Patents and Legal Resources

Overview of Patent Law

Courtesy of Ted Pitcher of Testa, Hurwitz & Thibeault, LLP

SCOPE OF PROTECTION:

A valid patent grants to its owner the right in the United States for a term of 20 years following the filing date of the patent application to exclude others from making, using offering for sale, or selling the subject matter defined by the claims made in the patent.

FUNDAMENTAL RATIONALE OF THE PATENT LAWS:

The Patent Act is found at 35 U.S.C. et seq. The basis for the Patent Law is Article 1, section 8 of the U.S. Constitution which states: "Congress shall have the power to promote the progress of science and the useful arts, by securing for limited times to authors and inventors the exclusive rights to their respective writings and discoveries."

• Encourage Creativity and Promote Public Disclosure: This goal of the patent system is accomplished by granting exclusive rights for a limited period and providing economic incentives for creative discoveries. The inventor receives control over the product of his inventive efforts and gets to exclude others from exploiting it.
• Quid Pro Quo - Exclusivity for Disclosure: The grant is made in return for public disclosure and ultimate public availability of the fruits of innovation. Patent application procedures and ultimate publication provide documentation of the compositions, methods or designs of the invention, and define the scope of precisely what the patent covers thereby promoting dissemination and creating a permanent repository of scientific and technological data for use and further innovation by others.
• Disclosure vs. Confidentiality: There is a fundamental conflict between the patent objectives of full disclosure and protecting technical information of commercial value as a trade secret. U.S. patent law seeks to promote disclosure and requires that the inventor disclose the best method known at the time of filing ("best mode") for carrying out the invention be disclosed.
• Patent and trade secret protection may coexist for different components of a patented composition, process or article. It is possible to disclose completely the process but retain secrecy for steps implementing its manufacture, as long as you comply with the statutory requirement that you teach persons skilled in the art how to make and use the invention and satisfy the best mode requirement.

PATENTABLE SUBJECT MATTER:

"Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor subject to the conditions and requirements of this title." (35 U.S.C. A7101)

• Patentable Subject Matter Includes: Physical Objects and Operations
  • Physical Objects: Machine; article of manufacture; compositions of matter; physical apparatus; device or mechanism; complete article or a component part; products produced from raw materials or prepared mixtures of substances or materials.
  • Physical Operations: Processes; novel sequence of procedures; new combinations of materials; novel manipulative steps leading to a useful result; mode of treatment of materials to produce a given result; mechanical and chemical processes; series of operations performed to transform and convert an item into a different state; process for producing chemical compounds; methods of manufacturing.
  • Structures or Methods Implementing Ideas - While a bare idea is not patentable, the method of implementation or execution of the idea through the medium of a process, machine, article of manufacture or composition of matter may well be; that is, a structure or method created through the use of the idea may be patentable.
• Excluded Subject Matter: Claims covering nothing more than natural laws and phenomena of nature; abstract ideas not reduced to operational form in a useful object or process; mental steps -- i.e., processes of judgment and calculation, including computing, measuring, determining; scientific principles; methods of doing business; algorithms.

WHAT IS REQUIRED FOR PATENTABILITY:

The invention must be novel, non-obvious and useful, and must be supported by a disclosure describing it, how to make it, and how to use it.

• Utility (A7101 of Patent Act): There must be present some application for a beneficial use in society; requires minimal demonstration that the invention operates or performs the functions set forth in the application; capable of performing some beneficial function or salutary, practical use; commercial product not required; invention does not have to accomplish all hoped for functions, and need not necessarily be better than what has gone before.
• Novelty (A7102 of Patent Act): The invention must be "new" and not already publicly known (95anticipated96), disclosed, patented elsewhere, or used or made available to others in the United States:
  "A person shall be entitled to a patent unless . . . the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country [or] described in a patent or an application for patent filed by another . . . before the invention by the applicant for patent." (A7102 of Patent Act)
  • Pertinent Inquiry for Novelty and "Anticipation": whether the claimed invention has been "anticipated". Anticipation means an embodiment of the claimed subject matter was already known before the patent application was filed or before the invention was made, and includes several 95statutory bar96 acts or printed references under Section 102:

1. Public knowledge or use of the claimed invention in the United States

2. Prior description of the invention in a printed publication in the United States or foreign country

3. Prior patent in the United States or foreign country

4. Creation of the claimed invention by another who has not abandoned, suppressed or concealed the invention

5. More than one year prior to the date of the U.S. patent application, the claimed invention was patented anywhere, described in a printed publication anywhere, publicly used in the United States, offered for sale, or sold in the United States (the 95On-Sale Bar96).

• Independent Development: Novelty bars the grant of a patent if an identical, or virtually identical, process or machine is already known, used or patented - whether or not the inventor in fact was aware of the existing prior art.
• Non-Obviousness (A7103 of the Patent Act): The statutory criterion of "non-obviousness" requires that the claimed invention 95taken as a whole96was not obvious to persons skilled in the relevant art at the time the invention was made:
  "A patent may not be obtained...if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains."
  • Innovative - The invention must be different in form, method or structure from existing technology, and the difference must have some result which would have been unexpected or unknown in light of the prior date.
  • Pertinent Inquiry for Non-Obviousness Basic factual inquiries regarding obviousness includes (1) a determination concerning the scope and content of prior art in the relevant field of the claim; (2) an examination of the differences between the prior art and the claims at issue; and (3) an identification of the level of ordinary skill in the pertinent art.

