Module 7
Patents
A. Foundations of Patent Law
A patent is a legal right granted by the federal government that permits its owner
to prevent others from making, using, selling, or importing an invention. There are three
types of patents: utility patents, design patents, and plant patents. The great majority of
patents are utility patents, granted for useful objects or processes. For more than 200
years, patents in the United States have been granted to the first to invent, assuming the
invention or discovery is not known or used by others in the United States or patented or
described in a printed publication in the United States or elsewhere. Effective March 16,
2013, however, and as a result of the Leahy-Smith America Invents Act of 2011, U.S.
law will be harmonized with that of nearly all foreign countries so that patents will be
awarded to the first to file the application. Not all discoveries or inventions are eligible
for utility patent protection. Patent protection is available only for a new and useful
process, machine, manufacture, or composition of matter, or any new and useful
improvement thereof. Thus, an inventor must demonstrate that the invention or discovery
is useful, novel, and nonobvious. Generally, patent law prohibits the patenting of an
invention that is merely an insignificant addition to or trivial alteration of something
already in existence or already known.
The word patent is a shorthand expression for “letters patent.” A patent is a grant
from the U.S. government to exclude others from making, using, selling, or importing
another person’s new, nonobvious, and useful invention in the United States for the term
of patent protection. After this period of exclusive protection (20 years from filing for
utility and plant patents and 14 years from grant for design patents), the invention falls
into the public domain and may be used by any person without permission. This right of
exclusion is far different from the rights provided under copyright law. Under patent law,
inventors can enjoin the making, using, selling, or importing of an infringing invention
even if it was independently created. In contrast, copyright law protects only original
works of authorship. If two writers independently compose the same poem, both are
protected under copyright law. A patent allows its owner to exclude others from using the
owner’s invention; it does not provide any guarantee that its owner can use or sell the
invention.
To obtain a patent, an inventor must file an application with the USPTO, the same
agency of the Department of Commerce that issues trademark registrations. The
application must describe the invention with specificity. The application will be reviewed
by a USPTO examiner, and, if approved, the patent will issue. The patent is a written
document that fully describes the invention. Just as U.S. copyright law derives from the
Constitution, so does patent law. The U.S. Constitution provides that Congress shall have
the power “to promote the progress of science and useful arts, by securing for limited
times to authors and inventors the exclusive right to their respective writings and
discoveries.” U.S. Const. art. I, § 8, cl. 8. The wording applicable to patents is science,
useful arts, inventors, and discoveries. Patents promote the public good in that patent
protection incentivizes inventors. If inventors of useful discoveries could not protect their
works from use or exploitation by others, there would be little motivation to expend
effort, time, and money in creating inventions. The introduction of new products and
processes benefits society. In return for the full disclosure to the public of the specifics of
the invention, thus advancing science and technology, the inventor is given a limited
period of time within which to exploit his or her invention and exclude others from doing
so. Inventors are thus encouraged to create new products, and the public benefits from
inventions that ultimately will fall into the public domain.
Revisions of federal patent statutes occurred in 1836 when the Patent Office was
created and again in 1870 and 1897. Thereafter, in 1952, Congress enacted a new patent
act, codified in Title 35 of the United States Code. The America Inventors Protection Act
of 1999 (discussed in later chapters) also produced some major changes in patent law. In
2011, however, Congress passed the most significant revisions to federal patent law since
1952 when it enacted the Leahy-Smith America Invents Act (AIA). Issues relating to
patents are resolved solely by federal law. Moreover, development of patent law has
evolved primarily through federal court decisions rather than the legislature. Just as seen
in copyright law, where the term writings has been held to be broad enough to cover
emerging technologies such as computer programs, the language in the 1793 act relating
to the protectability of machines, manufactures, art (later changed to process), and
compositions is broad enough to cover new developments such as computers and
electronics. In 1982, Congress created a new court, the Court of Appeals for the Federal
Circuit (CAFC), to exercise exclusive jurisdiction over all cases involving patent issues
and to promote uniform interpretation of the U.S. patent statutes, which until then had
been interpreted in often inconsistent ways by the various federal courts of appeals
throughout the nation. Unlike trademark and copyright law, both of which recognize
common law rights in marks and works of authorship even without federal registration,
patent law requires that an inventor secure issuance of a patent from the U.S. government
to protect and enforce his or her rights against infringers. Inventors, however, may also
secure some protection for their works under trade secret law (see Chapter 22).
Moreover, some inventions, such as computer programs, are protectable under copyright
law as well as patent law.
