PATENTS

A patent is a right, granted by a government, to exclude persons other than the patent owner from practicing an invention.  The social theory of patents is that an inventor ought to be rewarded for bringing his or her discovery to the public by granting to the inventor a monopoly, for a limited time, to exploit the patented invention.

Patents and Trade Secrets

Because of its public purpose – the publication of new inventions – the patent law imposes a requirement on inventors that they disclose the invention in sufficient detail that a “person of ordinary skill in the art” will be able to make and use the claimed invention.  This in turn sets up a fundamental tension between patent law and trade secret law, and a fundamental choice to the owner of an invention concerning how to protect it.

A trade secret theoretically can last forever, or until the information sought to be protected is publicly available or no longer useful.  Certain kinds of inventions or innovations are better suited to trade secret protection than others.  For example, the source code of computer software is rarely disclosed in normal operation; specific formulations of polymers and other chemical compositions may be difficult or impossible to reverse engineer; industrial processes and other confidential information may be easy to protect by imposing physical and contractual security.  And certain kinds of information, such as financial information and business methods, aren’t even theoretically protectable by patents, making trade secret protection the only possibility.  See the article on this site for more information on trade secrets.

On the other hand, tangible products that will be sold or leased to the public are susceptible to being quickly copied and it is difficult or impossible to protect those products from being “knocked off” by resort to trade secret law.  In many instances, a patent is the only viable way to protect a product from being quickly appropriated by competitors, and to protect the investment in the research and development that made the product possible.

Patent-eligible Subject Matter

For a patent to be contemplated, the invention must be of the sort that the patent law protects.  Patents can protect machines, articles of manufacture, processes and compositions of matter.  These are the classes of “statutory subject matter.”  But there are certain kinds of innovations that don’t qualify.  A patent cannot claim a law of nature or an abstract idea.  A method of doing business, even as aided by a digital computer, generally will not be patent-eligible.  A process that does no more than produce information outputs responsive to information inputs won’t, either.  Courts won’t uphold, and the USPTO is now unlikely to grant, a patent on a claim that recites no more than an algorithm executed by a programmable computer.  But many software-related inventions remain patentable.  Courts and the USPTO look for “significantly more” than the algorithm, such as a transformation of matter caused by a computer-directed process, or a specifically recited method of how a microprocessor executes instructions.  The law has also imposed limitations on what sort of biological materials and medical processes are patentable, and what sort are not.  For more information on patent eligibility, see the separate article on this site.

Novelty and Nonobviousness

Valid patents exist only for those inventions that are novel and nonobvious in view of the prior art.  With certain exceptions, the “prior art” is every public disclosure (including but not limited to prior patents) that occurred prior to the effective filing date of the patent application, anywhere in the world.  For an invention to be “novel”, it must not have been exactly the same as anything in the prior art.  For an invention to be “nonobvious”, it must not have been obvious, in view of the prior art, to a person of ordinary skill in the art as of the patent application’s effective filing date.

Who May Obtain a Patent; Priority

Only inventors or their assignees are entitled to obtain patents.  Persons who derived the invention from someone else are not.  In this respect, the United States is not really a “first to file” country; it is a “first inventor to file” country.  That is, the first inventor to file a patent application takes priority over an inventor who conceived of the invention first, but filed his or her patent application second.  Detailed records of an invention’s conception are no longer important to establish priority, but they still may be useful to show that the inventor really did conceive of the invention and didn’t derive it from someone else.

The Patenting Process

Because of the “patentability” requirements imposed by the patent statute, it is beneficial to have some idea of what the prior art contains before incurring the expense of preparing, filing and prosecuting a patent application.  Some inventors will be at the forefront of the research and development efforts in their technical fields and will have an extensive knowledge of the state of the art.  But for everyone else, it makes sense to perform a “preexamination patentability search” prior to committing significantly larger sums to patent application preparation and prosecution.  An applicant may do some searching itself – searchable prior art collections exist at uspto.gov and wipo.int, for example – or it may commission a patent attorney to do an initial search or a follow-up search.

