Wednesday, October 19, 2016

A brief post about USPTO events

The United States Patent and Trademark Office regularly holds events targeted all the various stakeholders it serves -- inventors, startups, big companies, attorneys, trademark owners, etc.  The events are all listed on the USPTO website, at

One event that all inventors should absolutely consider attending is a regional roundtable related to patent subject matter eligibility.  Among the patent community, this is sometimes referenced as "101", "Alice", "Mayo", and sometimes "Bilski".  The bottom line, though, is that the Supreme Court has issued a series of decisions that created a gigantic gray area in patent law -- and that gray area is the answer to this question:  "Even if my invention is novel, useful, and not obvious, is it eligible for a patent?"

The impact on patents has been profound.  When combined with the new post-grant review procedures that make it easier to challenge a patent and much more expensive to defend a patent (in large part by allowing administrative review that does not use the presumption of validity that courts apply), we are left with a situation that can be illustrated using a housing analogy.  Imagine that I have a fantastic house listed for sale.  However, the fine print says "there is no longer a presumption that the deed to this house is valid; the deed can be challenged at any time by anybody, and it will cost you at least $300,000 to defend; no title insurance is available; you are purchasing this as-is."

There are reports that patent values are down as much as 90% to 95% in certain art areas, and a lot of anecdotal experience showing that patents are far more difficult to license or sell than the used to be.

While subject matter eligibility is just a piece of the problem, it is an important piece.  I strong recommend attending one of the roundtables and letting your voice be heard as to what should be patentable.  If you apply by November 14, 2016, you can ask to speak at the event.

Thursday, September 29, 2016

First Amendment v. Limits on Trademarks: On to the Supreme Court

In 2015, the Federal Circuit held that "the disparagement provision of [trademark law is] unconstitutional....  We recognize that invalidating this provision may lead to the wider registration of marks that offend vulnerable communities....  But much the same can be (and has been) said of many decisions upholding First Amendment protection of speech that is hurtful or worse."

The Supreme Court just agreed to review the case.  The filings are available for public review at

The mark at issue is one that Simon Tam, "an Asian-American musician, lecturer, and political activist," uses for his band "The Slants".  According to the prospective registrant's filings, the band was "intended ... to be a vehicle for expressing his views on discrimination against Asian-Americans."  His position, which prevailed in the Federal Circuit, is that denying his trademark application for "The Slants" on the grounds that it is offensive to Asians, is a violation of his First Amendment rights.

The argument in favor of refusing offensive or disparaging marks revolves around several points, but ultimately boils down to this:  "Denial or cancellation of a trademark registration does not trigger civil or criminal penalties, and the PTO's denial of registration here left respondent free to use "THE SLANTS" as the name of his band and in any promotional materials he wished to disseminate."

We should know by summer whether content-based discrimination by a government agency is permitted under the First Amendment.  You can follow the briefs (and the nearly certain avalanche of "amicus", or friend of the court, briefs) here.

Thursday, September 22, 2016

Original US Government Works and Other Free-to-use Materials

Original US Government works are not subject to copyright.  The law is about as clear as it can be:
Copyright protection under this title is not available for any work of the United States Government, but the United States Government is not precluded from receiving and holding copyrights transferred to it by assignment, bequest, or otherwise. [17 U.S. Code § 105]
While there is a lot of room for confusion and accidental infringement (for example, state and local governments can copyright their works and US government sites may include copyrights they have licensed or been given), a fantastic place to obtain content for free is US government websites.

So how do you find these free works?  The answer is to use the advanced search operators that Google (or other search engines) make available.

Let's imagine that you want a picture of a syringe for a blog post about vaccinations.  If you use Google image search, unmodified, you get this:

Nice, but these images repreesnt a hodgepodge of copyright states (note that these screen shots fall into a category for another blog post, fair use).  The first image is from Wikipedia under a Creative Commons license; the second image is from and is of unknown source (therefore you need to assume it is copyright under a non-public license); the third image is from an online retailer and is also of unknown copyright status, etc.  In other words, the majority of images are unlikely to be useful to you without running a lot of risk of being sued for infringement.

Going to the advanced search options in Google, I picked "Labeled for reuse with modification" (other options are non-commercial use and reuse without modification).

