Read the NDA Before You Disclose

by admin - January 3rd, 2016

Non-Disclosure Agreements (“NDAs”) or Confidentiality Agreements are probably the most overused and abused of all commercial contracts. Businessmen and engineers often sign NDAs and then freely disclose business plans, trade secrets, and ideas to patent to potential “business partners” because they believe they are fully protected by the NDA. However, NDAs vary widely in the scope of their protection. Some NDAs offer powerful protection, but many NDAs offer very little practical protection. In fact, agreeing to some NDAs may be worse than no agreement at all.

Unless the party disclosing the confidential information clearly understands the scope of the NDA he or she is about to sign, the disclosing party may be revealing confidential information without adequate legal protection. This is especially true when the disclosing party uses a NDA from a previous situation or pulls down an NDA from the Internet.

When reviewing an NDA that you are about to sign, ask yourself the following questions:

Does the NDA obligate the Recipient’s subsidiaries and contractors?

Does the NDA require the Disclosing Party to mark the information as confidential? If so, are you really going to mark every correspondence with them as “Confidential.”

Does the NDA require the Disclosing Party to document conversations as confidential? If so, are you really going to document all of your conversations?

Does the NDA state “non-use” obligations in addition to “non-disclosure” obligations? If not, do you want them to be able to use your information for any purpose or do you want to limit how they use your information?

Are the exceptions to the definition of Confidential Information too broad?

Does the NDA allow for the independent development of competing products?

Should there be a no reverse engineering clause?

Does the NDA require a return or destruction of all materials?

Does the NDA contain an indefinite term for secrecy requirements? If so, the NDA may not be valid in many states.

What state law will be used to govern and interpret the NDA?

Where will any dispute resolutions occur? If out of your city or state, do you really want to fund litigation to enforce this NDA in another state?

Does the NDA have an arbitration clause?

Does the NDA provide for Injunctive Relief?

Does the NDA have any clauses that you do not understand?  If so, contact your lawyer or read the ebook: A Simplified Guide to NDAs.

A “Simplified Guide” to Patent Law is now available on Amazon

by admin - December 5th, 2015

For those interested in single short book explaining the patent process and what it means to own a patent, “A Simplified Guide to the Patents” is now available in ebook form on Amazon.  The link to the book is here.

This book is intended for entrepreneurs, small business owners, general practice lawyers, investors, and others who need a realistic overview of the patent process.  This book offers a somewhat simplified, but realistic explanation of an extremely complex and changing area of law.  It is not a “How to Draft a Patent Book.”  Instead, it discusses what to expect as one goes through the process.  For more information contact Bill Naifeh at



What Are the Costs of Obtaining a US Patent – Part 3

by admin - February 10th, 2015

In my last two posts, I discussed cost considerations for obtaining a United States patent.  However, I did not discuss prices and I know that most readers of this blog would like to see “ball park” estimates.

First, it is essential to understand that with patent applications you will always “get what you pay for” as I explained in my previous posts.  Second, the type of invention and the degree of complexity are probably the next most important cost considerations.

Unfortunately, clients almost universally believe that their inventions are relatively simple and can be easily described and claimed in a few hours.  This is almost always wishful thinking and, thus, totally false.  In fact, if clients reviewed other patent specifications in their area, they would find that that there are a lot of drawings and a large amount of text creating a document that is largely incomprehensible by anyone not familiar with in the intricacies of patent law.  Furthermore, as explained in previous posts, small clients often need greater protection and, thus should expect to incur greater costs.

Statistics indicate that the average U.S. patent costs $36,000 over the 20 year life of the patent.  This number includes application, issue, and maintenance fees paid to the patent office, prosecution costs (preparing responses to patent office rejections), and initial patent application preparation and filing.  Typically, the initial patent application preparation is about half of this cost.  So, if the average patent costs $36,000, the average cost for patent application and filing is about $18,000.  However, this number represents an average cost.  As stated previously, the type of invention and the degree of complexity are probably the most important factors in determining costs.

