U.S. PATENT LAWS
Patents allow their owners to exclude other entities from using, selling and manufacturing the invention, increase revenue and core business value, ask the government to block competitor products, and even to crush their competitors altogether. For example, Polaroid was able to close the $200 million instant camera business of its rival Kodak after winning a patent infringement lawsuit.
Owners of patents, trademarks, trade secrets, and copyrights can sell to others a license to use these intangible assets independently of the underlying goods or services. A license may include terms governing duration, exclusivity, licensee’s productivity, and other conditions. License duration cannot exceed the patent term. Commonly, a licensee pays an up-front fee, followed by monthly or quarterly royalty payments calculated as a percentage of the licensee’s revenues.
A prior art search assists patent examiners and attorneys in determining the patentability of the invention. After filing the application, the invention owner may use “Patent Pending” mark on its goods. Not every discovery or invention results in a patent. For example, it is not possible to patent mathematical algorithms or literary works. It is not possible to patent an abstract idea, but only its embodiment. For example, it is possible to obtain a design patent on the ornamental characteristics embodied in a flying submarine or on its utilitarian features, but it is not possible to obtain a utility patent on the naked idea of the flying submarine.
Patentable inventions range from methods of production of household items to microchips and biotechnology to developments in the space, food, or any other industry. All patents are published, thereby announcing the invention and its ownership to the world. Receiving a patent is only one phase in the process of implementing, licensing, marketing, and sale of the invention, as well as protecting subsequently the patent from infringement by competitors.
There is no such a thing as an international patent. It is necessary to patent the invention in every country in which the inventor wants to have patent protection. Many countries conform to the Patent Cooperation Treaty (PCT) allowing a centralized initial filing and examination of applications based on the Paris Convention for the Protection of Industrial Property. In the United States, the United States Patent and Trademark Office (“USPTO”) is the only government agency that issues patents in accordance with the U.S. federal statutory and regulatory law.
A utility patent protects previously undisclosed, new, useful and non-obvious composition of matter, structures, methods, machines and technologies, i.e. the structure, use and operation of an article of manufacture. 35 U.S.C. 101.
A utility patent for an invention is a 20-year (from the patent application filing date) property right monopoly granted by the U.S. Patent and Trademark Office effective only within the United States and U.S. territories.
The statutory patent monopoly grants "the right to exclude others from making, using, offering for sale, or selling" the invention in the United States or "importing" the invention into the United States.
The term of design patents (for new, original and ornamental designs of manufactured products) is 14 years from the date of filing a patent application with the USPTO.
Separate design patents may be granted for independent and unrelated items or for the related articles if their designs have different shapes and distinct appearances. An article having minor configuration variations reflects a single design concept and such different embodiments may be contained in one design patent.
Design patents protect the article’s unique shape or appearance and may be obtained for an article of manufacture along with a utility patent covering the article’s functionality.
A design patent will not be granted if an article’s distinctive shape or appearance is dictated primarily by the article’s function or performance, because it is considered to have no proper subject matter and not being original. 35 U.S.C. 171.
Designs simulating well-known persons or naturally occurring objects, or being offensive to any race, religion, sex, ethnic group, or nationality, will not be patented. 35 U.S.C. 171 and 37 CFR § 1.3.
Ideas and Inventions
The word "invention" refers to the inventor's conception and not to a physical embodiment of that idea. Laws of nature, physical phenomena, and abstract ideas are not patentable subject matter.
“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“ for these types of patentable subject matter. 35 U.S.C. §101 of the Patent Act of 1952.
Business methods are patentable after considering many factors. A machine-or-transformation test (transforming or reducing an article to a different state or thing) for the determination of patent eligibility may be used as a clue or investigative tool but it is not the sole test. For example, a method of hedging risk in energy or commodities market reduced to mathematical formulas is a non-patentable abstract idea.
Priority of Patent Applications
An invention may be patented before it is actually built (reduced to practice). Under The America Invents Act (“AIA”) of September 16, 2011, the first inventor to file a patent application with the USPTO (“first-to-file”) on or after March 16, 2013, wins a priority race between competing patent applicants. “Prior art” (preventing issuance of a patent) definition now includes all acts and disclosures including inventions on sale, used in public, published, patented or otherwise available to public as of the applcation filing date, except the inventor’s own publications within one year of filing. Such one-year “grace period” exception to prior art does not apply to other applicants who did not publish their inventions prior to the filing date.
One-Year Bar For Filing Patent Applications
Under the pre-AIA law, the “on sale” bar excluded from patent protection an invention that has been on sale for at least one year before filing a patent application covering that invention. In general, the on-sale bar applies when a product was offered for commercial sale more than one year prior to the patent application filing date and the invention had been ready for patenting by its reduction to practice, or its drawings, product disclosure or writings were sufficient to enable those skilled in the art to practice the invention.
