Patents 101 and Patent Prosecution Overview and Costs


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Introduction to Patents in the U.S., the process, and costs as well as the value Intellectual Property brings to businesses.

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Patents 101 and Patent Prosecution Overview and Costs

  1. 1. Patents 101 and Patent Prosecution Larry Baratta Partner and Patent Attorney, Electrical Practice Group Admitted in NC and GA, USPTO registered 1901 Roxborough Rd., Suite 250 Charlotte, NC 28211 704.790.3600
  2. 2. About Clements Bernard PLLC  Charlotte, NC – based Intellectual Property Boutique  Specializing in Electrical, Networking, Software, Mechanical, Chemical, and Biotech Fields  Focus  Patent and Trademark Prosecution and Licensing, Opinions, Transactional matters  Intellectual Property Litigation (Patents, Trademarks, Copyrights, and Trade Secrets)  Representative Clients  Publicly-traded companies  Numerous venture funded start-ups  U.S. Government Agencies  Entrepreneurial Individuals  Value to Clients  Reasonable, Fixed Fees offering clients deterministic, fixed-fee pricing  Individual focus from seasoned attorneys  Business minded  Experience - Former Patent Office Examiners in-house & Attorneys with in-house engineering industry experience
  3. 3. What is Intellectual Property (IP)  Intangible Property Rights including, for example, ideas, inventions and other innovations, expression, indications of origin and confidential information  Patent  Copyright  Trademark  Trade Secret (protected by State law)  Almost all aspects of technology, innovation, and/or works of authorship (including software) or art are addressable as IP  IP rights arises from Operation of Law  In U.S., Constitutional Basis – Article I, Section 8, Clause 8:  “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”
  4. 4. Patents, Copyrights and Trademarks Inventions Machines, methods, composition of matter, improvements Any name, symbol, device or combination that -identifies source -distinguishes goods and services from another “Original expression” “Fixed in tangible medium” Not novel, obvious, not useful (no utility) Functional Does not exclusively identify Descriptive Ideas, Facts, Methods and systems (patents) Idea – expression is protected, not idea When patent issues From use; Protection can last forever and can also disappear since protection is tied to use From time fixed in a tangible medium Fall within scope of a patent claim Likelihood of confusion Copying with Access and Substantial Similarity Patents Trademarks Copyrights Type Not Protected When Protected Infringement
  5. 5. What is a Patent?  In the U.S., Granted by the U.S. Patent & Trademark Office (USPTO)  Part of the Commerce Department  Protects: Manufactured items, Equipment, Processes, Compositions and Improvements to the above  Rights: Right to exclude others from making, using, offering for sale, selling and/or importing what is claimed  A negative right of exclusion only  Term: 20 Years From Filing or priority date – extensions available based on PTO delay  Territory: United States and its territories  Rights Arise: Upon issuance of a patent, arising from a patent application filed prior to public use, disclosure or sale
  6. 6. Sample Patent  U.S. Patent No. 6,469 to Abraham Lincoln, 1849  The 16th President is the only President to receive a U.S. Patent
  7. 7. Patent Claims  Section in the patent or application that defines the legal scope of protection granted by the patent  Parts  Preamble – recites the class of the invention and optionally primary purpose; e.g. “A system,” “A method,” “A network for providing…”  Transitional phrases  "comprising", "containing" and "including" are most often used to mean "having at least the following elements..." and are therefore open (inclusive) and do not exclude additional limitation  "consisting of" and "consisting essentially of" are more limiting, as they mean "having all and only" or "virtually only" and are therefore closed (exclusive)  Elements and/or Steps  Defines the invention and includes interaction between the elements.  A system, comprising: X, Y, and Z – X, Y, and Z are elements  A method, comprising: A, B, and C – A, B, and C are steps  Limitations  Clauses that define, i.e. limit, the elements and/or steps  wherein X is communicatively coupled to Y and Z for control thereof
  8. 8. Patentable Subjects Systems, Devices & Other Manufactured Items Such as manufactured equipment, e.g., electronic devices or circuits, semiconductors, systems configured to perform a function, networks, components, etc. Processes or Methods Such as manufacturing processes or methods of doing something—may be implemented as software or as a business method Materials/Composition of Matter Chemical, Genetics, drugs, compounds, etc.