Even as done by a patent attorney, a preexamination patentability search will not inspect the entirety of the relevant prior art.  Such a search is too expensive in any context other than litigation.  But a limited search should return results sufficient for the applicant to make a business decision on whether a patent application should be filed.  Further, the results of such a search often reveal which details of the invention might be novel and therefore should be claimed in the patent application, and which details are shown to be in the prior art.  The patent attorney can then draft patent application claims with a higher probability of their allowance by the US Patent and Trademark Office (USPTO) than would otherwise be the case.

Ideally, a patent application should be prepared and filed prior to the first public disclosure of the product.  In the patent laws of most foreign countries, the public disclosure of an invention prior to the effective filing date of the patent application will be considered “prior art” to the application, with the effect of invalidating the patent application; the inventor’s own work will be held against him.  In the United States and Canada, the applicant has a one year grace period to put a patent application on file, counted from the day of first public disclosure of a product or process embodying the invention.  The applicant consciously may take advantage of this grace period – in the instance where protecting potential foreign markets for the invention is not as important as seeing whether the invention is worth patenting in the US and Canada given how well it does here.  But the applicant should make this decision before publicly disclosing the invention.

The drafting of a nonprovisional utility patent application – the “regular” kind – is a specialized job best left to a registered patent attorney.  A complete application has a specification, drawings (if the subject matter admits to illustration, and all except chemical inventions do), an inventor’s declaration from each of the inventors, and an “Application Data Sheet” that conveniently brings together for the USPTO certain bibliographic data about the application, the inventors, the owner(s), the attorneys, priority claims and certain other matters.  The specification in turn includes a background of the invention, a summary of the invention, a brief description of the drawings, a detailed description, claims and an abstract.

The application almost always has multiple claims, which are numbered paragraphs appearing at the rear of the specification.  The claims define the metes and bounds of the subject matter that the applicant is claiming is its invention and for which it is seeking a patent monopoly.  The scope of the claims often is much broader than the specific examples of the invention disclosed in the rest of the specification and the drawings.  On the other hand, as issued, the claims may be narrower than what the patent application disclosed.  A mistake, commonly made by business people and non-patent practitioners, is to assume that the invention covered by a patent is limited by, or even extends to, what appears in its drawings, abstract or detailed description.

Sometimes, and in order to secure an early filing date, the patent application can temporarily use informal drawings supplied by the applicant and marked up by the patent attorney.  These informal drawings often are objected to by the USPTO and after such objection substitute drawings will have to be prepared.  It is better that formal drawings be prepared by a professional patent draftsman in the first instance; patent illustrators are knowledgeable of the peculiar requirements of the USPTO and have experience in meeting them.  Occasionally the informal drawings are so deficient in their content that they may not be corrected by filing formal drawings, without the introduction of “new matter”, resulting in an abandoned patent application.

Once an application is filed in the USPTO (and only then), the applicant may state in its marketing materials that a patent is “pending.”  This should not be confused, by the applicant or anyone else, with an enforceable right of action for patent infringement that only comes into existence with the issue of the patent.  But stating that a patent is “pending” will often give would-be copyists pause, because there is at least the threat that a patent will issue on the subject matter in the future.  The prospective copyist may not want to make the necessary investment in time and money in the copied product in view of such uncertainty.

The United States is peculiar in imposing a duty of disclosure on patent applicants.  If the applicant or anyone in privity with it (including the inventors and the attorneys) is in possession of information material to the patentability of any claim in the patent application, the applicant has a duty to disclose it to the USPTO.  This is almost always done with an “information disclosure statement” and should be done well before the Examiner takes up the application for substantive examination.