Patents exist only by authority of government grant. The department of the
government responsible for granting patents is the Department of Commerce, acting
through the USPTO. The USPTO receives applications, reviews them, and issues or
grants patents. The USPTO also publishes and disseminates patent information, records
assignments of patents, maintains files of U.S. and foreign patents, and maintains a
search room for public use in examining issued patents and records. The present address
for mailing most patent-related documents is Mail Stop ___ (insert particular mail stop or
box number per USPTO website instructions), Commissioner for Patents, P.O. Box
1450, Alexandria, VA 22313–1450. Because addresses may change, always check the
USPTO website before submitting documents or correspondence to the USPTO. Most
correspondence with the USPTO, however, is submitted electronically. Additionally, the
USPTO website (http://www.uspto.gov) offers a wealth of general information, forms for
downloading, patent statistics, news updates about issues affecting the USPTO and patent
practice, schedules of patent fees, and other valuable information.
As secretary of state, Thomas Jefferson was the first head of the Patent Office.
Legend has it that the reason the files in which patents are kept and maintained are called
shoes is that the first patent applications were stored in Jefferson’s shoeboxes. The
practices and procedures relating to examination and issuance of patents are found in the
USPTO publication Manual of Patent Examining Procedure (MPEP), which most
practitioners keep handy to serve as a reference tool for patent issues and questions. The
entire text of the MPEP is available for viewing and downloading at the USPTO website.
Additionally, regulations relating to patents are found in Title 37 of the Code of Federal
Regulations. These rules and regulations explain how the patent laws are to be
implemented, provide procedures to be followed at the USPTO, and generally govern the
day-to-day situations that may arise at the USPTO. Various methods for locating patents
are available. The University of New Hampshire’s Franklin Pierce Center for Intellectual
Property (http:// ipmall.info) provides links to a variety of patentrelated sites, including
one listing famous patents, from Eli Whitney’s cotton gin, to the application by Orville
and Wilbur Wright for the airplane, to the first application for a computer program.
Another site (http://www.colitz.com/site/wacky_new .html) identifies the “wacky patent
of the month” and references issued patents for oddities such as a “pat on the back
apparatus” and eye protectors for chickens.
Although ideas are not patentable, processes are. A process is a method of doing
something to produce a given result. According to Cochrane v. Deener, 94 U.S. 780, 788
(1877), a process is “an act, or series of acts, performed upon the subjectmatter to be
transformed and reduced to a different state or thing. If new and useful, it is just as
patentable as is a piece of machinery.” A patent may be issued for a newly developed
process or a new use of an already known process. Some examples of patented processes
are the process for chrome plating; the process for making synthetic diamonds; processes
for vulcanizing India rubber, smelting ore, tanning, and dyeing; Louis Pasteur’s 1873
patented yeast process; and Clarence Birdseye’s process for packaging frozen food. In
fact, the first patent issued in the United States, to Samuel Hopkins in 1790, was entitled
“improved potash process.” In some instances, not only the process but also the result of
the process is patentable, such as U.S. Patent No. 6,881,428 for the “process of making a
lactose-free milk and the milk so processed,” which combines a process (the method of
manufacturing) with a product (the milk). The other types of utility patents (machines,
manufactures, and compositions of matter) are all products or items. A machine is a
device with moving parts that accomplishes a result, such as a sewing machine or a
blender.
The Constitution itself provides that patent protection is available for “useful
arts,” and 35 U.S.C. § 101, in defining what is patentable, states that patents are available
for useful processes, machines, manufactures, and compositions of matter. Although
usefulness is not a stringent standard, the invention must be of some benefit to society to
be “useful.” Mere novelties or inventions that conflict with scientific principles, such as a
perpetual motion machine, are not patentable because they are not useful. In brief, such
an invention has no usefulness because it does not work. Similarly, inventions whose
only purpose is detrimental or fraudulent or would promote illegal ends cannot be
patented inasmuch as, by definition, they are not useful. For example, a patent was denied
for a process of making a low-cost tobacco leaf that resembled a more select leaf on the
basis that its only purpose was to deceive consumers. Rickard v. Du Bon, 103 F. 868 (2d
Cir. 1900). Inventions that serve to amuse or entertain are considered useful. Generally, a
small degree of utility is sufficient to show that an invention satisfies the requirement of
usefulness. In fact, the commercial success of an invention is evidence of its utility
The usefulness required of an invention must be present usefulness (determined at
the time of invention), not usefulness purely for research purposes. Thus, patent
protection will be denied to a drug whose usefulness cannot yet be shown or to a process,
the result of which produces an article that has no current use. The fact that a drug,
invention, or result of a process might show some benefit or usefulness at some time in
the future is generally not sufficient and a patent therefor will be denied. Nevertheless,
even if an invention or discovery shows no benefit to humans, it will be protected by
patent law if usefulness for animals can be shown. Thus, drugs or compounds whose
effectiveness has been demonstrated for animals can be patented even though their
usefulness for humans cannot yet be shown. In re Brana, 51 F.3d 1560 (Fed. Cir. 1995).