Google has very much improved their license search capability, so the results are far more likely to be available for use.  However, there remain two big risks:  First, I could upload a copyrighted image to wikimedia, label it as free to use, and trick Google that way.  Since so many people misunderstand copyright, there is a real risk that images can show up as "free to use" that are not.  Second, an improved algorithm does not mean it is a perfect algorithm.  It returned the following image from Flickr:

Seems great!  Except when you click through to the Flickr page, you may notice this text under the image (I say "may" because if you are in a hurry and aren't copyright-savvy, you might just swipe the image without looking):

"Some rights reserved".  When you click on that, you see that you can share, adapt or remix the image except as follows:

Whoops!  If you copied the image and pasted it on your site, and the site says at the bottom "(c) 2016 all rights reserved", or you don't credit and link back to the Flickr page, you are using the image in violation of copyright law and can be sued.

Here is where the advanced search operators help.  My new search is for "syringe":

Much better!  Sort of.  The first and third images are from and are actually found on a page intended for public reuse.  However, the second is from -- a state government site.  There is no copyright notice but that doesn't mean you can use it.  You would need to research whether Arizona asserts copyright to its own works (and with both state and federal sites, you'll want to make sure the images are original works of the government and not licensed by the government for use).

Once again, advanced search operators to the rescue.  We only want federal works, so we need to pick some federal websites likely to host the images we want.  For a syringe, we can pick, and  Our query is now syringe ( OR OR

Wow, that's much better.  Now we know we only have images from official US Government sites.  You can use them however you want -- so long as you make sure they are actual US Government creations and not something the government licensed from a third party. You can never really be positive -- after all, even if you called the CDC and they said it was a photograph their employee took in the course and scope of her job, there is a slim chance that she just copied the image from elsewhere and claimed it was her own (even Getty Images has confused sourcing of images in its catalog). This is the same risk you run when buying images from stock photography companies and cannot be fully eliminated unless you take the photograph yourself.   You can at least reduce your risk (particularly for images that are licensed by the copyright holder to the government for its own use) by visiting the page hosting the image, which often clarifies sourcing.

We're now in pretty good shape.  The first image is from the NIH and looks very much like it is intended for use by third parties.  It would be super-misleading for the NIH to put an image they licensed from a third party on a page like this.

But let's be even more paranoid (and at the same time introduce a tool that works to reduce the risk that the image came from a source you were unaware of).  Right click the image of the syringe and from the pop-up menu, select "Search Google for image" (you should do this in Google Chrome if you want to search from the context/right-click menu; other browsers can do this too, but aren't quite as straightforward).  The results are thumbs-up awesome.  While Google's image recognition got it wrong (it looks like it thought the syringe was a cross and called it a religious symbol -- oops), but the important line is "No other sizes of this image found", so it doesn't look like the image was resized from another source.  Similarly, if you scroll down to "Pages that include matching images", you'll see the only other pages with the matching image are hosted at (plus a bunch of golf club pages, so we again see the limits of Google's image recognition).  If you're super-careful, you can also use TinEye to do a second search.

I encourage you to play around with this, using very popular images (such as this official one of the President).

There are some images that can *only* have been taken by the US government, and some of those are fantastic.  For example, images from the Hubble Space Telescope.

The bottom line is that caution is important in using other people's images.  The penalties for copyright infringement are pretty steep.  It is a fairly quick job for an IP lawyer to make sure you're on solid ground, and in my opinion a cheap insurance policy.

Tuesday, September 20, 2016

The America Invents Act Turns Five -- What Inventors Need to Know

The America Invents Act ("AIA") turned five years old last week.

At the time of its adoption, independent inventors were hyper-focused on the switch from "First to Invent" to "First to File".  For example, NPR did a piece where they interviewed a very experienced patent lawyer who explained it as follows:
The biggest change will be in the first to file. Currently, if you are an inventor, you can take up to a year after you publish your invention to actually file your application and not risk losing it. And then you can, if there is somebody else who has also developed the invention, you end up in what's called an interference, where you debate which of you was first to invent.  The new law will streamline that process, and basically it will be the person who was first to file, and you will eliminate all of these issues about who was first to invent.
Other articles listed "First to File" as a primary item in their coverage, such as PCWorld, Patently-O, American University, Fast Company, Arstechnica, USA Today, and many others.

In practice, First to File changed a lot of things for independent inventors, but it was not the most important change in the law.  Amongst all of the angst about forcing inventors to file multiple provisional patent applications as they developed their invention, front-loading costs for start-ups, and the inherent big business tilt of requiring lawyer involvement even before the invention is complete, the post-grant review provisions got little attention.  They turned out to be far more important than the First to File switch.

For the sake of simplicity, this post will address the two major changes that the AIA brought about.

First Inventor To File:

The First Inventor to File rule is fairly simple, and brings the US in line with the rest of the world's approach to the matter.