Below is rough guidance regarding estimating the costs for the preparation and filing of a non-provisional application:



Attorney Fees

Draftsman Fees


Design Applications Shape of an object, such as a cup or bottle $1000 – $2000 $600 – $1000 $400
Extremely Simple A coat hanger or a belt clip $4000 to


$400 – $600 $730
Relatively Simple A single embodiment of a surgical instrument, a flashlight $5000 – $7000 $500 – $700 $730
Minimally Complex A medical device accessory, a portable oven, a crankshaft, simple gear systems. $7000 – $9000 $700 – $900 $730
Moderately Complex Medical waste compactors, RFID devices, medical devices. $8,000 – $10,000 $700 – $1100 $730
Relatively Complex Business methods, a simple electric motor/generator, medical device systems, medical devices involving limited biologics. $12,000 – $15,000 $800 – $1500 $2000
Highly Complex MRI scanner; complex software systems or networks, pharma, biotech. $15,000+ $1500 + $3000

The above table does not include the costs of patent searching or filing provisional patents.  Often clients can file a provisional patent application for about a third to three quarters of the costs for filing a non-provisional application.

It is also important to note that the above costs are from historical and personal observations and do not represent the costs that my firm charges.  Again, they are only meant to provide the reader with ballpark or order of magnitude estimates.  The reader should talk to a competent patent attorney for estimates involving a specific invention or technology.  For additional questions, contact Bill Naifeh at

What are the Costs of Obtaining a U.S. Patent? – Part 2

by admin - January 16th, 2015

In continuing this series of posts, let me describe two scenarios:  (1) a doctor walks into my office with an idea for a new medical instrument.  During the initial interview, he draws a freehand sketch and instructs me to draft a patent application; and (2) an engineer sends me a complete “invention disclosure” providing a detailed description of his invention, a PowerPoint Presentation describing the invention for investors, accompanying drawings, a Solid Works “edrawing” computer model, known prior art, and procedure detailing how to use the invention.

Assuming the level of complexity between the two inventions is about the same, which application will be less expensive?  Obviously (in my mind at least), the engineer’s invention will be cheaper to draft and file – by thousands of dollars.

While it is true that I have to wade through a lot of information from the engineer, more information is always better.  Furthermore, it is quicker to cut and paste sections of existing text than to draft from a blank computer screen. (By the way, this situation is entirely hypothetical – in my experience, engineers also hate to write.)

In the doctor’s situation, before I begin drafting, I will have to research existing inventions, medical procedures, etc.  I will also instruct either an outside draftsman to produce patent drawings or have a paralegal produce a 3D model in Sketchup.  Researching takes time and time costs money.  Furthermore, because I am not a doctor, I might miss an important nuance about the invention or the method of using the procedure.

Thus, a well-considered, clearly written, comprehensive invention disclosure can reduce patent costs and result in better patent protection.  In principle, no one knows more about an invention than the inventor.  If the patent attorney is to perform a proper patentability search, evaluate the search, and do a good job of preparing and prosecuting the patent application, it is critical that the inventor provide the attorney with specific written guidance in the form of an invention disclosure.  Most patent attorneys will provide invention disclosure forms as well as the appropriate instructions.

As discussed in my previous post in this series, a patent is a trade you make with the government.  The government grants you a monopoly for your invention.  In return, you must increase public knowledge.  For you to increase public knowledge, the patent application must contain enough detail to teach others how to make and use your invention.  Patents which just describe an idea, without teaching others how to make and use the invention, are invalid or can be invalidated.

So, just presenting an idea to your patent attorney will force him to develop the idea into an invention (if he is doing his job).  This will be an expensive endeavor. While most patent attorneys are engineers, we are not efficient engineers and we are expensive.  Thus, it almost always less expensive to either develop the idea into an invention yourself or pay an engineer to develop the idea.

The patent disclosure does not need to be as detailed as a performance specification, but it should contain enough detail so that a person of ordinary skill in the art can make and use the invention after reading the disclosure.

Thus, providing a detailed disclosure will increase the quality of the patent and be less expensive than just presenting an “idea” to your patent attorney.

For more information, contact Bill Naifeh at

What are the costs of obtaining a U.S. Patent? – Part 1

by admin - January 8th, 2015

This is a difficult question to answer for a variety of reasons.  First, patent costs vary based on differences in technology.  Second, patent costs vary due to the intended use of the patent and the client’s requirements.