Once an application is filed and is in condition for examination, there usually is a months-long delay before an Examiner at the USPTO will begin examining it.  If the Examiner decides that the Applicant is claiming more than one invention (and they often do), the first action of the Examiner will be a restriction/election requirement.  The applicant will have to decide which of two or more sets of claims, each allegedly directed to a separate invention, should be prosecuted in this application.  The issuance by the Examiner of a restriction/election requirement entitles the applicant to file a divisional patent application at any time during the pendency of the current patent application, on the claims that were restricted out.  That divisional patent application uses the effective filing date of its parent for the purposes of determining the content of the prior art and how long any patent issuing on the divisional patent application will last.

Once the Examiner is satisfied that he or she is examining claims directed to a single invention (and, sometimes, a single species of invention), the Examiner will examine the application for informalities and certain statutory requirements, and will perform a prior art search to determine the patentability of the claimed subject matter.  Most often, the Examiner will issue an office action that rejects, as unpatentable, all or some of the claims in view of one or more prior art references.  These prior art references tend to be prior US patents and published patent applications, but can also come from other publication sources and other patent offices.

The applicant must respond to this office action to keep the application alive.  In many instances, it is possible to argue that the invention as claimed is not anticipated or made obvious by the prior art.  In a good number of these instances, the patent attorney will propose amendments to the claims to pull them away from the prior art that the Examiner has cited.  These amendments may be accompanied by an argument explaining to the Examiner why the claims as amended (or as they stand in the original) are patentable in view of the prior art.  A response to this office action may be made without any USPTO extension fee if it is done within three months of the date of the office action, or with one of an escalating set of monthly extension fees if done within six months.  If no response is filed within six months, the application will become abandoned.

Sometimes it is helpful to have a telephone interview with the Examiner to correct misunderstandings, point out why the invention as claimed is patentable and negotiate the allowance of the patent application.  If the economic importance of the invention merits it, a face-to-face interview can be had with the Examiner at the USPTO in Alexandria, Virginia or at one of the USPTO’s regional campuses.

If a Reply to Office Action is filed, the Examiner will consider it and make up his or her mind about whether the initial rejection of the claims has been overcome.  If it has, the Examiner will likely issue a Notice of Allowance.  If the initial rejection has not been overcome, or if it has but the Examiner has found another reason to reject the claims, the Examiner will issue a second office action, and most often this second office action will be “final.”

In response to a final office action, an applicant may file an amendment after final rejection, a continuation patent application, a request for continued examination (RCE), or a notice of appeal.  An Amendment After Final Rejection doesn’t have to be considered by the Examiner and often isn’t.  If a continuation or an RCE is filed, prosecution continues further. The Notice of Appeal is to the Patent Trial and Appeal Board (PTAB) and should be selected only where the Examiner did not have “substantial evidence” to make his or her rejection; most of the time, the PTAB will sustain the Examiner.  From the PTAB, appeal may be had to the United States Court of Appeals for the Federal Circuit.

If the Examiner issues a Notice of Allowance, the Applicant has to pay an issue fee within three months of the notice.  Assuming this happens, the Applicant will receive a patent, usually about six weeks to two months after the issue fee is paid.

Published Patent Applications

Unless the Applicant arranges things otherwise, a nonprovisional utility patent application is published shortly after 18 months as counted from its effective filing date.  A patent application publication publishes the specification, drawings, claims and abstract of the application.  The claims as published typically are in the condition in which they existed upon filing, although early amendments by the Applicant may be reflected in the claims as published.

Once a patent application is published, any member of the public may electronically inspect the progress of the patent application before the USPTO (its “prosecution history”).  Prior to its publication, the patent application is confidential and no one other than the attorney of record may access it.

Despite looking rather like one, a published patent application should not be confused with an issued patent.  Its owner cannot sue anyone for infringement until a patent issues on the patent application, if one ever does.  The owner of the patent application may, or may not, have “provisional rights” in the claims as published.  “Provisional rights” entitle the owner to a reasonable royalty from an infringer of the claimed invention, but if and only if (a) the patent application issues as a patent, (b) at least one claim in the published patent application is substantially identical to a claim in the issued patent, (c) that claim is infringed by the infringer and (d) the infringer had been put on actual notice of the published patent application by the patent application owner.  The “reasonable royalty” may only be recovered from an infringer after the patent issues.  It is a remedy that covers the period from the date of issue, back to when the infringer was put on notice of the published patent application.  Because the claims of a patent application are often narrowed during prosecution, it is often the case that the patent owner will not have any such “provisional rights” at all.

