That’s Patentable? The Far-Reaching Definition of an “Invention”

U.S. patent law provides that “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,” 35 U.S. Code §101. This leaves open a broad range for potential patent protection. The categories of a “machine, manufacture, or composition of matter” provide for many traditional concepts of an invention, such as devices, chemicals or other physical objects. Focusing on these physical items as being invention ignores the “process” category. The process (or method) type of patent has been used to cover a broad range of technologies – from manufacturing techniques to medical procedures. It is this category’s open-endedness which has presented a number of extraordinary patent opportunities as well as a fair share of headaches.

Concerns that method patents may be used to cover broader concepts than is appropriate has caused many to struggle to determine what types of technologies should be allowed to receive patents. The myriad court decisions and United States Patent and Trademark Office rules in the past few decades alone have created a complicated thicket of patent eligibility rules. Despite these issues some interesting ideas and non-traditional concepts have been granted patents. While some might argue that such patents are not appropriate, the Patent Office’s willingness to grant such patents introduces some leeway into determining what might be patentable and that might otherwise be overlooked.

In some cases, patents have been issued for processes used to play card games. One patent that has reached a particular level of notoriety (or infamy) is US 5,662,332. This patent covers a method of playing trading card games where each player constructs a deck of cards. The claims include coverage for “designating the [card] being brought into play by rotating the [card] from an original orientation to a second orientation.” Further claims cover a rotating, or ‘tapping,’ to make players are aware the trading card is in use.

Patent protection has also been awarded to methods involved in the presentation used in computer games. Patent US 6,935,954 was awarded for a sanity system used in a video game where the “character may experience hallucinations as a result of the sanity level.” During game play, the sanity level of the game character is modified based on a character reaction and an amount of character preparation. As the game continues, game play is impacted by varying game effects according to the game character sanity level.

In another patent, US 8,082,499, the graphical interface for an interactive dialog is presented. A dialog choice indicator is shown which has a number of directional choices. Dialog responses corresponding to a particular emotion are then provided in a consistent location/direction.

In 2014, the U.S. Supreme Court decided CLS Bank International v. Alice Corp which invalidated claims that were determined to be drawn to an abstract idea. In response to this case, the USPTO has adjusted their stance regarding patentable subject matter and has rejected many applications held to be too “abstract”. However, this has not prevented the Patent Office from still issuing patents directed to some intriguing methods.

Patent US 8,920,245 is directed to a video game award method. According to the claimed method, the player is awarded a digital gaming object while playing a first game and is then able to use the digital gaming object within a different game.

A language-based video game method is protected by US 8,825,492. In this method, the game display shows an animated portion of a human head related to speech to show a pronunciation of selected text. The text is then transformed into a non-textual form which can be used by the avatar to overcome at least one challenge, for example, a letter of the alphabet may be transformed into a rope which can be used to overcome a rock climbing challenge.

In another post-Alice patent, protection extends beyond graphic displays. US 8,721,415 covers a computer-based solitaire game with stack-based pay table. The player is provided a payout which is calculated based on a per-card payout award and the actual number of cards transferred during the game.

These examples demonstrate that patentable inventions can be made in non-traditional fields. Simply because an invention is not incorporated in a physical object, such as a motor or a chemical composition, or relates to an industrial process, doesn’t mean that patent protection is unavailable. While care must be taken to ensure the claims comply with patentable subject matter restrictions, great opportunities still exist for patenting concepts which might otherwise be overlooked. 

Closing the U.S. Border Gates Against Infringing Imports

Could infringing imports be jeopardizing your intellectual property rights without your knowledge? U.S. Customs and Border Protection (CBP) may be a valuable resource to protect your registered U.S. trademarks and copyrights, trade name, and U.S. patents at the border gates.

These benefits and protections to IP owners do not automatically follow issuance of a U.S. patent, trademark registration, or copyright registration, however. IP owners must take affirmative steps.

CBP is the primary federal agency responsible for securing America’s borders. With more than 60,000 employees, CBP monitors U.S. borders at and between 328 ports of entry, including more than 95,000 miles of shoreline, 1,900 miles of border with Mexico, and 5,000 miles of border with Canada. On a typical day, CBP welcomes nearly 1 million visitors, screens more than 67,000 cargo containers, arrests more than 1,100 individuals, and seizes nearly 6 tons of illicit drugs. CBP is also armed with the legal authority to detain, seize, examine, and forfeit or destroy infringing goods, and can make infringement determinations, subject to appellate review by U.S. federal courts. CPB is not required to establish personal jurisdiction over the importing party or prove intent to infringe to take enforcement action.

In fiscal year 2014, CBP processed 31.6 million trade entries, and seized approximately $1.2 billion worth of goods believed to infringe U.S. IP rights. The commodities that CBP seized in connection with more than 23,000 seizures included apparel and accessories, consumer electronics, pharmaceuticals and personal care products, footwear, watches, jewelry, optical media, computers and accessories, labels, tags, toys, and other goods. CBP analyzed samples and found intellectual property rights violations in commercial products that included integrated circuits, networking devices, gaming devices, and cell phones. Approximately 63% of the seized goods originated in China.

