Intellectual Property Directions

Since Valentine’s day is behind us, is it okay to speak of a relationship gone bad? A “divorce” that has ended up in patent court some 12 years after the patent issued? Can you really enforce a patent 12 years after the supposed infringement started or is this just a “lovers’ quarrel” taken too far?

Hassan Kunbargi started investigating the chemistry of cement at a graduate student in 1984. Edward Rice, owner of CTS Cement Manufacturing, became aware of Kunbargi’s work and sought an adjunct faculty position at UCLA so that he could serve as Kunbargi’s advisor. Rice hired Kunbargi to work at CTS in 1985. After that, both men worked for another company, Fibermesh.

In 1989, after demonstrating the invention disclosed in a patent application to Rice, something in the relationship apparentlyy turned sour and Kunbargi ceased working for Rice. In September 1990 the patent was allowed and Kunbargi received the ’556 patent, entitled “Very Early Setting High Strength Early Cement.”

Fast forward to 2002. Upon the issuance of his third patent, Kunargi sued Rice for, among other things, patent infringement and theft of trade secrets. This case bounced around the courts with motions on both sides being considered at one time or another. [including Kunbargi's motion to disqualify Rice's counsel, who had been listed on a power of attorney as entitled to prosecute a patent application on an invention by Rice and Kunbargi when they had both worked for Fibermesh!].

Among other defenses, Rice turned to the doctrine of laches - that is, the idea that if you fail to act within a reasonable period of time you lose your rights under the law. The concept, like most aspects of patent law, is an attempt to enforce fairness. If you believe someone is infringing your patent, it is considered unfair for you to wait until the other party has invested in the technology and built up a large business before enforcing your patent. The District Court agreed with Rice that 12 years was too long and declared the patent unenforcable against Rice in a summary judgement [viz., without a trial].

According to the court, Kunbargi should have known of his infringement claim because of his history of working on cement mixtures with, and then having a falling out with, Rice, and because of his prior affiliation with CTS. The court found that, because Kunbargi had demonstrated his invention to Rice before the ’556 patent issued, Kunbargi was on “inquiry notice” at the time the patent issued.

The appeals court (the CAFC) disagreed. It said:

CTS does not dispute that [Kunbargi] could not have tested CTS’s product for the presence of soluble anhydrite. Without access to CTS’s internal procedures, Kunbargi could not have investigated CTS’s methods to determine infringement. Even Kunbargi’s hiring of a private investigator led to no conclusive result that CTS’s products infringed the ’556 patent. An infringer does not escape liability merely by infringing in secret. [Kunbargi] could only have asserted infringement of the ’556 patent upon a reasonable belief that CTS infringed all of the limitations of the claims, including the limitation requiring soluble anhydrite.

The CAFC therefore reversed the summary judgement and sent the question of laches back for trial. The CAFC pointed out that, for laches to apply, the only time that counts is the time after the patent holder should have had a reasonable basis to believe infringement is taking place.

Keeping a low profile while you infringe, even if you are successful for many years, will not get you off the hook for infringement. And knowingly allowing someone to infringe in order to build up your settlement (or get revenge in a relationship gone bad) may leave you holding an empty purse.

While admittedly a very special case, funded on both sides by very deep pockets, 1.7 BILLION dollars isn’t chump change to anyone. See http://www.bizjournals.com/boston/stories/2010/02/01/daily1.html.

One thing this settlement reinforces is the advice I always give clients: you only know you have a valuable patent when someone wants to copy your invention - either by licensing or infringing your patent. So the key to getting “the right patents, at the right time, for the right cost” is to ask yourself the question “If so, so what?” In other words, if you do get a patent issued on your invention (3 or 4 years from now), will anyone care?

• Will your competitors simply find another way to build a competing product, having seen your patent application 18 months from now?
• Will the cost of their R&D make your solution look attractive?
• Will they already have a competing, non-infringing product on the market by the time your patent issues?
• Will your approach represent a big cost savings?
• Will the state of the art already passed by this technology?
• Will you have the resources to defend your patent rights (or at least find an attorney to take your case on contingency)

Think carefully about these questions before investing in a patent. Remember that your patent can only stop someone from making, using, selling, etc starting on the day your patent issues. All of the sales the competition has made during your patent’s pendancy are not considered infringement.

Before committing to filing a patent application you should evaluate (with professional help) how broad your patent is likely to be, in light of the prior art and what your competitors are likely to do if they are blocked by your patent.

