engines, processes and procedures. What is your IP, how is it protected, how much protection can you afford, and which IP is at the core of your businesses profit-making? Once the IP is identified and the state of protection determined, budgets can be set. Of course, none of this matters if you don't care if someone copies you.

So I'm an inventor, what now?

2008-11-25T09:18:00.000-08:00

You have invented the new widget. You have decided to seek patent protection. What now? Does the money just come when the invention is patented, or the application is filed? Does corporate America send you green mail when you notify them of your impending rights? Not hardly.

Patent attorneys are frequently asked for direction on how to take the invention from the patent stage to the market stage, but the fact is, patent attorneys are generally not business people and have little, or no, marketing and product development sense. Ultimately, the inventor turned budding entrepreneur either needs to be a business person, including marketing and financial savvy, become such a person, or hire/partner with such a person.

But first things first. How to go from invention to product. If you can, make a prototype. If you cannot, make a drawing. Here, the patent application can come in handy because if your patent attorney was sharp, he or she would have made sure there would good drawings to help support the patent application. Nice perspective, exploded, and/or perspective-in-use drawings can pay dividends, not just in understanding the invention, but in explaining what you want to a product developer. Remember, a picture is worth a thousand words. In either case (preferably after a patent application is filed), take the prototype or drawings (with serial number, title and filing date redacted) to the relevant professional for commercial product speccing (and make sure you use a very good, attorney vetted NDA). Who is the relevant professional? That depends on the art area. There are tons of plastics, machine shops, rotomolders and design shops around, many providing services specifically to inventors. If you need help, start with the Inventor's Digest magazine which has a host of ads and classifieds from such professionals, and which also has useful articles. You can also go to your State small business center. In Washington, the State has several Small Business Development Centers with certified business specialists whose very purpose is to help and point you in the right direction. The U.S. Small Business Administration has similar services. Public universities and community colleges also have business departments that can usually send you in the right direction. But there is no getting around the fact that you are going to have to use some elbow grease, make calls, and attend meetings. Remember Edison's adage: Genius is one percent inspiration and ninety-nine percent perspiration. This applies equally to entrepreneurship.

How long until I have patent protection?

2008-11-18T16:00:00.000-08:00

Inventors frequently ask how long will it take before a patent will issue. This seemingly straightforward question, however, is not so straightforwardly answered. First, you might not get a patent. Your claims might be rejected and you might decide to abandon the application. Or you might appeal to the Board of Patent Appeals and Interferences (which is becoming more frequent) and lose. Or you might seek further appeal at the Federal Circuit, and lose.

Second, depending on the type of invention for which you are seeking patent protection, the length of time it takes for the examiner to issue a first office action can vary widely. The closely followed patent blog, PatentlyO (http://www.patentlyo.com/), recently summarized in a table the average time to first office action by art area. For example, on average it takes 3.5 years for a first office action for business method patent applications, 3.2 years for computer networks, 2.2 years for machine elements, 1.9 years for amusement devices, and 1.7 years for manufacturing devices. Assuming a first office action allowance (a big assumption), you still would have to pay the issue fees and await issue, at least another 4 to 6 months. But most cases are not allowed on first office action, so there will be a second office action, and perhaps a request for continued examination, and then possibly the appeals mentioned above.

Third, much more rare, a secrecy order could get slapped on your patent, and you could be denied a patent entirely if granting a patent on your invention is considered a threat to national security.

When it comes to patenting, therefore, the old adage rings true: most people overestimate what they can accomplish in 6 months, and underestimate what they can accomplish in 5 years---that is, if they stick with it.

You dedicated What to the public?

2008-10-09T09:07:00.000-07:00

IP entrepreneurs frequently run afoul of the one year bar, which dedicates perhaps a valuable invention, to the public. How does this occur? Section 102(b) of the Patent Act provides, all other conditions satisfied, as follows:

A person shall be entitled to a patent unless— ...(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States, ...

This is the one year bar. Sometimes, because of the “on sale” provision, it is referred to as the On-Sale Bar. There are two parts, first, the invention must be “ready for patenting”, i.e., the invention is at the stage where a patent application could be filed. Second, it must either be (a) described in a printed publication, (b) put in public use, or (c) put on sale. These are all gray areas and if you have to look closely at them, you might already be in trouble. The safest course is to keep the invention confidential until you are ready to go to market. At that stage, file a patent application, get the “patent pending” status, and go to market. Not vice versa.

How does anyone know? Can you just keep your barring public use or barring sale secret and still get a patent? There are two aspects to this, legal and moral. The entrepreneur needs to make the moral decision for themselves.

