Filed under: Patents
This week the Federal Circuit issued a non-precedential opinion that provides some insight into what the court considers to be “common sense” in the context of patent application examination. In In re Vaidyanathan (no. 2009-1404, issued May 19, 2010), the Court explained when rejecting a claim as obvious, USPTO examiners and the Board of Patent Appeals and Interferences cannot simply assert that a combination is “common sense” in a conclusory manner. The Court also chided the USPTO for a record that provided several different interpretations of a single prior art reference.
In the case, the patent claims related to (more…)
The Intangible Asset Finance Society recently published Mission: Intangible, a book that advocates the careful stewardship of corporate reputation. Authored by IAFS Executive Secretary Nir Kossovsky with Todd Miller, the book explains how corporate stock prices and revenues are driven by effective risk management practices, ethical operating principles, quality assurance procedures, and safety and security practices.
The book contains many examples of best practices — and big mistakes — relating to the protection of consumer goodwill. From Johnson & Johnson’s weathering of malicious tampering with its Tylenol product, to the demise of Chi-Chi’s Restaurants after it failed to recover from a tragedy caused by tainted tomatoes, the book’s case studies serve as a useful guide for corporate executives who are charged with reputation and crisis management.
One practice that the book advocates is that companies adopt the examples of H.J. Heinz and Disney and create a position of Chief Reputation Officer. The CRO will oversee a variety of functions relating to risk management, markeiting, law, and security. For more details, read the book, which is available here.
The New Jersey Supreme Court recently issued a decision that caught the interest of companies across the country who are considering whether similar rulings may spread to other jurisdictions. In Stengart v. Loving Care Agency, Inc., A-16-09, 2010 N.J. LEXIS 241 (Mar. 30, 2010), the court explained that employers may (and may not) take certain actions, and it also discussed conditions on each type of action. Maureen Dwyer of Pepper Hamilton’s Princeton, NJ office summarized the decision and its implications for New Jersey employers in a recent article. As Maureen writes:
The court ruled that employers may implement policies limiting personal communications on company computers, and employers may discipline employees for violating those policies. The court also ruled that employers may review the substance of most private e-mail and computer communications, but only if the employer has implemented and communicated a detailed policy that effectively eliminates any reasonable expectation the employee may have that his or her computer communications are private. [However], the court held that employers are never free to review the substance of certain communications, in particular an employee’s confidential communications with his or her lawyer.
More details and Maureen Dwyer’s article are available at the Pepper Hamilton website via this link.
Filed under: Business Law
On June 24, 2010, my partner Susan Krembs will moderate a one-hour online discussion about the similarities and differences of trade secret protection in the United States and Canada.
Topics will include:
- how to protect your trade secrets/confidential information
- how to prosecute and/or defend a trade secret misappropriation/breach of restrictive covenant lawsuit
- how to avoid being sued for trade secret misappropriation/misuse
- dealing with a departing employee who knows your trade secrets
- hiring a new employee who knows trade secrets of your competitor
- how best to be prepared for trade secrets litigation.
For details, visit the Pepper Hamilton website here.
Filed under: Patents
USPTO regulations (37 C.F.R. 1.56) state that any individual who is substantively involved in the preparation and prosecution of a patent application owes a duty of candor to the USPTO. According to the regulation, this requirement “includes a duty to disclose to the Office all information known to that individual to be material to patentability.” Failure to comply with this requirement can render a patent unenforceable.
In the recent case of Avid Identification Systems, Inc. v. Crystal Import Corp., the Federal Circuit held that this duty can extend to a person — such as a corporate officer — who is neither an inventor nor a prosecuting patent attorney. In the case, Avid’s president demonstrated a new invention at a trade show. More than one year later, the company applied for a patent on the invention. The president was not the inventor, he did not prepare the patent application, and he did not direct the attorneys who did prepare the application. Nonetheless, the Court found that he was “substantively involved” in the prosecution, stating:
We read “substantively involved” to mean that the involvement relates to the content of the application or decisions related thereto, and that the involvement is not wholly administrative or secretarial in nature.
Factors relevant to the court’s decision included that (i) the president specifically hired the inventors to develop the invention, (ii) the president was involved in “all aspects” of the company’s operation, implying that he would have been involved in the patent prosecution, and (iii) the president was included on communcations involving a related European patent application, thus further implying that he would have been involved in prosecution of the U.S. patent.
Because Avid’s president did not disclose the trade show demonstration to the USPTO, the court held the patent to be unenforceable.
The Federal Circuit’s decision serves as a reminder that all individuals involved in patent prosecution matters should consider the duty of disclosure, and that they should provide their patent attorneys or agents with all material information for disclosure to the USPTO.