By way of background, patents are not like copyrights or trademarks in that if you are the first to think of and use a logo, you own rights in it.  Patents are only granted if your invention increases the general knowledge of the public (at least theoretically).  In order to increase the general knowledge, a patent application must do more than simply present an idea.  By law, the patent application must teach others skilled in the art how to make and use the invention.  In exchange for the increase in public knowledge, the inventor is granted a monopoly which is (theoretically) proportional to the increase in public knowledge.

Some areas of technology simply require more drawings and descriptions to enable “one skilled in the art” to make and use an invention than other technology areas.  Drawings and descriptions are expensive and costly – especially if an attorney drafts them.  Obviously, the longer the application, the more costly, it will be.

A simple mechanical invention with a short specification will likely be much less expensive to draft than a complex biotech invention.  On the other hand, in my experience, simple inventions with short specifications are typically harder to get allowed.  It seems that U.S. patent examiners have a bias against short applications.  It almost appears that the examiners require the applicant put in a certain amount of “sweat” labor into the application.  So, I often advise clients to “beef up” their shorter descriptions in order to overcome the examiner’s bias against short applications.  A short application can be beefed up by adding more embodiments or by making the invention part of a system or “kit.”  (These are often useful for legal reasons too).  The more description added, the higher the costs.  This means that often simple inventions become expensive.

With rising hourly legal rates, some law firms have extolled the benefits of short applications.  Generally, however, I believe short applications are not as strong and do not provide the depth and flexibility needed if the patent is used in licensing or litigation.  For instance, the majority of patents typically asserted by successful NPEs have lengthy specifications. (Lengthy specifications are usually harder to invalidate and provide support for numerous continuations.)

Another cost factor is that different clients use patents differently.  For instance, the goal of many large companies with thousands of patents is to keep costs down for every patent or patent application.  No one single patent will be that important to them.  Consequently, these clients want what is called “defensive” patents.  (If they are sued by a competitor, they can counter sue by claiming infringement of 20 to 50 patents.  Since no one can defend against so many patents, a settlement involving cross licensing is often reached.)  In this scenario, the quality of each patent, although important, is not as paramount because each patent is likely to be just one of a large group of asserted patents.  Obviously, this scenario only works when the defensive patent owner has a very large number of patents in their portfolio and, thus, is able to claim infringement of many patents.

On the other hand, a small start-up company will only have a few patents in their portfolio.  Consequently, the patent quality must be paramount – especially if they go up against an industry giant.  Obviously, patent quality is often a function of the time involved in its preparation.  The longer a patent application takes to draft, the better the quality is likely to be (as a general rule). In the legal world, time equates to cost.

This often means that a small company (who is likely to use its few patents offensively) should expect to pay more per patent (for better quality) than large companies who can also rely only on the quantity of their patents.

For more information, contact Bill Naifeh at

Obama Administration forces USPTO to Deny Access to Residents from “Offending” States

by admin - August 8th, 2014

As of August 4, 2014, the U.S. Patent and Trademark Office (USPTO) will be instituting new access control procedures that may affect visitors to the USPTO campus in Alexandria, Virginia, as well as visitors to USPTO’s satellite offices in Denver and Detroit.

These changes are the result of the Federal Government’s enforcement of the REAL ID Act, which enacts one of the key recommendations of the 9/11 Commission.  The Act establishes minimum security standards for state-issued driver licenses and identification cards and prohibits Federal agencies from accepting those documents for official purposes unless the Department of Homeland Security (DHS) determines that the state meets the minimum standards.

As of April 21, the following states do not meet the REAL ID standards:

  • Alaska
  • American Samoa
  • Arizona
  • Kentucky
  • Louisiana
  • Maine
  • Massachusetts
  • Minnesota
  • Montana
  • New York
  • Oklahoma
  • Washington

Visitors to the USPTO with state issued identification from these states must present alternate forms of identification to facilitate access.  Three of the states listed above offer an Enhanced Driver’s License that is identifiable by an American flag on the license; they are New York, Minnesota, and Washington.  USPTO will accept the Enhanced Driver’s Licenses from those states.