The legal aspect is straightforward. When you file a patent application, you sign a declaration, under Federal law (thus, willful violation of which could be a Federal crime), that you know and understand your duty to disclose all information material to patentability to the Patent Office. When you don’t do so, it is called inequitable conduct. If the Patent Office finds out, it can bar your patent. If a patent issues and a competitor finds out, it can invalidate your patent and open you up to liability for bad faith patent enforcement. Every year patents are invalidated based on inequitable conduct for failure to disclose. It is not a situation you want to be in, especially since there is an easy way to avoid the problem -- apply for patent first, and then market the product. Otherwise, you could end up dedicating your invention to the public.

Note, some countries/regions don't allow a one year grace period at all. An IP entrepreneur that considers international protection will want to check the countries he or she is interested in before doing an act that starts the clock ticking. There may be less time than the one year allowed in the US, or no time at all.

Design Patents reinvigorated

2008-09-30T12:34:00.000-07:00

Design patent holders will be thrilled withe new decision by the Federal Circuit in Egyptian Goddess, Inc. v. Swisa, Inc., _ F.3d _ (Fed. Cir. 2008), making enforcement of patent protection for design patent owners less onerous. Design patents protect the ornamental features of functional articles. Previous to the Egyptian Goddess decision, the test for infringement was (1) substantial similarity from the perspective of an ordinary observer, and (2) the accused device contains the same points of novelty as the ptented design. The second test required claim construction in words of the graphic ornamental features and was used for appeals, hearings, and other purposes in defense of a design patent infringement suit. The Federal Circuit in Egyptian Goddess did away with the point of novelty test, thus easing the burden on patent holders in proving infringement. Since design patents are often easier to obtain, and less expensive, than utility patents, this is a significant boost to the small business ip entrepreneur.

Time for a New Court

2008-09-30T12:23:00.000-07:00

As I've mentioned numerous times, patent litigation is expensive for all concerned. The average pricess for patent litigation in attorneys fees is above $1 Million Dollars. For the overwhelming majority of patent owners, that price tag is simply too steep. Conversely, if you are unfortunate enought to be sued, the price tag is the same or higher, simply too steep. Sometimes the pre-suit negotiation or pre-Answer negotation, of a suit that has been filed, is a game of chicken where each side inches toward destruction, waiting for the other side to blink.

But protecting IP rights, and defending against claims of infringement, should not be a game solely for the rich. A new type of court is needed that significantly reduces the cost of enforcement. Some have called for a specialty U.S. Patent Court, somewhat like the U.S. Tax Court or the U.S. Court of Federal Claims, for handling all suits for patent infringement. But that doesn't resolve issues involving the 7th Amendment where a right to jury is guaranteed. Perhaps what is needed is a Federal small claims IP court, where people can plead patent and IP cases under a certain threshhold and get accelerated treatment, reduced discovery, and other procedure saving features. Some simple ways to reduce costs in IP litigation are: (1) mandatory, nonwaivable initial disclosures, and (2) combining summary judgment with Markman hearings or, where thare are no summary judgment motions, combining trial with Markman hearings.

Whatever the solution, the small business entrepreneur needs to be able to protect its intellectual property, and needs to be able to defend itseld against claims of infringement, neither of which are effectively being provided under the current IP enforcement framework.

False Marking

2008-07-03T21:44:00.000-07:00

IP entrepreneurs typically want to get, and should get, notification of their IP rights on their product, packaging, and marketing materials. The benefits are legion, from alerting people to the claim of right in the product, the product configuration, the product name, etc., to utilizing the advertising benefit of claiming a patented, trademark registered, or copyrighted creation. For patents, failure to properly mark can preclude the patent owner from getting any damages at all from an infringer. So to, the means for marking can be legion, from Patents: "pat. pending", "U.S. Pat. _", "U.S. Des. Pat. _", "U.S. Plant Pat. PP_", to Trademarks: (TM), (R), (SM), to Copyrights: (SR), (PA), (C), among others.

But marking has its flip side. To avoid a claim of false marking, there must be, as an absolute floor, a reasonable belief that the product marked as "patent pending" is actually the subject of a legitimate patent application, that a product marked as "U.S. Patent _" is actually covered by claims of a validly issued and unexpired patent, that a mark with the (R) subscript is actually registered by the U.S. Federal government, and not by a state or foreign country.

Where this floor is not met, the penalties can be stiff. For false marking of a patent, a Federal statute imposes a fine of $500 per product, and the suit can be brought by anyone, even if you don't have a dispute with them. False marking can also constitute unfair competition and violation of trade laws.