Applications that claim some drug or other substance is useful for humans must be
accompanied by supporting evidence, usually results of tests or trials, and must show the
substance is reasonably safe. To be patentable, an invention need not meet the stricter
standards of regulatory agencies such as the Food and Drug Administration; it need only
be “reasonably safe.” To ensure that the invention is useful, the application must disclose
or specify the usefulness of the invention. To allow a patent that does not specify its
utility would be to grant a patent on an entire range of unknown applications, thereby
allowing an inventor to obtain a monopoly on an entire field of knowledge. Thus, patent
applications must describe their specific advantage or usefulness so the public can benefit
from the invention. Similarly, a patent will be denied when an invention fails to operate
as described or claimed in the application.
Current Section 102 of the Patent Act (effective only until March 16, 2013)
elaborates on the requirement of novelty by setting forth certain situations that
demonstrate the invention is not novel. Most codify the principle that will be recognized
until March 16, 2013, that the first to invent will be granted a patent. If an invention is
known or used by others, is the subject of an existing patent, or has been described or
sold, then it is not novel and, accordingly, is not eligible for patent protection. In such a
case, it is deemed that the applicant’s invention was anticipated and an application will be
denied. Often called the doctrine of anticipation, this principle is intended to ensure that a
second or junior inventor does not secure a monopoly on an invention that a senior
inventor owns or that is in the public domain. Effective March 16, 2013, the AIA creates
a new first to file system. Every industrialized nation other than the United States uses a
“first to file” patent priority system. In such a system, when more than one application
claiming the same invention is filed, priority is given to the earlier-filed application. The
United States, by contrast, has used a first to invent system, in which, if there is a conflict
over priority of inventorship, priority is established through a complex and expensive
proceeding (called an “interference proceeding”) to determine which applicant invented
the claimed invention first. In a first to file system, the filing date of the application is
critical. This “line in the sand” filing date provides an objective and easy way of
determining which inventor is entitled to a patent.
Pursuant to 35 U.S.C. § 102, effective March 16, 2013, a person will be entitled to
a patent unless the claimed invention was already patented, described in a printed
publication, or in public use, on sale, or otherwise available to the public anywhere in the
world before the filing date of the application for the invention. Nevertheless, as
described previously, a disclosure made one year or less before the filing date will not bar
the application as prior art if the disclosure was made by the inventor or by another who
obtained the information disclosed directly or indirectly from the inventor. Thus, once the
inventor publishes or discloses his or her invention, he or she has one year to file the
patent application. Failure to file an application within the one-year grace period will bar
issuance of a patent. After March 16, 2013, any public use or sale of the invention prior
to the application filing date will preclude the granting of a patent unless the disclosure is
by the inventor or one who obtained the subject matter directly or indirectly from the
inventor.
The on sale bar of current 35 U.S.C. § 102(b) engenders many refusals by the
USPTO. It is intended to encourage prompt action by inventors. It would be unfair to
allow an inventor to use an invention for profit and delay filing for an application because
such a delay has the effect of adding time to the term of protection for the patent and
delaying its entry into the public domain. Recall that the focus of Section 102(a) is on the
acts of those other than the inventor. The focus of Section 102(b) is on the actions of both
the inventor and others more than one year before the inventor files his or her patent
application (although it is often the inventor’s own acts that trigger the one-year time
bar). Another distinction between the two subsections is that Section 102(a) bars a patent
if the invention was patented or described in a printed publication anywhere in the world
before the invention by the applicant; Section 102(b) bars a patent if the invention was
printed or described anywhere in the world more than one year before an application is
filed for the invention.