DHS currently accepts other forms of Federal-issued identification in lieu of a state-issued driver’s license, such as a:

  • Passport
  • Passport card
  • DoD’s CAC
  • Federal agency HSPD-12 ID
  • Veterans ID
  • Military dependents ID
  • Trusted Traveler card – Global Entry, SENTRI, or NEXUS
  • Transportation Workers Identification Credential (TWIC)

For visitors using state-issued ID to access the USPTO, only driver’s licenses or identification cards from states that meet Federal standards will be honored.  USPTO will continue to accept other forms of government-issued identification, including Federal employee badges, passports, military identification cards, or Enhanced Driver’s Licenses as noted above.

If visitors do not have acceptable identity documents, the person to be visited at USPTO will need to provide an escort in order for the visitor to access the USPTO. The visitor must be escorted at all times while in USPTO secured areas.

The Patent Indefiniteness Requirement now has Teeth!

by admin - June 3rd, 2014

The Supreme Court reverses the Federal Circuit’s Indefiniteness Standard in a decision likely to negatively impact patent owners.

As many know who have been involved in patent litigation, it is often impossible to determine claim meaning in some patents.  This uncertainty makes patent claim construction extremely difficult – both for the lawyer advising a client and the district judge.  It also allows certain patent owners (usually trolls) to file outlandish patent infringement lawsuits based on poorly worded and vague claim interpretation.

The uncertainty existed despite the definitiveness requirement in the Patent Act which requires that a patent specification “conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as [the] invention.” 35 U. S. C. §112, ¶2.  The uncertainly existed because the Federal Circuit’s standard to determine indefiniteness under this §112 requirement was whether the claim is “amenable to construction.”  In my view, this is a much lower standard than the statutory language requires.

In Nautilus, Inc., v. Biosig Instruments, Inc., the Supreme Court reversed the Federal Circuit’s standard and held that a patent is invalid for indefiniteness if its claims, read in light of the patent’s specification and prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.

Assigned to Biosig Instruments, Inc., the patent in dispute (U.S. Patent 5,337,753, the ’753 patent) involves a heart-rate monitor used with exercise equipment.  Prior heart-rate monitors, the patent asserts, were often inaccurate in measuring the electrical signals accompanying each heartbeat (electrocardiograph or ECG signals) because of the presence of other electrical signals (electromyogram or EMG signals), generated by the user’s skeletal muscles, that can impede ECG signal detection. The invention claims to improve on prior art by detecting and processing ECG signals in a way that filters out the EMG interference.

Claim 1 of the ’753 patent, which contains the limitations critical to the case, refers to a “heart rate monitor for use by a user in association with exercise apparatus and/or exercise procedures.” The claim includes, among other elements, a cylindrical bar fitted with a display device; “electronic circuitry including a difference amplifier”; and, on each half of the cylindrical bar, a “live” electrode and a “common” electrode “mounted . . . in spaced relationship with each other.

Biosig filed a patent infringement suit, alleging that Nautilus, Inc. sold exercise machines containing Biosig’s patented technology. The District Court, after conducting a “Markman” hearing to determine the proper construction of the patent’s claims, granted Nautilus’ motion for summary judgment on the ground that the claim term “in spaced relationship with each other” failed §112, ¶2’s definiteness requirement.

The Federal Circuit reversed and remanded, concluding that a patent claim passes the §112, ¶2 threshold so long as the claim is “amenable to construction,” and the claim, as construed, is not “insolubly ambiguous.” Under that standard, the Federal Circuit determined, the ’753 patent survived indefiniteness review. As noted above, the Supreme Court correctly reversed and finally added “teeth” to the definiteness requirement of the patent act.

This decision may affect thousands of claims.  It also might affect thousands of licenses and previous analyses because patent lawyers, in performing invalidity analysis have previously had no choice but to follow the Federal Circuit’s holdings and have often ignored the definiteness requirement of the Patent Act.

The Nautilus decision will also make invalidity of patents much easier – especially in administrative procedures before the patent office such as covered business method review and inter partes review.

What does a Provisional Cost?

by admin - April 21st, 2014

The cost of a provisional depends on the invention.  An invention that takes 20 drawings to describe will cost more than an invention that takes 3 drawings to describe.