Savvy inventors know that their "inventor's notebooks" carry little to no weight in determining the "priority date" (the date after which inventions of others are considered to post-date, and therefore not impact, the patentability of the invention).  However, they are also aware that filing a series of provisional patent applications during the year they are developing their invention will protect the priority date for whatever content is enabled in each provisional application.

A provisional patent application (in fact any patent application) that does not go through a patent lawyer carries inherent risk.  There are certain "magic words" that can kill a patent.  For example, if years of research rendered something obvious to you, but to nobody else, carelessly writing "it was obvious to combine A, B, and C to create D" will make a patent for that combination almost impossible to get.  Similarly, a patent claim using the term "composing" instead of "comprising" holds a significantly narrower scope.

The bottom line is that there is a real urgency to get a patent on file as rapidly as possible.  I use the "casual observer" test:  If I write a sentence about the problem, and somebody looks over my shoulder and reads it, can they figure out the invention?  In an extreme example, imagine the discovery of the wing.  If Orville Wright left out a simple line drawing of a plane and a note saying "wow, I can't believe this shape can fly", it would have been easy for anybody to see that, copy the design, and file for a patent.  Under the First Inventor to File rules (and assuming he can't provide that the design was copied from him), he would not have received his patent for a "Flying Machine".

It is important to note that the switch to "First Inventor to File" simply built on what independent inventors had long known:  If you aren't first to file, you will have an uphill battle to show you were first to invent.  By getting rid of the ability to rely on a notebook to prove invention date, the AIA also got rid of the risk that the first to invent didn't rush to file, and only to find later that proving invention date is a lot harder than it might seem.  Best practice before the AIA was to file provisionals after each important invention during the development of a product.  The AIA got rid of an excuse not to do so.

Bottom line:  As hard as it is to come up with money to pay lawyers before you've even completed your invention development, that is what the AIA forces you to do.  If money is an issue, write up as much of the provisional yourself, but do it in concert with (and following the instructions of) a patent lawyer.

Post-Grant Review:

The AIA created a set of new administrative procedures that companies can use to attack the validity of a patent.  These procedures take place in front of the Patent Trial and Appeal Board -- an Article I court, meaning that it is comprised of administrative judges that ultimately answer to the President.  The PTAB has an enormously high invalidation rate, striking down a supermajority of the claims it has reviewed -- so much so that Randall Rader, former Chief Judge of the Federal Circuit Court of Appeals, has called them "death quads killing property rights" and a "death squad" for patents.  He went on to observe that "We have an enterprise (i.e., the USPTO) that has 8,000 employees creating a product (i.e., patents) and has 300 employees destroying the same product in contested proceedings."

Chief Judge Rader is hardly alone.  Many pro-invention commentators have decried the AIA, calling it "an Unmitigated Disaster and the Destruction of American Innovation", "undermining confidence in our patent system, chilling innovation at its roots", and a "benefit [to] those who want to use patented technology without paying for it".  It has given rise to a concept called "efficient infringement":

Recently, various commentators have examined the licensing behaviors of IT firms under the currently prevailing regime of weakened patent rights.2 These commentators note that in this environment of weakened patent rights, firms are making a different rational ignorance decision—namely, they are opting to ignore licensing requests from patent holders, relying on the view that most patent holders will not resort to litigation and that those claims resulting in litigation can generally be dispatched inexpensively either via AIA trials or through motion practice in district courts. Commentators label this form of rationally ignorant behavior "Efficient Infringement."
Before we delve into the three kinds of post-grant review that the AIA created, it is worth noting the sea change that efficient infringement has brought about.  In the years prior to the AIA, patent rights were assumed to be valid, allowing cheap and easy resolution of at least some disputes -- the inventor contacts the infringer and they work out a deal (with many exceptions).  Now -- particularly for start-ups and independent inventors -- the typical response of an infringer is to either ignore the patent or trigger a post-grant review.  Post-grant reviews normally fall into a cost range of $300,000 to $500,000 to defend, meaning that an inventor who does not already have a war chest can have a very solid patent but find herself unable to approach infringers for fear of being unable to defend a post-grant review.

It is fairly well accepted among independent inventors that the combination of the AIA and recent Supreme Court decisions have dramatically reduced the value of patents.  In informal discussions with five different patent brokers, estimates of the decline in patent valuation between 2000 and 2016 ranged from 80% to 95%.  Several empirical studies also show a steep decline.  The editor of Intellectual Asset Management has also noted that "It's been tough in the patent transactions market for several years now."

Turning to the three types of post-grant review available under the AIA, I first note that the USPTO has put out a helpful chart linked here.  I also note that there is one form of post-grant review that is literally called "Post Grant Review", so while all three forms take place after the patent grant, and are descriptively post grant review, knowing this is useful in avoiding confusion on the subject.