• Basic Statutory Test: If the claimed subject matter, taken as a whole would have been obvious to a person having ordinary skill in the pertinent art in light of the prior art, the claim is unpatentable (even if it was granted by the Patent Office). If the person having an ordinary level of skill in the relevant art to which the invention pertains would not find the claimed subject matter to be obvious viewed against the prior state of technology or learning, then the claim meets the Section 103 standard of non-obviousness. Testimony of experts familiar with the relevant technology may be required.
• Collateral Considerations: courts have also looked to "secondary" factors in determining obviousness: commercial success of the claimed invention, satisfaction by the invention of "long felt but unresolved needs" of the industry, and the failure of others to produce a comparable solution to the perceived problem.
• Subjective Standard: Obviousness is a carefully defined legal standard that is not the same as a scientist94s internal, subjective assessment of what is obvious to him. If a particular development in original, in the sense that it was not purchased or copied from public or private information, and if it has value to the business, advice should be sought to assess patentability, and a business judgement made as to whether pursuit of a patent is cost effective. Many valuable, patentable innovations have been dedicated to the public because the inventor subjectively considered the development obvious.

• Adequate Disclosure (A7112 of Patent Act): The invention must be described with sufficient precision and detail to permit one skilled in the art to practice it. The patent application must contain a "specification" or written description of the invention in such "full, clear, concise and exact terms" so as to enable one "skilled in the art" to "make and use" the invention. The specification must include a written word description, or claim, describing precisely what the applicants regard as their invention. The claims must clearly delineate the invention. They define what it is that is patented, that is, precisely what others must refrain from doing to avoid infringement. Their scope is refined and their wording amended, typically narrowed, during prosecution of the application in the Patent Office.

STATUTORY FORMALITIES:

Filing of patent application with the United States Patent and Trademark Office (PTO) with the requisite filing fee; specification or written description of the claimed invention; any necessary drawings; claims setting forth the precise limits of the claimed invention. The application is assigned to an Art Unit according to the technology, and examined by a patent examiner.

• during examination of the application, the patent examiner conducts a search of the relevant prior art and compares it with the claimed invention
• the claims are either deemed allowable by the examiner, or, as is almost always the case, rejected for allegedly not meeting one or more of the statutory requirements.
• upon rejection, the attorney for the applicant submits a written response requesting reconsideration of the application and often amending the claims to respond to the examiner's arguments.
• possible further interim actions and amendments may occur until final rejection or allowance from the examiner.
• final rejection may be appealed to Board of Patent Appeals and Interferences, and possibly remanded to the examiner for further action in accordance with Board's recommendations
• applications also may be refiled with the same or different claims and prosecution started over

INFRINGEMENT:

Governed by 35 U.S.C. A7271. Section 271(a) provides that whoever without authority makes, uses offers to sell or sells any patented invention within the United States, or imports into the United States any patented invention during the term of the patent therefor, infringes the patent. Section 271(b) provides that anyone who actively induces infringement shall be liable as an infringer. Section 271(c) governs contributory infringement. This section provides that whoever sells a patented component of a patented article, composition etc...or a material or apparatus for use in practicing a patented process shall be liable as a contributory infringer.

• relief available includes injunctive relief and monetary damages.
• cannot import an infringing product into the Untied States if a valid U.S. patent is in effect even if the product did not infringe any patent in its country of origin.
• it is an act of infringement to supply or cause to be supplied a substantial portion of the uncombined components of a patented invention where such manner as to actively induce the combination of the components outside of the U.S. in a manner that would infringe the patent if such combination occurred within the U.S.
• Presumption of Validity: Section 282 provides a presumption of validity for an issued patent. The party asserting invalidity bears the heavy burden of proof by clear and convincing evidence.
• Statutory Defenses: Section 282 provides that the defenses of noninfringement and invalidity must be pleaded in any action involving the validity or infringement of a patent.
• a willful infringer maybe liable for treble damages.
• there is a six-year statute of limitations for obtaining money damages for infringement under Section 286.

TRANSFER OF RIGHTS IN PATENTS:

Patents may be assigned in whole in part, or may be the subject of a security interest or lien. Notice of the assignment, security interest or lien must be recorded with the Assignment Branch of the Patent and Trademark Office in order to be effective against a bona fide subsequent purchaser for value without notice of the prior grant. In order be recordable, the transfer document must adequately identify the patents or applications, i.e., by patent number or serial number.

• Patents and pending applications must be identified individually
• Fee for each patent or application is $40.00
• requires a cover sheet
• Transfer of patents typically has tax consequences

FOREIGN PATENTS:

Patents may be field in almost any country in the world. Foreign applications based on a U.S. application may obtain the benefit of the U.S. filing date by claiming priority to the U.S. case. To claim priority, foreign applications must be filed within one year of the U.S. application. Foreign rights may be reserved for 18 months additional by filing an international application through the Patent Cooperation Treaty.