A provisional must meet most of the requirements of a regular utility patent.  In other words, the provisional must contain a written description of the invention (not just a description of the idea underlying the invention) and enable one skilled in the art to make and use the invention by reading the specification and drawings of the patent application.  If these requirements are not met, the provisional may not provide any patent protection.

In fact, the only theoretical difference is that a utility application must have claims where a provisional is not required to have claims.   However, under the relatively new American Invents Act, there are references to the claimed invention.  So, many lawyers have been including claims in a “full provisional.”  Furthermore, if international protection is important, the provisional must have claims to be recognized by foreign patent offices, such as the EPO.  (If foreign filing is important, the provisional should actually have “European Style” claims so that Europe will accept the filing date of the provisional.  A discussion of an “international” ready provisional is beyond the scope of this post. Just remember that if foreign filing is important, the provisional should cost more and be adapted for acceptance later by other patent offices.)

From a practical perspective, the client should think of the full provisional as a first draft of the utility application.    A “US only” provisional should have all of the required substance, but can forgo some of the formalities because the provisional will not be examined.  So, if the costs of a utility might average $1000/page of drawings, the costs of a provisional might average $700/page of drawings.

Additionally, because of the “first to file” provision of the AIA, it is important to get applications on file as soon as possible.  U.S. inventors and companies no longer have the luxury of waiting and relying on evidence such as inventor’s notebooks.  Consequently, many lawyers have been using the concept of filing at least two provisionals.  The first provisional is a “quick and dirty” filing or presentation of an idea, but may not fully describe or enable the invention in as much detail as a full provisional.  Hopefully, the first provisional might poison the waters for your competition and give you a first priority date (depending on the detail of the description).  However, because the application may not have been fully thought out, the first provisional might not convey the patent rights of a full provisional.  The theory is that it can’t hurt and might help.  So, the process is to file the “idea provisional” within days of receiving the invention disclosure, then immediately (or as soon as practical) follow up by filing a full provisional.   The costs of the these “idea provisionals” are around $1500.

In sum, the costs for filing a “US only” provisional application can be estimated to be:

First or “idea” provisional           $1500

Second or “full” provisional        $700/per page of drawings (assuming at least 5 drawings).

Patent Quality Levels

by admin - April 2nd, 2014

At the risk of over simplification, most companies employ one or more of four quality “levels” patents.  Often companies will have patents from a mixture of the levels below.  Sometimes, this mixture occurs as a result of design and prioritization.  Sometimes, it occurs as the result of political influence within the company or other factors.  Typically, the quality levels are:

Level 1 – Defensive patents.

  • Defensive patents are patents usually obtained by large companies having huge portfolios.  The large companies will typically cross license with their competitors and usually will not sue their competitors.  This strategy is conceptually similar to an arms race.
  • These patents are “defensive” in nature because if a competitor sues them for patent infringement, they will counter claim with a large number of their own patent.
  • Because the patent portfolios are so large, a defendant corporation can often find 20 to 50 patents that can be alleged in counterclaims.  Very few if anyone can defend against 20 to 50 patents (regardless of the validity of the patents), so the plaintiff companies will settle rather than face the litigation costs of defending 20 to 50 patents.
  • When using defensive patents, the object is not to protect the technology or obtaining royalties.  The object is to develop a litigation weapon which would make any suit against the company prohibitively expensive.
  • Because there are a large number of patents, cost control is important and the quality of the individual patents are often suspect.
  • Such patent applications are usually drafted on a “fixed-fee” model.  In a law firm, these patents are drafted by patent agents or very young lawyers.
  • IBM created this patent portfolio model when they determined it was too expensive to perform clearance searches on their products and/or to design around the patents of others.  Many large companies have since followed IBM’s model.

