Each year, Washington Law and Politics magazine asks Washington's best lawyers to select among their peers the 2.5% that are the brightest and most promising.
The Rising Stars must be 40 years old or younger and have been in practice ten or fewer years. This is an incredible distinction and we are honored for our attorneys to receive it.
Mason Boswell practices patent law in Seattle, Washington for clients throughout the United States. This honor is an acknowledgment of Mason's dedication to client service and leadership in the field of patent law.
]]>Each year, Washington Law and Politics magazine asks Washington's best lawyers to select among their peers the 2.5% that are the brightest and most promising.
The Rising Stars must be 40 years old or younger and have been in practice ten or fewer years. This is an incredible distinction and we are honored for our attorneys to receive it.
Mason Boswell practices patent law in Seattle, Washington for clients throughout the United States. This honor is an acknowledgment of Mason's dedication to client service and leadership in the field of patent law.
]]>Each year, Washington Law and Politics magazine asks Washington's best lawyers to select among their peers the 2.5% that are the brightest and most promising.
The Rising Stars must be 40 years old or younger and have been in practice ten or fewer years. This is an incredible distinction and we are honored for our attorneys to receive it.
Mason Boswell practices patent law in Seattle, Washington for clients throughout the United States. This honor is an acknowledgment of Mason's dedication to client service and leadership in the field of patent law.
]]>Each year, Washington Law and Politics magazine asks Washington's best lawyers to select among their peers the 2.5% that are the brightest and most promising.
The Rising Stars must be 40 years old or younger and have been in practice ten or fewer years. This is an incredible distinction and we are honored for our attorneys to receive it.
Mason Boswell practices patent law in Seattle, Washington for clients throughout the United States. This honor is an acknowledgment of Mason's dedication to client service and leadership in the field of patent law.
]]>First-to-file: For my smaller clients, switching to first-to-file will mean that more of them find themselves shut out of the system by their pre-filing activities. I recognize that there is an exception for your own activity, but it is not strong enough. Many startups do not learn about patent law or consult a patent attorney until well after they have already put up a website, presented at a conference, or engaged in business activities that could trigger the on-sale bar. My larger clients will more easily adapt and find it to be business as usual. They already have good filing practices in place and this may simply mean that we file earlier in the process (e.g., after the first developer spec is written rather than after the first prototype).
Patent Quality: For those that want to see higher quality patents, I hardly see how forcing inventors into a rush to the Patent Office rather than letting them perfect the invention before filing is going to lead to anything other than more hastily written patent specifications. There will be a need to file earlier and do more “guessing” about how the invention should work rather than waiting (as you can today) to complete all of your experimentation before filing.
Fee Diversion: Congress continues to raid the fees of the Patent Office. While the Patent Office could easily be a self-supporting agency getting better and better (particular with the great IT improvement plans Director Kappos had in mind that are now shelved due to budget cuts), instead it is becoming a cash cow for Congress to milk. Fees are going to go up 15%, and the Patent Office is going to keep less of them. The Patent Office has asked repeatedly to keep all of its fees, and in this law that is definitively denied.
Fast Track: A new accelerated examination program that allows inventors to pay $4,500 to get their patent to the front of the line may mean that startups wait longer than ever for a patent. Big companies have the resources to fill the fast queue, and others will be at the back of the line. While large companies have their patent and will be at the courthouse ready to sue with it, the startup and small inventor will not even have received any correspondence from the Patent Office yet. It is hard to see how that will be good for small business.
Best Mode: The changes basically eliminate the “best mode” requirement. The bargain that a patent strikes is that you get a 20 year monopoly but in return you explain to the world exactly how your invention works so that after 20 years the public benefits by knowing how to use your invention for free. Best mode is the doctrine that basically said that if there are multiple ways to perform part of your invention, you cannot hide the one that works the best even though you disclose the others. You had to put on paper the best way you know how to implement the invention. Now inventors may be able to hide that best way, disclose inferior ways of implementing the invention, and the public loses. Consider it a way of keeping a trade secret even though you filed a patent. In the past you had to choose either a patent or trade secret.