At the time that it is filed, the Applicant may choose to “request not to publish” a US nonprovisional utility patent application.  In that condition, an application will become available to the public only upon the issuance of a patent on it (if one does).  On the other hand, an Applicant may request early publication, which will then happen in only a few months rather than after 18 months have elapsed.  If the Applicant does any foreign or international patent filing, the US application must be published, and any filed request not to publish must be rescinded.

Marking

The US patent statute requires that any patented product be marked with the patent number or an equivalent.  If the character of the article prohibits this, the marking should appear on a label or packaging of the product.  Instead of “Patent x,xxx,xxx”, the owner may choose to mark the product with the url of a publicly available web site that identifies the patent(s) covering the product, e.g., “Patent www.[client.com]/patents (http://www.[client.com]/patents)”.  The failure of the patent owner to “mark” the product precludes the owner’s ability to collect damages from an infringer for acts of infringement occurring prior to the date that the infringer is put on actual notice.

Kinds of Patents and Patent Applications

The above discussion concerns “nonprovisional utility patent applications.”   Instead of a nonprovisional utility patent application, an applicant may file a provisional utility patent application, at a somewhat cheaper cost.  But provisional patent applications have several issues and should be avoided where possible.  See the separate article on this site about them.

In certain foreign countries such as Germany and Japan, an applicant may apply for a “utility model” instead of or in addition to a patent.  A utility model is a kind of petty patent that lasts half as long and has a more cursory examination on its merits.

There are also “design patents” that are granted for novel, nonobvious and ornamental external appearances of articles.  Design patents are discussed elsewhere on this site.  Design patents should not be confused with utility patents or utility models, as the latter cover the function of a device, but the former only cover how it looks.

Finally, there are plant patents that cover distinct and new varieties of asexually reproduced plants.

Foreign Patents

A United States patent only covers the territory of the United States.  If protection in any foreign country is wanted, a patent application will be have to be filed there.  Most countries of the world belong to the Paris Convention.  According to the Paris Convention, a utility patent application filed in a foreign country will enjoy the filing date of the corresponding United States patent application, if the US patent application was the first one to claim the invention and the actual filing date in the foreign country is less than twelve months from the US filing date.  Certain US patent applications are entitled to the filing dates of their corresponding foreign patent applications on the same basis.

One way to achieve foreign protection is to file an application in each country of interest, separately.  Another way is to file an “International patent application” within twelve months of the US filing date.  This is done under the Patent Cooperation Treaty (PCT).  An applicant of an international or PCT patent application will routinely designate every signatory country of the PCT, which now includes most foreign countries of importance.  An international patent application theoretically is filed in the patent office of each of those designated countries, as of the international patent application filing date.

While there is such a thing as “international patent application”, there is no such thing as an “international patent.”  The prosecution of a PCT patent application has an international phase and a national phase.  Entry into the national phase is done before the patent offices of the countries in which the applicant has a real interest, is done no later than 30 or 31 months (depending on the identity of the country) from the PCT patent application’s priority date, and incurs significant additional expense.  A PCT patent application may result in patents in many countries, or it may result in no national patents at all if the applicant does not enter into the national stage of prosecution or if the national patent offices reject the claimed subject matter as unpatentable.

Almost all of the countries of Western and Central Europe are members of the European Patent Convention (EPC).  The membership of the EPC and that of the European Union are largely similar, but they are distinct and one does not depend on the other.  Switzerland, for example, is a member of the EPC but not the EU, and the United Kingdom may be in this position soon.