I’m not much of a seamstress, so I can’t testify to how many stitches are saved by repairing a tear as soon as it happens, but I do know that investing in a prior art search can easily save you from wasting ten or more times as much on an application for an un-patentable invention. And the ROI can be much much greater if prior art search saves you from infringing someone’s broad but not widely known patent.

In the past couple of weeks I’ve had essentially identical discussions with two clients. In both cases my clients had the foresight (okay, at my urging) to have me do a prior art search to see what was out there BEFORE we started pulling together patent disclosure to send to the patent attorney. In both cases I discovered some prior art that would have made getting a patent difficult at best and, if allowed, would have been quite limited in scope. In both cases we concluded that the business value of such a limited patent, three of four years from now, did not justify the investment today.

 When should you initiate a prior art search? The different circumstances of my two clients may help you make that decision. One client - Client “X” - recognized a need in the marketplace, identified a solution and was hoping to develop a product to meet that need. He asked me to take a quick look at the patent prior art, since he wanted to feel comfortable that he had the freedom to build the type of device he imagined, and a second, deeper look to see if there was prior art of any sort that would limit his ability to obtain a reasonably broad patent to protect his market. The good news/bad news is that I found a recently published patent application that disclosed most, if not all, of what he wanted to do. Whether or not that application ever turns into a patent, its prior publication meant that my client would not be able to get a patent to protect his device and he dropped the project (and the patent work for me!). Bad news: no product and no patent; good news: saving the cost of filing a patent application that would probably never give him a return on investment.

The second client - Client “Y” - had already developed a novel image processing approach as an off-shoot of his main business thrust. He wanted to get a patent on the invention to increase its potential licensing value, since he does not need the invention in his core business. Again, as a preliminary step to preparing a patent disclosure, I did a prior art search, extending the search beyond the areas for which Client “Y” had developed the technology. Again the good news/bad news is that I uncovered a large collection of academic papers that disclosed perhaps 95% of my client’s approach. Together we decided that, at best, we might be able to get a narrow patent covering that last 5%; that competitors could probably work around that 5% anyway; and that it would be a long and painful fight with the examiner to surmount the certain-to-come obviousness objection. And of course we would not know if the patent would issue for 3 years or more. And the whole of the invention would be made public. So we decided that he would be better off pursuing license agreements based on keeping his approach as a trade secret. At least he saved the cost of trying to obtain the patent.

So are you like these clients - willing and wanting to invest in a prior art search to save an order of magnitude more money if the patent would not make sense? Or are you doing so well that you’ll throw money down the drain?

In a seeming paradox, in the magic world of patent filings it is possible to “enable” your invention - that is, explain to someone of skill in your field how to make or use your invention - and yet not fully meet the written description requirement for obtaining a patent (or at least patent coverage for all aspects of your invention). Orlando Lopez, a partner at Burns & Levinson, was kind enough to provide an example where this was an issue:

In a 1971 case again involving chemical subject matter, the court expressly stated that “it is possible for a specification to enable the practice of an invention as broadly as it is claimed, and still not describe that invention.” [**15] In re DiLeone, 58 C.C.P.A. 925, 436 F.2d 1404, 1405, 168 U.S.P.Q. (BNA) 592, 593 (1971). As an example, the court posited the situation “where the specification discusses only compound A and contains no broadening language of any kind. This might very well enable one skilled in the art to make and use compounds B and C; yet the class consisting of A, B and C has not been described.”

Admittedly it is rarely the case, but it certainly shows an internal, logical inconsistancy. It seems to me, in this case, that compounds B and C, being enabled for one skilled in the art, should at least be covered by the doctrine of equivalents, assuming the patent was covering a process for making A.

Similarly, I would expect that a separate patent application for compounds B and C, made by this process, would be tossed out as either anticipated or obvious in light of the patent in this case.

In the same vein, had the enabling description for making compound A in this patent been presented in a journal more than a year before filing, would compounds B and C run into the prior disclosure bar? Seems to me it all needs to hang together.

And it certainly will depend on what the patent specification in question is actually trying to cover. If I come up with a new paint in which oxidized metallic flakes provide some new and beneficial property and enable the process of incorporating the flakes uniformly, but I only describe red paint based on iron (known to look red), should my patent bar someone from using oxidized copper flakes to make green paint? I would think/hope it would!

[This example begs another question - could someone else get a patent on the green paint that I enabled but didn't describe? Admittedly it would be dominated by my patent, but it would bar me from making green paint.]