Both before and after March 16, 2013, an invention is deemed to be “in public
use” if it is being used in the manner intended by the inventor without any confidentiality
restrictions. An exception allows experimental use of the invention so that the inventor
can perfect the invention or ascertain whether it will fulfill its intended purpose. Thus,
such experimental use will not defeat novelty. Similarly, private use by the inventor or
use for the inventor’s own enjoyment will not defeat novelty; however, an invention that
is “ready for patenting” will defeat novelty if there is a commercial offer for sale of the
invention. Pfaff v. Wells Elecs., Inc., 525 U.S. 55 (1998). In Pfaff, the one-year on sale
bar of current 35 U.S.C. § 102(b) applied although the inventor had made only
engineering drawings and had not yet made the invention, because he had accepted an
offer to sell the invention. An invention is deemed to be “on sale” if it is offered for sale,
even though no actual sales occur. Even a single sale or offer to sell may bar patentability
Merely because an invention is useful and novel does not automatically entitle it
to patent protection. To qualify for a grant of patent, the invention must be nonobvious to
those having ordinary skill in the field or art to which the subject matter pertains. 35
U.S.C. § 103. The subject matter sought to be patented must be sufficiently different from
what has been used or described before that it may be said to be nonobvious to a person
having ordinary skill in the area of technology related to the invention. For example, the
substitution of one material for another in an invention and mere changes in size are
ordinarily not patentable because they are obvious. A distinct improvement, however, is
patentable even if the new invention improves matter in the public domain. Similarly, a
new use of a known process is patentable. Determining whether an invention is
nonobvious is one of the most difficult tasks in patent law. After all, a disposable razor, a
safety pin, and a retractable tape measure all seem obvious now, yet none of these items
were obvious at the time they were invented. Until the 1952 Patent Act, courts generally
required that an invention result from a “flash of genius” or some sudden insight (an
inventor’s “aha!” moment). The view was that an invention must have been so
nonobvious that no amount of diligent research would have produced it. The Act now
provides (and will continue to provide after the AIA) that patentability shall not be
negated by the manner in which the invention was made. 35 U.S.C. § 103. Thus, whether
an invention is produced by dint of arduous research or a flash of genius does not
determine whether it is nonobvious. The present method of determining nonobviousness
is by reference to the prior art. Prior art is generally defined as all information available
to the public in any form about an invention. Until March 16, 2013, when the United
States moves to a “first to file” system, prior art is measured from the date of invention.
On and after March 16, 2013, prior art will be measured from the date of filing the
application, meaning that information that publicly exists prior to the filing date (other
than disclosures by the inventor within one year before filing) will bar the application.
B. Patent Searches, Applications, and Post-Issuance Proceedings
Before an application for a patent is filed, a search should be conducted to ensure
that the invention is novel and nonobvious. If the search results suggest that an invention
may be patentable, an application is then prepared. An application consists of two parts:
the specification (describing the invention) and the inventor’s oath or declaration. Until
September 16, 2012, applications must be filed by individual inventors, although the
application can be assigned to another at the same time it is filed. After the application is
filed at the USPTO, it will be examined for patentability. Application proceedings at the
USPTO are confidential until the application is published, generally 18 months after the
application filing date. The examiner may issue office actions, requiring amendment of
some of the claims of the invention. No new matter can be added to an application. When
an application is allowed by an examiner, a notice of allowance is issued, and an “issue
fee” must be paid to the USPTO for the patent to be granted. The term of utility and plant
patents is 20 years from the date of filing of the application therefor. The term of design
patents is 14 years from the date of grant. Maintenance fees must be paid at three
intervals during the term of a utility patent to maintain it in force. Once the patent is
issued, its owner may exclude others from making, selling, importing, or using the
invention for the term of the patent.
Patentability requires novelty and nonobviousness. The only predictable method
of determining whether an invention is new and nonobvious is to conduct a search of the
prior art (including patent records and printed publications). The patentability search,
sometimes called a novelty search or prior art search, will help determine whether the
differences in the subject matter sought to be patented and the prior art are such that the
subject matter as a whole would have been obvious to a person having ordinary skill in
the art. Moreover, because 35 U.S.C. § 102 imposes novelty as a condition for
patentability, a search will disclose whether novelty bars to protection exist. Finally, if an
invention has fallen into the public domain because its patent has expired, anyone can use
it and no one can obtain a patent for it. Searching will disclose the existence of such
expired patents. Thus, although not required prior to filing a patent application, a search
is recommended to determine the feasibility of obtaining a patent. Otherwise, an inventor
may incur costs of several thousand dollars in prosecuting a patent application only to
have an examiner determine that the invention fails to satisfy the requirements of novelty
and nonobviousness. An additional benefit of conducting a search is that it may provide
ideas for drafting the application itself.
Although the terms “freedom to operate search” and “infringement search” are
often used interchangeably, there are differences between the two types of searches,
although both focus on whether the client’s invention is blocked by another’s intellectual
property rights. A freedom to operate search is usually conducted before the invention is
brought to market and is intended to ensure that the invention does not infringe any
patents. In contrast, an infringement search is usually conducted after the inventor has
been informed that he or she is violating another’s patent, and it focuses on examination
of this specific and known patent (often with the goal of invalidating this patent). An
infringement search or full patentability search is far more extensive than a novelty
search and is thus more expensive, often costing between $3,000 and $10,000.
Conducting a search and obtaining an opinion relating to infringement is important
because although there is no affirmative duty to obtain advice of counsel with regard to
whether one’s actions might constitute infringement, relying on counsel’s advice is an
important factor in determining willfulness. Generally, willful infringement may lead to
the imposition of punitive damages in an infringement action (see Chapter 20). Some
inventors conduct their own searches. Others retain patent attorneys to perform the search
or to engage the services of a professional search company. Naturally, the scope and
breadth of the search depends on a variety of factors, including cost, complexity, and
importance of the invention. In many instances, paralegals conduct preliminary searches
of the U.S. Patent Trademark Office (USPTO) databases and if this initial review
indicates that the invention may be patentable, a more comprehensive search is conducted
by professional patent searchers.