Dis-joinder: On the litigation side, the changes bar those suing for infringement from naming multiple defendants in a single lawsuit when the only common ground is infringing the same patent. Patent cases start out with what is called a Markman hearing during which a judge determines how the words of a patent's claims will be interpreted for the trial. In many cases, each side has a good idea whether it will win or not based on the outcome of this hearing. Thus, many cases settle after this stage before any factual arguments have been made about a particular defendant's infringement. Given this, it seems inefficient to force separate lawsuits for each defendant. Again, small companies will be hurt the most. While patent trolls and big companies have ample resources to pursue 10 separate defendants in 10 separate cases, small companies may have to choose one golden target and try that case first. If they lose that one, they may not have the resources to pursue other defendants even if their cause is just.
Earmarks: The bill also contains some provisions that are questionable. For example, one large law firm missed a filing date and has been in a malpractice suit worth over $200M. They have reportedly engaged in a heavy lobbying campaign and the reform act changes the patent laws to “forgive” the error (click here for more details). A late attempt to add an amendment removing this provision by Sen. Jeff Sessions, R-Ala., failed.
During my time as a patent attorney, most changes to patent law have unfortunately made the complexity of filing and prosecuting patent applications go up. This in turn makes attorneys charge more and makes the Patent Office's fees increase. So while Congress is likely patting itself on the back for these changes, I find little in the new law to get excited about.
]]>The following quotes are often heard from clients that come to me after having a bad experience with the wrong patent attorney:
“I did not even recognize the application from my attorney as my invention.”
“I feel like I spent all my money paying to train their new attorneys.”
“I was charged for every copy and phone call but still do not understand the total cost.”
“It has been 4 years and we have not gotten anywhere with the examiner.”
Following is some inside information about how the field works and how you can start out with the right patent attorney from the start to avoid the same pitfalls.
1. Technical Experience. One of the most overlooked factors is technical experience. The attorney obtained this experience before becoming a lawyer. All patent attorneys have to have engineering or other technical degrees to pass the patent bar, but not all have the same technical experience. You want an attorney to write your patents that has technical experience most closely matching your product. Some patent attorneys claim to handle any type of patent, but the best stick to their technical field. If you have a software invention, look for a computer or electrical engineer with experience writing software. If you have a mechanical invention, look for a mechanical engineer with experience building widgets. One question to ask is whether the attorney has a resume sufficient for you to hire them in an entry level or higher technical position in your company. If not, they probably should not be writing your patents.
2. Small vs. Big Firms. I am often asked whether there is any difference between large law firms and solo firms. The truth is often that there is very little difference. It is a bit like asking who has smarter engineers, a large company or a startup. There are smart engineers at both for different reasons, and there are just as many reasons why patent attorneys choose to work in different environments. At the end of the day, you are hiring a specific attorney that will write your patents. At a large law firm, it is more likely that an associate in training will write your patent with an experienced partner reviewing their work (many law firm partners only supervise work and no longer write patents). You often only meet the partner and may only see who worked on your patent on the bill. At a solo firm, the attorney you meet will also write your patent. Having done both, I would rather have the person with the most experience spend their time on my patent. To use a surgical analogy, it is better to have an experienced surgeon perform the whole surgery than to have a resident operate on you with a supervisor popping in for a few minutes at the end. Going back to technical experience above, make sure you know who is actually working on your patent and that person's level of experience.
3. Cost. Although patent costs vary from firm to firm, one thing I would consistently suggest is to select an attorney that will give you an accurate picture of the costs upfront, and will commit to a cap on the total bill for filing your application. Hourly billing is particularly difficult for the client, because it gives the client very little upfront knowledge about how much a particular patent will cost, and unfortunately many clients often feel like the “clock is always running”. At large firms each attorney may have a different hourly rate and some will be faster than others, making it nearly impossible to know in advance how much anything will cost. I prefer flat fee billing because it gives you the clearest picture of the costs involved so you can plan effectively. Flat fee billing is a recent trend for law firms, and most old firms still use hourly billing. Also, watch out for extremely low fees. If you shop around you will find that most patent attorneys charge within a 10-20% range of each other, but some are 50% or more less than the going rate. Unlike most areas where a smart consumer looks for a low price, this is usually a warning sign in the patent field. Someone charging an unusually low fee may have had a hard time keeping clients in the past (due to poor work or missing deadlines), or may be very inexperienced.
