ContactProvisional Damages
Posted Friday, February 03, 2012 by Mike Cicero.
The most obvious underlying theme of the United States patent system is to incentivize innovation and disclosure. Of course, the incentive is the possibility of being granted a patent or, more specifically, a monopoly over practicing the invention during the patent term. It is during that period that inventors often recover the financial investment that went into both the creative and patent prosecution processes. This is straightforward and, since many people are by nature self-interested, many people who have sought patent protection have thought of and are motivated by this incentive.
Although less obvious, another theme of our patent system is to put the public on notice of precisely what is covered by the patent claims. This theme is codified in 35 U.S.C. § 112, second paragraph, which states that “[t]he specification shall conclude with one or more claims particularly pointing out and distinctly claiming the sub¬ject matter which the applicant regards as his invention.” According to the Manual of Patent Examining Procedure (MPEP) §2173.02, in order to comply with the second paragraph, the claim must be sufficiently clear and precise so as to provide “clear warning to others as to what constitutes infringement of the patent.”
Because these themes coexist, laws must balance the competing interests that each represent. A prime example involves published patent applications which have yet to mature into an issued patent. In this situation, because the patent has not issued the possible future patentee does not have a monopoly over practicing the invention. Even so, it would be unfair to allow an entity to do what would later be infringement during the sometimes lengthy process of patent prosecution. This would be especially so if that entity actually learned of the invention from the published application and was not a true inventor. To resolve this conflict 35 U.S.C. § 154(d) provides an applicant with provisional rights. Once a patent has issued, a patentee may assert provisional rights to obtain a “reasonable royalty” from an entity that has infringed on that patent’s previously published application. The time period for which royalties can be obtained begins when the application published and ends when it issued as a patent.
While the prospect of having to pay out royalties is likely to deter unethical application infringement, it would still be unfair to penalize an entity that had no reason to know that such provisional rights might exist. It would also be unreasonable to expect decision makers to stay current with publishing patent application in order to avoid future litigation. Often times the phrase “Patent Pending” or “Patent Applied For” is placed conspicuously on a product to alert other entities that patent rights are being sought after. This might deter an entity from investing time and resources toward bringing a product to market, but the phrase is still merely a deterrent and holds no legal effect. That is because it would be unfair to the public to place legal effect on these phrases for the same reason it would be unfair to place legal effect on ambiguous patent claims; both fail to provide the public with a clear warning as to what constitutes infringement. Therefore, 35 U.S.C. §154(d)(1)(B) requires a patentee to have provided the specific entity with “actual notice of the published patent application” in order to assert provisional rights. Additionally, 35 U.S.C. §154(d)(2) precludes the patentee from obtaining the “reasonable royalty …unless the invention as claimed in the patent is substantially identical to the invention as claimed in the published patent application.” An entity can’t be provided with a moving target and expected to rationally plan its actions to avoid infringement.
In sum, provisional rights provide inventors with a powerful tool to deter infringement prior to the patent actually being issued while also protecting third parties from being blind-sided with infringement claims that it couldn’t have reasonably predicted.
Kodak
Posted Friday, January 27, 2012 by Mike Cicero.
Last week, the Eastman Kodak Company (Kodak) filed for Chapter 11 bankruptcy. For many this came as quite a surprise. After all Kodak had once been the leading producer of film products which helped the company to grow into an industry giant. Moreover, Kodak did not exactly sit around and idly watch as consumers replaced their Minolta 35mm cameras with newer digital technology. Kodak initiated this transition when it invented the first digital camera in 1975.
Since inventing the digital camera, Kodak has continued to emphasize research and development in its daily operations. According to its bankruptcy documents, Kodak has worked diligently to protect its intellectual property through traditional avenues. Today, Kodak’s overall intellectual property portfolio consists of approximately 13,100 foreign patents and trademark registrations, and an additional 8,900 patents and trademark registrations in the United States. Within its overall portfolio is a very valuable subset of approximately 1,150 patents known as the “Imaging Portfolio.” Kodak claims that the “Imaging Portfolio pertains to capturing, processing, storing, organizing, editing, sharing and monetizing digital images, and is fundamental to the digital imaging industry, including the cell phone, tablet and social networking markets.” Kodak further claims that the Imaging Portfolio: (1) is one of the world’s largest collections of digital image related intellectual property; (2) reflects billions of dollars in R&D; (3) has no foreseeable expiration date(s) that will materially impact revenues; and (4) continues to grow.