Elements common to all forms of post-grant review:
- Patents can be invalidated without judicial review by an Article III court;
- While the Supreme Court case on the standard of review involved IPR, it is very likely that all forms of post-grant review will give the patent claims the "Broadest Reasonable Interpretation" ("BRI").  BRI means that if there is a reasonable way to read the claim that renders it obvious or not novel, the claim is invalid.  By contrast, Article III courts give the claim language terms "their ordinary and customary meaning."  BRI makes invalidation much more likely.
- There is no presumption of validity in post grant reviews.  By contrast, Article III courts require clear and convincing evidence of invalidity.
- The defense of the patent's validity is up to the patent owner.
- The patent owner cannot seek post grant review of their own patent.
- A showing that a patent claim is not novel will invalidate the claim under Section 102.
- A showing that a patent claim is obvious will invalidate the claim under Section 103.
- The cost of defending a review is measured in the hundreds of thousands of dollars.
- The procedure must be completed within a year from the PTAB's decision to institute the review, although a six month extension is possible.
- Post grant review may be repeatedly sought against the same patent by a parade of challengers.  Just because a patent survives IPR does not mean that a new IPR will not be filed against it, for example.
- District Court judges have a lot of latitude to manage their caseload, so it is not uncommon for judges to stay (or put on hold) litigation over a patent while they await a decision from the PTAB.

(1) Inter Parties Review (IPR):  This is the most frequently discussed form of post-grant review.  A petition is filed seeking IPR.  After the petition is filed, the PTAB determines whether there is a reasonable likelihood that the claim is invalid.  If the answer is yes, the PTAB institutes IPR.  By law, IPR must be completed within a year (and the PTAB has been pretty good about meeting that deadline).  Anybody other than the patent owner can seek IPR as long as they have not sued to invalidate the patent or been served with an infringement complaint more than a year prior to filing for IPR.

IPR is like a mini-litigation.  The parties make motions, engage in discovery, and generally do the very expensive things that parties to litigation hire lawyers to do.

(2) Covered Business Method ("CBM"):   This is available only for a non-technological invention (whatever that means), and can only be brought by a party sued or charged with infringement.  It is instituted if it is more likely than not that the claim is invalid or if it presents a novel or unsettled legal question with implications beyond the patent at issue.

CBM is not available in cases where the patent at issue does not claim "management of a financial product or service" or "activities that are financial in nature", and where the specification does not "indicate or suggest" that the patent claims are directed at financial activity.  In the interest of full disclosure, I am the inventor of the patent that led to this holding.

(3) Post Grant Review ("PGR"): PGR is the only one of the post-grant proceedings to allow a challenge based on subject matter eligibility (Section 101), as well as problems arising from the specification (Section 112).  Because the AIA predated the aggressive Supreme Court cases limiting patent eligibility under Section 101, this difference is much more important now that it was at the time the AIA was adopted.  PGR is instituted if it is more likely than not that the claim is invalid or if it presents a novel or unsettled legal question with implications beyond the patent at issue.

Anybody other than the inventor may file a PGR, but it must be sought within 9 months from patent grant.  This raises a strategic question for the inventor:  Do you assert a patent immediately, or wait until the 9 month period has passed?  By waiting to assert, a District Court will be the only forum to look at Section 101 eligibility, and there are significant differences between the districts and between judges as to how they approach eligibility.  By the same token, the USPTO's guidance on subject matter eligibility leaves a lot of things open to interpretation.  Because of the speed with which Section 101 jurisprudence is evolving, this is a discussion that the inventor should have with her patent lawyer.

Monday, September 12, 2016

How to not get scammed as an inventor

Inventors are commonly the target of scams, so much so that the USPTO has issued specific guidance, invention promotion companies are subject to mandatory disclosure requirements, and Congress has passed a law prohibiting "Improper and deceptive invention promotion".  The World Intellectual Property Organization has issued warnings about fraudulent bills being sent for various fees (and has even asked for suggestions from the public as to methods for stopping these schemes).

These schemes range from truly pernicious (e.g. "pay us $50,000 in advance and we promise you success") to borderline silly ("Congratulations on your newly issued patent.  We are offering a one-time-only set of coffee mugs and a framed certificate for a low payment of $200.").  However, they all have one thing in common:  They exploit the natural affinity an inventor has for anything to do with her invention.

It is notoriously difficult for independent inventors to see every invention as anything short of an amazing innovation that the world need only see to fall in love with.  With my 170th United States patent issuing in a few weeks, I find it shocking that my legal training (Harvard no less), my tens of thousands of hours of IP development, marketing, and strategy experience, and my experience in licensing and sales do little to make it easier to abandon inventions that logic says are no longer good investments.  In my opinion and experience, inventions themselves serve as a "receptacle for personality", making abandoning them tantamount to giving up on a part of yourself.

