Category Archives: Patents

International patent strategy: tips for selecting countries in which to file

A question that patent attorneys often receive from clients who are relatively new to international patent filing procedures is “where outside of the U.S. should I file my patent application?” While the attorney typically can’t provide the answer — each client must choose the countries that make sense for its business —  the attorney can help lead the client to the answer that’s right for them by asking a few key questions. Here are key factors that I typically ask clients to consider when deciding where to apply for patent rights outside of the U.S:

What is the cost in each country?

The budget is always going to be a very important factor. After the U.S. patent application is filed, international filing costs typically vary from about $2,000 to $8,000 per country.  Costs of prosecution and maintenance can raise the cost to $20,000 or more per country over the life of the patent.

Since 148 countries are currently parties to the Patent Cooperation Treaty, international filing costs can add up very quickly.  Patent applicants should balance the cost of filing in each country against the benefits of filing or losses that can result from not filing  (more on that below) and select countries where the costs are justified.

Where are your customers?

A key reason to apply for patent protection is to protect market share for a product or service. Any country where the market is likely to be significant — or at least a substantial multiple of the patent cost —  is a candidate for patent protection.

However, patent applicants should balance market size against the practical realities of market opportunities. China and India are by far the world’s largest markets, but unless a company has the connections, expertise and resources to break into the Chinese or Indian market, a patent filing may be wasted in those countries.

In addition, in some cases one or two countries may be sufficient to protect the lion’s share of the market in a particular region.  For example, if 80% of a company’s South American sales occur in two South American countries, then filing in those two countries may be sufficient to deter others from trying to capture your South American market.

Where are your competitors?

This question may yield the same answer as the “where are my customers” question. However, a patent provides exclusive rights to make, use and sell an invention. Often, a product may have a large market in one country, but manufacturing may occur in another country where costs are lower. Filing in countries where key competitors have their manufacturing operations can help you stop infringement at its source.

Where are your suppliers?

If you are contracting your manufacturing to an overseas supplier, you will be teaching that supplier exactly how to make your product. The supplier and its personnel will gain expertise, and perhaps even have tooling in place that is especially suitable for the product. If your relationship with the supplier sours, a patent can help you ensure that the supplier won’t continue to supply your product or service to others without you.

Where might I set up a regional operation in the future?

Enforcement efforts are often more successful for businesses with “boots on the ground” (and eyes and ears, too) in a country. If you are planning a regional office in a location, then it can be valuable to have patents in that location because your local representatives can help you yield results from those patents.

Are there any country-specific laws to consider?

Finally, a handful of countries have laws can affect a patent filing decision.  For example, countries such as India have imposed compulsory licensing requirements on certain drug patents. While the licensing requirements can still result in royalties, these laws change the economics and need to be considered. As another example, Europe generally frowns on software patents, although devices and systems that perform certain processes often can be patented in Europe.

10 things software patent applicants need to know about the USPTO’s Glossary Initiative

In an effort to combat criticisms about poor quality and ambiguity in software and business method patents, the USPTO has announced a new “Glossary Pilot Program” that encourages applicants to provide a glossary of clear definitions for important claim terms.

Patent applicants who include such a glossary can benefit from expedited processing up to the first Office Action. In addition, the USPTO is hopeful that the clarity resulting from the use of a glossary will improve examination and patent quality, resulting in more certainty for patent applicants and those who are accused of infringing the patents.

Here are the key features of the new Glossary Initiative that patent applicants need to know:

  1. Only new applications filed on or after June 4, 2014 are eligible. The Glossary Pilot Program is only available to original, non-provisional applications.  Continuation, divisional, reissue and national stage applications are not eligible.  However, continuations-in-part and utility applications that claim priority to a provisional application may be eligible for the program.  The request to participate in the Program must accompany the original filing.
  2. Only certain technologies are eligible. The Program is only open to applications that the USPTO assigns to its Technology Center 2100 (Computer Architecture, Software, Information Security), 2400 (Computer Networks, Multiples Communication), 2600 (Communications), or the Business Methods area of Technology Center 3600. Although an applicant may suggest a particular classification, Technology Center assignment is ultimately a decision of the USPTO.  So, an applicant won’t know whether it will satisfy this requirement until after it files the application.
  3. Act fast – supplies are limited.  The Pilot is only available to the first 200 applicants, or until December 31, 2014, whichever occurs first.
  4. Limit your claims.  The application may contain no more than 4 independent claims, no more than 30 total claims, and no multiple dependent claims.
  5. Formatting requirements apply.  The glossary must be at the beginning of the Detailed Description section of the specification, identified with a heading, and presented on filing the application. The glossary can’t be a separate filing, an appendix, or added after the filing date.
  6. The definitions must be useful. According to the USPTO:  “The glossary should include definitions that will assist in clarifying the claimed invention and creating a clear application file wrapper record. Suggestions for definitions include key claim terminology (such as a term with a special definition), substantive terms within the context of the invention, abbreviations, acronyms, evolving technological nomenclature, relative terms, terms of degree, and functional terminology.”
  7. The definitions must not be open-ended or incomplete. The glossary can’t refer to or rely on other parts of the application, nor may it incorporate other documents by reference.  The glossary may include examples, but a particular definition may not rely solely on examples. In addition, the glossary cannot define a term solely by what it doesn’t mean.
  8. The applicant must not contradict the definitions. The description may not disavow or contradict the claim terms, such as by stating that the definitions aren’t limiting. This requirement applies to other parts of the application, as well as subsequent communications with the USPTO.
  9. Use the form and file electronically.  The application must include a completed USPTO Form PTO-SB-436, and it must be filed through the USPTO’s electronic filing system.
  10. The Glossary Pilot Program provides a quicker, but not necessarily the fastest, option.   Expedited processing is likely to result in a much shorter wait time than the current 19-to-24 month average wait for first action in software and business method patent applications. However, expedited processing is not a guarantee of action within any particular time period.  Other options, such as the USPTO’s Track One Examination Program, typically yield a final result within one year of the filing date. That said, the Glossary Pilot is certainly a less expensive option:  Track One requires a substantial ($2,000 – $4,000) additional filing fee.

