Business Law for engineering Case study

Patent law

A patent is a grant of exclusive rights from the US government to an inventor for a period of

time in return for making and fully disclosing an invention. There are some important and

technical pieces to this definition, so let's break it down piece-by-piece.

A patent can only be granted through registration with the United States Patent and Trademark

Office (“USPTO”). Patents are also only granted for a limited period of time. The duration is 20

years from the date of filing. Notice, the duration of patent protection is much more limited

than the duration of protection for other areas of intellectual property. Trademarks, for

example, can last for a very long time – so long as a mark is being used in commerce in

connection with a product. Think about companies like Coca-Cola® or Pepsi.® These trademarks

have been in use for over 100 years – well over the 20 year duration of patent protection.

Copyright protection lasts generally for the life of the author plus 70 years.

Patents also grant an inventor exclusive rights in his or her invention in a way that other areas

of intellectual property do not. Patent law is more like a monopoly than any of the other areas

of IP. It is for this reason that the duration of protection is much shorter than the duration of

protection for trademarks, copyrights and trade secrets. The law balances this near-monopoly

protection with a shorter duration of protection.

Moreover, a patent is granted in return for the full disclosure of the invention. In other words,

the inventor agrees to teach the world how to practice the invention. This is the bargained for

exchange between the government and the inventor. The government allows the inventor to

enforce the exclusive rights in an invention. In exchange, the inventor agrees to fully disclose

the teachings behind the invention in a way that enables other to practice the invention. This

disclosure takes place in the patent application.

There are three kinds of patents, utility patents, design patents and plant patents. Utility

patents are by far the most common type of patent and what we will focus on during this part

of the lecture.

Patentable subject matter

The federal statute governing patent law is found in Section 35 of the United States Code (§35

USC). Section 101 of §35 USC sets out the categories of patentable subject matter and includes:

1) a method or process, 2) any device, machine or apparatus, 3) any article of manufacture, 4)

any composition of matter or 5) any improvement thereof. Let's talk about each of these

categories individually.

A process or method has been defined as “an act, or a series of acts, performed upon the

subject matter to be transformed and reduced to a different state or thing." It’s essentially a

method for doing something, making something, achieving a certain result or using something

in a specific way. Some examples of patentable methods include, manufacturing processes, a

method for curing a polymer and methods of doing business.

Now let's turn to a device, machine or apparatus. This category includes many items that you

are very familiar with. It has been defined as a mechanical device or devices that “performs

some function or produces some effect or result.” A coffee maker or factory machine fall into

this category. Even tweezers or a safety pin fall under this category as a device.

Next is an article of manufacture. An article of manufacture essentially includes any product

that is manufactured. The Supreme Court has defined the term manufacture as "the production

of articles for use from raw or prepared materials by getting those materials new forms,

qualities, properties or combinations, whether by hand labor or by machinery: also anything

made for use from raw or prepared materials." This category has been limited to tangible

articles of manufacture.

The last area of patentable subject matter falls under the category, composition of matter. This

category has been defined by the courts as; the “composition of two or more substances and …

all composite articles, whether they be the result of chemical union, mechanical mixture, or

whether they be gases, fluids, powders or solid." That definition comes from a Supreme Court

case. An example of a composition of matter would be a pharmaceutical drug.

Subject Matter that is Not Patentable

Before we get to the substantive requirements for gaining patent protection, let's talk about

what is not patentable. Three areas of subject matter that are specifically excluded from patent

protection are: laws of nature, abstract ideas and physical phenomena.

Laws of Nature

Laws of nature can never be patented. Even the first person to discover a law of nature cannot

protect the discovery under patent law. Instead, laws of nature simply exist and are not in any

way subject to patent protection. This category includes things like scientific principles.They are

free for everyone to use and cannot be monopolized by a patent.

However, as a general rule, the use of a law of nature to produce an effect that is novel, may be

patentable. (We’ll talk more about what is novel later.) But to transform an un-patentable law

of nature into a patent-eligible application of such a law, a patent must do more than simply

state the law of nature while adding the words “apply it.” This was the situation in Mayo

Collaborative Services v. Prometheus, Inc., 566 U.S. – (2012). Read this NY Times article about

the ruling before going on with the rest of the lecture.

The blog, Patently-O, also published an opinion on the Court’s ruling.

In the Mayo Clinic case, the invention at issue was a method for administering medication

based on the correlation between levels of the medication in a patient’s blood and the

appropriate dosage of a certain medication based on each patient’s ability to metabolize the

medication differently. Too much of the medication would be harmful to a patient while too

little would be ineffective. The patent claimed the steps of administering the drugs to the

patient, determining the resulting metabolite levels in the patient’s blood, and informing the

doctor of the specific dosage of the medication was effective based on the patient’s ability to

metabolize the drugs differently. The patent claimed a method for prescribing certain levels of a

medication based on a patient’s ability to metabolize the drug. At issue, was whether this

method could be claimed as the patent or if it was just a law of nature.

As a general rule, the Court said that the patent in question merely sets forth a law of nature,

namely, the “relationships between concentrations of certain metabolites in the blood and the

likelihood that a dosage of the drug will prove ineffective or cause harm.”

In order for a process or method to be patentable, it must be more than just a law of nature. In

this case, the inventors had identified a law of nature (how a patient’s blood reacts with a

certain medication) and prescribed a certain dosage of medication based on the findings of how

the patients had reacted. Although the patent may have claimed a method, the Court held that

the claims had not added anything specific to the law of nature they had discovered.

Abstract ideas

During our copyright discussion and in the textbook, we established the fact that ideas are not

subject to copyright protection. In the same way, in patent law, abstract ideas are not

protectable either.

Here’s a great example of why. I found this example recently in a text book and I think it

illustrates a few points beautifully. In O’Reilly v. Morse, 56 US 62 (1853), the Supreme Court

denied a claim in Morse’s patent that attempted to claim the “use of electro magnetism,

however developed, for making or printing intelligible characters, signs, or letters, at any

distances.”

Do you see why this claim was rejected? Notice the part that states “however developed.” The

claim doesn’t attempt to cover a specific process, but rather any process for accomplishing the

stated goal. The idea at issue was to create characters and letters at a distance using some sort

of electromagnetic process, but doesn’t specify the method or any method. This is no more

than an abstract idea.

Is a Business method an abstract idea?

For many years business method patents were criticized as an area in which far too many

patents were being granted for methods that shouldn’t necessarily rise to the level of patent

protection. Remember, a patent grants a monopoly – something that shouldn’t be taken lightly

and shouldn’t come too easily.

A case called Bilski v. Kappos, 561 US 593 (2010) brought this very issue to the forefront. In this

case the Supreme Court reinforced the idea that business methods are patentable however,

the Bilski case provided more guidance in determining which business methods can be

patented. The issue in this case was whether a patent should be issued for an invention

designed for the business world. The patent claimed a procedure for instructing buyers and

sellers on how to protect against the risk of price fluctuations in specific sectors of the

economy. In essence, the claim was for a method of hedging risk in the field of commodities

trading. That’s all! Eventually, after several appeals, the Supreme Court held that the method at

issue was nothing more than an abstract idea and was not patent-eligible.

Physical Phenomena

Physical phenomena are things that occur in nature, such as minerals or plants and organisms

that are found in the wild. Like laws of nature, physical phenomena can be, and often is,

incorporated into a patentable invention. However, on its own without adding something

novel, physical phenomena is outside the scope of patentable subject matter and must be left

in the public domain.