Through 2010 Kodak had negotiated $3 billion in licensing revenue from its Imaging Portfolio; however, in 2011 it received only a mere $98 million, or alternatively 3.3% of the negotiated revenue. Kodak claims that its difficulties in licensing negotiations and revenue collection began only after the global recession had impaired the company’s liquidity making it difficult for the company to enforce its rights. Kodak has since initiated patent litigation against Apple Inc. (Apple), Research In Motion, Corp., and HTC Corp. in an effort to recover substantial royalties which Kodak claims it is owed. This is not first time these companies have quarreled over patents. As recently as 2010 Apple Inc. filed a lawsuit against Kodak claiming patent infringement. The claims were ultimately rejected. Subsequently, in another patent infringement suit, Kodak prevailed in a claim against both Apple and Research In Motion, Corp. Interestingly those two companies, having entered licensing agreements after the unfavorable ruling, are now allegedly at the heart of Kodak’s financial troubles. Making matters worse for Kodak, Apple is claiming that Kodak does not even own the patents in question, but rather Apple does. In light of recent events, Kodak has certainly seen better times, and now only time will tell whether the company that dominated the imagery market in the 20th century will be able to survive the 21st century.
Two Contexts for Interpretation of Claim Terms
Posted Sunday, January 22, 2012 by Mike Gibbons.
The intellectual property an inventor regards as his or her own is detailed in a set of patent claims. Analogous to the legal description of a parcel of real estate included in a title to a home, patent claims precisely describe the boundaries of invention. Patent claims provide notice to other parties exactly what the patented invention is, so that another party doesn’t inadvertently infringe the patent. This is akin to placing a fence on the property lines of a home, so that would-be trespassers know where to find the boundary that shouldn’t be crossed.
An important difference between a legal description of real estate and a patent claim, however, is that the terminology of a real property legal description is standardized, while the terminology of a patent claim varies with the invention itself. Thus, during the patent examination process, a patent examiner takes care to ensure that the terms used in the patent claim are clearly defined and have meanings that would be easily understood by one reading the patent claim.
This can be trickier than one might imagine. Consider a patent claim for a chemical compound to “restore hair growth.” Does “restore hair growth” mean to return a full head of hair? Or does it mean to get some amount of hair growing again? In order for the patent to issue, the meaning of “restore hair growth” would have to be clarified so as to provide the notice to others discussed above.
Of course, what seems clear to a patent examiner who allows a patent might not seem clear to everyone. Occasionally, that lack of clarity becomes the basis for a patent infringement suit. In other words, a patent-holder and an accused infringer might disagree on what a claim term means. From the standpoint of the accused infringer, infringement may not have occurred because what the accused infringer produced isn’t within the accused infringer’s interpretation of the meaning of the patent claim. Conversely, the patent-holder may believe the patent claim has a different meaning, one which encompasses the item the accused infringer produced. In a patent litigation suit, such a dispute would be resolved judicially.
Consequently, the precision and clarity of a patent claim may be considered in two different contexts: first, during the prosecution of the application, and second, in litigation after the patent has been issued.
During prosecution, an examiner may require the applicant to revise the proposed patent claims to increase the precision and clarity of a claim. Claims need to be concise, however. For example, say the examiner feels “restore hair growth” is indefinite. It may not be practical to provide a definition for “restore hair growth” in the claim itself, because the claim might get lengthy. So we look to the specification, including the detailed description that is a part of every patent application, to see if the meaning of “restore hair growth” is more apparent. If there is additional definition in the specification, the patent claim may be refined in accordance with the detailed description.
In the litigation context, when the opposing parties assert the patent claim has different meanings, the specification and detailed description is again consulted to ascertain what the patentee meant by a particular claim term. If the meaning of the term is not apparent, the court may consult additional sources to arrive at the meaning. There is a hierarchy for the values a court should apply to different types of additional source.
This leads to an important principle for preparing the content of an application for a patent. Detailed descriptions have to be carefully crafted to provide meaning for claim terms. During patent prosecution, if patent claims must be revised for a patent to issue, a patent attorney or patent agent must limit the revisions to content taken from the application as it was originally filed, or limit the refinements to claim terms that would be commonly understood. There is a prohibition on appending new matter into an application after it is filed. It is difficult to clarify patent claims with language that didn’t appear in the original application.