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Penn State University to license patents via online auction

Penn State University is primed to launch the country’s first online auction of patent rights resulting from university research. According to a Penn State news release:

About 70 engineering patents in areas as diverse as acoustics, fuel cells and sensors will be available for license in this first auction. Required bid minimums on many will be as low as $5,000.

Available patents are listed on the Penn State Intellectual Property Auction Website. Bidders must pre-register to participate in the action. In addition to single patents with minimum bids as low as $5,000, the auction will include several patent bundles with minimum bids ranging from $10,000 to $50,000. The auction will open March 31, 2104 and close on April 11, 2014.

Winning bidders will need to enter into a license agreement with the University’s Office of Technology Management. The agreement will require the winning bidder to also pay all patent maintenance fees. However, unlike typical university research licenses, no ongoing royalties will be due. Penn State also retains the right to pursue third-party infringers; the licensee can only participate in enforcement if Penn State’s enforcement efforts are not successful after a six month period.

Patent auctions have met with limited success over the years. However, Penn State is tempering expectations with low minimum bids and realistic public statements. Penn State’s news release notes that a key goal of the auction is to “raise awareness among interested parties in business and industry that the University does have licenses available whose commercial applications could prove extremely valuable.”

A small license fee is certainly better than no license fee, especially for patents that are just sitting on the shelf.  In addition, by calling attention to its portfolio of IP in fields such as antenna systems, superconductors, and ground water remediation, the auction will certainly help draw attention to the university’s diverse research capabilities.

Texas court unveils fast track option for patent cases

The Eastern District of Texas has launched a new case management procedure for patent infringement lawsuits.  The new procedures, dubbed “Track B” in the court’s General Order 14-3, are designed to give litigants an option that can help save money and move a case to resolution more quickly.

Key features of the Track B case management procedures are:

  • within 14 days after the defendant files an answer or motion, the plaintiff must (i) serve infringement contentions, and (ii) disclose all licenses and settlement agreements involving the patents in suit;
  • within 30 days after service of the infringement contentions, all parties must provide initial disclosures, and the defendants must produce summary sales information regarding the sales of accused products and reasonably similar products; and
  • within 14 days after the initial disclosures and summary sales information, both parties must file a good faith estimate of damages;
  • within 14 days of the good faith estimate, the defendant must serve its invalidity contentions.

After serving invalidity contentions, the case will quickly move to a management conference and discovery plan.  Discovery prior to the conference will be limited to 5 interrogatories, 5 requests for production, and 5 requests for admission per side.

The Court’s traditional case management procedures (now called “Track A”) will remain the default.  The court will apply Track B if and when the parties request it.

Medtronic v. Mirowski Family Ventures: Supreme Court decision affects patent license disputes

A recent Supreme Court decision may prompt patent holders to review license agreements and build in extra protections against actions filed by their licensees. In the case, Medtronic Inv. v. Mirowski Family Ventures, the Court held that a patent holder has the burden of proving infringement in a declaratory judgment action brought by a licensee.

The case was based on an arrangement in which Mirowski Family Ventures held several patents relating to implantable heart stimulators. Medtronic was party to a license agreement with Mirowski, as Medtronic was successor in interest to the original licensee (Eli Lilly). The agreement gave Medtronic a license to produce certain products under the patents in exchange for royalty payments. The agreement also included a procedure for bringing new products under the license. Specifically, if Mirowski notified Medtronic that a new product was infringing any of the patents, Medtronic could either cure the infringement by paying royalties or challenge the infringement by filing a declaratory judgment action.