An applicant may file a European patent application at the European Patent Office (EPO) in Munich, with possible effect in each of the member states of the EPC.  A European patent application may be filed within twelve months of the US patent application and claim priority directly under the Paris Convention.  Alternatively, the EPC may be treated as a “country” under the PCT and a “regional phase” of prosecution undergone there.  The European patent application is prosecuted before the EPO and, if such an application meets the requirements of the EPC (including novelty and inventive step), the EPO will grant a European patent.  This patent may then be “validated” in each member state (or in only some or none of them), resulting in a sheaf of patents having identical coverage in several European countries.

Similar regional patent conventions exist for the many of the former Soviet socialist republics (EAPO); certain African states, most of which are former British colonies (ARIPO); and certain other African states, most of which are former French colonies (OAPI).

Maintenance Fees and Annuities

Once a patent issues, its owner must pay periodic maintenance fees to keep it alive.  In the United States, these are due at 3 ½, 7 ½ and 11 ½ years from the date of issue.  For most foreign countries, a maintenance fee or “annuity” is due every year.  Some jurisdictions, such as the European Patent Office, charge an annuity even on patent applications that have not yet been granted.  These maintenance fees should be docketed and the owner should decide to pay them, or not, in good time before their due dates.   Generally, the cost of maintaining foreign patents and patent applications can be of the same magnitude as the cost of obtaining them in the first place, and must be justified by the owner’s economic interest in the invention in the country in question.

Transfers of Interests in Patents and Patent Applications

Patents and patent applications are personal property and may be assigned, licensed or used as loan collateral.

Assignments of patents and patent applications must be done in writing and the fact of their assignment should be recorded in the patent office of their origin.  The USPTO keeps assignment records that permit members of the public to ascertain who the present patent owners are.

Licenses don’t have to be, but typically are, in writing.   A patent owner may license a patent for a particular territory or field of use.  The license may be exclusive or nonexclusive and the consideration for the license can be a lump sum, a running royalty, a cross-license to another patent, or a combination of these.

It sometimes happens that an employee invents an invention using the time, tools or premises of his or her employer – but never signed any agreement promising to transfer such invention to the employer.  Absent a written assignment, the employee will continue to own the invention and any patent issuing on it, and all the employer gets is a “shop right.”  A shop right is a license to such an employer to use the invention for its internal purposes only; it can’t even incorporate the invention into products it makes for sale to the public.  From this, it can be seen that obtaining a written assignment from the inventor/employee is critical, if the employer wants patent rights assertable against its competitors.

Patents and patent applications are “general intangible” personal property and their owner can grant a security interest in them, which may be perfected by filing a financing statement with the Secretary of State where the owner is incorporated (if a company) or resides (if a natural person).  As an additional precaution, security interests (and licenses) in patents are sometimes recorded in the USPTO.

Assertion of Patents

If a patent owner discovers that someone is infringing its patent, the patent owner may assert it against the infringer.  A patent is infringed if a machine, article, composition of matter or process meets every limitation of at least one of the claims of the patent.  The presence or absence of infringement should be determined by a patent attorney, and an accusation of infringement should not be made without an adequate investigation; accusations of infringement made without such may be actionable business defamation.  Patents may be infringed by any of the following acts: manufacture, use, sale, offer for sale or importation.  Patents may be directly infringed where the infringer is performing one or more of the infringing acts itself, or indirectly infringed.  Indirect infringement includes inducing another to infringe and “contributory” infringement.

Patent infringement actions are heard in federal district courts only.  A patent owner may choose to file a patent infringement action first or may put the infringer on notice prior to the institution of litigation.  The accused infringer and the owner may decide to negotiate a settlement agreement, by which a royalty, license fee or some other consideration is given to the patent owner.  Alternatively, the accused infringer may resist the assertion of the patent by claiming that the asserted patent is invalid or is not infringed.

Patent infringement litigation is quite expensive; if taken all the way to trial, the fees and costs are typically in at least the seven-figure range.  Attorneys’ fees and exemplary damages are theoretically available as remedies but in practice are rarely granted by the courts.

