Is Your Software Invention Eligible for Patent Protection?

Under the patent laws, “Whoever invents or discovers any new or useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor…” While the statement of the law appears clear, its application to inventions embodied in software is anything but straightforward. 

Patent practitioners and clients alike have long sought clarification of when methods and systems embodied in software would be considered patent eligible, and when such methods will be viewed as directed to non-statutory subject matter for which patent protection is not available. It was hoped that an eagerly awaited Supreme Court decision in Alice Corp. Pty. Ltd. v. CLS Bank International, et al. (Alice Corp.) would provide such clarification. It did not.

           

What constitutes an “abstract idea?”

Though the statutory language that defines patent-eligibility is extremely broad, the courts have held that abstract ideas are one of the “basic tools of scientific and technological work” and that [M]onopolization of those tools through the grant of a patent might tend to impede innovation more than it would tend to promote it.” The courts have held that abstract ideas are fundamental truths that are “part of the storehouse of knowledge of all men … free to all men and reserved exclusively to none.”

Without ever clearly defining what an abstract idea might be, in a string of cases leading up to the Alice Corp. decision, the courts concluded that various processes and systems that were implemented in software were directed to an “abstract idea” and thus, constituted patent-ineligible subject matter. 

While recognizing that computer implemented inventions are patent eligible just like any other machines and, that once programmed, a computer is a special purpose device just like any other machine, the courts have struggled with computer implemented inventions where the invention involves some form of calculations, the display of a result and data manipulation within a computer without more tangible results that extend beyond the execution of the computer software. 

The boundaries of patent-eligibility with respect to inventions embodied in computer software have remained unclear and decisions of the courts have been difficult to reconcile. Furthermore, while holding that computer related inventions that embody an abstract idea are patent ineligible, the courts have never clearly defined what constitutes an abstract idea.   

How is patent eligibility determined?

           

The Supreme Court in Alice Corp. stated that a two part test should be employed to ascertain whether claims are directed to patent-eligible subject matter.  First, a determination must be made as to whether the claims are directed to an “abstract idea.”  If the claims are directed to an abstract idea, an examination must next be undertaken to ascertain whether the claims contain an “inventive concept” sufficient to “transform” the claimed abstract idea into a patent-eligible application. 

The application of this test, however, in practice, is problematic. In the recent cases the courts have looked at the patent claim in question and distilled it into an “abstract idea.”  In this exercise, however, the courts have often ignored specific claim limitations and have focused on a high level objective of the claim, even if the patent claim could not be asserted at the level of breadth of the courts abstraction. In short, the conclusions reached by the courts regarding abstractness at times appear subjective and arbitrary.

In the Alice Corp. case, the Supreme Court stated that the involved claims were “abstract” because they were similar to claims considered in a prior case decided by the Court. Such logic provides little guidance to a practitioner that is attempting to assess whether a specific subject would be viewed as “abstract” if not directly analogous to subject matter previously considered by a court. 

Under the second part of the two part test discussed by the Alice Court, one must examine the claim to determine whether it contains an “inventive concept” sufficient to “transform” the claimed abstract idea into a patent-eligible application. The Court stated that this process requires more than simply stating the abstract idea while adding the words “apply it.”  However, the Court never defined what type of “transformation” would establish a qualifying “inventive concept” under the stated test.  A review of recent cases suggests that the second part of the two part test is more akin to a test based on obviousness rather than one directed at patent eligibility under the patent laws. 

Key takeaways

The Court intentionally did not enunciate a rule that precluded patentability of inventions embodied in software, but left the boundaries of patent eligibility ill-defined. Nonetheless, there are several takeaways from the Alice Corp. decision: 

1. Inventions that are solely embodied in software and simply display an output, manipulate data, or involve a calculation may be viewed as patent-ineligible. However, even in this category, prior cases would suggest that there are exceptions.

2. An invention claimed as a series of steps performed by computer software that are conventional steps recited at a high level of generality or well-known steps are not likely to be viewed as providing an “inventive concept” and thus, are likely to be held to be patent ineligible.

 

3. When an invention is embodied in computer software, one must be able to clearly articulate an “inventive concept.” Patent eligibility will not rest solely on the use of a computer to implement an otherwise known method or facilitate the operation of an otherwise known system. The software must do something other than what software running on a general purpose computer is known to do. 

4. Finally, if a claim is directed to subject matter that is viewed as being “abstract,” the claim will not be patent-eligible simply because it is limited to a particular technological field or application.

As with any inventions for which patentability is uncertain, one must weigh the potential value of obtaining patent protection and the attendant costs associated with such efforts against the risk that patent protection may be unavailable. For inventions that are embodied solely in software, the “clarifications” provided by Supreme Court in the Alice Corp. decision offer little new guidance to the practitioner and client as to the boundaries of patent eligibility.

