Intellectual Property Directions

Although it is your patent attorney’s job to keep abreast of changes in the rules at the various patent offices around the world, it is the inventor’s job to at least be aware of the general issues so that he or she understands what the attorney is trying to do. So consider this post just a “heads up” notice of some changes that went into effect in April 2010.

Divisional applications: A basic rule all around the world is 1 invention = 1 patent. This makes sense since the purpose of a patent is to fence off a particular invention for you sole profit and it would be hard to figure out if someone was infringing when more than one invention was described in the patent. Sometimes we find it convenient to file an application that, intentionally or not, covers more than one invention. When this occurs we usually file one or more “divisional” applications to get back to the one invention per patent rule, where a divisional application is just the original specification with new claims directed to the additional inventions.

Under current US and the old European rules you could (voluntary) divisional applications years after your original filling date. Under the new European rules, all voluntary divisional applications must be filed within 2 years from the first office action, but not earlier than October 1, 2010. This means that “old” patent applications have a relatively short window for filing any new divisional applications. So don’t be surprised if your patent attorney calls you and wants to discuss the need for getting these applications filed.

Early Reply to Objections: In an apparent move to keep the process moving forward, the new rules require you to reply within one month to objections raised in search reports generated by the European Patent Office when you file under the Patent Cooperation Treaty (”PTC”).  Here in the US we are used to being able to delay responses to the patent office for as long as 6 months. So again, don’t be surprised when your attorney presses you to answer his questions quickly - he’s just trying to keep your application from being “abandoned”

There have been other changes too, but particular changes are likely to affect the communications you have with your patent attorney very soon.

Can you trespass on someone’s property before they own it? More to the point, can you be forced to pay back rent for the time during which you were acting like a squatter on public land that was later sold to a developer? In the world of land development the answer is (probably) no; in the world of IP development the answer is a definite maybe.

Back in the olden days, BP (Before Publication), the invention you disclosed in your patent application was kept secret until your patent issued. You could mark your product “patent pending”, which gave anyone copying your product fair warning that IF your patent issued they might have to stop making, using, selling an infringing product.

With the advent of pre-allowance application publication (~ 18 months after the priority date), the world was given access to your invention even though you had no patent to stop them from copying it. This, it would seem, violated the quid-pro-quo of the applicant’s “contract with society” [if you teach society about your invention you can have ~ 17 years of exclusionary rights]. To correct this imbalance, Congress added a modicum of pre-grant patent protection.

Of course, it’s still the case that no infringement action may be started until the patent is issued. After all, the patent may NEVER issue, in which case there can’t be infringement. However, once the patent issues, a patent owner can  collect “reasonable” royalties for infringement activities that occurred between an application’s publication and the date of issuance. In theory, that is. [for you doubting Thomases, see 35 U.S.C. § 154, section (d)].

To collect these royalties, a patent owner has to:

1. sue to prove infringement (no cheap feat),
2. prove that the claims that survived to form the issued patent are “substantially identical” to the claims in the published application,
3. demonstrate that the infringer had “actual notice” of the published application, and
4. show the infringing activity took place after the date of publication.

Of these 4 conditions, only the last will be easy to satisfy. The other three conditions are likely to cause more headaches and expense than the “reasonable royalties” are worth.

For an example of the headaches, consider the “actual notice” condition. Presumably this means the patent applicant has to observe a competitor building something that will possibly infringe the yet-to-be-examined patent and then send them a copy of the published application. But if they were working on it before publication (i.e., before public disclosure of the application), then their work might be prior art and you are probably required to inform the patent office, under your duty of candor. Failure to notify the patent office may cost you your patent even if the actual information turns out not to affect the examiner’s decision.

And on the other side of the equation, the “what’s in it for me” side, the “reasonable royalty” limit on what you can collect is reasonable, since the “infringement” being addressed is infringement of a non-existent patent. Indeed, infringement of a patent that might never come into existence at all. The patent application process should not become a show stopper for competitors. Competitors are already put on warning that they may have to stop selling their product if/when your patent issues; the reasonable royalty cost allows them to make a rational business decision about the risks of pre-issue activity.

So, my recommendation to a patent applicant is, in most situations, let this sleeping dog lie. And to the potential infringer, I suggest worrying more about what changes you might have to make if and when the patent issues, rather than worrying about the “reasonable” royalty you might have to pay for what you are doing now.

A recent issue of the on-line Harvard Business Review “The Magazine” has an interesting and provocative Q&A with Oded Shenkar, who, they say, exhaustively reviewed research on major business-model innovations and on breakthroughs in eight scientific and academic disciplines, ranging from history to neuroscience. In all cases, he found imitation to be a primary source of progress, even though that progress often went unrecognized by executives and scholars. He also discovered that good imitation is difficult and requires intelligence and imagination.

While I don’t know how valid his research is, I strongly agree with his key business finding; that being the holder of a seminal patent does NOT always position your company in the best competitive position. In fact, he believes the data says that companies that are adept at “imitating” [what I prefer to call "designing around" or "building off of"] other companies’ intellectual property are often the big winners in the marketplace.

It’s important to note that Shenkar is NOT suggesting infringing - in fact he is pointing out that “imitators” are actually doing exactly what the patent system was set up to facilitate:

Good imitators don’t wait [until an idea is successful in the marketplace]; they actively search for ideas worth copying. And they often look far from their industry or home country. They also don’t just copy an idea, they come up with a cheaper or better—increasingly it’s cheaper and better—mousetrap. They disrupt the innovator, whose costs are higher by a third, on average, and who’s still sinking investments into the innovation while the imitators are building an offering based on the market reaction to it. [emphasis added]

The patent system is a contract between inventors and society. We (society) give inventors a limited time of exclusivity on their inventions in exchange for teaching us about this advance in the state of the art - so that someone else can take that information and advance the art even further. If you, as an inventor, didn’t realize that this was the bargain you were making, well, you know it now.

The key sentence in this article is

“Medical imaging company Hologic Inc. has settled patent disputes with a subsidiary of Johnson & Johnson Co. in a deal that will see Bedford-based Hologic pay out $12.5 million for one product [and pay ongoing royalties] and get ongoing royalties coming in from another.”

That is, Hologic reached into its patent portfolio [a year and a half] after it was sued by J&J in order to find a bargaining chip. Would J&J have let Hologic keep selling the product in suit if it did not have its own product in patent problems?

Hologic settles J&J subsidiary patent dispute - Mass High Tech Business News

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