If abandoning them is unduly difficult, the drive to be overprotective of them is unduly powerful.  The powerful role inventions play in the development of an inventor's feelings of self-worth is a bug in human programming, and one that bad actors now regularly exploit.  If humans were software, the inventor's almost parental love of his own inventions would be an unpatchable zero day exploit.  Like a true zero day exploit, inventors are almost all unaware of the problem, and even if aware, are often unable to eliminate it.

The best thing an inventor can do is to get advice from a dispassionate third party.  An attorney familiar with intellectual property and licensing can be a fantastic resource to this end.  While there is no substitute for legal advice (and the following is not legal advice), here are some quick tips, inventor to inventor:

(1) The only time it is ok to pay money to somebody up front before a patent issues is if they have a long track record and good, third party references.  Even so, I would only pay money up front to an IP lawyer, an experienced inventor, a collaborator, an employee, or a technical writer.  These are all people who can help you figure out whether to continue to invest in the invention and/or help you develop and dimensionalize the invention.

(2) If somebody promises to get you money for an invention you haven't filed for a patent on, that is a huge red flag.  There are some programs that are legitimate (for example, the Invention Development Fund), but these are few and far between.  Even for legitimate programs, be sure to read and understand the terms of the deal, since they may not work for you.  Remember this:  A pending patent is worth little in the vast majority of cases.  Investors are often risk averse, so unless they are a company staffed to the hilt with patent lawyers and experienced patent strategists, a legitimate company is going to apply an inordinate discount to the price -- if they are willing to pay anything at all.  Again, if you don't talk with an attorney or advisor very familiar with the IP market, you are probably going to lose money.

(3) Legitimate patent brokers do not charge you up front.  Period.  They get paid by taking a percentage of the deal price.  There may be exceptions (though I haven't encountered them), but ask whether you would be willing to pay a real estate broker their commission up front, without any promise that the sale would even happen.  Despite the America Invents Act's negative effects on the value of patents, patents remain a property right and paying up front means you are paying in advance somebody to try to sell your property.

(4) It is very flattering to get letters congratulating you on your invention -- so much so that whenever a patent issues, the inventor can expect to get half a dozen letters attempting to exploit that flattery.  Whether they tout a non-existent customer for your patent if you only advance them a few thousand dollars, or whether they try to sell you a $1 ceramic mug for $50 because they've emblazoned it with your patent number, you must view these letters with the highest level of skepticism.  I have literally never made a penny, or seen a legitimate opportunity, in any unsolicited letters sent directly to me.  However....

(5) Sometimes letters are sent to your patent lawyer of record.  A company willing to send a letter to the lawyer expects the contents of the letter to be scrutinized with a protecting eye.  I have been presented with legitimate opportunities in unsolicited letters sent to my IP lawyers.

(6) Patents are an unusual thing, expensive to obtain and imprinted with the personality and dreams of the inventor.  In their best incarnation, they are world-changing ideas worth hundreds of millions of dollars.  However, the best incarnation is rare, like finding a gold nugget in your backyard rare.  Many inventors think their invention is the exception, so important and valuable that the rules don't apply to them.  Those inventors are playing with fire.  Get professional advice.  Get an IP lawyer and an IP consultant on board.  Better safe than sorry.

(7) If you have a question about whether a bill is legitimate, call relevant patent office to confirm it.  Make sure you are calling the right office (do *not* use the number they provide on the bill -- look up the number yourself).

(8) Very few inventors are able to generate valuable IP without the help of a patent lawyer.  Just hire one.  Don't assume that an expensive lawyer, or a lawyer from a giant firm, is the best choice.  Patent lawyers are quirky, and the great ones often prefer less formal work environments.  I've gone from small firm lawyers to big firm lawyers and back.  You need to find a lawyer you trust, you get along well with, you communicate well with, and you can afford.

Wednesday, August 31, 2016

Mistakes Inventors Make When Dealing With Patent Lawyers

As an inventor with well over 150 issued U.S. Patents and a Harvard Law degree, I have a unique perspective on the inventor/lawyer relationship.  I understand the frustration that patent lawyers feel when the inventor doesn't understand that patent lawyers aren't magicians, patent law is in flux, and that fees should be paid even for a patent application that doesn't end up getting a patent issued.  I understand the frustration that inventors feel when their patent lawyer doesn't seem to understand the business reasons for the invention, the role the patent application plays in the inventor's business, and the cash flow issues that face start-up companies (and, increasingly, internal budget limitations for patent activities even at large companies).