As with many such issues, a determination regarding patent-eligibility is highly fact dependent. The details regarding the specific software system for which patent protection is desired in many cases permit a more informed view regarding patent-eligibility.       

Design Patents and Product Appearance

In the world of industrial design and branding, the appearance or look and feel of a product can be subject to various forms of intellectual property (IP) protection. Copyrights and trademarks usually come to mind when considering the appearance, imagery or look and feel of a product, but design patent protection should not be overlooked and can provide an important avenue for protection. The saga of the cellphone litigation wars has brought to greater prominence the use of design patents on product appearance.

As stated in the patent statute, a design patent can be obtained for "a new, original and ornamental design for an article of manufacture." Most products are certainly articles of manufacture, and the appearance of a product—or portions of a product or its decoration—can be the subject of a design patent. Static and dynamic graphics and logos as displayed on a cellphone screen or other display may also be the subject of a design patent.

One form of IP protection does not exclude the other forms. Often, design patents, copyrights and trademarks can be used in concert to protect aspects of product appearance. As an example, a product shape may be design patented and also trademarked if the shape or trade dress of the product serves to identify the product source, such as the original Coca-Cola bottle. Or a product shape may be both copyrighted and design patented for its ornamental or artistic appearance.

A practical benefit of a design patent is the relative ease of obtaining one at relatively low cost. Examination of design patent applications by the United States Patent and Trademark Office is less than rigorous and most applications proceed to grant.

While a design may be subject to both patent and copyright protection, design patents offer benefits not available for copyrights. One notable benefit is that a design patent can be infringed with no proof of copying as required under the copyright law. A patented design is infringed if to an ordinary observer an accused design appears substantially the same. Another beneficial difference is that the fair use defense is not available to an accused design patent infringer, as it is for copyrights.

One should therefore consider design patents as one mode of protection for product appearance as well as copyright and trademark modes.

Where Should Foreign Patent Protection Be Pursued?

Once a client has made a decision to file a patent application, invariably, at some point during the patent procurement process, assuming foreign protection is not barred, the client will be asked whether it desires to pursue patent protection for the invention in foreign countries. Patents are territorial and have no applicability outside of the country in which they are granted. A United States patent would afford no protection in a foreign country against a competitor that manufactured, in a foreign country, a product covered by the claims of the United States patent and sold such products outside of the United States. Generally, to prevent manufacture, use or sale in any given country one must obtain a patent in the respective country.

The pursuit of patent protection in foreign countries is costly. With exceptions involving the filing of regional patent applications subsequently discussed, it is necessary to file and prosecute a separate patent application in each country in which patent protection is desired. To file a patent application in a foreign country, a foreign associate that is licensed to practice in the respective jurisdiction must be engaged and translations of original patent applications must be obtained for filing in non-English speaking countries. Thus, the costs involved in the pursuit of foreign protection in each country include the professional fees of the U.S. attorneys and the respective foreign associate, as well as the government fees. It is not uncommon for the prosecution of a single patent application in a foreign country to involve an investment of $10,000-$20,000 or more with no assurance that the patent will necessarily be granted.

A European patent application may be filed in the European Patent Office (EPO). The European patent application is an example of one notable regional application that affords the benefit of a single examination of the application that is accepted by all of the member states. The filing costs for an EPO application can be significantly higher than direct filings in most individual European countries but the ability to pursue a single examination in the EPO can provide cost savings if patent protection in multiple countries in Europe is sought. Furthermore, filing in the EPO affords flexibility with respect to the member states in which protection is finally obtainable since the decision to select the European countries in which a patent will be granted may be deferred until after the grant of the European application by the EPO.

So, with that background, the question remains where should foreign patent protection be pursued? No companies seek patent protection in all countries since to do so would be cost prohibitive. Moreover, it may not be an effective strategy to file in a country where a competitor would only be expected to manufacture a competitive product since the competitor could elect to manufacture the product in another country where no patent protection had been obtained. The most reasonable course of action often involves determining which jurisdictions represent the most significant markets and pursuing patent protection in those jurisdictions.

Finally, it is often desirable to file a Patent Cooperation Treaty (PCT) application to preserve foreign filing opportunities. A PCT application may be filed as the first filed application or within one year of a patent application on which it relies for priority. The PCT application never issues as a patent, but rather, is a placeholder that defers the deadline by which applications in foreign countries (“national phase applications”) must be filed. In most cases the filing of a PCT application permits the deferral of the timeframe in which to file a national phase application up to 30 months from the priority date of the earliest filed application.