The dispute arose when Mirowski notified Medtronic that seven new products infringed the Mirowski patents. Medtronic disagreed and brought an action for declaratory judgment of non-infringement. Ordinarily, in any patent infringement dispute, the patent holder bears the burden of proof of infringement. However, the lower court (the Federal Circuit) held that where the dispute is one between a licensor and licensee, the burden of persuasion shifts to the licensee (to prove non-infringement) if the licensee brings a declaratory judgment action.

In its opinion of the appeal from the Federal Circuit decision, the Supreme Court provided a very concise summary of the question and its conclusion:

We now turn to the question presented. A patent licensee paying royalties into an escrow account under a patent licensing agreement seeks a declaratory judgment that some of its products are not covered by or do not infringe the patent, and that it therefore does not owe royalties for those products. In that suit, who bears the burden of proof, or, to be more precise, the burden of persuasion? Must the patentee prove infringement or must the licensee prove noninfringement? In our view, the burden of persuasion is with the patentee, just as it would be had the patentee brought an infringement suit.

Thus, in a unanimous opinion, the Court reversed the decision of the Federal Circuit.

An implication of the decision is that patent licensors should be cautious when accusing licensees of patent infringement, whether the accusation is based on non-payment of royalties or on the sale of non-licensed products. Accusations of infringement could result in a declaratory judgment action by the licensee. If the declaratory judgment action involves only the patents and not the license agreement, the licensee may be able to select the venue for the declaratory judgment action.

Because of this, patent holders may wish to consider certain changes to their typical license agreements.  For example, if a choice of venue clause refers only to disputes under the agreement, disputes regarding unlicensed products could be considered to fall outside of the agreement. So, a patent holder may consider bringing any disputes relating to the licensed patents into the choice of venue clause.  This could limit the locations in which the licensee can bring a declaratory judgment action, and perhaps make it more inconvenient for the licensee to do so.

However, the extent to which a patent holder can place other limits on declaratory judgment actions is not as clear. For example, the licensor could include a clause that permits termination of the license agreement if the licensee brings a declaratory judgment action. Whether such a clause will be upheld on public policy grounds has been questioned by a number of commentators after cases such as MedImmune v. Genentech.  Until such clauses are definitively upheld or struck down many patent holders are including such clauses to provide an extra degree of protection in licensing arrangements.

Received a patent in the past 7 months? Act quickly to take advantage of possible term adjustment.

If you received a patent in the past seven months, you may be eligible to extend the term of your patent if you qualify for Patent Term Adjustment (PTA).

PTA can extend a patent’s term beyond its typical 20 years if certain delays occurred during prosecution of the application. PTA will account for any days beyond three years that the patent application was pending before the USPTO, with certain exceptions. Exceptions include delays caused by the applicant, such as a request for an extension of time to respond to a USPTO  action.

The USPTO has also treated any time after the applicant filed a request for continued examination (RCE) as an exception to the PTA eligibility period.  A new court decision (Novartis AG v. Lee) held that the USPTO was only partially right. According to the new decision, although PTA will not be awarded for the time between RCE filing and allowance, PTA should be awarded for the time spent between allowance and grant. This period is commonly three to five months, which means that many granted patents may be eligible for PTA to cover this additional period.

Under current USPTO rules, the deadline for filing a Request for Reconsideration of PTA Calculation is two months from grant. This time period may be extended period by five months. A $200 petition fee is required, plus extension of time fees if filed within the 5-month extension period.

So, if you were awarded a patent within the past seven months, and if you filed an RCE while the patent was pending, you should act fast if you want to take advantage of the additional PTA that may available based on this new Court decision.

Hardware alone does not infringe patent that also requires software running on the hardware

The mere capability of infringement does not necessarily give rise to liability for infringement, according to the Federal Circuit’s opinion in Nazomi Communications v. Nokia Corp. (No. 2013-1165, 1/10/2014).

In the case, non-practicing entity Nazomi held two patents covering hardware-based java virtual machines (JVMs) that can process both programming instructions stored in a stack-based memory and legacy applications that are stored in a register-based memory. The case involved electronic devices sold by Western Digital (specifically, the MyBook) and Sling Media (which sells the SlingBox). Each device  contained a processor that was licensed from ARM Continue reading

Patent and trademark applicants: Beware the hidden costs of an appeal from the PTAB/TTAB

A recent case involving an appeal of a rejected trademark application highlights a hidden cost that may occur if a patent or trademark applicant asks a District Court to overturn the USPTO’s action.