This post explores the inventor side of some of the more common mistakes and misunderstandings that impair the inventor/lawyer relationship.

1. Patent lawyers are not magicians:

The most common mistake inventors make is thinking that handing an invention and a big check to a lawyer will magically make a patent issue.  Bad patent lawyers will get you a patent nearly every time.  Good patent lawyers will tell you when you are throwing your money away.  I know this sounds counterintuitive, but as described in more detail in mistake 5 ("The name of the game is the claim"), getting a patent that covers only a tiny, valueless corner of your invention is a great way to incur costs without any corresponding benefit.

Here are some things that inventors should understand (and that good lawyers will explain):

a. Your invention must be patent-eligible (see point 2 below).  Some fantastic inventions (like a finding a new antibiotic in a soil sample) are simply no longer patentable; others fall into the vast grey area of patent-questionable subject matter.  Your patent lawyer may call this "101" (after the code section) or "Alice" (after one of the cases interpreting 101).

b. Your invention must be novel, meaning that nobody has done it before even if doing it for the reason you are doing it is not obvious.  A refusal to issue a patent on this basis is called a 102 rejection, and "is established only when a single ... reference discloses ... each and every element of a claimed invention." (RCA Corp. v. Applied Digital Systems, Inc., 221 USPQ 385, 388 (Fed. Cir. 1984).  For example, erectile dysfunction drugs were initially developed with blood pressure control as a goal.  If a patent for one of those drugs never mentioned erectile dysfunction, it would nevertheless prevent a later inventor who independently developed the same drug for erectile dysfunction from getting a patent.

c. Your invention must not be obvious.  This means that a patent can be rejected if it combines known things in a way that people of ordinary skill in the area of your invention would do.  A refusal to issue a patent on this basis is called a 103 rejection.

There are other patentability requirements, but a failure to meet all three criteria will prevent you from getting a patent.  A good patent lawyer can amend the claims or argue against the reasons for rejection, but sometimes the only way to get a patent allowed is to modify the claims so significantly that they no longer hold commercial value.  A bad patent lawyer can also amend the claims or argue against the reasons for rejection, but is willing to destroy the commercial value of the patent claims in order to do so.

Bad patent lawyers view their job as getting to where they can call you and say "your patent application has been allowed".  Good patent lawyers view their job as bringing net financial benefit to the inventor, and that sometimes means calling the client and saying "it is very unlikely we can get claims issued that are worth what they will cost to obtain."

2. Patent law is in flux:

Over the past ten years, patent law has undergone massive changes.  These changes left a lot of patent law as a grey area.  The two big changes are:

(a) The America Invents Act created several new administrative procedures to challenge the validity of a patent.  The standard for validity in these procedures is different from the standard that courts use, and this different standard makes these administrative procedures much more likely than a court would be to invalidate a patent.  While a recent Supreme Court case has affirmed that the differing standards of review are correct, the patent community is still working through the implications.  For example, some judges will stay a case pending resolution of one of these administrative procedures; others will not.  Some patentees have adopted the (costly) strategy of keeping an "open continuation" on file in case they are not allowed to amend their claims during these procedures.  A cottage industry has grown up around these procedures, including companies with the primary mission of filing patent challenges and investors who short stock of patentees and then file challenges.

The end result is that U.S. patents are harder to enforce than ever before, and even a patent not being asserted can be challenged in a very costly administrative proceeding.  This makes getting patent prosecution right, and structuring the claims correctly, is more difficult and more important than before.

(b) Subject matter eligibility is enormously underdefined.  The Supreme Court has taken several cracks at clarifying patent eligibility over the first half of this decade (for example, 2010's Bilski case, the 2012 Mayo case, the 2013 Myriad Genetics case, the 2014 Alice Corp. case), but as Judge Linn of the Federal Circuit observed (in a concurrence), the law is now murky enough that even a "truly meritorious" invention that had "never been done before" and that "effectuated a practical result not previously attained" can, and sometimes must, be defined as patent-ineligible.  Judge Linn concludes by noting that "[b]ut for the sweeping language in the Supreme Court's Mayo opinion, I see no reason, in policy or statute, why this breakthrough invention should be deemed patent ineligible."

I have personally had numerous conversations with patent examiners who have unanimously (if off the record) complained that the judicial and patent office guidance is so poor that they often are left to guess as to what courts would consider patentable subject matter.

If you do not discuss with your lawyer the implications of the current state of patent enforceability and patent eligibility, you are setting yourself up for enormous unexpected costs and disappointing results.  There are strategies that can be employed to deal with these issues, but they need to be deliberately pursued.