The deferral of the filing of foreign applications by utilizing the PCT process offers several benefits:

1. The filing costs associated with national phase applications are delayed, which is helpful to many startups and growing companies for cash flow reasons.
2. The deferral of national phase filings affords the applicant more time to assess which markets are likely to be significant and which are not. As a result, filings in certain countries along with the attendant costs may be avoided based on observations of the marketplace that become evident over time whereas a broader filing strategy may have originally been felt necessary in the absence of actual market data.
3. The deferral of foreign filings via a PCT application permits the filing of national phase applications in any PCT member state well beyond the timeframe in which direct filings would otherwise need to be made. As a consequence, startups and small companies contemplating a liquidity event may be able to defer significant filing and prosecution costs for foreign applications until a time when another party with deeper pockets assumes responsibility for the applications or until a time when financial resources are more plentiful. Additionally, it is often beneficial for a company contemplating a sale of the business to file a PCT application even if it does not have significant foreign markets since a potential acquirer may value the ability to obtain patent protection in major foreign markets of the potential acquirer.

Viewed in the above framework, a decision can be made as to where and how foreign patent protection should be pursued in a cost-effective manner.

Recent Trends in Global Trademark Publications

A recent study indicates that in 2013 China again held the title of most trademark applications published by a national trademark office in a given year.  And, while the United States retained its hold on the number two position, Brazil saw major increases in published trademark applications in 2013 and claimed third place.

The data, published by Thomson Reuters® and culled using its SAEGIS® on SERION® trademark search platform, finds some shuffling in the ranks of the top ten trademark publishers for 2013.  Canada, Germany, and the United Kingdom fell out of the top ten, while India, Mexico and Taiwan took their places.  And while most of the top ten saw fairly steady numbers of trademark publications compared to the previous year, both South Korea and Brazil saw marked increases in 2013.  Aside from those already mentioned, the top ten countries include Turkey, Japan, and France.

A word on methodology: since China requires a separate trademark application for each class of goods or services for a given mark, unlike other countries that allow multi-class applications, one cannot compare the gross number of publications alone.  Rather, Thomson Reuters looked at the number of discrete marks that were published in a given year.  In other words, if a mark was published in three classes in China, it would still count as one published mark for purposes of this study.

Taking a closer look at the data, China saw an almost five-fold increase in the number of published marks from 2007 to 2010, to a peak of approximately 1.2 million published marks.  The numbers fell back in 2011 to under 1 million, and fell further to some 860,000 published marks in 2013.

In the U.S., publications fell off a bit in 2009 and 2010, compared to previous years, which would be consistent with a decline in filings in the immediate aftermath of the recession that began in 2008.  The numbers have been fairly steady over the past three years, at about 325,000 publications per year.

The biggest increases in the number of publications from 2012 to 2013 were found in Brazil, South Korea and Turkey.  Thomson Reuters reports a 53% increase in publications in Brazil last year, a 23%  increase in South Korea, and about an 18% increase in Turkey.  While we do not have empirical evidence to back this up, one wonders if the 2014 FIFA World Cup® and 2016 Summer Olympic Games have contributed to the increase in Brazilian publications.

While it is interesting to see how the gross numbers of published marks compare between countries, it is important to note that the most popular classes of goods and services vary from country to country.  In China, the most popular class for published trademark applications in 2013 was International Class 25, which includes clothing, footwear, and headgear.  Second place in China was Class 35: advertising and business management.

In the United States, most trademark applications were published for goods in Class 9, which includes scientific, photographic, measuring and signaling instruments.

Interestingly, in Turkey, France, and Brazil, the most popular class was Class 35: advertising and business management.  This class was also the most popular world-wide in 2013.

This data suggests that there is a lot of interest in protecting brands in developing economies, and that at least for the near term we expect this trend to continue.  The more challenging task is identifying the countries that will see new or continued growth in filings.

[All trademarks used in this article are the property of the respective owner.]

Sometimes, It's Just the Simple Things

While I was in law school, I had the opportunity to work as a part-time law clerk for a patent law firm.  I helped to prepare responses to office actions, perform legal research and search prior art patents.  I was going to law school full-time after having been an engineer for over eight years so this was some of my first exposure to what being a patent attorney was going to be like.

One project involved reviewing patents in the areas of car alarms and anti-theft technology.  This was last century, back in the early 90s, so many of the patents came from a time before the proliferation of mobile phones, tablets and (gasp!) the internet.  There were references to car phones but they were described as being the size of a shoe box and built right in.