  9. 9. Patentability Requirements Novelty  Does not exist in the prior art; Not previously disclosed  OK if Modification of an existing product/process, or use of something “old” in new/different way Usefulness  Utility - Performs a useful function, does it work?  An easy requirement to meet in mechanical and electrical arts. Sometimes difficult in chemical and life sciences – “I have a new compound, I just don’t know what it does yet” – therefore, no utility Non-obviousness  A knowledgeable but relatively unimaginative person working in your field would not have been led directly to the invention in light of the available information at the time of invention.  This is difficult to describe in general, as lawyers the focus on non-obviousness is generally based on prior case law for guidance.  Is there a suggestion/motivation/teaching to combine existing knowledge (i.e., one or more existing pieces of art) to solve the problem your invention solves?  This is the current legal test, and it allows the Patent Office to reject an invention as obvious if the elements and limitations of the invention can be found in one or more references, and if there is a reason, i.e. suggestion, to combine them.  A rejection under obviousness generally involves “combining” one or more references to meet all of the limitations and elements of the claimed invention
  10. 10. Patentability Requirements  Novelty (35 U.S.C. 102)  Generally applies to all technology areas  Utility (35 U.S.C. 101)  Typically an issue in chemical, biological, and pharmaceutical arts – “I have this new compound, I just don’t know what it does yet” – i.e. must have a practical application for patentability  Non-Obviousness (35 U.S.C. 103)  This is a typical rejection in the Electrical/Software/Mechanical arts  Two or more separate references combined show all elements of the invention  Must show distinction over these references or why these references cannot be combined in light of the claimed invention  Subject Matter (35 U.S.C. 101)  An issue in the Software arts  In light of court precedent, software-related inventions must be tied to a particular machine or perform a physical transformation of a physical device
  11. 11. Inventor  The person(s) who first conceived the invention  Joint inventors - Each inventor must have contributed to the subject matter of at least one claim  Non-Inventors:  Persons who implement the ideas of others  Persons who have obtained the entire idea of an invention from another are not inventors  Persons who suggest concepts without contributing to the means for carrying out the suggestion (“Wouldn’t it be nice if….”)
  12. 12. When to file a Patent Application You Develop, Improve, or Do, Something New or Different!! • You solved a problem or developed something new and useful • Your solution for the problem is not the same as another’s solution for the same problem **Note that use of something known in a new, non-obvious, and different way or to solve another problem can be patentable!!!**
  13. 13. What to Disclose  General  Has this invention been discussed with others:  Inside or outside of your company? With Whom? When?  Was there a Non-Disclosure Agreement in place?  Have you done a search? Key Words for Database Searching  Is this Invention relevant to a Standards activity?  Describe the Invention  “Tell a Story” - start at high level, then work down into details, including:  What is the Invention about?  What Problem does it solve?  What other Solutions have been tried or exist, and what were their shortcomings?  What are the Specific Elements or Steps that solved the problem?  What are the values of the Invention  Disclosure Submission Form
  14. 14. Patentability Search  Search of U.S. and Foreign patent applications and issued patents and non-patent literature (journals, white papers, etc.)  Objectives  To ascertain whether the invention has been patented or disclosed previously and, thus, would be unpatentable;  To avoid filing a patent application and having it summarily rejected by the Patent Office because of an identical or substantially similar invention which would render your invention not new or not non- obvious; and  To draft a better patent application by emphasizing those features of the invention not turned up in the search.  Duty to Disclose known references which predate your application to the Patent Office  However, no affirmative duty to perform a search  Provide known closely related references with invention disclosure
  15. 15. Filing Process 1 Attorney prepares a draft Application Inventor Reviews & Comments Application is Finalized Inventor Reviews & Signs (declaration/POA and maybe an Assignment) Application is Filed Inventor’s Help Sought In Responding to Office Actions During Prosecution To Issuance Foreign Filing? Invention Disclosure to Attorney 2 3 4 5 6 7 8 Disclosure Conference with Inventors and Attorney