The patent record databases (e.g., the USPTO’s database of more than eight
million issued patents) allow searching by keyword. This method matches words,
phrases, and terms relating to the claimed invention to the words, phrases, and terms in
the patents themselves. Patents from January 1976 to the present can be searched by a
variety of fields or terms, such as the inventor’s name, the patent’s title, the full
description of the invention, and the claims. Most keyword searches rely on Boolean
searching to formulate queries. The Boolean search method uses terms and connectors
such as or, and, and and not to construct searches.
Additionally, the USPTO database affords several elements or “fields” that can be
searched, so that a search will retrieve only documents relating to the attorney
representing an applicant, a specific patent examiner, issued patent number, and so forth.
The display of each patent’s full-text includes a hyperlink to obtain full-page images of
each page of the patent. Pre-1976 patents can only be searched by the patent number or
the USPTO’s classification number or code assigned to the invention; however, this
limited display also includes a hyperlink to obtain full-page images of each page of the
patent. The USPTO database affords several methods to narrow a search and obtain
precise results. For example, searchers may select a date range to obtain patents issued
only after a specific date. Keyword searches are fast and easy; however, the quality of a
keyword search is highly dependent on the searcher’s ability to anticipate the words an
applicant used in an application. For example, a keyword search for a term such as “bird”
will produce only patents with that specific word and no patents with the word “avian.”
C. Patent Ownership and Transfer
Because patents have the attributes of personal property, they may be sold,
licensed, or made subject to security agreements. In many instances, inventions are the
product of more than one inventor. Joint inventorship exists even when the contributions
are not equal and the parties do not work in the same physical location. Until the United
States moves to a first to file patent system on March 16, 2013, disputes over priority of
invention will be determined by the principle that the first to invent is presumed to be the
one who first reduced the invention to practice. Laboratory notebooks kept by inventors
assist in determining the efforts inventors have made in reducing the invention to
practice. Inventions made by an employee are owned by the employee, subject, however,
to a “shop right,” a nonexclusive royalty-free license to use the invention in favor of the
employer. Nevertheless, if an employee is specifically hired to make an invention, the
invention will belong to the employer. In most cases, employees and employers enter into
written agreements by which employees agree that any inventions will be owned by and
assigned to the employer. Patents may be assigned to others (an outright sale) or may be
licensed to others, in which case permission to use the invention is granted to another.
Patents are items of personal property and thus may be owned, sold, licensed, or
devised by will. Until September 16, 2012, applications for patents must be filed by the
actual inventor of the article, process, design, or plant. After that date, under the America
Invents Act (AIA), applications may be filed by the assignee of the invention (or one to
whom the inventor has an obligation to assign), making it easier for the true owner of an
invention, often an employer, to file the application. If there is more than one inventor,
the application must be signed by all inventors (or assignees, after September 16, 2012).
Before September 16, 2012, although the application must be signed by the actual
inventor(s), it is possible that another party may already own the invention and any rights
arising from it. For example, in many instances, employees are required to sign
agreements with their employers whereby they agree that any invention or discovery
invented by them while on the job will belong to the employer and that they will agree to
assist and cooperate in any manner, including signing applications for patents, to ensure
the employer’s rights are protected. In such cases, although the oath in the patent
application is signed by the individual inventor, when the application is filed, a
simultaneous assignment is also filed, transferring the application and any rights under it
to the employer. (See Appendix D, Form 14, for an agreement including provisions
relating to ownership of inventions and work product by employers.) The new provisions
of the AIA (effective September 16, 2012) will eliminate this cumbersome procedure by
allowing the assignee to file the application directly
When more than one person contributes to an invention, they are joint inventors.
Persons may be joint inventors even though they do not physically work together or at the
same time, do not make the same type or amount of contribution to the invention, or do
not make a contribution to the subject matter of every claim of a patent. 35 U.S.C. § 116.
Each, however, must have made some contribution of inventive thought to the resulting
product, and there must be some amount of collaboration or connection between them.
Thus, individuals who are completely ignorant of what each other has done cannot be
considered joint inventors. Until September 16, 2012, when assignees may file patent
applications, joint inventors must apply for a patent jointly, and each must make the
required oath or declaration in the application. If one of the joint inventors cannot be
found or refuses to join the application, the application may be made by the others on
behalf of themselves and the omitted inventor. The U.S. Patent and Trademark Office
(USPTO) will grant the patent to the inventor making the application, but the patent will
remain subject to the rights of the omitted inventor. Errors in the naming of inventors can
be readily corrected by amendment to the application or by correction to an issued patent.