Financial Desirability of Patents
Inventors in any country desire to sell, get loans against or license their innovations and discoveries. Potential buyers, licensees and lenders want to know the identity of the real owner, advantages over the known state of the art, the novelty, utility, marketability, priority and value of the invention. Patents are one of the main factors in considering the invention’s financial desirability.
Since patents are issued by national patent offices, they protect from infringement only in the countries where they were issued. The U.S. patent may protect the patent holder from infringement only in the United States but not in China, Brazil or any other country. There are no international patents covering all countries.
Patent infringement is making, using, importing, selling or offering for sale the patented item, during the term of the patent and within the country that issued the patent, without permission (such as a license) from the owner of the patent.
The patent claims define the scope of the patented invention protection and inform the public thereabout.
If all of the patent claim's elements are "read on" the infringing item (device, technology, method or process), then the patentee may allege patent infringement and seek the damages from the wrongdoer. If one or more claim elements are not covering or “read on” one the allegedly infringing item, then the patent was not infringed with regard to such a claim..
Indirect infringement is either active inducement of infringement or contribution to the patent infringement, which take place only when (1) there is a direct infringement of the patent; (2) the accused indirect infringer had some knowledge and intent about the patent infringement; (3) one encourages, aids, or otherwise actively and knowingly induces the patent infringement by another party.
A third party's or contributory infringement occurs when a supplier’s part not infringing any patent can be used solely as part of the item covered by a patent. If it can be sued for any other valid uses, or it is a staple article or commodity of commerce suitable for substantial non-infringing use, then there is no contributory infringement under the U.S. laws.
Patent Infringement Defenses
Antitrust/ patent misuse (tying royalties for unpatented and patented products, seeking royalties on an expired/ invalid patent, price fixing and discrimination);
Breach of contract with the Standard Setting / Developing Organization (“SSO” or “SDO”) as patent holders, who made RAND (“reasonable and non-discriminatory” royalty rate) commitments to license on RAND terms to those who wish to adhere to SSO or SDO rules, cannot seek patent infringement remedies (e.g., an injunction) if they had offered licenses on non-RAND terms;
Patent/s is invalid (because of the newly found prior art), or unenforceable, or has expired;
Accuser’s patent license was already obtained;
Accuser has infringed patent/s of the accused party;
Patent claims do not “read on” the infringing item, i.e. each element of the claim is not reflected in the allegedly infringing item.
Benefit of Prior Foreign Application Date
Filing of a U.S. non-provisional patent application within 12 months from the date of filing of the same application in a foreign patent office gives the benefits of the prior foreign application filing date.
This right of priority is based on a claim filed in the USPTO with identification of the foreign application, its filing date, application number, the patent office or country for which the application was filed.
A copy of the original foreign application containing the filing date, specification, and drawings, certified by the foreign patent office where application was filed, a translation if not in the English language, must be filed in the USPTO.
The failure to perfect a claim to foreign priority benefit prior to issuance of the patent may be cured by filing a certificate of correction or a reissue application.
Marking the patented products (or product packaging, or shipping documents) with the issued patent numbers (patent marking) helps patent owners to collect past damages (i.e. before the infringer has been actually notified of the patent by filing of an infringement suit) for patent infringement. The patent claims must cover the product marked with that patent number to avoid liability for false patent marking. The webpage selling the patented method or system online must be marked with the patent number, and the website’s notice must be linked to the patented system to provide clear patent marking in a conspicuous location.
After filing a provisional or non-provisional patent application with the USPTO, a product may be marked or stamped with a notice “Patent Pending”, and promotional literature may contain such a notice. The product marking enhances the value of the product and gives notice to potential infringers..
Provisional Patent Application
A provisional application for patent filed in the USPTO secures a filing date for an issued patent, if the applicant files a non-provisional application within one year, and will be automatically abandoned one year after it is filed.
At least one inventor must be common to both a non-provisional and provisional applications.
A provisional application contains an invention description (specification), and drawing(s). No patent claims, inventors' oaths or declarations, or information disclosure statement are required or permitted.
A provisional application is not published, examined by the USPTO, will not mature into a patent, but may be filed faster and cheaper than a non-provisional patent application.Provisional applications (1) must have a detailed disclosure so that the issued patent validity is not jeopardized due to insufficient provisional application disclosure; (2) may be submitted in any language but a translation will be required if a subsequent non-provisional application claims the provisional application filing date; and (3) become public when a patent claiming its filing date is issued. Additional provisional applications may be filed prior to filing a non-provisional application for new improvements.
The provisional filing date is (1) not counted toward the patent’s 20-year life term; (2) can be used as the foreign priority date for foreign and PCT applications, but not for a design patent; and (3) starts the U.S. license review period for foreign or international applications.
Another filed provisional application will start another one-year period, but the expired provisional application’s priority date will be discarded.
A non-provisional application may be converted into a provisional within 12 months of filing if the applicant decides not to pursue the non-provisional application.