I do remember coming across one patent where the inventor had used the original stereo speakers as the basis for retro-fitting a car with an alarm system that included a motion sensing component.  The inventor connected to the voice coils on the speakers and used the speaker cones as the vibration sensors.  For those readers who might not understand how a speaker works, normally the speaker voice coil is driven by an input signal, e.g., music, which causes the speaker cone to vibrate, which results in sound.  This inventor, however, realized that the speaker could be used “in reverse” in that whenever the speaker cone is shaken, for example, when the car is being broken into or moved, it will cause a signal on the voice coil and that signal can be detected.  As a result, each of the speakers in the car became a vibration sensor as part of an anti-theft system without the need for extensive re-working or running of wires.
 
I thought that was a very elegant solution.  Now, that may just be my geek flag flying, but I realized then that an invention doesn't have to be super complex to merit protection.  There was something about this “simple” solution to a problem that earned it my respect.

I believe that this is something that we should all keep in mind.  When you are conducting your patent harvesting reviews, i.e., evaluating your technology and deciding what might be the subject of a patent application to add to your portfolio, you should keep in mind that it's not always just the most complex ideas or technology that merit a patent application.  Those “simple,” but important, concepts also may need to be protected.

Trade Secrets and Economic Espionage

On April 29, 2014, U.S. Senators Orrin Hatch (R-Utah), the former Chairman and a current member of the Senate Judiciary Committee, and Chris Coons (D-Del.), a member of the Senate Judiciary Committee, introduced the Defend Trade Secrets Act of 2014 [the “DTSA”].  The DTSA is a bipartisan bill that proposes to amend the Economic Espionage Act of 1996 [the “EEA”] to create the first federal private right-of-action for theft of trade secrets.

Trade secret theft is on the rise.  According to Senators Hatch and Coons, theft of corporate trade secrets results in an estimated loss of $160 billion to $480 billion each year in the United States.  In this information age, trade secrets may be vulnerable to theft by a few keystrokes from a remote location, compared to the bygone era when trade secret theft may have required accessing and photocopying paper documents stored under lock and key.  Trade secrets are increasingly stolen at the direction of a foreign government or to benefit a foreign competitor.  “The intellectual property that drives the U.S. economy has never been more valuable, or more vulnerable,” according to Senator Coons.  “American companies are losing jobs because of the theft of trade secrets every day.”

Currently, trade secret misappropriation claims are generally brought under state laws.  Trade secret laws vary from state to state, which can create problems for trade secret owners and make it difficult for U.S. companies to develop uniform policies.  Although the EEA made trade secret theft a federal crime, federal criminal laws do not appear to have successfully stemmed the tide.  The Department of Justice brought only 25 cases of criminal trade secret theft in 2013.
 
The availability of a federal civil cause of action may harmonize U.S. trade secret law, enable companies to develop a unified set of nondisclosure policies with federal protection, create a uniform standard for trade secret misappropriation, and facilitate access to federal courts.  The DTSA bill would arm trade secret owners with federal rights and remedies, including:

• ex parte orders to preserve evidence and seize property;

• injunctions or royalties in lieu of an injunction;

• damages for actual loss plus unjust enrichment to the extent not compensated by an award of actual loss, or a reasonable royalty in lieu of damages measured by other methods; 

• potential treble damages for willful or malicious trade secret misappropriation; and

• reasonable attorney fees for willful and malicious misappropriation, bad faith claims of misappropriation, or motions to terminate an injunction made or opposed in bad faith.

Rapid changes in technology and increases in employee turnover in today’s job market warrant appropriate measures to preserve and protect trade secrets.  This federal legislation may help companies protect their valuable trade secrets, but trade secret owners will need to continue to rely on state laws for the time being.
 

Benefits of Utility Model Protection

Some countries have a form of patent protection for inventions which do not qualify for regular patent protection.  This type of patent—generally called a utility model, and sometimes known as a petty patent—has a lower standard of patentability than regular patents.  Utility models, in most applicable countries, must relate to apparatus and not to methods, and generally have a term of 10 years.

While the United States does provide for utility model protection, many countries have such protection, including Australia, Germany, China, Taiwan, Japan, Korea and other countries in Europe, South America and Africa.  Since the patentability standard for utility models is lower than for regular patents, utility model protection can often be obtained for incremental or small improvements where regular patent protection is not available.  Therefore, utility models present options for some level of patent protection rather than no patent protection at all.

In many countries with such protection, a utility model application can be filed after a regular patent application has been rejected or even after such an application has lapsed.  A regular patent application can often be converted to a utility model application, to provide an avenue for protection where regular patent protection appears doubtful.  In some countries, both regular and utility model patent applications can be filed concurrently to provide a hedge that some patent coverage will more likely be achieved.