Level 2 – Mainstream Patents:

  • Although large companies can afford to develop large portfolios often involving thousands of patents, most small to mid-size companies cannot maintain a large number of portfolios.  Thus, most of these companies will opt for mainstream patents.
  • Mainstream patents are typically better quality than true “defensive” patents.  They are typically longer in length, have more claims, and more carefully drafted to withstand some scrutiny (either in acquisition or litigation).
  • They typically may be used to protect a company’s secondary products and are often used by smaller companies to protect a company’s main products.
  • Budgets still play an important role in such patents.
  • One or two continuations may be sequentially filed to expand claim protection or two keep a “child” of the patent alive (so the owner is free to file additional claims to cover competitor’s products or future products).
  • Typically, U.S. companies will not file in other countries because of the costs of such foreign filings.  If foreign filing is contemplated, PCT applications are typically filed with U.S. style claims.

Level 3 – “Bet the company” Patents

  • These patents protect a company’s key technology.
  • They tend to be longer, have more claims, and more expensive.
  • Often the inventors and others will meet to “design around” the claims of such patents.  The “design” around solutions are then either included in the patent application or in other applications.
  • Such patents often start an extensive family tree of related patents where “continuation-in-part” and continuation patents are filed and prosecuted simultaneously.
  • Office Action Rejections are typically handled by face to face interviews to reduce prosecution history estoppel arguments in litigation.
  • If foreign filing is desired, the U.S. claims and/or specification are redrafted to better conform to the patent laws of different jurisdictions.
  • Oil companies, medical device companies, and drug companies often develop patents of Level 3 quality.

Level 4 – “Non-Practicing Entity” or NPE Patents

  • NPE are licensing only entities.  The advantage of an NPE model is that the NPE cannot be counter-sued for infringing patents in a larger company because the NPE does not produce its own products or services.
  • Although some NPE’s can readily license their technology, many NPEs must use the courts to enforce their licenses.  Consequently, NPEs assume all of their patents will be litigated.
  • Because most of the portfolio may be litigated, NPEs often employ prosecution procedures designed to make defending against the patent very expensive.  For instance, rather than modify one claim, NPE’s typically delete and replace 100 claims at a time.
  • NPEs typically employ a combination of Level 1 and Level 3 patents because most of their patents will see litigation.  Thus, a large percentage of their patents must be “litigation ready.”
  • NPEs will file many more continuations and more claims.  Often one patent specification will result 10 to 50 patents involving thousands of claims.
  • NPEs usually do not file foreign because of the expense and limited recovery in foreign jurisdictions.

In recent years, NPEs have been successful at asserting “junk” patents against many businesses.  These businesses have lobbied both the White House and Congress to change the patent law.  As is usually the case, Congress will probably hurt legitimate small business owners in the process in the same way medical malpractice laws prevented patients with actual injuries from fully recovering.

It is a new Patent Game

by Bill Naifeh - September 17th, 2011

On September 16, 2011 President Obama signed into law  the Leahy-Smith Patent Reform Act, thereby ending the most favorable patent system in the world for legitimate small businesses.

The law is lengthy (169 pages) and complex.  Furthermore, the provisions of the new law have a variety of effective dates.  Some of the provisions are effective immediately.  Some of the provisions, such as increased patent office fees will be instituted on September 26, 2011.  Yet other provisions are not be implemented until 2012 and 2013.

In my opinion, this law is an example of a broken democratic system.  The backbone of economic growth in this country has been small business, yet under this law, small businesses are the losers.

The law is a compromise hammered out of by essentially three political lobbies: (1) large technology companies who would rather not have a patent system in the U.S. (because they have the resources to win in the marketplace without patents); (2) U.S. pharmaceutical companies who are very dependent on a strong patent system, and (3) large multinational companies who want a harmonization of patent laws across the world.

Although there are some good provisions in the new law, in general, the result is a law which will make patents more expensive, harder to enforce, and much more like the system in Europe (where patents are also much more expensive and harder to enforce).

Senator Leahy said that the law will create 200,000 jobs.  In my opinion, he over estimated the number of jobs by at least 200,000 (or he was talking about the creation of 200,000 jobs in China).

I am still working through the implications of the 169 pages of changes.  However, the reported changes are:

I.          Third-Party Challenges to Patent Rights:

A.        The bill includes three expanded ways that a third party can use the Patent Office to challenge a patent: Pre-Issuance Third-Party Submissions; Third-Party Requested Post-Grant Review; and Inter Partes Post Grant Review.