When the USPTO rejects a patent or trademark application, the applicant may appeal the rejection to the Patent Trial and Appeal Board (PTAB) or Trademark Trial and Appeal Board (TTAB), as the case may be.  If the applicant doesn’t like the PTAB/TTAB result, it may then appeal to a federal court.  As to which court, the applicant will have two options:  (1) appeal to the Eastern District of Virginia, or (2) appeal to the Federal Circuit.  The benefit of option (1) is that it allows the applicant to bring in new evidence in an attempt to improve its chances for a good result.  However, the downside of option (1) is that the applicant must pay the expenses of the proceeding under 35 U.S.C. 145 (if a patent appeal) or 15 U.S.C. 1071(b)(1) (if a trademark appeal).

In the recentdecision, Shammas v. Focarino, E.D. Va. No. 1:12-cv-1462 (Jan. 3 2014), the court held that “expenses” in the context of a trademark appeal includes attorneys’ fees, and that the appellant must pay those fees regardless of the outcome.  This included a pro rata portion of the actual salaries of the government attorneys who handled the case for the USPTO, based on the time that they devoted to the case.

Previous cases, such as the Supreme Court’s decision in Hyatt v Kappos, reached similar rulings in the patent context.  However, this is the first time that a court specifically held that the expenses included USPTO attorney salaries.

So, before appealing a PTAB or TTAB decision to District Court rather than the Federal Circuit, patent and trademark applicants should weigh the costs of the proceeding (including USPTO expenses) against the potential benefits of introducing additional evidence.

[NOTE:  Special thanks to my colleagues Jeff Schwartz and Lindette Hassan of Fox Rothschild LLP for co-authoring this post.]

Court delays question of whether software patent should be upheld or overturned

In what may be the first of several software patent litigation matters that are placed in a holding pattern this year, the District of Delaware has stayed a group of patent infringement cases involving software patents pending the Supreme Court’s decision in CLS Bank Int’l v. Alice Corporation Pty Ltd.

As noted in a previous IP Spotlight post, in Alice the Court will consider the question of whether patent claims covering computer-implemented inventions are directed to patent-eligible subject matter.

In the Delaware cases, collectively captioned The Money Suite Company v. 21st Century Insurance and Financial Services, the plaintiff sued several defendants for infringement of a patent relating to use of a remote computer terminal to search for financial products for quoting. At least one of the defendants argued that the patent was invalid as being directed to ineligible subject matter because using a computer to generate a quote for a financial product was merely an abstract idea.

Noting that the Supreme Court will soon address the question of whether software is patent-eligible, the Delaware court stayed the cases until the Supreme Court issues its decision in Alice.

Design patents and prosecution history estoppel: restriction requirements can lead to surrender of alternate claim scope

A recent case from the Federal Circuit held that the principles of prosecution history estoppel apply to design patents. While the case is obviously significant for anyone involved in litigating a design patent, inventors and patent applicants should also know that the case indicates that restriction requirements can have a significant impact on the resulting scope of a design patent.

In Pacific Coast Marine Windshields Ltd. v. Malibu Boats, LLC, Pacific Coast Windshield figuresowned a design patent covering the design of a windshield for a boat.  Pacific Coast’s original application for the patent described several options for the design, including various vent hole configurations (four holes, two holes, or no holes), and designs with or without a hatch. During prosecution, the USPTO issued a restriction requirement, stating that the various vent hole and hatch configurations represented five patentably distinct designs. The USPTO required the applicant to elect one design for prosecution. In response, the applicant elected the design that depicted four vent holes and a hatch. The applicant also cancelled all figures that did not show a hatch and four vent holes.

After the patent granted, WindshieldPacific Coast sued Malibu Boats for patent infringement. Malibu Boats sold a windshield product containing three vent holes and a hatch, as shown in the image to the right of this text. Malibu Boats moved for summary judgment of non-infringement, arguing that its design could not be covered by the Pacific Coast patent because Pacific Coast specifically surrendered designs other than four-hole designs during prosecution.

Because the Malibu Boats design was not a four-hole configuration, the questions that the Court asked were: (1) did Pacific Coast surrender certain claim scope during prosecution for reasons of patentability; and (2) if so, was a three-hole design within the scope of surrender.  If the answer to both questions was “yes”, then the Court would have permitted summary judgment.

Regarding the first question, the Court answered “yes,” stating that prosecution history estoppel could apply to a design patent. However, the Court answered “no” to the second question, as the surrendered variations only described two-hole and no-hole designs. The Court then remanded the case to the district court to determine whether the three-hole design actually infringed the patent.

While Pacific Coast’s claims of infringement survived, the case does provide lessons for those who seek design patents in the U.S.  If a design patent describes several variations of the invention, then before filing the applicant should consider showing optional features as broken lines (representing elements that are not part of the claimed design) instead of solid lines (which are part of the claimed design). If that is not possible, then after receiving a restriction requirement the applicant should consider filing divisional applications to cover the non-elected designs. Otherwise, the canceled figures or non-elected designs could serve as an instruction manual for those who want to make and sell a product that avoids infringement of the patent.