U.S. Continuation Practice

by Bill Naifeh - July 28th, 2016

A key aspect of strategic patenting is U.S. continuation practice.  Continuation patents have several advantages and are widely used by small companies to build patent portfolios (especially companies who license their technology).  In fact, I almost always draft initial claims with the assumption that clients will file continuations at a later point in time.

A “continuation patent” is a new patent filed with different claims but with the same specification or technical description as a previous or “parent” application.  It is afforded the same priority date as the parent patent application.  U.S. continuation practice is somewhat unique in the world.  It allows an entire patent portfolio to be built around a few key patent applications.  In contrast to a divisional application discussed above, a continuation application is one where the applicant desires to obtain more than one patent from the same specification (and priority date).

One advantage of using continuations is that you can get more and better claim coverage.  Think of the process as the “Patent Two Step.” In the first step, you file your claims with the original application.  However, at that point, you do not know what prior art has been filed in the last 18 months.  In fact, unless you have an exceptionally good search report, you may not know of the relevant prior art.  Furthermore, you do not know which patent examiner will handle the case nor what prior art the Examiner feels is relevant.  In other words, when you file, you are going in blind.  So, at this point, as discussed in a previous “Narrow Claiming” post, it may be best just to first narrowly claim your invention and to get a patent issued as quickly as possible.

Once you have one notice of allowance, you implement the second step – you file a “continuation” patent application with new and broader claims. However, by this point, you know the prior art, the Examiner and you know what prior art he believes is important.  So, you are much more likely to draft better and broader claims.

A second advantage of using continuations is that you can claim various aspects or embodiments of the invention.  Often patent specifications describe several embodiments yet Examiners are pressured to only allow claims directed to one embodiment.  Continuation practice allows you to claim several inventions.

However, the most important advantage of using continuations is that the claim scope for the patent portfolio remains flexible. As long as there is some “live” continuation application, you can always change the claim scope of that continuation or you can file another continuation with new claims. This flexibility is extremely important to licensees, potential acquirers, and anyone who might be enforcing the patent portfolio.

There are important cost considerations too.  A small business can start with just a few applications, then patent other aspects contained in the applications at a later date – while claiming back to an original priority date.  The effective use of continuation practice allows a company to claim various aspects of inventions and systems at a later date when financial conditions are likely to be better.

In fact, the use of continuation patents is strongly encouraged and almost always recommended.  With the onslaught of recent challenges to patents, no one can guarantee that a patent will stand up if asserted in court or in a post grant challenge.  A continuation patent allows the patent owner to actually change claim scope in light of such challenges.

What Can Be Patented?

by admin - July 27th, 2016

U.S. patent law specifies the general field of subject matter that can be patented and the requirements for a patent.  The purpose of these requirements is to make sure that the bargain between the government and the inventor or applicant is “equal” or balanced.  In other words, the law is designed to prevent the patent owner from receiving a larger monopoly than the patent owner deserves.  At least, that is the theory.  Whether the USPTO accomplishes this balance is hotly debated and the USPTO has been under extreme political pressure in the last few years to make sure that patent owners receive no more than they deserve (and often less than the patent owners deserve).

In the language of the statute, any person who “invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent,” subject to the conditions and requirements of the law.

The word “process” is defined by law as a process, act, or method, and primarily includes industrial or technical processes.  In addition to manufacturing processes, processes can theoretically include software, business methods, and websites.  The term “machine” used in the statute needs very little explanation.  The term “manufacture” refers to articles that are made, and includes all manufactured articles.  The term “composition of matter” relates to chemical compositions and may include mixtures of ingredients as well as new chemical compounds.  These classes of subject matter taken together include practically everything that is made by man and the processes for making the products.

Interpretations of the statute by the courts have limited the field of subject matter that can be patented.  For instance, courts have held that laws of nature, physical phenomena, and abstract ideas are not patentable subject matter.  Unfortunately, courts are not always consistent and often vary their interpretation over time and as a result of political pressure.  For instance, in 1998, the Federal Circuit (which is the appellate court for patent cases) held that business methods and websites were patentable.  In 2008, after a number of patent trolls began suing numerous websites and on-line businesses, the Federal Circuit essentially changed its mind and held that business methods are not patentable.

The 2008 case and other cases went up to the U.S. Supreme Court which confirmed the patentability of business methods and software, but only if they are NOT “abstract ideas.” Unfortunately, the Supreme Court did not provide meaningful guidance regarding the definition of abstract ideas.  Currently, most lower courts have held that business methods and software are not patentable subject matter because they are nothing more than abstract ideas.  So, today, many software patents (especially patents dealing with high or “application” level software) may not be valid under current case law.

Ideas are not patentable – only Inventions are patentable!

Contrary to popular belief, a patent cannot be obtained upon a mere idea or suggestion.  A patent is granted upon an invention (e.g., a new machine) and not upon the idea or features of the new machine.  Thus, a complete description of the actual machine or other subject matter for which a patent is sought is required to be submitted in the patent application.