In short, marking laws can be complex. To do it properly, the IP entrepreneur must make sure to toe the mark.

Happy Fourth of July!

2008-07-03T21:28:00.000-07:00

To celebrate the Fourth of July, I'll give you a quick primer on the Constitutional bases for Federal intellectual property protection.

Patents and Copyrights derive directly from the United States Constitution. Our Founders wrote into the Constitution the Patents and Copyrights Clause which reads:

"The Congress shall have Power ... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;"

From that sprang the Patent Act and the Copyright Act, and all laws related to them.

Trademarks, however, were overlooked by our Founders, and are protected by the Constitution only indirectly, through the Commerce Clause, which reads:

"The Congress shall have Power ... To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;"

From that authority, Congress ultimately created the Federal Lanham Act governing Federal trademark rights.

Happy Fourth!

Spell it Out

2008-05-21T13:54:00.000-07:00

Sometimes it is tempting to sell, or attempt to sell, an invention without filing a patent application for it. This can be budget wise and economical. But it is also very dangerous. The Washington case in Oliver v. Flow International, 137 Wash. App. 655, 155 P.3d 140 (2006), exemplifies some of these dangers. Oliver sold his invention to Flow for $150,000 plus royalties. Flow never filed any patent application on the invention and never sold any products under the invention, and consequently there were no royalties. Oliver sued for failure to commercialize the invention and file patent applications on the invention which duties he claimed were implied by the contract and the reason for the royalty language. The Washington court ruled that there was no such language in the contract, and the court would not imply that duty. Thus, Oliver lost. Not discussed was that due to the one year “on sale” bar of patent law, because Flow never filed a patent application, the invention became dedicated to the public. The bottom line, if you want the contracting party to have a duty, such as to commercialize or seek a patent, you need to spell it out. Oliver could have included language that Flow was required to make verifiable concrete efforts to commercialize the invention. Oliver could have included language spelling out who had obligation to file and prosecute patent applications and maintain them. Olive could have required milestones relating to commercializations and sales such that if the milestones weren't being met the invention reverted back. But, as the case shows, if it isn't spelled out, it might not be enforceable.

Generic Trade Names and Trade Marks not protectable in Washington

2008-05-20T22:02:00.001-07:00

The Washington Court of Appeals, Division II, ruled today in Custom Auto Interiors v. Custom RV Interiors that generic trade names and trade marks are not protectable. To the extent that the 1926 Electric Supply case held generic names were protectable, subsequent cases and legislation have rendered that position invalid. Custom Auto Interiors involved an interlocutory appeal of a preliminary injunction enjoning the defnendat, Custom RV Interiors from using the name Custom RV Interiors for its business of providing custom RV interiors. Custom Auto Interiors contended it had used the name Custom RV Interiors for over 15 years in the same locale for the serice of providing custom RV interiors, and that, generic or not, the potential for, or existence of confusion, rendered the name protectable, and the defendant's use of the name enjoinable. The trial court accepted this proposition. The defendant petition for review. Review was accepted and the trial court's injunction was reversed. The firm of Rylander & Associates PC (which this blogger manages), represented the defendant on appeal. This is also an important note for the small or start up business--the smaller party does not have to surrender in the face of an adverse decision

Buying the Cow

2008-05-13T11:04:00.000-07:00

IP entrepreneurs frequently seek to acquire intellectual property from other entities, whether as a straight license or assignment, or as party of a merger or acquisition of assets. If a substantial portion of the value relies upon the intellectual property, the entrepreneur needs substantial due diligence to avoid buying the cow rather than just the milk.

First, intellectual property is subject to wide variations of valuation. Never take the seller’s word for it. Proven sales or established licensing rates help. Experts exist to give a fair market appraisal, to the extent that it can be done, for intellectual property.

Second, intellectual property can disappear. Patents and trademarks can be invalidated or rendered unenforceable. Copyright registrations can be invalidated, and/or the copyright protectable expression can be found to be non-existent.

Third, ownership is rarely clear cut. Ownership where employees or contractors are involved can be a nasty mess requiring tracing back through each person and each agreement to determine what, if anything, was effectively assigned, what was obligated to be assigned, or what might be hanging out free and clear. Like buying the cow, when buying intellectual property due diligence can sometimes show that the milk is free.

Invention Promotion Companies.