4. Workload. High workload is often an indicator of good patent attorneys. This is a field where the supply of patent attorneys is lower than the demand for patent services, and the field has been growing steadily even throughout the recent recession. In fiscal year 2010, the Patent Office reports 509,367 U.S. patent applications were filed (a 4.7% increase over the prior year), with only 60,000 registered patent attorneys or agents (of which, approximately 1/3 are in-house at various companies and do not write patents and another 1/3 are retired or supervise the work of others). That means that even assuming an even distribution, the average attorney is drafting 25 patent applications a year, or one every other week. Because work will naturally find those who are good at performing it (and shy away from those who are not), a patent attorney without much work could be a warning sign of prior client dissatisfaction or other issues. Like any rule of thumb, there are exceptions: some attorneys may simply choose to work a low work schedule or may be returning to the field after some event.
5. Prosecution Success. The process of getting a patent through the Patent Office is referred to as prosecution. One of the best ways to evaluate a patent attorney (and the most difficult bits of information to find) is the attorney's success in getting patents through the Patent Office efficiently. Many clients that come to me after firing other firms have done so because the other firm has spent years in prosecution without making substantial progress. This can happen because the application was not written well in the first place or because the attorney is just ineffective at working with patent examiners. I have found that one of the most effective tools for working with the Patent Office is an examiner interview. The examiner handling the patent will often meet with your attorney if they simply request it, in a meeting called an interview. This is an incredible opportunity rarely used by many patent firms. Visiting the Patent Office and speaking in person with the examiner is often the most effective way to make progress in getting a patent. Everything in the patent record will later be used against you in litigation, so another advantage of interviews is that they are largely off the record and avoid hurting your patent during litigation.
6. Referrals. The way you find your patent attorney is often a good signal of how successful your experience with them will be. Unfortunately, many people do not know a patent attorney in advance of needing a patent. The Patent Office has only registered about 60,000 patent attorneys or agents in the U.S., so we make up less than 0.02% of the population. It is indeed a very specialized field. However, lawyers know lawyers and clients know the lawyers with which they have successfully worked. If you can get a recommendation for a patent attorney through another lawyer you trust (e.g., corporate attorneys often knows good patent attorneys) or from other businesses similar to your own, you are much more likely to start off with the right fit.
]]>Yesterday, the Enlarged Board delivered their opinion, which you can find in full here: G 0003/08 (Programs for computers) of 12.5.2010. The following is a summary of the four questions and the answers provided by the Enlarged Board (which I will refer to as the EB below). Basically it is a big letdown, as the EB squandered a big opportunity to provide some clarification and opted not to answer anything.
Answer: There is no divergence in the case law, so the question is inadmissible. The EB rephrased the question as referring to whether software should be treated differently for determining patentability based on the form in which it is claimed. In U.S. practice, we often file claims for software related to methods (e.g., a set of steps), systems (e.g., a set of components that can perform various tasks), and computer-readable media (e.g., a disk or other storage containing software instructions). Each of these types of claims has different infringers. A method claim is often infringed by the user, since the user causes the steps to be performed. A system claim is infringed by the person that puts an infringing system together, which could be a software manufacturer (e.g., a competitor of the patent holder) or an IT staff member in an organization (who installs and assembles all of the pieces the make up the system). A computer-readable medium claim is infringed by a disk pressing company, someone who puts the software on a USB drive, and so forth. To a patent attorney these are each claims to very different things, and applications usually contain a mix of claim types for the same invention to cast a broad net to protect the invention.
The EB spends a lot of time considering whether they can even take the question. They can only get involved on a referral of questions of this type if there is a conflict of rulings that come from two separate lower courts. They distinguish between cases that come out differently because of "developments in the law" from those cases that come out differently because two lower courts disagree on the law. Here they find the conflict to be developments in the law, and thus claim there is no conflict and punt on the underlying question. As a result, the previous case law on the topic stands, which they describe as follows "a claim in the area of computer programs can avoid exclusion under Articles 52(2)(c) and (3) EPC merely by explicitly mentioning the use of a computer or a computer-readable storage medium. But no exposition of this position would be complete without the remark that it is also quite clear from the case law of the Boards of Appeal...that if a claim to program X falls under the exclusion of Articles 52(2) and (3) EPC, a claim which specifies no more than "Program X on a computer-readable storage medium," or "A method of operating a computer according to program X," will always still fail to be patentable for lack of an inventive step under Articles 52(1) and 56 EPC. Merely the EPC article applied is different."