Similarly, amendments occurring during prosecution that result in deletion of certain
claims may require changing the named inventors if those inventors contributed only to
the deleted claims.
Until March 16, 2013, a patent will be awarded to the first to invent. To
harmonize U.S. law with that of all other industrialized nations (which follow a “first to
file” system), the United States enacted the AIA and will convert to a first to file system
on March 16, 2013 (with the grace period described in Chapter 17). Until March 16,
2013, disputes over inventorship will be determined in interference proceedings, as
described in Chapter 18. When a dispute occurs over inventorship, generally, the first to
conceive the invention and to reduce it to practice (either actually or constructively) will
be held to be the prior inventor. Conception of an invention refers to the formation in the
mind of the inventor of a definite and permanent idea of the complete invention. For
example, in one case it was held that an inventor’s “hope” that a certain process would
work did not establish conception because the inventor did not have a definite and
permanent understanding as to whether or how the process would work. Generally,
conception is complete only when the idea for the invention is so clearly outlined in the
inventor’s mind that mere ordinary skill would be required to reduce the invention to
practice, without the need for elaborate experimentation or further developmental
research. An invention is not finished when it is conceived. It must be reduced to
practice, meaning that it must be made and tested to ensure it works. Reduction to
practice may be actual or constructive. Actual reduction to practice involves construction
of the invention in physical form or making or testing the invention or a prototype
thereof.
Employers and universities engaged in the business of developing inventions,
drugs, processes, and other matter subject to patent protection typically require their
employees to sign agreements by which the employees agree that anything discovered or
invented by them during employment will be owned by the employer. The employee also
usually agrees to assign the invention and any patent rights therein to the employer and to
cooperate in filing documents and taking any other action to assist the employer in
obtaining a patent. If the employee later refuses to sign an application for a patent as the
inventor, the employer may do so upon a showing to the USPTO of his or her proprietary
interest in the invention, and a patent will issue in the employer’s name (see Appendix D,
Form 14). Recall that under the AIA, and effective September 16, 2012, one to whom an
inventor has assigned an invention (or is under an obligation to do so) may file the patent
application. Thus, assignment documents should state that employees not only assign
rights in inventions to their employers but also provide that the employer may file the
patent application for the invention.
Because patents have the attributes of personal property, they may be transferred
or assigned, just as may other items of personal property, and may be bequeathed by will.
Patents or applications for patents may be assigned to another; a written instrument is
required. 35 U.S.C. § 261. The written instrument should identify the patent by
application or issue number, date, and title of the invention. An assignment is a transfer
of a party’s entire ownership interest or a percentage of that party’s ownership interest
(see Exhibit 19–1). A few states have prescribed certain formalities to be observed in
connection with the sale of patent rights. Although recording the assignment with the
USPTO is not required for an assignment to be valid, recording is recommended because
if the assignment is not recorded with the USPTO within three months from its date, it is
void against a subsequent purchaser for a valuable consideration who acquired the patent
without notice (unless the assignment is recorded prior to the subsequent purchase).
A license differs from an assignment in that it is not an outright grant or transfer
of ownership. The licensing of a patent transfers a bundle of rights, which is less than the
entire ownership interest. A license is merely a permission to use. The permission or
license may be limited in its scope, duration, terms, or territory. A patent license is, in
effect, a contractual agreement that the patent owner will not sue the licensee for patent
infringement if the licensee makes, uses, offers for sale, sells, or imports the claimed
invention, as long as the licensee fulfills its obligations and operates according to the
terms of the license agreement. Licenses may be exclusive (meaning that only one party
has the ability to exploit the invention) or may be nonexclusive (meaning that more than
one party may be given rights in the invention or patent). Similarly, licenses may be for
the term of the patent (20 years from the date of filing) or may be for a limited time
period. Licenses may be granted to one party to make the invention and to another party
to sell the invention.
D. Patent Infringement
Any person who, without authority, makes, uses, offers to sell, sells, or imports
any patented invention infringes the patent. Innocence is not a defense to a claim of direct
infringement, although it may serve to ensure punitive damages are not assessed. A
person can also be liable for encouraging or inducing infringement or for contributory
infringement by selling a component of a patented invention knowing it will be used to
infringe a patent. In determining whether infringement has occurred, the infringing
device will be compared against the claims of a patent. If the accused invention falls
within the language used in a patent claim, infringement is literal. Even if the accused
invention differs from the claims in some way, it may still infringe under the doctrine of
equivalents if there is equivalence between the elements of the accused product and the
claimed elements of the invention, looking at whether the accused equivalent element
performs substantially the same function in substantially the same way to reach
substantially the same result as the claim in the patented invention. A patentee is bound
by the prosecution history of the patent process and cannot assert a position inconsistent
with one taken during prosecution of the patent. In an infringement action, a defendant
can raise a variety of defenses, including asserting there was no infringement, that the
patent is invalid or was procured by fraud, that the patentee has misused the patent to
abuse his or her position, laches, estoppel, or that the alleged infringer is using the
invention solely for research purposes. If infringement is found, a court may order
injunctive relief, compensatory damages in an amount necessary to compensate the
patentee for injury, costs, interest, and, if objective recklessness is shown, punitive
damages up to three times the amount of compensatory damages and attorneys’ fees. If
parties cannot resolve infringement disputes amicably, litigation takes place in federal
district court and is governed by the Federal Rules of Civil Procedure.