3. Costs and fees need to be treated differently:

Patent lawyers are often flexible about how quickly they are paid.  While this is an issue that should be discussed in advance, it is not uncommon for startups to experience big fluctuations in cash flow and to be slow in paying down legal bills.  However, the legal bills really contain two elements:  Fees and costs.  Fees represent time spent by the attorneys, and attorneys may be willing to defer some of those.  Costs are actual dollars paid by the attorneys to the Patent Office on behalf of the client, and a failure to timely reimburse those costs is very frustrating and troubling to the attorneys.

4. Pushing your lawyer to get a patent issued can backfire:

You came up with a great invention.  You spent a lot of time writing it up.  You paid your lawyer a lot of money.  It is tempting to pressure your lawyer to get a patent issued.  As described in section 5 below, not all patents are created equal.

By way of example, imagine that you invent a way to store more data on a magnetic drive by storing the data in trinary mode (off, weak, strong magnetic storage) instead of the normal binary mode (off, on).  The patent examiner responds to your filing with prior art showing exactly what your invention does.  Your patent application probably contained a few commercially impractical variants.  For example, while most hard drive surfaces use a cobalt-based alloy, imagine that you also disclosed using a gold platter covered with an alloy.  The gold platter is heavier and far more expensive, so there is no commercial value.  However, if you push your patent lawyer hard enough, they may amend the patent claims to require that the trinary storage be implemented on a cobalt-covered gold platter.

Instead of abandoning the application (or finding commercially valuable variants in the application), the lawyer under pressure to get something -- anything -- issued is likely to spend the money on the office action response, and have you spend the money on an issue fee (and probably a continuation application) when the costs of doing so far outweigh the likely benefits.

I recommend approaching your patent lawyer (and even the patent examiner, during an interview) with the goal of getting a commercially valuable and strong patent issued.  It is better to tell your lawyer (and the patent examiner) that you would rather have no patent than one that is probably invalid and/or probably valueless.

5. The name of the game is the claim (and winning the game requires your active participation):

While the body of the patent is becoming increasingly important, Giles Rich's (former Chief Judge of the Federal Circuit) observation that "the name of the game is the claim" is still a powerful one.

A lot of the hullabaloo over "overbroad" patents can be traced to a fundamental misunderstanding about the difference between what the patent describes and what it claims.  The claim describes the legal property right that the patent grants.  It is literally impossible to infringe a patent without infringing a claim of the patent.  The claims are the only part of the patent that may be legally enforced.

It is very common for a patent application filed just after invention to claim things that are either unpatentable or commercially not viable.  The important thing to remember is that your patent lawyer is not an expert in your invention and is not running your business.  Despite this, many inventors count on the patent lawyer to manage what should be claimed, how the claims should be amended, and when a continuing patent application should be filed to claim additional matter.

This is the single most important place where your input is needed.  Ask yourself "if I get the claims issued the way they are written, is my business protected?"  If the answer is no, you need to get your lawyer on the phone and help them draft claims that do protect your business.

6. You must do examiner interviews:

As part of the patent application process, you are allowed to ask the patent examiner for an interview.  You should do this as frequently as possible.  If it is just your lawyer, the examiner, and papers, it is very easy for the examiner to respond in a mechanical way.  By contrast, an interview lets the examiner ask questions, better understand the invention, and work cooperatively to find patentable subject matter.  As with all human interactions, an interpersonal interaction has the added benefit of making the patent application something that matters to a specific, known person and more than simply an abstract exercise.

7. Your lawyer can influence the validity of your patent, even a decade after issuance:

It is important to maintain a good relationship with all of the named inventors and all of the lawyers who have worked on a patent application.  One common defense to patent infringement is "inequitable conduct", an allegation that materials relevant to patentability were intentionally withheld from the patent examiner.  If such an allegation is made, your relationship with your lawyer may suddenly become very relevant.

8. An issued patent is the start of the journey, not the end:

When my first issued patent arrived, I was not sure what to do next.  I had focused for so long on getting the patent issued that I treated it as if the issued patent would arrive with a check in the envelope.  It does not.  Having received more than 150 patents since then, I have a much better idea.  However, the one thing that remains true is that a patent does not magically create money.

You can use a patent to maintain a competitive advantage, you can license a patent, you can sell a patent, you can use it in a cross-licensing way to settle patent litigation -- in short, there are a lot of things that are possible when the issued patent arrives.  However, none of them are self-executing.  You will need a plan to get from issued patent to financial return.

Lawyers and IP consultants can help you figure out what the next step is.