The inventive step needs to include more as described by one case they considered, "In the view of the Board, a computer program claimed by itself is not excluded from patentability if the program, when running on a computer or loaded into a computer, brings about, or is capable of bringing about, a technical effect which goes beyond the "normal" physical interactions between the program (software) and the computer (hardware) on which it is run. "Running on a computer" means that the system comprising the computer program plus the computer carries out a method (or process) which may be of the kind according to claim 1. "Loaded into a computer" means that the computer programmed in this way is capable of or adapted to carrying out a method which may be of the kind according to claim 1 and thus constitutes a system (or device or apparatus) which may be of the kind according to claim 14."
Answer: There is no divergence in the case law, so the question is inadmissible. The EB finds that the existing case law correctly distinguishes a computer program's instructions from the method the program performs. They point out that there is a difference between what something is versus what it is called, even though both use the same words. Here is a funny example: "Tigers eat meat. Meat is a word. Therefore tigers eat words." The problem with this statement is that "meat" is being used as what something is in the first instance and what something is called in the second instance. They apply this to computers as follows: "In the present case there is a logical distinction between a method carried out by a computer and the sequential list of instructions which specify that method."
Answer: There is no divergence in the case law, so the question is inadmissible. A technical effect is required, and previous cases do not care whether the "technical effects were on a physical entity in the real world" or not.
Answer: There is no divergence in the case law, so the question is inadmissible. The EB summarizes the prior case law as follows: "all computer programs have technical effects, since for example when different programs are executed they cause different electrical currents to circulate in the computer they run on. However such technical effects are not sufficient to confer "technical character" on the programs; they must cause further technical effects."
]]>When you get in a cab the meter starts and you usually pay by the mile. When you are in a city that you are not familiar with, it is often the case that the route on which you are driven is not necessarily the shortest route. Even when it is the shortest route, you often do not have enough familiarity with the area to verify that. Whether the driver takes advantage of it or not, there is a financial incentive to drive you farther than you need to go and cost you more time and money. All I could do was watch and be amazed at how fast that electronic meter racked up the dollars.
That's a lot like modern legal service that charges by the billable hour. Most clients are seeing an attorney because they are not familiar enough with the work that needs to be done to do it without the attorney. The attorney has the upper hand on information, and the client must often trust the attorney to take the client down the shortest, most cost-effective path. While we must hope that all attorneys have the highest ethical standards and put the client's interests before their own, why create an incentive in the first place that misaligns the attorney's interests and the client's interests?
The solution is simple, flat fees. Boswell IP has charged flat fees since day one. If you work with us, you will get a fixed quote at our first meeting that will tell you exactly how much you pay for the work. Imagine how the cab driver's incentives would change if he knew he was getting a flat $20 fee to drive you from the airport to your hotel. He would take the quickest route, because he would want to get the $20 and get back to the airport to pick up more passengers. The same is true of flat fees. Rather than an incentive to waste time and increase cost, the attorney has an incentive to get the work done and the client knows exactly how much he/she will pay.
The moral of the story is, do not trust your legal work to an attorney that charges like a cab driver.
]]>For the Patent Office's technology centers that correspond to many of the fields that I work in (e.g., 3620 - E-Commerce, 2160 - GUI and Database, 2150 - Networks) the rejection rates are greater than 80%. Note that these numbers are for patent applications that ultimately issued as patents, meaning that these numbers do not include those applications that were abandoned at some point in the process.
For patent filers, this highlights three key points. First, your application needs to be well written by an attorney that is an expert in your field. There are numerous things that a competent patent attorney knows to include in the application to provide support for multiple directions that the application may take in the Patent Office. The application should support not only the key concepts of the invention, but other subtle nuances that may take center stage as potential narrowing amendments based on prior art raised by the examiner.