• Patent applications are considered "technology" for export purposes, and may require an export license before they can be sent to a foreign country. A license is needed before (1) a draft application is sent out of the country before filing; or (2) for filing an application abroad within the first six months after its U.S. filing date. The Patent Office typically grants a foreign filing license automatically when it sends out the official filing receipt. Export control rules appear at 15 C.F.R. Ch. VII, parts 730-799.
• the various regulations which apply to disclosure of information to foreign nationals are detailed and complex. References should always be made to the relevant statute and regulations. Given the pace of change in Eastern Europe, the Middle East, and elsewhere, and other political developments, statutory and regulatory changes may render current rules obsolete.
• There are three principal controls on the release of information, or what is defined as "Technical Data," to foreign nationals:
  • Bureau of Export Administration of the U.S. Department of Commerce;
  • U.S. State Department--regulates release of technical data to foreign nationals which relates to items on the Untied States Munitions List; and
  • U.S. Government Classified Information--requires specific approvals.

BASIC ANTITRUST ISSUES:

It is often stated that the Patent Law constitutes an exception to the antitrust laws. The patent owner may license or sell the patent to a third party, and generally may carve up his rights in any way she wants, but not in such a manner as to extend the scope of the patent monopoly, for example, by restraining competition in an unpatented product, or by extending her rights beyond the twenty year term.

ANTITRUST ISSUES IN PATENT LICENSING:

Antitrust considerations arise most often in the context of patent licensing. Technology licenses must comply with existing statutory and judicial standards under the patent and antitrust laws. The patent owner maintains the sole discretion whether to use the patented invention or to allow others to use the invention. Since a patent grants the owner the right to exclude all others from making, using, or selling the claimed invention, the patentee may elect not to use or may refuse to license the invention without running afoul of antitrust laws. The Patent Misuse Reform Act of 1988 confirmed that nonuse or refusal to license a patent is not misuse. On the other hand, a refusal to license that is not unilateral on the part of the patentee may not necessarily be immune from antitrust attack.

SPECIFIC LICENSING PRACTICES WHICH MAY HAVE ANTITRUST IMPLICATIONS:

Generally, a patentee is free to license her patent so as maximize the profit derived from its exploitation. Certain licensing practices, however, may be held to reach beyond the proper scope of the patent grant or otherwise illegally restrict trade and have, therefore, been challenged as antitrust violations. These include:

• tying (conditioning grant of a license on the purchase of other patent rights or unpatented goods;
• resale price restraints;
• restrictions on dealing in competing goods;
• resale restrictions, and
• grant back clauses

PRACTICAL THINGS TO REMEMBER ABOUT PATENTS:

• Why Seek A Patent?
  • Maintain exclusivity of product, or at least reduce competition, and charge what the market will bear.
  • Build value by securing technology as an exclusive corporate asset, thereby justifying investment and helping to secure appropriate returns.
  • License
  • Obtain leverage against competitors and obtain the rights to blocking technology through cross-licensing
• Exclusionary Right
  • A valid patent provides a right to exclude others from practicing the claimed invention.
  • Claims determine the scope of patent rights.
  • A patent "specification" is generally much broader than the rights protected by the claims.
  • A patent provides no affirmative right to practice an invention, it only provides a right to exclude others from practicing what is claimed.
• Licenses
  • A non-exclusive license to practice a patent essentially is the equivalent of an agreement not to sue.
  • An exclusive license usually includes the right to enforce the patent against others and often also includes the right to prosecute the patents.
  • Patent licenses are often limited by field of use, geography, etc.
• Increasing Value of Patents: The Court of Appeals for the Federal Circuit (CAFC) was created in 1982 to decide all patent appeals. This court sets the precedents on patent interpretation and enforcement.
  • Minimized "forum shopping" and created a consistent body of patent law.
  • The CAFC has been pro patent. By 1989 the CAFC had upheld patents about 80% of the time.
  • The scope of patent protection has been extended to expand software and biotechnology inventions.
  • The risks of infringement is now greater.

• Large damage awards
• Preliminary and permanent injunctions
• Awards of lost profits

• Willful infringement damages can be very expansive.

• Treble damages
• Attorney fees

• Reliance on opinion of counsel is available to counter a willful infringement charge.

• Must be given by a patent attorney (preferably not in-house)
• Must have internal indicia of reliability

• Assignment of Patent Rights
  • All patents are issued in the names of the inventors.
  • Inventorship is a legal question involving an assessment of who conceived the claims, not an honorarium.
  • All inventors are joint owners of the patent.
  • In the absence of an agreement to the contrary, each owner may make, use or sell the patented invention without the consent of and without accounting to the others.
  • Proper assignment of all the inventors' rights to a corporate entity is essential to secure corporate ownership.
  • Assignment must be in writing. Obligations should be spelled out in all agreements.