U.S. provisional patent applications provide a fast and low cost option for winning an invention priority date in view of the new U.S. laws (first-to-file a patent application wins the priority race), increasing value of invention and respective core business for monetization purposes, and securing the US patent law protection for making, using and selling the invention in the U.S.A.
Non-Obviousness (Inventive Step) Patentability Requirement
The "non-obviousness" patentability requirement (similar to the "inventive step" used by the European Patent Office and national patent offices per the European Patent Convention) is that the invention must not be obvious to a person having ordinary skill in the respective art.
In other words, a patent may not be obtained if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.
Once a patent application is filed in the US Patent and Trademark Office to stake out a “territory” within the patent claim defined border, the invention owner may start selling or monetizing it in any other way.
Besides the patent infringement protection use (a defensive use), the patents may also be used offensively by selling or licensing them, and adding value to the underlying core business or otherwise monetizing them
Patent Infringement Damages
If the patent holder’s actual damages (such as lost profits) arising from patent infringement cannot be proved, then compensatory damages replacing the inventor’s losses are awarded to that holder in the form of a reasonable royalty (an amount which a person desiring to manufacture a patented article would be willing to pay as a royalty) and, in some cases, damages based on the value of an entire apparatus containing only one element infringing the patent.
In addition to the compensatory damages, the court may award punitive damages trebling actual damages if the infringer has willfully and deliberately infringed the patent. 35 U.S.C. S 284.
A patent owner can recover both prejudgment and post-judgment interest on an infringement award and attorney fees, but only in exceptional cases. 35 U.S.C. S 285.
Each patent claim allowed by the USPTO sets forth a legal scope or “territory” of the patented invention, gives notice to the public and competitors of that scope, and serves as the basis for patent infringement suits, licensing, patent valuation, investor’s decisions, lenders, business value enhancement, potential buyers and other legal and business purposes.
Patent attorneys always try to broaden the scope of such claims while writing the application claims but the USPTO restricts such a scope in view of the known prior art.
If an article has all elements (limitations) of a patent claim but also has an element supplementing the patent claim elements, the article will infringe the patent. But if an article lacks a patent claim element (which cannot be “read on” that article either literally or equivalently, i.e. substantially the same in the eyes of one of ordinary skill in the arts), then that patent claim is not infringed. That is how one may determine whether competitors successfully “designed around” the patented invention or infringed it.
The United States International Trade Commission
The United States International Trade Commission, an independent federal agency, investigates and adjudicates cases involving imports that allegedly infringe the U.S. owners’ intellectual property rights. The Commission provides the President, US Trade Representative, and Congress with its analysis and information as to international trade, tariffs, and U.S. competitiveness. It conducts Section 337 investigations of complaints of patent (utility and design), mask works, registered copyrights, boat hull, and trademark infringement by imports, misappropriation of trade secrets or product’s trade dress, false advertising, passing off and antitrust claims.
The Section 337 investigations may result in permanent or temporary exclusion orders (directing the U.S. Customs to bar the infringing goods from coming to the United States) and cease and desist orders against violators of Section 337. Administrative law judges rule on these investigations (conducted per 19 U.S.C. § 1337 and the Administrative Procedure Act) at trial proceedings and the Commission reviews the decisions. Complaints of patent infringement are usually filed in both the federal court and with the Commission in cases involving imported goods.
Continuation-In-Part Patent Application
A continuation-in-part (“CIP”) is an application, filed while an earlier filed non-provisional (provisional applications cannot have a continuation, CIP or divisional application but only a non-provisional application arising therefrom) application is still pending in the USPTO. The CIP adds previously undisclosed matter to the repeated non-provisional application (or its substantial portions) and utilizes the benefit of that prior application. 37 CFR 1.53(b).
The CIP claims addressed to the additional subject matter (usually subsequent invention improvements) will have the CIP application filing date but not the original application’s filing date.
CIP and continuation applications shorten the life of the issued patent because the 20-year patent term starts from the earliest filing date of the original/parent patent application and not from the patent issuance date. If additional disclosure of new embodiments or invention use behooves supplemental claims, in many circumstances (e.g. in case of patented drugs which usually generate revenue till the last day of the patent’s life) an original application is filed instead of the CIP application.
A continuation application uses the original patent application (a “parent” application) specification and filing priority date but presents new claims in addition to the parent application claims in order to overcome a patent examiner’s previous claim rejections or claim different embodiments of the disclosed invention.
The subsequent continuation application is given the parent’s filing priority date if the original application was terminated but at least one continuation application is still pending in the USPTO. The claims of the pending continuation application could be amended to cover a new competing product if the specification supports such claim modification.
U.S. continuation applications are similar to European divisional applications
Divisional Patent Application
A divisional application has the parent application’s specification and priority date but contains patent claims, which are addressed to one distinct invention being different than other invention(s) included in the parent application. Divisional applications sometimes are filed when the USPTO issues a “restriction” separating or limiting the application’s multiple inventions.
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