The grant of a patent may be thought of as an exchange, bargain, or “quid quo pro” you make with the government.  In exchange for disclosing details about how to make and use your invention, you receive a 20 year “quasi-monopoly” for the invention described in your “claims” IF the patent office believes that your patent increases public knowledge in a meaningful way.  Ideas do not increase public knowledge because ideas alone are just science fiction.  Think about Star Trek’s transporter.  It is based on Einstein’s famous e=mc2 equation, but without more, the transporter is just an idea – not an invention.

For more information, visit contact www.naifeh.com.

The “Defend Trade Secret Act” is about to become law.

by Bill Naifeh - April 28th, 2016

Yesterday, the House passed the “Defend Trade Secrets Act” (“DTSA”) by a 410-2 vote.  Previously, the DTSA passed the senate.  So, now the DTSA is headed to President Obama who is expected to sign it.  The law is designed to go into effect on the date of its enactment.

The DTSA amends the Economic Espionage Act to create a private civil cause of action for trade secret misappropriation.  Previously, civil trade secret misappropriation has been purely a matter of state law.

Due to the enactment of the Uniform Trade Secret Act in 47 states, there already is a great deal of uniformity in state law regarding trade secrets.  The DTSA is not designed to eliminate or preempt the various state trade secret laws but rather act as an additional layer of protection.  Some question the need for the law.  In reality, Congress can point to this law as proof that they actually did something this election year.

For more information, contact Bill Naifeh at www.naifeh.com.

File Your Applications Early

by Bill Naifeh - February 20th, 2016

Many companies or inventors unknowingly engage in activities which essentially forfeit their right to file for a U.S. patent. Patent attorneys call these activities “statutory patent bars” because the patent statute lists several activities which will “bar” an inventor or company from obtaining a patent.

The modern patent statute goes back to 1952. Since 1952, every “barring activity” mentioned in this statute has been heavily litigated and courts have developed a fairly mature and well-defined body of case law interpreting the barring activities and exceptions to the barring activities.

When Congress passed the American Invents Act or the “AIA” which became effective in 2013, the statutory language changed. So, now we have a new list with new terms. Any lawyer will tell you that courts do not always interpret statutory language in a reasonable or predictable manner. Thus, we are now in an era where there is uncertainty regarding the meaning of the new statute because courts have not yet had an opportunity to interpret the new language.

The United States Patent and Trademark Office (“USPTO”) cannot wait on the courts and has to interpret the new AIA statute in order to issue patents. This memo attempts to explain and simplify the USPTO’s interpretation of the patent bars or patent barring activities listed in the new AIA statute. Just remember that the courts are not bound by the USPTO’s interpretation. So, we do not know if a court will agree with the USPTO.

At a risk of oversimplification, the USPTO believes the following list of activities or disclosures bars one from obtaining a patent:

(1) The invention was patented previously anywhere in the world,
(2) The invention was previously described in a document available to the public anywhere in the world;
(3) The invention was previously in public use and the use was known by the public anywhere in the world;
(4) The invention was on sale or offered for sale to the general public anywhere in the world;
(5) The invention was otherwise available to the public anywhere in the world.

However, there are exceptions to the above “disclosures.” The exceptions are:

A disclosure does not bar patentability if made 1 year or less before the effective filing date of a claimed invention where:

(A) the disclosure was made by: (1) the inventor, (2) a joint inventor or (3) by another who obtained the disclosure directly or indirectly from the inventor or a joint inventor; or

(B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the disclosure from the inventor or a joint inventor.

The “exceptions” are designed to give the patent owner a limited one year grace period for his/her own activities.

So, if an inventor (or assignee): (1) publishes, (2) uses in a publicly known way, (3) offers to sell or sell the invention to the public, or (4) makes the invention public more than one year before filing a patent application on the invention, the inventor or assignee loses the ability to file for a patent on the invention.

In this situation the “public” means anyone who does not have an obligation of confidentiality. Thus, if the inventor discloses the invention to a small group of potential investors and the investors have no duty of confidentiality, the inventor has made the invention “public” or a public disclosure.

Although the U.S. provides for a limited grace period, keep in mind that most other countries do not have a grace period. Thus, while the public disclosure in the above example may have started a one year grace period for a U.S. patent filing, the public disclosure destroyed the inventor’s ability to file in Europe and other regions who does not have a grace period. If foreign filing is important, you should forget about the U.S. grace period.

Additionally, the inventor or assignee will be prevented from obtaining a patent if a third party (who has independently invented the invention or a similar invention) files for a patent before the inventor or assignee files for their patent. In other words, the first person to file an application is entitled to receive the patent. This is another major change of the AIA. Previously, the first person to invent was entitled to receive the patent.  So, under the regime of the AIA, it is even more important to file early and often to prevent others from racing to the patent office.

For more information contact Bill Naifeh at www.naifeh.com.

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 www.naifeh.com.

 

 

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:

Complexity:

Examples

Attorney Fees

Draftsman Fees

USPTO 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

$6000

$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 www.naifeh.com.

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 www.naifeh.com.

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 www.naifeh.com.

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.