Second, you should expect that no matter how well your application is written, it is very likely going to be initially rejected. Though I mention this to every new client in our first conversation, it always hits like a ton of bricks when they receive that first rejection from the Patent Office. In most cases an initial rejection is not the end of the line and the application will mature into a patent with a proper response to the examiner's concerns and some patience.
Third, after filing you should work with an attorney that is experienced at working with the Patent Office and plan for the cost of this stage of your application. The application process is not done when the application is filed, rather it is just getting started. Efforts after the application is filed are typically equal in scope and cost to the filing of the application. A skilled patent attorney knows how to work with the patent examiner to get to the root of the examiner's rejections and to get the application in condition for allowance as quickly and cost-effectivevly as possible. Unfortunately I have seen too many firms use this as an opportunity to run up costs by providing incomplete responses to Office Action after Office Action, further delaying the application's issuance. I have found that a proactive approach up front works well, and I often fly to the Patent Office (the U.S. only has one in Alexandria, Virginia) to meet with the examiner in person as early as possible for each application.
Despite the high rejection rates, with the right approach an initial rejection can be a sign of progress rather than the end of the line for your patent application.
]]>As many who are close to me know, I try to balance my patent work 50% among established corporations and 50% among startups. While I am seeing established corporations cut budgets and pull back 10-20% on patent work in the current economy, I am also seeing a flood of growth in the number of laid off workers starting new ventures and seeking patent protection. Whether from Microsoft or other local companies, many who have for years been seduced by a steady corporate paycheck are finding that the current crisis is providing an opportunity to pursue a long-held dream of starting a technology company.
Not every new venture will succeed, but this period will undoubtedly lead to some very interesting and useful innovation that will spur the next wave of economic growth. Now if we can just get the government to stay out of businesses enough to let them succeed (but that's deserving of its own post).
]]>Many are hoping for a return to the tradition of the leader of the Patent Office being a former patent attorney, and that the next leader will work to streamline the current 2+ year process involved with getting a patent.
Gary Locke was Washington's governor from 1997-2005, and is currently a partner at the Seatle office of Davis Wright Tremaine LLP. He holds a Bachelor of Arts degree from Yale (1972) and a law degree from Boston University (1975). Locke was the first Chinese-American governor in U.S. history; during his time as governor he led eight trade missions to China and opened a Washington state trade office in Guangzhou. It will be interesting to see if he works to improve U.S.-China relations on patent policy.
]]>Many patent attorneys have argued that the rules went beyond simple procedural instructions and into substantive lawmaking by dictating what could and could not be patented. The rules consist of three major areas. The first area regards the availability of continuations (Rule 78). Rule 78 prevents the filing of more than two continuations or continuations-in-part against a parent application without the filing of a petition to show why the substance of the continuation could not have been covered in the prior application.
The second area regards the availability of RCEs in an application. Typically, a patent application receives a first non-final Office action then a second final Office action. To keep the application alive and provide further argument to a final Office action, an applicant has to file an RCE. This two-Office-action-followed-by-RCE cycle can repeat several times before the USPTO either 1) is convinced by the attorney's arguments and allows the application, or 2) the applicant abandons the application (there is also the additional option of an appeal to the Board of Patent Appeals and Interferences (BPAI)). Rule 114 allows an applicant only one RCE without a similar petition to that described above for continuations.
The third area regards applications with high numbers of claims. Rules 75 and 265 require applicants that exceed a 25 claims to file an Examination Support Document (ESD) and conduct his/her own search of the prior art. Essentially, the applicant takes part of the burden off the USPTO examiner by searching and making arguments relative to each reference found as to why the application is patentable in light of the reference. This has been criticized as taking away the essential function of the examiner in examining applications as well as forcing the applicant to go on record with arguments that could later be damaging to the application.
The Federal Circuit Court of Appeals in its decision today made several holdings. First, the Court confirmed that the USPTO has no substantive rulemaking authority, but rather can only make procedural rules. Second, the Court finds the rules in this case to be procedural. Third, the Court finds that, "Rule 78 is invalid because it attempts to add an additional requirement — that the application not contain amendments, arguments, or evidence that could have been submitted earlier — that is foreclosed by the statute."