Monday, June 20, 2016

Cuozzo v. Lee: IP Protection Gets More Complicated

The Supreme Court handed down a decision this morning in Cuozzo v. Lee.

Two questions were before the court:
(1) Is the decision to institute "inter-parties review" ("IPR") appealable?
(2) Is the Patent Office allowed to continue to use the Broadest Reasonable Interpretation as the standard of review?

They answered both questions "yes" (with some nuances).  This has some implications for IP strategy.

First, the newly passed federal trade secrets statute continues to be an attractive alternative to patents.  As the courts and Congress continue to chip away at patents (sometimes with a rock hammer, other times with a jackhammer), patents become less attractive and simply keeping your discoveries and inventions secret becomes more attractive.

Second, while the Court leaves open the possibility that some extraordinary circumstances, such as a constitutional question, may merit review of the decision to institute IPR, it holds that ordinary questions about the propriety of an institution decision may never be appealed.  The only possible upside for inventors is that it is very likely that a similar conclusion will be drawn with regard to the denial of a request to institute review.  The upshot is that patent holders with valid and infringed technology can expect infringers to continue the practice of filing a request for IPR and asking the Court to stay any infringement lawsuit pending the patent office's administrative (IPR) proceeding.

Third, the standard for IPR is substantially tougher on the patentee than the District Court standard is.  In District Court, the patent claims are interpreted according to their ordinary meaning, and are presumed valid in the absence of "clear and convincing" evidence to the contrary.  By contrast, in an IPR, the patent claims are interpreted as broadly as reasonably possible (meaning that much larger amounts of "prior art" are available to invalidate the claims).  Making this uphill climb even steeper is the standard of review in IPR:  A claim is invalid if the challenger shows it to be invalid by a preponderance of the evidence.

What the Court does not recognize (although it constituted an inordinate amount of the oral argument in the case) is that the USPTO rarely, almost never, allows a patentee to amend or narrow the claims during inter-parties review.  This is contrary to the original process of getting a patent, where the patentee can amend dozens of times (if they want to spend that kind of money on requests for continued examination) in response to a negative decision by the examiner.

Best practice for a patent portfolio now includes keeping a live continuation (a continuation is a second patent filing, usually made right before the issuance of the first patent filing).  This significantly raises the cost of inventing.  To explain why, an example is useful:

Imagine that I file a patent disclosure describing a method of doing A, B, and C, and I also disclose doing those things in conjunction with any combination of steps D-Z.  I get a patent for a method of doing A, B and C, with dependent claims covering D, E and F.  I then let the patent issue without a continuation.  It turns out that somebody else reads my patent and begins to infringe by doing steps A, B, C and Z in combination.  Since my claim on A, B and C is infringed by A, B, C and Z (since infringement constitutes doing all of the steps in the issued claim), I sue.  The infringer files for IPR and the patent office determines that that it is barely more likely than not that A, B and C are disclosed in the prior art and invalid.  I apply to the patent office to narrow my claim to also require Z (which is not disclosed in any of the prior art that the patent office used to find the A, B and C claim invalid), and they refuse (they do refuse amendments in almost all cases).  My patent is now invalid (where a District Court would have found it valid) and I have no right to narrow it even though I invented the combination of A, B, C and Z.

This unfair outcome can be easily avoided by a wealthy inventor who can afford to keep a live continuation on file, preserving the right to obtain a narrowed claim (such as A, B, C and Z) in the continuation, even after the IPR killed the parent.  However, without an open continuation, the patent is simply gone and the infringer gets to use my invention for free.

Here are the take-aways:

(1) If you can choose between trade secret and patent, choose trade secret.  Congress has substantially strengthened protections for trade secrets even as it substantially weakened protections for patents.  This means that some great innovations will become unavailable as building blocks for a next generation of innovations (because those building blocks will not be available to the public), but regardless of whether it is good public policy, it is good strategy.

(2) If you do file for a patent (for example, because the technology can be reverse engineered), make sure to file dependent claims that are narrow enough to survive even the most stringent review and keep an open continuation on file.

(3) This impacts only the United States.  For inventions where there is a foreign market, it continues to be good strategy to file foreign.  At minimum, Germany makes sense as the biggest economy in the EU.  The cost of a full blown international filing can easily exceed $100,000, so it becomes a bit of a game of kings.

(4) Hire a patent lawyer and an IP strategist.  Patent law is moving so quickly that only those able to leverage expertise and experience have a reasonable shot at good IP protection.

About the author:  Gary Shuster is an inventor and IP strategist and an attorney at Coleman and Horowitt, where his patent lawyer, Sherrie Flynn, also works.