2008-05-05T16:27:00.000-07:00

Frequently consumers report problems with invention promoters or invention promotion firms. Congress passed the American Inventors Protection Act of 1999 to deal with the problem of scam invention promotion firms. Congress recognized that a growing number of invention promotion firms do not provide accurate statistics to the inquiring inventor of unsuccessful invention promotions, but instead typically provide nice shiny packages to inventors, giving misleadingly glowing suggestions of rewards to be reaped if only the inventor will pay substantial money for the marketing.

The American Inventor’s Protection Act requires invention promotion firms to disclose in writing to the inventor the following: (1) the number of positive and negative evaluations of inventions the invention promoter has given over a five-year period and (2) the success of the invention promoter’s customers in receiving net financial profit and license agreements as a direct result of the invention promotion services.

Not all invention promoters are “bad”. Some are reputable and may perform a useful function. The Patent Office keeps track of complaints filed against invention promoters. The Federal Trade Commission (FTC) also keeps a record of its enforcement actions against invention promoters—just type “invention” in the FTC search engine to see FTC press releases related to invention promotion firms and enforcement actions. Additionally, the FTC has an information website explaining invention promotion firms as well as a useful “consumer alert”.

Please post any comments regarding experiences with invention promotion companies.

Shhhh!

2008-04-29T21:05:00.000-07:00

Trade secrets can be a valuable asset in the entrepreneur's IP portfolio. Unlike copyrights, trademarks, and patents, trade secrets are not registered nor are they applied for, granted, or issued. In a short definition, trade secrets are information that is maintained confidential and which gives the entrepreneur competitive advantage and/or derives independent value from being kept confidential.

Virtually every state protects trade secrets using some form of the Uniform Trade Secrets Act. Common law also gives some protection to trade secrets. Theft, or misappropriation, of trade secrets can also implicate the Federal Economic Espionage Act.

But trade secrets are only protectable if they are maintained as secret, and that includes the requirement that (a) the information is not easily available to competitors, and (b) reasonable precautions are used to maintain secrecy.

Customer lists are frequently claimed to be trade secret, but in many cases the customer and contact list is as easy to discern as looking in a known industry directory, or typing a well phrased Google(R) search. On the other hand, some customer lists are not accessible that easily and can only be created over time using sources not readily available. In such a case, the list may well qualify as trade secret...but only so long as reasonable precautions are used to maintain it. Is the information let out to people who are not under a written obligation of confidentiality? Is the information laying on a desk that members of the public or frequent vendors walk past? Do employees have a written obligation of confidentiality? Is the information on a computer connected to the Internet that has only the most rudimentary of security protections? Do the customers know each other and do that they know that they are all customers of the entrepreneur? These things factor, sometimes dispositively into the question of whether reasonable precautions are being used.

One easy self assessment is to ask the following questions. For (a), is the nature and reason for the trade secret status easy to state. For (b), are the precautions taken to preserve secrecy well documented and do they include documentation on the items just listed. If either of the answers are "no", then trade secret protection is not being well established and/or maintained. But don't tell anybody that, it'll be our secret.

Insurance and the Intrepid Inventor

2008-04-25T14:11:00.000-07:00

Inventors who bring their own product to market should consider, among other insurance issues, both product liability insurance and patent infringement insurance. Product liability insurance covers liability for claims for injury caused by the new product. Patent infringement insurance comes in two flavors, offense and defense. Insurance exists for infringement offense to cover the cost of bringing a suit in the event someone infringes on the inventor’s patent. Conversely, insurance exists for infringement defense for claims that the entrepreneur infringes someone else’s patent. None of these types of “invention” insurance come cheap, so it is important to find out the premiums on these when writing the business plan.

A Rose by Any Other Name.

2008-04-22T14:32:00.000-07:00

If patents are the heart of a business’s competitive edge, trademarks are the face. New entrepreneurs frequently seek information regarding choice of a company or product name. Despite the seeming ease, choosing a mark by which people will identify your product or company can be difficult. Opposing considerations come into play. Does the chosen mark add to marketability? Does the chosen mark infringe someone else’s mark? Can the chosen mark be protected? The more descriptive a mark is, and thus potentially more immediate marketing edge, the less protection it may receive, and perhaps no protection at all.

Marks are placed on a spectrum of protectiveness defining what must be done to make them protectable, i.e., are they inherently distinctive, distinctive only after acquiring secondary meaning, or never distinctive. While generic marks immediately identify the product, they are not protectable in most jurisdictions. Fanciful or arbitrary marks can be immediately protectable, but they give no information about the product whatsoever, so have no immediate marketing bump. A choice must be made then, whether to seek little or no protectability with a generic or highly descriptive name, little or no immediate marketing bump with a fanciful or arbitrary name, or somewhere in between. Once that choice is made, the question becomes whether someone else has the name for the same or related good, which would interfere with the ability to get protection for the entrepreneur, and open the entrepreneur up to trademark infringement or dilution liability.