  16. 16. Application Process at the Patent Office Application Amendments RCE/Appeals Examination Allowance Office Action Issue Rejection of one or more claimsAllowance of all claims Amendment of Claims to overcome rejections Arguments to counter rejections RCE if the Office Action was “Final” to continue examination Potential Appeal to the BPAI after a “Final” Office Action if desired 1st Office Action time can significantly vary on the order of 1-5 years Pay Issue Fees
  17. 17. Provisional Patent Application  A provisional application is a simplified filing whose purpose is to preserve one’s right to file a utility patent within one year of the filing of the provisional application  A provisional application requires the filing only of a specification adequately describing the invention, and drawings where necessary for the understanding of the invention.  It is important that a provisional application describe the invention fully, as the provisional filing date is only effective for subject matter disclosed in the provisional application.  A provisional application cannot mature into a patent, it is not examined and it cannot claim priority in an earlier application.  A provisional application is kept in confidence by the Patent Office. A provisional application is, however, a regular national filing that starts the Paris Convention priority year (discussed below).  A provisional application will automatically go abandoned by law one year after filing.  The provisional application has several important benefits.  It places domestic applicants on an even footing with foreign applicants because the filing of a provisional application does not trigger the start of the 20-year patent term.  It has minimal legal and formal requirements.  The provisional application provides a mechanism whereby applicants can quickly and relatively inexpensively establish an early effective filing date in a patent application which establishes a constructive reduction to practice for any invention described in the provisional application.  The filing of a provisional application also provides up to twelve months to further develop the invention, determine marketability, acquire funding or capital, seek licensing or seek manufacturing.
  18. 18. Patent Lifecycle and Costs End of Patent Term Invention Disclosure Submission $4-6K $1.2K $1.5K $1.2K $0.9K* $0.5K* $1.3K* $2.0K* Patent Application Preparation and Filing Patent Application Prosecution Patent Issue Fee Patent Maintenance Fee Patent Maintenance Fee Patent Maintenance Fee ~$15.0K Approximate fees * Small Entity Fees (<500 employees) ~3 yrs. 3½ yrs. 4 yrs. 4 yrs. 20 yrs.
  19. 19. IPR Value Leverage Discontinued Products/ Technologies & Their Value Utilize Technologies/ Products in New & Different Ways for Incremental Value Utilize Technology/IPR To Foster Development By Others Help Drive Adoption Of & Value From Standards Based On our Technology Help Drive & Realize Value From M&A Activities Generate High Margin Royalty Income Generate Demand For Products Facilitate Deals/ Relationships With Customers, Suppliers, Partners & Others To ObtainTo Obtain Business ValueBusiness Value Support Other Business Objectives Obtain Access/ Rights To 3rd Party Technology/IPR Defend Against 3rd Party Claims (Especially IPR Claims) Protect (Especially Core) Products & Technology Promote Technology Leadership Defense &Defense & ProtectionProtection LeadershipLeadership OtherOther BusinessBusiness ValueValue (via Strategic Licensing) LicensingLicensing Income/Income/ ValueValue * Pure Income * Savings * Product Pull-Through * Business Needs * Reputation/Leadership (Licensing Plays The Key Role)(Licensing Plays The Key Role)
  20. 20. Patent Value for Small/Mid-size Companies Staking claim to key technologies and product differentiation – Minefield analogy OFFENSE DEFENSE Deterrence against litigation – Mutually Assured Destruction Deterrence against one-sided licensing requirements from larger companies (e.g., IBM) Product Protection Marketing Litigation/Injunction/Licensing R&D Investment Insurance Preventing competitors from market entry
  21. 21. Defensive Aspects of Patents  Mutual assured destruction (MAD) is a doctrine of military strategy and national security policy in which a full-scale use of nuclear weapons by two opposing sides would effectively result in the destruction of both the attacker and the defender.  Patents are like a nuclear weapon – it only takes infringement of one claim of one patent to potentially shut down a product  Using Cold War strategy, the best way to avoid a fight is to have as many weapons in your arsenal as possible  Larger patent portfolio avoids licensing requirements from larger companies  Landmine analogy  For both existing markets and newly emerging technologies, patents provide coverage over the technology landscape akin to landmines on the battlefield, the more on the field, the less likely your opponent will cross the field  Use Patent prosecution/portfolio in a two prong manner  Protection against larger competitors  Staking claim to new technologies, markets, etc.