So what will really happen if these rules now go into effect? My opinion is that like so many recent decisions that fail to consider the additional burdens on inventors, the cost of getting a patent will just increase. To comply with Rules 75 and 265, most attorneys will urge their clients not to exceed 25 claims, and when they do exceed 25 claims will have to charge an additional premium for the additional searching and analysis involved (probably on the order of $5,000 to $10,000, potentially doubling the cost of filing the application). This only puts patents further out of the reach of small inventors, some of this country's main innovators. The costs related to applications will also go up because of Rule 114 for two reasons. First, patent attorneys will be reluctant to leave out any argument during prosecution of an application for fear that he/she will run into the limit against RCEs and will not be able to show that the argument could not have been raised earlier. Thus, Office action responses will become longer, cost will go up, and the USPTO will face even more paper to consider. Second, malpractice claims against attorneys will increase for failure to make arguments early enough, causing insurance premiums to go up (a cost that is ultimately paid by the attorney's clients through higher fees).
What is clear is that the USPTO's purpose behind these rules of reducing the current backlog almost certainly will not occur, since these rules primarily increase the burden on the Office to consume all of the new paper. The Obama Administration has yet to name a new USPTO Director, but we can only hope that new leadership will be able to find some more constructive suggestions for keeping our patent system strong and clearing the backlog.
The full opinion can be found here: CAFC Patent Rules Decision.
]]>In a related study the Kauffman Foundation named Washington one of the top five states for innovation. Hitting closer to my own field, they found that Washington holds the second most patents per capita (up from a rank of 10 in 2002) only behind Idaho (where Micron and other top filers are located). You can read the full report here (p.47 has patent info): Kauffman Study.
]]>Each year, Washington Law and Politics magazine asks Washington's best lawyers to select among their peers the 2.5% that are the brightest and most promising.
The Rising Stars must be 40 years old or younger and have been in practice ten or fewer years. This is an incredible distinction and we are honored for our attorneys to receive it.
Mason Boswell practices patent law in Seattle, Washington for clients throughout the United States. This honor is an acknowledgment of Mason's dedication to client service and leadership in the field of patent law. Thanks to all of Mason's peers who nominated him for this unexpected recognition!
]]>"Krebs said the billable hour discourages efficiency and encourages bill padding. It also stymies companies' attempts to forecast and budget legal costs. And it assumes that all services are worth the same – something that companies just don't believe is true."
You can find the article here: Boston Business Journal Article.
]]>The cases in this area like to talk a lot about purely mental processes or steps that can be performed entirely in one's head as being unpatentable. I always think of the example of popular cryptographic algorithms like SHA, MD5, and RC4, and wonder if they would be patentable under these standards. My opinion is that these are ingenious algorithms, they take a lot of work and investment to come up with, and they should be patentable. And while these algorithms would be difficult to perform in your head, that is due more to how much you would have to remember than any one step being that hard (the assembly code for SHA fits on a page, for example). If people can spout off a thousand digits of pi, I am sure someone out there could do a round or two of the RC4 cipher in their head. However, in practice I am sure RSA (if they were my client) would be happy enough to corner the market on computer-based implementations of their algorithms and leave the market open for all those would-be mechanical or paper-based competitors:). Still, why should they not have a patent on the use of the algorithms in any form when they went through all of the trouble to discover them?
For business method patents I think the ruling is more dire. Even though the court would not explicitly exclude them from patentability, I have been struggling to come up with a good business method example that would fit the court's new test of including a machine or transformation. Maybe what is considered a "transformation" will become looser over time to include some of the results of business methods. It does seem like the net effect will be that getting a business method patent through the Patent Office will be very hard in the coming years. Even so, for those that are basing a new venture entirely on a novel business method, patents are still one of the best deals going. If your company plans to make several million of revenue based on a novel business method, then paying tens of thousands to potentially get a patent on it (i.e., a 20 year government backed monopoly) is not a bad deal. Therefore, I am sure many in that position will still try to get business method patents. Otherwise, the court just put a whole examination group at the Patent Office out of work.