If one assumes that a claim term has an easily understood meaning and that assumption turns out not to be correct, there might be an unexpected challenge ahead during patent prosecution. Even if one is able to come to an agreement with the patent examiner resulting in an issued patent, a claim term appearing ambiguous might still be subject to additional scrutiny in patent litigation.
Best Mode Changes with America Invents Act
Posted Thursday, January 19, 2012 by Mike Cicero.
Whenever an inventor seeks patent protection, that person is agreeing to disclose valuable information to the public in return for a temporary monopoly over practicing the invention by way of exclusionary rights. During the time period of that inventor’s exclusionary rights the public can learn from the inventor’s disclosure and eventually, when the patent term expires, actually practice the invention. This system of exchanging information for rights is critical because it provides inventors with an incentive to contribute to the collective knowledge of society which, ultimately, helps to maximize social welfare.
To ensure that the public receives sufficient information in exchange for granting patent rights, 35 U.S.C. 112, First Paragraph sets out three distinct requirements which must be met for an inventor to obtain a valid patent. The First Paragraph’s Best Mode requirement states that “[t]he specification…shall set forth the best mode contemplated by the inventor of carrying out his invention.” This requirement aims to provide a disincentive for inventors to disclose a less efficient mode to the public while saving the best mode for themselves. Patent applications can be rejected for failure to disclose the best mode and, previously, issued patents could be held invalid during an infringement lawsuit if shown that an inventor withheld the best mode. While both of these results create a disincentive to holding out, the stronger of the two was probably the latter.
The America Invents Act, signed into law on September 16, 2011, reduces the impact of the best mode requirement immensely. Under the new law, an entity being sued for patent infringement can no longer raise the defense that the patent is invalid due to the inventor withholding the best mode from the patent’s disclosure. Essentially, if an inventor can make it through examination without facing a rejection based on best mode requirements, the inventor is home free notwithstanding having held out. Moreover, rejections of applications for failure to disclose best mode during examination are rare simply because the examiner is in a poor position to discover what an inventor is withholding. So has the Best Mode requirement been eliminated? No, it remains a requirement under 35 U.S.C. 112, First Paragraph. However, it might prove to be nearly unenforceable from now on.
Because the public still wishes for and can benefit from the disclosure of a contemplated best mode but has lost a huge path of securing this information, maybe it is now more accurate to refer to best mode as a request rather than a strict requirement.
"Patent Eligible" vs. "Patentable"
Posted Sunday, January 15, 2012 by Mike Gibbons.
Patent attorneys and patent agents are often asked by an inventor who is interested in patenting an invention whether the invention is patentable.
Most often, the answer I give upon hearing more about an invention is that it is patent eligible, but that whether it is patentable is up to the patent office. The terms “patent eligible” and “patentable” sound similar, but have very different meanings, and it is important for an inventor to understand the distinction.
“Patent eligible” means that the invention falls within a category of inventions for which U.S. patent law provides that a patent may be sought. The U.S. patent laws are codified in Title 35 of the United States Code, and section 101 of the code reads “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” Therefore, if an invention is a tangible object, for example, it’s a composition of matter and probably an article of manufacture, so it falls in one of the categories. A patent attorney or patent agent would say that the tangible object is “patent eligible” since it qualifies as something for which one could apply for a patent by law.
Whether one would actually get the patent for that tangible object is another question altogether. That is the question of whether the object is “patentable.” Patentability is largely determined by requirements in different sections of Title 35, namely 35 U.S.C. §§102, 103 and 112. Those three sections of the code require an invention to be novel, non-obvious and adequately described, respectively, for a patent to issue.
If the tangible object that is the patent eligible invention is also novel, non-obvious and adequately described in an application for the patent, then the invention would be said to be patentable. Patentability of an invention is initially determined solely by the U.S. Patent and Trademark Office, based upon the search and examination the office performs in response to an application for a patent. Prior to an application being filed, no patent attorney or patent agent can tell an inventor with authority that an invention is patentable, because that is up to the patent office. A patent practitioner can conduct an independent search and render an opinion on patentability, and for a variety of reasons it can be a good idea to pay a practitioner to do exactly that, but it is important to note that the result is still just an opinion (albeit a well-informed opinion) and not a guarantee.
In most cases, a patent practitioner will only be able to say with authority that an invention is patent eligible. To determine with certainty that something is patentable requires an application for a patent for the invention to be submitted and for the application to be examined by the patent office.
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