In comparison, CBP processed more than $2.3 trillion in trade in fiscal year 2013, including nearly 25 million cargo containers. CBP conducted more than 24,000 seizures of goods that violated intellectual property rights, with a total retail value of $1.7 billion, representing a 38 percent increase in value from fiscal year 2012.

To take advantage of CBP’s formidable IP enforcement resources and intercept foreign pirated, counterfeit, or gray market goods at the border, intellectual property owners may record U.S. trademark and copyright registrations and trade names with CBP. Owners of U.S. trademark registrations may also apply for “Lever rule” protection to prevent parallel imports of gray market goods, which are branded goods that are purchased outside the U.S. and imported for sale into the U.S. without authorization from the U.S. trademark owner. Patent owners cannot presently record U.S. patents with CBP, but may be entitled to exclusion of infringing imports into the U.S. under Section 337 of the Tariff Act of 1930.

Trademarks

A trademark owner who has registered a trademark with the United States Patent and Trademark Office (USPTO) may apply to record the trademark registration with CBP, and may also apply for “Lever rule” protection against parallel imports or gray market goods. CBP primarily focuses its border trademark enforcement efforts on marks that have been recorded with CBP.

Trade Names

A trade name is the name under which a company does business. Trade names are not registered with the USPTO, but may be recorded with CBP if they have been used to identify a trade or manufacturer for at least six months. Notice of tentative recordation of a trade name is published in the Federal Register and the Customs Bulletin and Decisions (Customs Bulletin) to provide notice to the public and give interested parties an opportunity to oppose the recordation.

Copyrights

CBP’s border enforcement of copyrights is primarily concentrated on works of authorship covered under copyrights that are registered with the U.S. Copyright Office (USCO) and have been recorded with the agency.

Patents

Although a patent that is issued by the USPTO may not be recorded with CBP, the agency enforces exclusion orders issued by the U.S. International Trade Commission (ITC) pursuant to Section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337), which provides relief to U.S. industries that have established the existence of unfair trade practices in importing. ITC exclusion orders are issued for findings of patent infringement, among other things. CBP has authority to exclude importation of articles that infringe a patent pursuant to an exclusion order issued by the ITC.

To harness the powers of CBP to close the border gates on infringing imports, consult with an experienced intellectual property attorney.

IP Owners Beware! A Con Artist May Be Behind that Official-Looking Letter

The World Wide Web promised an infrastructure for the free flow of information.  For Intellectual Property (IP) owners, this meant free, instant access to patent and trademark administrative details and status.  Unfortunately, the same types of people who call at inconvenient hours, professing to be from the “Revenue Service,” and demanding payment of a (fictitious) delinquent debt are using the same Web resources to target patent and trademark owners.  Despite efforts aimed at raising awareness in the IP community, scammers continue to produce sophisticated, official-looking communications that sometimes succeed in trapping the unwary.

Trademark owners have been the targets of several types of fraudulent schemes.  Here are some of the more common ones:

“Greetings from [a foreign country].  We have been asked by company ABC to register the mark XYZ as their brand name and their domain name.  But, we noticed XYZ is similar to your brand name. Let us know if you gave them permission.” 

Company ABC is most likely fictitious.  If you write back saying you did not give ABC permission to pursue these registrations, you will be given the opportunity to pursue domain name and trademark applications in that country.  Even if legitimate filings result, you may be paying excessive fees.

“Greetings from the United States Trademark Registration Office (USTRO).  Upon payment of this invoice for $395, we will register your trademark XYZ with the U.S. Customs and Border Patrol.  In addition, we will monitor your mark with our proprietary search engine and alert you to possible third party infringement.  We look forward to your prompt payment.”

“USTRO” sounds a lot like “USPTO,’ the acronym for the United States Patent and Trademark Office.  While the USPTO is a U.S. government agency, the USTRO is a private firm in Los Angeles offering expensive and possibly unnecessary registration services.  Variations of this scam have come from sources such as the “United State Trademark Agency” or the “Trademark Monitoring Service” with offers to monitor the progress of your trademark application for you or to provide trademark renewal reminder services, neither of which have much value and would be duplicative of the efforts of your trademark counsel.

“You are cordially invited to have us list your trademark in the TM REGISTER / The International Trade Marks and Service Marks Catalog.”

This is an invitation to extract a hefty sum from your bank account in exchange for the opportunity to include your trademark in a publication that no one looks at and that has no value.

On the patent side, there have been similar efforts:

“The international patent application cited above has been Published in the WIPO Gazette.  This form is an offer to register your international patent application in our internet database and access to all database services.”

This offer appears in the form of a very official-looking invoice from “World Patent & Trademark Services,” or “World Patent & Trademark Organization,” or “World Intelligent Property Office,” etc.  The latter is particularly devious because of its similarity to the legitimate “World Intellectual Property Office” (WIPO).  When you file an international patent application, it does get published in the WIPO Gazette, so that part of their letter is true.  In fact, that’s where they got the administrative details of your international patent application that may be printed in their letter, perhaps along with the abstract or a representative figure from your application.  It may even have a fancy seal embossed into it.  Those who are taken in by this “offer” may have their international patent application included in a database that no one looks at, in exchange for hundreds or even thousands of dollars.