Many countries have no substantive examination of utility model applications and thus utility model patents will be granted so long as the formalities of the application are met, including payment of applicable filing fees.  Where applicable, a benefit of utility models is the availability of a grace period (generally six months) in which to file for utility model protection after public use of an invention outside of the home country.  Such earlier use will normally bar regular patent protection.

Thus, utility models can provide opportunities for some level of patent protection in instances where a regular patent is not achievable.

Priority in Patent and Design Applications

Noteworthy Changes for Patent Applicants related to the Patent Law Treaties Implementation Act (PLTIA) effective December 18, 2013.

Although the Leahy-Smith America Invents Act (AIA) gets most of the attention, the Federal rules revised for consistency with the PLTIA include some noteworthy changes related to, among others, the restoration of the right to priority and revival of abandoned applications.

Under the revised rules, applicants have two additional months to restore a right to priority to a previously filed foreign, provisional or design application as long as the delay in filing the priority claim was unintentional. The applicant must file two petitions: 1) a petition to restore the right to priority; and 2) a petition to claim priority.  The petition to restore the right to priority must include the priority claim in an application data sheet, the petition fee and a statement that the delay was unintentional.  The petition must be filed within 14 months of the filing of the priority foreign or provisional application or within 8 months of the filing of the priority design application.  The petition to claim priority must include an application data sheet identifying the priority application, a certified copy of the priority application if required under the Rule 37 CFR §1.55(f) unless previously submitted, the petition fee, and again a statement that the delay was unintentional.  The Director may require additional information where there is a question regarding whether the delay was unintentional.  Each petition requires a hefty $1700 petition fee for applicants other than small entities for a total of $3400.

Applicant may also file a petition to revive an abandoned application as long as the abandonment was unintentional.  Thus, the revived rules eliminate the “unavoidable” delay standard for application revival.  The petition must include the reply required to any outstanding office action or notice unless previously filed, the petition fee, any required terminal disclaimer, and a statement that the delay was unintentional.  The petition fee is yet another hefty $1700 for a non-small entity applicant.

At the end of the day, the good news is that applicants now have an extra 2 months to restore a right to priority as long as the delay was unintentional.  Of course, for practitioners and clients alike, the moral is to follow best practices: consider claims to priority at the time of filing and not after the fact, and avoid unintentional abandonment.  For those interested, the details of the new rules are spelled out in 37 CFR §§ 1.55, 1.78 and 1.137 in the Federal Register dated October 21, 2013.

Is Your Intellectual Property House In Order?

When a company is seeking an infusion of capital, a loan, is involved in merger and acquisition (M&A) discussions, or considering an initial public offering (IPO), invariably an investigation of the intellectual property assets (IP assets) of the company ensues. The entity that represents the source of funds, a suitor or the underwriter wants to be sure that all IP assets, and particularly patent and trademark assets, are assigned to the company, that all such assignments have been properly recorded and that the recorded assignments establish a clear and uninterrupted chain of title to the company.

It has been observed that companies frequently do not pay attention to the housekeeping associated with their IP assets, and for one reason or another, assignments of IP assets have not been obtained or have not been recorded in the USPTO. By way of example, companies frequently are not diligent in obtaining assignments of patent applications from all named inventors on patent applications, do not record assignments of patent applications with the USPTO, or have not obtained and recorded IP assets at the time of an acquisition or merger. Additionally, in transactions which involve foreign IP assets, it is common for companies to neglect to correct or intentionally defer the correction of the ownership records for the foreign assets.

The failure to address the housekeeping associated with the company's IP assets is almost universally a mistake. While it is quite straightforward to deal with such issues contemporaneously when inventors work for a company or when parties exist and recognize the benefit of dealing with such matters, the passage of time frequently changes the landscape. It may become difficult or impossible to locate inventors no longer employed by the company, inventors may die and inventors may become uncooperative if the separation from the company was not amicable. Additionally, it may become difficult to find persons who will execute assignments on behalf of companies that no longer exist.  Consequently, developing a clear chain of title to the IP assets, which is almost universally required by the funding source, the suitor or an underwriter, can become problematic.  While it is usually possible to address such issues after the fact, it is almost always more difficult and costly.

For the above reasons, it is recommended that companies contemporaneously deal with assignment obligations as they arise.  If this has not been the normal and customary practice, it is recommended that a review of the company’s intellectual property assets be conducted to identify and address any matters that have not previously been dealt with. Such a review pays dividends when a company is seeking financing, initiates M&A discussions or is approaching an IPO.