Defenses Against Patents

The most common defenses against the assertion of a patent are (a) the accused infringer isn’t infringing the patent and (b) the patent is invalid in view of the prior art.  Often, the accused infringer will further accuse the patentee of inequitable conduct before the US Patent and Trademark Office (previously called “fraud against the Patent Office”) in concealing or mischaracterizing information that would have resulted in the USPTO rejecting the patent application.  But this “inequitable conduct” defense rarely works.  Another defense is that the accused infringer has already taken a license to the patent.

A noninfringement defense may be raised in response to a patent assertion letter or as an affirmative defense to a complaint for patent infringement or in a declaratory judgment action filed in federal district court.  It will succeed if the court determines that one or more limitations of each asserted patent claim aren’t met in the accused device or process, either literally or under something called the “doctrine of equivalents.”  A well-reasoned opinion by a patent attorney that the asserted patent is not infringed may sometimes be evidence that the accused infringer did not willfully infringe the patent.

Often a company will be interested in learning whether one or more patents exist that would block its manufacture or importation of a new product.  A patent attorney may perform a “product clearance search” to determine whether any such patent exists and the strength of any future accusation by its owner that one or more claims of it are infringed.  At the same time, the patent attorney may find one or more expired patents that disclose the company’s proposed product.  Subject matter disclosed in expired patents is in the public domain and, absent special circumstances, may be freely copied by anyone.

What doesn’t work as a noninfringement defense is the ownership by the accused infringer of another patent on the accused device.  Patents are negative monopolies, not positive ones.  They are rights to exclude others from making, using, selling, offering for sale or importing the patented subject matter.  They are not exclusive rights to do the same.  A product can, and often is, covered by two or more patents, and it is not unusual that these are owned by different entities.  In one common scenario, one inventor may have invented and patented a basic invention, and a second inventor may have invented a nonobvious improvement on that invention.  Patents may issue on both the basic invention and on the improvement.  In order for a product covered by multiple patents to be manufactured, a license from the owner of each patent that covers it is necessary.

Sometimes, an accused infringer will have commercially used the patented invention in a nonpublic but commercial way, more than one year prior to the effective filing date of the patent being asserted.  In certain circumstances this “prior commercial use” is a defense against patent infringement while not acting to invalidate the patent.  It may be raised in the same venues that a noninfringement defense may be invoked.

An invalidity defense may be raised in response to a patent assertion letter, as an affirmative defense against a patent infringement complaint, a declaratory judgment action or in an “inter partes” proceeding conducted before the USPTO.  An invalidity defense typically is based on an allegation that the claimed subject matter is exactly disclosed in the prior art (“anticipated”) or that the claimed subject matter would have been obvious in view of the prior art.  Sometimes, the claimed subject matter may be attacked as not being supported by “enabling disclosure” in the specification; here, the accused infringer asserts that the patent specification does not have enough information in it to enable a person of ordinary skill in the art to make and use the claimed invention.  The accused infringer may also allege that the claims of the patent are too indefinite to understand what they cover.  Where an invalidity defense is raised in a patent infringement action, it must be proved by clear and convincing evidence.  But a ground for invalidity in an inter partes proceeding need only be proved by a preponderance of the evidence.

There are now two main kinds of inter partes proceedings before the USPTO.  The first is called a “Post-grant Review” (PGR) and must be instituted within nine months of the issuance of the patent.  The second is called an “Inter Partes Review” (IPR) and may be instituted only thereafter.  The grounds for a PGR include lack of novelty and obviousness in view of any prior printed publication or public use, and also include invalidity based on indefiniteness or lack of enabling disclosure.  The grounds for an IPR are limited to a lack of novelty or obviousness, either being based on prior patents and printed publications only.

Because USPTO inter partes proceedings are procedurally friendlier to accused infringers than are district courts, validity challenges are often heard there while related federal district court litigation is stayed pending the outcome. But the USPTO’s jurisdiction is limited to assessing the validity of its patents, and does not extend to whether any other defense against patent infringement exists or of the assessment of damages where patent infringement is found.