Filed under: Patents
This week USPTO Director David Kappos’ blog included a post discussing the Federal Circuit’s recent decision in Ariad Pharmaceuticals v. Eli Lilly. In the case, the Federal Circuit held that Section 112 of the Patent Act has a written description requirement that is separate and apart from the enablement requirement. Director Kappos’ post notes that in all applications reviewed from 2005-2010, the USPTO issued Section 112 rejections for the application’s asserted failure to contain an adequate written description.
In what may be a signal that the USPTO intends to apply Section 112 more aggressively to software claims, the post also states:
[T]he written description doctrine is particularly useful in examining claims that employ functional language, or that merely set forth a desired result without any indication of what achieves that result. . . . Thus, when confronted with functional claims, as with results obtained claims, I encourage examiners to carefully consider whether such claims — amended or original — are adequately supported by the specification.
Patent claims relating to software often use functional language, as the function of the software is typically what separates it from the prior art. For the patent practitioners reading this post — are you seeing an increased use of Section 112 rejections for software claims? I’m interested in reader comments on this subject.
Filed under: Electronic Communication
The creation and storage of electronic medical records has resulted in medical professionals generating massive amounts of data about their patients. Privacy requirements, such as those arising under the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rules mandate that this data be carefully secured from unintentional disclosure. However, most medical professionals do not have the time or resources to implement security requirements themselves. Because of this, it is common practice to outsource electronic medical records storage services.
My colleague Anne Newman recently wrote an article describing the items that hospitals, physican practices, and other medical professionals should consider when contracting to outsource medical records storage services. As Anne notes in the article, agreements to outsource medical records storage must contain several features that are not typically found in agreements for other outsourcing services.
For the complete article, click here.
Filed under: Licensing
Patent, trademark, and copyright license agreements typically give the licensor a right to audit the licensee’s records to ensure that the licensee is accurately reporting sales and calculating royalties that are due. However, licensors often forego this right and merely trust that the licensee will provide accurate reports of royalties due.
Licensors who fail to audit may be losing significant revenues. According to a new report from Invotex Group titled It’s Just Not Fair: Unintended and Unforeseen Intepretations of License Agreement Language, their audit practice has found that a whopping 86% of licensees underreport — and thus underpay — royalties due under intellectual property license agreements. These are no small errors: according to the study, over 40% underreport royalties by 25% or more.
The reasons for underreporting vary, with the most common reasons being (1) simply underreporting sales, and (2) questionable interpretation of the underlying contract. These finding emphasize the importance of carefully drafting license agreements to avoid ambiguity — especially when it comes to payment obligations.
For the full report, click here. Hat tip to Joff Wild of IAM Magazine for calling this report to my attention.
Filed under: Electronic Communication
On March 1, 2010, new personal information protection standards took effect in Massachusetts. The standards are published at 201 CMR 1700 and establish requirements for anyone who owns or licenses personal information about a resident of the state of Massachusetts — regardless of whether the information is maintained in written or electronic form.
Under the regulations, anyone who owns or licenses personal information about a Massachusetts resident must “develop, implement and maintain” a comprehensive, written information security program. The written information security program:
must contain[ ] administrative, technical, and physical safeguards that are appropriate to (a) the size, scope and type of business of the person obligated to safeguard the personal information under such comprehensive information security program; (b) the amount of resources available to such person; (c) the amount of stored data; and (d) the need for security and confidentiality of both consumer and employee information. The safeguards contained in such program must be consistent with the safeguards for protection of personal information and information of a similar character set forth in any state or federal regulations by which the person who owns or licenses such information may be regulated.
The standards require that the written program include many additional elements, including:
- designating one or more employees as responsible for maintaining the program;
- imposing disciplinary measures on employees who violated the policy; and
- requiring third party service providers to implement and maintain appropriate security measures for personal information.
The standards also contains specific protocols for electronically stored personal information.
Several companies have developed software products to assist with masking of electronically stored personal information. These include DMSuite from Axis Technology LLC, and products from Grid-Tools. These products will not allow data holders to avoid developing an information security plan. However, tools like these can be a useful feature of a plan when it is developed.
Forrester Research recently published a report entitled “The Value of Corporate Secrets.” Commissioned by Microsoft and RSA, the report studied data security practices of over 300 companies in North America, Europe and Australia to understand how those companies value sensitive information.
The findings are revealing. The report notes that proprietary information and trade secrets contribute nearly twice as much to corporate value as custodial data (such as customer financial information and employee medical information). However, corporations devote most of their security resources and budgets to protecting the custodial data. This is because a wide array of regulations mandate the protection of medical, financial, and other custodial data, while corporations can decide for themselves how best to protect trade secrets. Because of this, many corporations are unable to assess how effective they are in protecting proprietary information.
RSA has published the full report here. It’s a worthwhile read for anyone who is involved in protecting a company’s intangible assets.