Consider Design Patents as One Mode of Protection for Product Appearance

In the world of industrial design and branding, the appearance or look and feel of a product can be subject to various forms of intellectual property (IP) protection.  Copyrights and trademarks usually come to mind when considering the appearance, imagery or look and feel of a product, but design patent protection should not be overlooked and can provide an important avenue for protection.  The saga of the cellphone litigation wars has brought to greater prominence the use of design patents on product appearance.

As stated in the patent statute, a design patent can be obtained for "a new, original and ornamental design for an article of manufacture."  Most products are certainly articles of manufacture, and the appearance of a product or portions of a product or its decoration can be the subject of a design patent.  Static and dynamic graphics and logos as displayed on a cellphone screen or other display may also be the subject of a design patent.

One form of IP protection does not exclude the other forms.  Often, design patents, copyrights and trademarks can be used in concert to protect aspects of product appearance.  As an example, a product shape may be design patented and also trademarked if the shape or trade dress of the product serves to identify the product source.  Or a product shape may be both copyrighted and design patented for its ornamental or artistic appearance.

A practical benefit of a design patent is the relative ease of obtaining one at relatively low cost.  Examination of design patent applications by the United States Patent and Trademark Office is less than rigorous and most applications proceed to grant.

While a design may be subject to both patent and copyright protection, design patents offer benefits not available for copyrights.  One notable benefit is that a design patent can be infringed with no proof of copying as required under the copyright law.  A patented design is infringed if to an ordinary observer an accused design appears substantially the same.  Another beneficial difference is that the fair use defense is not available to an accused design patent infringer, as it is for copyrights.

One should therefore consider design patents as one mode of protection for product appearance as well as copyright and trademark modes.

International Patent Filings Break Record

The Patent Cooperation Treaty (PCT) provides a mechanism for filing one patent application, referred to as a PCT or international patent application, that can later branch out into one or more national or regional patent applications.  PCT applicants receive an International Search Report and a Written Opinion regarding the patentability of the claimed invention based upon the references found in the search report.  In addition, PCT applicants have the option of requesting an International Preliminary Report on Patentability, which is a preliminary assessment of whether the claimed invention is novel, represents an inventive step (i.e., is not obvious), and has industrial applicability.

PCT applications are useful in that a single filing can preserve the right to later pursue patent protection in regional patent systems like the European Patent Office and in the patent offices of most industrialized nations including the United States.  A PCT applicant can use the International Search Report, the Written Opinion, and other relevant business factors in deciding where to further pursue protection.

In 2013, there were 205,300 PCT filings, the first time the 200,000 annual threshold has been crossed and a 5.1% increase over 2012.  The United States retained its leadership as the top PCT filing country with just over 57,000 applications.  Japan came in second with almost 44,000 applications.  China moved up to third place for the first time at over 21,500 filings, followed by  Germany at almost 18,000 and South Korea nearing 12,500.  Together, the filings from the U.S. and Japan represented almost half of all PCT filings in 2013.

If the member states of the European Patent Convention (EPC) are analyzed collectively, rather than individually, the EPC would represent the co-leader in the number of PCT filings at about 28% of the annual total.

The year-to-year change in filing activity is particularly interesting.  While the EPC member filings declined slightly in 2013, the PCT filings from China increased about 15% compared to 2012.  The next highest annual increases were the U.S. at 10.8% and Sweden at 10.4%.  The rapid increase in filings from China may be attributed in part to government patent subsidies to small and medium sized domestic enterprises and research institutions.

So, You've Just Read About Someone Getting a Patent

A day does not go by without a new article about a company or individual obtaining a patent. A company itself may be behind an article because it wants to hype its technical achievements, as was the case with “Powerhouse Dynamics Gets Patent for Appliance Monitoring Technology.” Or someone may publish a piece to report on his patent “sleuthing,” see “Apple Patents A Smarter, More Accurate Wrist-Based Activity Tracker.”

Understanding some basic patent concepts will help you interpret this kind of “news.”  It will also help you in discerning what your competition may be up to with their (possibly) patented new technology.  Some definitions are in order:

According to 35 U.S.C. 271, “whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States,….infringes the patent.”  This is often referred to as a “negative right” in that a patent provides the patent owner with the ability to prevent others from making, using, selling, etc.  As to determining what has been patented, i.e., what is protected, one looks to the patent claims.

A patent, according to 35 U.S.C. 112, includes “a written description of the invention, and of the manner and process of making and using it, in … terms as to enable any person skilled in the art … to make and use the same.”  In addition, the specification “shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention.”  If you have ever read a patent, those numbered paragraphs at the end of the description are the claims and, in some cases, may be where you stopped reading because they can be, at times, inscrutable.

The claims define the “metes-and-bounds” of the invention and one looks at the claims to determine whether infringement has occurred.  The claims are central to understanding the protection provided by the patent.  The interpretation of claims, however, has filled volumes of court decisions and is beyond the scope of this article.