How does an entrepreneur navigate these shoals? First, make the choice of whether to seek immediate marketability using a descriptive or generic name, or to go with a name less immediately marketable but more immediately protectable. Second, conduct a trademark clearance or name availability search. Third, if a name is chosen that is potentially protectable, and a search reveals no conflicting uses, decide whether to seek formal registration of the mark. Choosing a mark, like growing roses, can be thorny, but when grown correctly, be just as sweet.

Double Duty

2008-04-18T13:57:00.000-07:00

Any business that gains a competitive edge from a custom software engine may wish to consider a multi-faceted IP protection plan. Software can be the subject of a patent, the subject of a copyright, and in some cases, the subject of a trademark (or trade dress) for a unique user interface. Engineers frequently seek patent protection on a new device, but almost invariably focus on the electrical, circuit or mechanical aspects, never considering (or perhaps considering too “soft”) protecting the unique code that runs the new widget. But the original expression in code is just as copyrightable as the novel and nonobvious useful process of code is patentable. From an enforcement perspective there is almost no richer or worse type of suit to prosecute or defend. Software code can be the hardest to convey to a judge or a jury, even without throwing in the impenetrability of patent law and claim construction. Similarly, the copyright law surrounding code and user interface protection is literally (small copyright joke) a patchwork quilt.

Small Changes and Big Realities

2008-04-18T13:35:00.000-07:00

Isn’t it true that competitors need only make a small change and get around a patent? If so, then why should I get a patent? This is a common refrain, mistaken both in its premise, and in pragmatic reality. For patents, a small change is neither here nor there. Is the competitor’s product within the terms of any claim in the patent? That is the question. If a small change is within the terms or, in many cases, is the equivalent of the terms, then a case for patent infringement may exist.

That is the analysis on the merits. But the real analysis is on the economics.

Patent litigation is unbelievably expensive. More so for defendants, in most cases, then plaintiffs (for reasons that will be the subject of other blog entries). A defendant receiving a cease and desist letter faces an economic wake-up call. When the defendant takes it to the patent lawyer, the lawyer often will require a seemingly gargantuan retainer fee and monthly litigation budget. For most small, and even medium sized, defendants, making a patent infringement defense is not practical, and in many cases not possible. A small change (or even not so small) to a product can still nevertheless come within the terms of a patent claim, allowing a patent holder to terrify, in many cases into submission, a defendant who cannot meet the sticker price for a defense. The threat or even reality of a patent infringement lawsuit can be effective at keeping the competition in line. But, the patent owner has to be willing to enforce it.

Plan to Succeed

2008-04-16T10:19:00.000-07:00

The new IP entrepreneur typically seeks to protect his or her new creation, whether it is an invention, a new name for a product, an original design, an artistic performance, or otherwise. At first glance, the costs of IP acquisition/protection can seem large. A successful IP entrepreneur will first create a business plan that provides a roadmap of how the new busines is going to succeed, factoring in not only the costs, risks, and advantages of IP acquisition/protection, but also costs of prototyping, manufacturing, getting the product to market, marketing the product, administrative costs, and a host of other start up costs (licensing, business formation, etc.) that go into being an entrepreneurial business. The U.S. Small Business Administration has a good site with information on how to write a business plan. The State of Washington's Small Business Development Center also has a good informative page on business plans. Once a solid business plan is created, the entrepreneur can weigh and allocate the costs for doing IP acquisition/protection right away, versus waiting until other milestones are reached. Of course, the IP entrepreneur is wise to take consultation to discover the risks of waiting for IP aquisition/protection, as some risks can be substantial and sometimes the IP acquisition/protection work must be done immediately. Making a good business plan is the best first step in succeeding in the new venture. When you fail to plan, you plan to fail.

Start Right at Start Up

2008-04-14T12:55:00.000-07:00

The best time to avoid later problems is before the dispute occurs. For the entreprenuer, this means at the beginning. Written Assignments, Shareholder Agreements, Work for Hire Agreements, Non-disclosure Agreements, and Noncompetition Agreements, among others, are frequently desired after the fact. Putting these in place at the beginning of a business or a relationship let's everyone start on the same page, lessening the chance of a later misunderstanding. Good fences make good neighbors, and good contracts make good business.