We’ve seen fewer attempts to take advantage of U.S. patent applicants with similar offers, but vigilance is always called for. 

The bottom line: if you’re in doubt, contact your IP attorney with any suspicious correspondence - he or she will be able to quickly assess its validity and help you avoid such costly and valueless schemes.

 

 

 

 

 

 

Starting a New Company? Protect Your Intellectual Property Now or Maybe Never

When getting a startup off the ground and in the course of ongoing operations, it is important to take care of some fundamental housekeeping matters.  The failure to do so can result in problems that could be costly and/or difficult to resolve later.

Incorporation
Steps should be taken to incorporate early.  The entity form and jurisdiction should be discussed with legal counsel so that appropriate tax and legal issues can be considered.  When more than one individual is involved, the terms of an operating agreement that address contingencies and matters of corporate control should be discussed at the outset. Some firms offer special fee arrangements for startups which can be attractive.  This firm, through the PRETI FLAHERTY BUSINESS LAUNCH PAD ™, assists in the formation of new ventures under certain guidelines.

Employment Agreements
All employees, members and key individuals of the company should be required to execute confidentiality and assignment agreements.  These agreements should address basic obligations to the company including the obligation to maintain sensitive company information in confidence, the obligation to assign intellectual property to the company, an identification of pre-existing intellectual property of the individual, non-compete obligations, non-solicitation obligations with respect to customers and other employees and assurances that the employment will not conflict with any prior obligations of the employee.  A failure to enter into such agreements upon the formation of a company with key personnel can result in claims that the company does not own its intellectual property or claims that the company does not possess the exclusive rights to its intellectual property.

Consulting Agreements
Frequently, startups need to rely on other parties for expertise in specialized areas.  Prior to the commencement of work with any consultants, a consulting agreement should be put in place that provides, in addition to a work statement that addresses the specifics of the undertaking and compensation arrangements, obligations of confidentiality of company information and information developed in the course of the undertaking, a right of use with respect to any intellectual property of the consultant embodied in the deliverables, obligations to assign intellectual property developed pursuant to the agreement, an agreement not to solicit employees of the company and assurances that the undertaking does not conflict with any prior obligations assumed by the consultant.  Absent an express agreement with consultants, disputes regarding the ownership and use of intellectual property developed by the consultant can arise.

Filing of Patent Applications on Inventions
As a result of changes in the patent law over the last several years, the party who first files a patent application for a particular invention in the US typically has superior rights over parties that file later. For this reason it is advantageous to pursue the filing of patent application on subject matter that is perceived to be of commercial value as soon as the basic ideas are sufficiently defined when patent protection is available.  When a startup pursues funding, a sale of the company or an initial public offering, it is inevitable that one of the checklist questions that will be asked is whether patent protection has been pursued so as to establish a barrier to entry of the marketplace by competitors. Frequently, the initial patent application filed will be a provisional patent application in recognition that the technology may evolve in the initial one-year period after the filing of the provisional application by which time a non-provisional application must be filed to preserve the priority date of the provisional application.  A failure to file a patent application within specified periods can result in a bar to a later filing and a loss of an ability to pursue patent protection which can detract from the perceived value of the company.

Name Clearance and Filing of Trademark Applications for Significant Trademarks
Prior to formalizing and registering a corporate or other entity, a name clearance search should be undertaken to determine if objections are likely to be raised by others with respect to the use or registration of the name by other business entities.  The costs associated with such clearance searches are generally considerably lower than the costs associated with changing a corporate name and rebranding activities that must be undertaken if a name change is later required due to a conflict with a preexisting business. Since at the outset most startups will not have used any marks in interstate commerce, they should consider filing applications for federal registration of significant trademarks based on an ”intent to use” the mark(s) in the future.  If it is determined by the U.S. Patent and Trademark Office that a mark is registrable, a Notice of Allowance is issued.  Once the mark is used in interstate commerce, a statement of use is filed and the registration is issued.   The inattention to the filing of trademarks can result in the adoption and registration of the marks by others and an inability to use the marks in conjunction with the business of the company.
 
Use of Non-Disclosure Agreements
Discussions with parties outside the company should be undertaken pursuant to non-disclosure agreements.  Such agreements obligate the recipient of confidential company information to maintain the information in confidence and limit the use of such information solely to the limited purpose specified in the agreement.  The failure to utilize non-disclosure agreements when disclosing sensitive company information to other parties can result in the loss of the right to file patent applications on inventions of the company in certain circumstances, the use of the company information in a manner adverse to the company, or the public disclosure of information that the company desired to maintain in confidence.

Should a startup pursue external funding or get to a point at which it is considering a liquidity event, due diligence investigations will be pursued to ascertain whether the company has taken appropriate steps to protect its intellectual property assets. A failure to assure that the above-identified housekeeping matters have been appropriately addressed can adversely affect the valuation of the company or the ability to achieve desired funding.