In the United States, patents issue every Tuesday and are assigned a patent number.  As of this writing, Patent No. 8,671,461 appears to be the highest number to date.  An issued patent gives the owner the rights of exclusion outlined above.

Additionally, every Thursday, pending patent applications are published per the American Inventor’s Protection Act which requires publication of some patent applications eighteen months after their earliest effective filing date.  Not all patent applications, however, are published. These publications are given a number in the form of 20140075637, where the first four digits indicate the calendar year.  Published patent applications, in and of themselves, do not provide the owner with any exclusionary rights although they may function to put potential infringers on notice (an issue not being discussed here).

So, returning to the two online articles above, we note that the first one tells us that “Powerhouse Dynamics has been awarded a patent for a technology which can remotely monitor appliances to gauge how efficiently they are operating.”  This tells us that they are talking about an issued US patent.  One could then look to the claims to get some idea of what was being protected.

The second online article indicates that Apple has patented some technology, at least according to the title.  Reading further, however, it states that “Apple has applied for a patent for an improved wearable pedometer design….”  Clearly, this is referring to a pending patent application.

There is, however, information to be obtained from reviewing a published application.  First, patent applications may reflect the technical area a company is researching and indicate where new products from that company may be targeted.  By looking at the published claims, one can get a sense about what aspect of the invention the applicant is trying to protect.  This could be different from the characterization provided in an accompanying article or press release.  In addition, once a patent application has published, its progress through the Patent Office can be monitored by third parties who can then possibly discern the ultimate scope of coverage as based on the claims.

I have attempted to provide the reader with an understanding as to the differences between an issued US Patent and a US Patent Publication and how reviewing the claims will give an indication of the protection obtained or being sought, respectively.  It must be strongly emphasized, however, that one should only rely on a claims interpretation provided by a qualified attorney, as the claims construction ultimately relies on more than just the words in the claims.  Any business decisions, and certainly conclusions as to non-infringement, must be based on a qualified analysis.

What is "Patent Marking?"

Patent marking is a way for a patent owner to let the public know an article is believed to be covered by one or more of its patents.  This is referred to as “constructive notice” to the public that the article may embody patent rights.

What Purpose Does Patent Marking Serve?

Some people mark their products with applicable patent numbers to discourage copying: “Hmm – this company went to the trouble of obtaining patents.  They may also be willing to enforce those patents.”  

Others use it as a marketing tool:  “Look!  The latest in patented technology!”

But the main legal advantage provided by proper patent marking has to do with the amount of damages a patent owner can seek in an infringement suit.  If an infringer was given constructive notice of patents through a properly marked article, all sales of its infringing articles may be used in calculating money damages.  If the patented article wasn’t marked, the patent owner may only seek damages dated from when the infringer was given actual notice of the patents.  

What Does Patent Marking Look Like?

Marking includes the word “patent” or the abbreviation “pat.” followed by the relevant patent numbers.  (Some precede this with “U.S.” since different countries have different requirements).  This notice can be printed or stamped directly on an article, or printed on a label attached to the article.  If the article is too small, the notice can be printed on packaging for the article or on documentation that ships with it.

What If Lots of Patent Numbers Apply?

Patent owners now have the option of providing a URL which links to a list of patent numbers associated with a given article.  Such a notice might look like: “Patent www.CompanyABC.com/patents”.  This virtual marking makes it much easier to provide current, up-to-date patent information to the public.

When Can a Product Be Marked or Described as “Patent Pending?”

As long as a relevant provisional, utility, design, or plant patent application has been filed and remains pending, the article may be marked or described as “patent pending.”

How Big a Problem Is an Out-of-Date Listing of Expired Patents on an Article?

As long as the expired patents used to cover some aspect of the article on which they are listed, it’s okay if they remain.  A periodic review of all patent markings is not only a good way to facilitate the removal of expired patent numbers, but also to enable the addition of newly issued patents.

Protect Your Boat Hull Designs Under Copyright Law

Boat vessel hull designs can be protected by design registration under less well known provisions of the United States Copyright Law, 17 U.S.C. 1301-1332.

This design registration protects a vessel hull, deck or combination of hull and deck, which is an original design that is attractive or distinctive in appearance. The law also covers plugs and molds for making hulls and decks.  Protection is for a ten year term commencing on the date when the vessel is publicly exhibited, distributed, offered for sale or sold, and an application for design registration must be made within two years from the date when the vessel was first publicly exhibited, offered for sale or sold.