1.         Pre-Issuance Third-Party Submissions:

a.         Under the new law, third parties would be allowed to submit any printed publication along with a description of the relevance to the USPTO to be considered during the examination of a pending patent application.

2.         Third-Party Requested Post Grant Review:

a.         A post grant review proceeding would be created (similar to the current reexamination proceeding) that could be initiated by any party.

b.         The review would allow a third party to present essentially any legal challenge to the validity of at least one claim.

c.         A major limitation on the post grant review is the request for review must be filed within nine-months of issuance.  This is similar to Europe.

B.        Inter Partes Review Proceedings:

1.         Once the nine-month window for post grant review is expired, a party may then file for “inter parties review.” This new system would replace the current inter-parties reexamination and would be limited to consideration of novelty & obviousness issues based on prior art patents and printed publications. (It appears that the current third-party ex-parte reexamination would remain a viable option as well).

II.         Damages:

A.        Patent defendants have argued that courts often treat damages issues as afterthoughts with little procedural control. The proposed amendment would add specific procedures and checks on how a judge manages the damages portion of a case.

B.        The new law requires that a court “identify methodologies and factors that are relevant to the determination of damages” and that “only those methodologies and factors” be considered when determining the damage award.

C.        Prior to the introduction of damages evidence, the court is required to consider either party’s contentions that the others damage case lacks a legally sufficient evidentiary base.

D.        The new law requires a judge to bifurcate the damages portion of a trial if requested “absent good cause to reject the request, such as the absence of issues of significant damages or infringement and validity.”

E.        The new law appears to bar a judge from amending the discovery schedule or any “other matters” based upon the trial sequencing.

F.         Damages:

1.         The new law would codify the Federal Circuit’s holding with the words “Infringement is not willful unless the claimant proves by clear and convincing evidence that the accused infringer’s conduct with respect to the patent was objectively reckless. [i.e., that] the infringer was acting despite an objectively high likelihood that his actions constituted infringement of a valid patent, and this objectively-defined risk was either known or so obvious that it should have been known to the accused infringer.”

2.         The new law also provides:

a.         accusations of willful infringement must be pled with particularity (following FRCP 9(b));

b.         proof of knowledge of patent is insufficient to establish willful infringement;

c.         a pre-lawsuit notice of infringement cannot itself establish willfulness unless the notification is fact specific in explaining the infringement;

d.         the failure to obtain the advice of counsel (or to present that advice to the jury) “may not be used” to prove willful infringement or inducement of infringement; and

e.         damages subject to trebling are only those accrued after the infringement became willful;

f.          in a “close case” there will be no willful infringement (here, the new law requires a judge to “explain its decision” and to make a decision prior to the issue being tried by the jury).

III.        First-Inventor-to-File

A.        The new law moves the US to a first-to-file system. Each patent application would be given an “effective filing date,” and the patentability will be judged on whether any prior art was available prior to the filing date.

1.         The U.S. one-year grace period would remain in effect, but only for the inventor’s own disclosures (and disclosures derived from the inventor).

2.         Obviousness will also be judged as of the effective filing date. (Inventors will no longer be able to swear behind prior art nor will they be able to establish priority in an interference proceeding.)

3.         A new creation in the bill is a “derivation proceeding” that would operate only in times where an original inventor alleges that a patent applicant derived the invention from the original inventor’s work.

IV.       False Marking:

A.        A large number of false patent marking cases have been filed plaintiff attorneys in the past few year looking to make a quick buck.  The bill would eliminate those lawsuits except for ones filed by the US government or filed by a competitor who can prove competitive injury.  This is provision is good for any legitimate business.

V.        Oath/Declaration: The bill would make it easier for a corporation to file a substitute inventor’s oath when the inventor is non-cooperative.  This is also a good provision for legitimate businesses.

VI.       Best Mode:

A.        The best mode requirement appears to be gutted.  An inventor will still be required to “set forth” the best mode for accomplishing the invention, the new law amends the existing statute to exclude failure of disclose a best mode from being used as a basis for invalidating an issued patent.  In other words, the best mode requirement is still law, but it is unenforceable.  This is another move towards the European System (which does not have a best mode requirement).

VII.      Fee Setting Authority:

A.        The PTO would be given authority to adjust its fees, so fees will increase.