]]>Experimental use is a common exception to public use of an invention, and was created by an 1878 court case about a new roadway technology. City of Elizabeth v. American Nicholson Pavement Co., 97 U.S. 126 (1878). The inventor, Nicholson, argued that he had to lay the new road down and see how it held up to daily traffic of hundreds of horse carriages to perfect the invention before filing a patent application. Neither public use or commercial sale can occur before the invention has been perfected or what is called "reduced to practice." The court in the roadway case held that the invention had not been reduced to practice until it was perfected by the testing. The testing actually went on for 10 years.
In re Cygnus is about a calling technology in which a beta was held to test calling all over the world. The court found a reduction to practice in the inventor's own statement that the software was functional before the beta, even though it was not tested well enough to be ready for consumers. The beta test was largely to test the scalability of the software when hundreds of users were using it. Sound a lot like the roadway case? It does to me, but the court said that the use by Cygnus was not experimental because the invention already worked well enough and thus an application could have been filed within the one year deadline.
Given this decision, it is hard to see how any use of software would be considered experimental. Most software works in at least a rudimentary way by the time it leaves the developer's computer and is given to a tester for testing. By the time a beta occurs, the software is often functional even if flawed.
To be safe, it is wise for software inventors to file a patent before going to beta, or at least within one year after. If budget or other factors prevent filing at that stage, the next best alternative is to make beta testers agree to terms of use that create a duty of confidentiality. This can prevent any use from being seen as public. Another factor in Cygnus was that the inventor asked beta testers to pay for their own phone calls made with the system, which the court held to be a commercial sale even though it created no profit for the inventor. It is a good idea to avoid charging beta testers or asking them to incur any costs to prevent the beta from being treated as a commercial sale.
]]>In the U.S. you cannot file for patent protection more than one year from the date the invention was first patented or described in a printed publication in this or a foreign country or in public use or on sale in this country. This includes disclosures you make as well as disclosures someone else who independently invents the same invention makes. For foreign rights you generally must file an application before ever publicly disclosing the invention.
In addition, the earlier you file an application the more likely you will predate potential prior art that is used against your application during the process of getting a patent. Although the U.S. is technically a first-to-invent system (meaning that whoever invents something first has superior rights to a patent) rather than a first-to-file system (meaning that whoever got to the Patent Office first has superior rights to a patent), the reality is that it is often very difficult to prove to the Patent Office an invention date earlier than the filing date. Thus, filing an application as early as possible is the best strategy to protect against anything anyone else is doing.
What most people refer to as a patent is called a nonprovisional utility application. However, the Patent Office also provides a provisional utility application that is designed to have less stringent formal requirements and allow you to file an application in situations where there is too little time or money to prepare a nonprovisional application. A provisional application secures a filing date and allows you to use "patent pending" in association with your product or service. However, a provisional application is not examined by the Patent Office and will never, by itself, become a patent. A provisional application expires one year after it is filed.
A nonprovisional utility application is examined by the Patent Office and if it meets all of the requirements and is found to be novel and nonobvious (i.e., not done before and not an obvious variation of what has been done before), then it will become a patent. A nonprovisional application can claim priority to a provisional application, which causes the nonprovisional application to be treated as if it were filed on the date of the provisional application. The caveat is that the nonprovisional will only get the benefit of the earlier date for subject matter that was described in the provisional application. For example, if you describe Component A in the provisional and Components A and B in the nonprovisional, then Component A would get the benefit of the earlier filing date, but Component B would not.
The Patent Office costs for filing a provisional and a nonprovisional application are similar, and the bulk of the cost of filing a nonprovisional application is for the attorney's drafting time. A provisional application is generally filed to save time and/or money, so the goal is often to reduce the amount of attorney drafting involved. A provisional can often be filed using whatever materials about the invention are already available. For example, an inventor may have prepared a business plan, marketing materials, a presentation, or a journal article that describes the invention. Or, the inventor may be willing to prepare a write up describing how the invention works. When these are not available and a substantial amount of attorney drafting is involved, it is usually more cost effective to go ahead with preparing and filing a nonprovisional application.