A patent issued by the USPTO does not grant a party any right to make, use, offer
to sell, sell, or import an invention but rather excludes others from engaging in such acts.
Under the Patent Act, any person who, without authority, makes, uses, offers to sell, or
sells any patented invention within the United States or imports into the United States any
patented invention during the term of its patent, infringes the patent (35 U.S.C. § 271(a)).
A patent is effective and enforceable only after it is issued. Thus, making, using, selling,
or importing devices prior to the time of a patent’s issuance do not constitute acts of
infringement. Nevertheless, recall from Chapter 18 that under the American Inventors
Protection Act (AIPA) of 1999, patentees may obtain reasonable royalties if others make,
use, sell, or import their invention during the period between publication of their patent
application (18 months after filing of most applications) and grant of the patent.
Under the first sale doctrine (also called the exhaustion doctrine), once the patent
owner unconditionally sells a patented item, the buyer has the right to sell it or use it as
desired. It is said that the first sale of the invention “exhausts” the patentee’s rights to
control the purchaser’s use of the device thereafter. Thus, if you buy a patented espresso
machine, you may use it as you see fit, resell it at a garage sale, or give it to a friend. The
theory underlying the first sale doctrine is that when a patent owner sells an invention
without any restrictions, he or she impliedly promises the buyer that the buyer may fully
enjoy the invention. Of course, if the patentee imposes restrictions, conditions, or
limitations on the sale (e.g., instructing a buyer that the patented invention may only be
resold at a minimum price), then the buyer must comply with these agreed-upon terms.
Similarly, the first sale doctrine does not apply if there is a license of the patented item
rather than an unconditional sale. Recall that the first sale doctrine is also applicable to
trademarks and copyrights.
An adjunct of the rule that a buyer has a right to use the patented invention under
the first sale doctrine is that the buyer has the right to repair the patented invention in
order to prolong its use. Courts, however, draw a distinction between repair of a patented
invention, which is permissible, and reconstruction of it, which is impermissible
infringement. Courts often view purchasers of patented products as having been granted
an implied license by the patentee to use the product, which use includes repair or
replacement of its parts. While an owner of a patented invention thus has the right to
repair and restore the article, activities that amount to rebuilding it such that the invention
is being made anew are infringements. For example, if a party lawfully acquires a
patented television, replacing components or reconditioning it is acceptable as a repair of
the invention so long as the complete invention is not reconstructed.
As an alternative to suing for patent infringement in the United States for
another’s act of importing the patented invention (and identical to the approach a
trademark or copyright owner may take; see Chapters 6 and 14, respectively), a patent
owner may bring a proceeding before the International Trade Commission (ITC) to block
the infringing device from entry into the United States. Under section 337 of the Tariff
Act of 1930 (19 U.S.C. § 1337), the ITC conducts investigations into allegations of unfair
practices in import trade, including patent infringements. After a party files a complaint
with the ITC alleging an act of patent infringement, the ITC examines the complaint and
determines whether a Section 337 investigation should be conducted. Recall that a
Section 337 investigation is somewhat similar to a trial in that motions will be made,
discovery will occur, parties will testify, and an evidentiary hearing will be held. An
administrative law judge will render an initial determination as to whether section 337
has been violated. The ITC then may affirm, reverse, or modify this initial determination.
If section 337 has been violated, the ITC may issue an exclusion order, which bars the
products from entry into the United States (which order is enforced by the U.S. Customs
and Border Protection) and/or may issue a cease and desist order, which directs violators
to cease certain actions. An award of money damages is not available as a remedy for
violation of section 337.
E. New Developments and International Patent Law
Many of the new developments in patent law relate to the increasing number of
patent applications filed for computer software and business methods, reflecting the
somewhat more limited scope of protection afforded to software under copyright law.