Notice for a protected design is similar to a copyright notice and comprises any of the following notations “Protected Design”, “Prot’d Des”, (D) or *D*, the year date protection commenced and the owners name or abbreviation of the name.  After registration, the registration number may be used instead of the foregoing. Absence of Notice can prevent recovery from infringement.

The owner of a registered design has the exclusive right to make, have made, sell, distribute, use or import vessels having the registered design.  Infringement can be redressed by a Federal Court action or by an action against importation in an ITC proceeding.  Remedies for infringement include injunction, damages and seizure, and destruction of the infringing items.

Vessel hulls and decks can also be the subject of design patents, but if a design patent is obtained for the same design, the design registration will terminate.

Participating in a Standards Development Organization (SDO)? Proceed with Caution.

What are SDOs?

Standards Development Organizations (SDOs) are organizations that develop standards that allow for interoperability and/or interchangeability between products of different companies. SDOs have become quite commonplace. The adoption of industry standards can greatly expand the market for companies that provide products compliant with a standard while simultaneously increasing competition.   Some of the more well-known SDOs include the Institute of Electrical and Electronic Engineers (IEEE), the Internet Engineering Task Force (IETF), the American Society of Mechanical Engineers (ASME), the American National Standards Institute (ANSI) and the American Society of Testing and Materials (ASTM).

How do SDOs Work?

The issuance of a patent affords the patent holder the right to exclude others from making, using or selling a product covered by the patent, or employing a patented method.  While protecting the patent holder, this can have consequences for the adoption of industry standards and the effectiveness of SDOs. Companies that obtain the issuance of one or more claims in a patent that are essential to the practice of a standard adopted by an SDO (essential patent claims) could demand unreasonably high royalties from parties producing products compliant with the standard or take steps to enjoin the manufacture and sale of products compliant with the standard.  Such actions would make it more difficult for companies to compete with the patent holder when selling products that were compliant with the standard.

To avoid these types of problems, SDOs typically require that, as part of the standards adoption process, SDO participants disclose the existence of potential or granted patent rights necessary for the practice of the proposed standard. Upon the identification of such potential or granted rights, SDOs typically require that the patent holder provide the SDO with a Letter of Assurance (LOA) in which the patent holder agrees to make essential patent claims that they own available on reasonable and non-discriminatory (RAND), fair, reasonable and non-discriminatory (FRAND) terms, or without compensation.  Such disclosures allow the SDO to consider whether to adopt a standard encumbered by potential or actual patent rights that would (a) be made available for license without compensation of the patent holder, or (b) be made available by the patent holder on RAND or FRAND license terms.  If the SDO is not able obtain a suitable LOA, the SDO may choose an alternative technical path that might be unencumbered by patent rights.  Entities that do not participate in SDOs are under no obligation to disclose the existence of their pending patent applications or granted patents that are applicable to a proposed industry standard.

Should you Participate?

Companies that own essential patent claims or that own patent applications that might issue with essential patent claims, should participate in an SDO only after a strategic evaluation of the pros and cons associated with the licensing restrictions that are likely to flow from participation.  The strategic benefits associated with participation in the SDO, including the ability to urge the adoption of the participant’s technology as an industry standard, could outweigh the restrictions associated with an agreement to license essential patent claims without compensation or on RAND or FRAND terms.  On the other hand, the desire to maintain exclusivity in the marketplace and exclude competitors through the enforcement of patent rights involving essential patent claims could be of paramount importance.  Participation in an SDO should thus occur only after a careful review of the SDO policies regarding the licensing of patent rights and consideration of pros and cons attendant to such participation.

There is often no simple answer as to whether participation in an SDO makes sense.  Companies should therefore consider their strategic objectives and weigh the benefits and risks of participation before joining an SDO.

Steve Wilson Appointed to International Trademark Association (INTA) Enforcement Committee

Steve Wilson, Co-Chair of the Intellectual Property Group, Chair of the Sports & Entertainment Law Group, and Member of the Litigation Group at Preti Flaherty, has been appointed to serve on the Enforcement Committee of the International Trademark Association (INTA).

Founded in 1878, INTA is a global not-for-profit membership association of trademark owners and professionals dedicated to supporting trademarks and related intellectual property in order to protect consumers and to promote fair and effective commerce.   INTA comprises more than 6,000 trademark owners, professionals, and academics from more than 190 countries.   INTA is headquartered in New York City, with offices in Shanghai, Brussels, and Washington DC, and representatives in Geneva and Mumbai.

The Enforcement Committee analyzes judicial and administrative rules and procedures affecting the enforcement of trademarks and business identifiers, and develops and advocates policies to harmonize and strengthen trademark rights.  Areas of focus include trademark litigation, opposition and cancellation proceedings, courts and tribunals, and discovery.