A provisional application can be filed for about $3,000. The attorney time involved is spent preparing the Patent Office documents and reviewing the materials provided by the inventor and revising any statements that could hinder the breadth of a later nonprovisional. A nonprovisional on the other hand costs about $15,000 to file. Thus, there can be significant advantages for a company seeking funding to start by filing a provisional. The provisional filing provides another year before more significant costs are incurred, and gives many of the same benefits, including being able to use "patent pending" to ward off competitors, assuring investors that steps have been taken to protect your core idea, and so on.
There are several risks involved with filing a provisional that need to be considered carefully. First, if the provisional fails to describe some important detail about the invention, the patent may later not get the benefit of the earlier filing date. This could cause the patent to be found invalid if there is similar art filed in between the filing of the provisional and nonprovisional applications. Second, you cannot stop others from using your invention or collect license fees from them until you have a patent, and waiting to file a nonprovisional delays the date you ultimately receive a patent. In fast moving technology areas, this can be a problem as the techniques protected by the patent may be irrelevant several years down the road. On the other hand, you will extend the life of the patent by an extra year (21 years instead of 20), since the life of the patent is determined by the nonprovisional filing date.
The last thing I want to cover is the value of a patent. One question I am often asked is, "why do I even need a patent?" The answer varies. In some cases you may not need a patent. For example, some companies derive their value from their brand, such as Coca Cola. It would not have benefited Coca Cola very much to have 20 years of exclusive use of the soda making process. On the other hand, for many technology companies their value is in their discovery of a great idea. These ideas often take years to develop but relatively little time to copy once they are discovered. Patents are ideal for preventing this type of copying. It is important for a company to determine what exactly its secret sauce is and to focus early intellectual property protection efforts on covering that. For some companies, a trademark on the name of the company (e.g., Match.com) may be much more important than the way the company's product works. For others, a patent on the core process is critical.
Although most patents will not be used in litigation, they can have numerous other benefits that are difficult to quantify. A patent may ward off competitors, convey careful planning to investors, solidify an exit strategy, or boost marketing of a product. Regarding exit strategy, if a company wants to be acquired, being able to prove that the company owns the technology being sold increases value. Even if a company fails, patents can often be the most valuable asset left in the company and they provide an alternative exit strategy through selling the patents or using them to extract license fees from a competitor that has done a better job executing on the idea. Regarding marketing, both Washington Mutual (who patented their banking center experience) and Amazon (who patented one-click shopping) have gained enormous marketing value by being able to project one-of-a-kind experiences to the marketplace.
]]>Rick's comments go right along with a message about the importance of patents to protect the research and development a company is doing. In my experience, I have met three types of companies:
This order of this list also often corresponds to the rate of success that I see from these companies. All of the big players, such as Microsoft, Intel, IBM, and others, make major investments in both research and IP and see the rewards of those investments to their bottom line. However, what is less visible is the enormous benefits that come to small to medium sized companies that protect their IP. These companies can ward off competitors seeking to copy their hard work, and they provide themselves with a defensive position when competitors try to assert IP against them. These companies are also often the targets for acquisition by bigger companies that view the IP the company has built as an asset as valuable as the team and products of the company.
]]>If the original transfer is treated as a license, then the first-sale doctrine does not apply and the copyright owner can control how the item is transferred (or even prevent transfers). If the original transfer is treated as a sale of a copy, then the first-sale doctrine applies and the copyright owner has no further control over the sold copy.
In the case today, Verner v. Autodesk, the District Court held that the original transfer was a sale, and that Verner could legally resell the software. The case involved Timothy Vernor's EBay store where he sold legitimate copies of AutoCAD among other things. Autodesk asked him to take down the software and he refused, so AutoDesk got EBay to take down the software. Verner sued, and today won.
This still does not resolve the overall conflict, it is just one more point on the board. The 7th and 8th Circuits of the U.S. Court of Appeals have held in cases that the original transfer is only a license, while the 3rd circuit has held that the original transfer is a sale of a copy. We will have to wait and see if Autodesk appeals this case to the 9th Circuit.
In the meantime, software manufacturers should look at their end-user license agreements (EULA) based on the court's decision and not rely on preventing subsequent transfers of software as a key element of their business model.
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