Other new developments relate to medicine, science, pharmacology, and patents for new
varieties of seeds and agricultural food products. The most significant development in
U.S. patent law, however, is the passage of the Leahy-Smith America Invents Act in
2011, which, among other things, will move the United States from a first to invent
system to a first to file system (effective March 16, 2013), in which a patent is awarded to
the first inventor to file a patent application (with the one-year grace period described in
Chapter 17). Among other reforms are the following: interference proceedings will be
replaced with derivation proceedings (to ensure that the inventor who files a patent
application did not derive the invention from another), various post-issuance actions have
been added, and prioritized examination of applications is available for additional fees. In
regard to international patent law, because patents granted in the United States have no
effect outside U.S. territorial borders, inventors desiring patent protection in foreign
countries must comply with the laws of the countries in which they desire patent
protection. Alternatively, however, they may rely on three treaties to which the United
States adheres. Under the Paris Convention, a U.S. inventor who files a patent application
in any of the more than 170 Paris member nations has 12 months to file applications in
any of the other member nations and yet claim the priority date of the first filing. Under
the Patent Cooperation Treaty (PCT), an inventor may file one “international”
application, thereby receiving the benefit of one centralized filing, searching, and
examination process and receiving protection in any PCT member nation, as long as the
application is ultimately prosecuted in those nations. Prosecution in the other countries
may be delayed for up to 30 months, affording the inventor significant time to gather
funds, consider the commercial application of the invention, and evaluate market
conditions. Applicants may also rely on the European Patent Convention to obtain patent
protection in any or all of the 38 contracting nations. Finally, under the Agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS), member nations must
afford patent protection to citizens of member nations on the same basis they do for their
own citizens. Foreign inventors may apply for patents in the United States as long as they
comply with the provisions of the Patent Act.
Many of the cutting-edge issues in patent law relate to patents for computer
software. For several years, the conventional wisdom was that unless a computer program
had significant commercial value and application, patent protection was often
counterproductive or ineffective in that the USPTO often took more than two years to
issue a patent, roughly the same time it took for the software program to become
obsolete. Thus, protection of the program under copyright law was viewed as the most
effective means of protection for software. Some experts believe that in 1995, when the
First Circuit held in Lotus Development Corp. v. Borland International Inc., 49 F.3d 807
(1st Cir. 1995), aff’d, 516 U.S. 233 (1996), that Lotus’s menu command system did not
constitute copyrightable expression (being an unprotectable method of operation), courts
clearly signaled that copyright law provides insufficient protection for computer
software. Major companies apparently felt the same way: More than one-third of the
patents issued to IBM in 1998 were software-related and nearly one-fourth related to
network computing. Similarly, in the wake of losing a $120 million patent infringement
suit, Microsoft received nearly 200 patents for software in 1997 alone. A 2004 study by
Boston University reported that approximately 15 percent of all patents issued are for
software.
In 2000, the USPTO issued a “Business Method Patent Initiative” designed to
ensure high-quality patents in this fast-emerging technology field. The USPTO hired new
examiners, provided additional training to the examiners, held roundtable meetings with
patent practitioners, began subjecting business method applications to expanded prior art
searches, and imposed a second review, usually called the “second pair of eyes review,”
for those applications. The USPTO maintains a separate Web page within its site for the
exclusive purpose of providing information and updates on business method patents (see
http://www.uspto.gov/web/menu/pbmethod). In the wake of public criticism of overbroad
and often ridiculous patents (such as the patent granted for a crustless peanut butter and
jelly sandwich) and a significant rise in litigation related to such patents, a number of
court cases attempted to clarify what subject matter was patentable. In 2008, the Federal
Circuit rejected its previous State Street test (which allowed a business method patent if
the invention produced a useful, concrete, and tangible result), and held that the sole
method of determining patentability was whether the claimed process was either tied to a
particular machine or apparatus or whether it transformed a particular article into a
different state or thing. Bilski v. Kappos, 545 F.3d 943 (Fed. Cir. 2008), aff ’d, 130 S. Ct.
3218 (2010). Bilski involved a patent for a method of protecting or hedging against risk
in the commodities market. The process was not tied to a particular machine nor did it
change any particular article into a different state or thing and was thus held unpatentable
by the Federal Circuit. In 2010, however, the U.S. Supreme Court stated that, although
the Federal Circuit’s “machineor-transformation” test was a “useful and important clue or
investigative tool,” it was not the sole test for patentability. Although the Supreme Court
agreed that the claimed patent for hedging risk was unpatentable because it was merely
an abstract idea, it did not categorically exclude business method patents. Thus, the
chances of tying a business method to a machine or transformation of matter in the hope
of obtaining a patent are diminished post-Bilski.
When patents are issued without adequate review of prior art, too many patents
are issued, causing technology owners to stumble over each other’s intellectual property
and producing an avalanche of litigation. Each year Microsoft spends between $75
million and $100 million simply to defend the patent lawsuits brought against it. In early
2006, Research in Motion Limited paid NTP, Inc. $612.5 million to settle the parties’
long-term dispute over whether Research in Motion’s popular BlackBerry wireless e-mail
system infringed on NTP’s patents.
