Tuesday, May 31, 2011

Pro-Patent Ruling Strengthens Patent Owners’ Hands

The Federal Circuit Court of Appeals issued a ruling last week strengthening the hand of patentees.  The Therasense ruling largely removes the “inequitable conduct” Joker from a patent infringer’s hand. 
Up until last Wednesday, a defendant could play that Joker whenever the patentee failed to disclose to the Patent Office information that might have been material to the patentability of their claims (as viewed with 20-20 hindsight).  Now, the defendant can only play that card if the patentee knew of material information, knew that it was material, made a deliberate decision to withhold it, and that the Patent Office would have withheld the patent “but for” the withheld information.  If so, the court can hold the entire patent (and possibly even related patents) unenforceable.
That rule poses a high burden for infringers trying to squirm out of ponying up damages - with one significant exception.  If the patentee acted egregiously (e.g., fabricated evidence), the court remains free to find inequitable conduct. 
The Therasense ruling seems likely to stop the avalanche of irrelevant disclosures that many patentees previously felt compelled to cause because of the now obsolete standard for inequitable conduct.  The ruling will also likely ease the burden placed on the courts by the routine play of this card.  On the downside, with the Patent Office arguably being deprived of seeing all of the applicant’s cards (information that might have otherwise been disclosed previously), invalidity arguments might shift toward the expensive setting of the trial courts rather than the relatively inexpensive setting before the Patent Office. 

This is not to say that information should be withheld.  Cautious applicants should still disclose information that they feel is material.  Moreover, the Patent Office has the power to re-write their regulations in response to this ruling.  Indeed, they have notified the community they they plan to respond. 
Nonetheless, at the Patent Office, the game of disclosure-based Indian Poker has come to a long needed end.  And the Federal Circuit handed infringers their hats.
For more information about patents and the patenting process readers are invited to visit http://www.villhardpatents.com/ or call us at (512) 897-0399.

Monday, May 23, 2011

Shooting From the IP Hip

Tech-savvy entrepreneurs sometimes find themselves on the horns of an IP (intellectual property) dilemma.  They conduct their own “patent search,” misinterpret the results, and state in writing that they might be infringing one or more patents - thereby admitting (correctly or not) that they are infringing.  Plus, the resulting perceived fear of patent infringement then paralyzes them. 
Entrepreneurs can avoid these situations by not shooting from the “IP hip.”  First, keep in mind that the claims of a patent represent the starting point for determining infringement.  That some portion of a patent, other than the claims, describes technology similar to yours might be beside the point depending on circumstances.  Of course, depending on those circumstances, that information could instead be quite germane to an infringement determination.  Furthermore, determining what a claim covers often presents notoriously complex legal issues.  Therefore, a likelihood of infringement can usually be determined only by someone with proper training. 
Yet, some entrepreneurs readily proclaim that they might be or, worse yet, “are” infringing a patent.  Once these words appear in a potentially discoverable document there’s no telling where the ricochet ends up.  Should a patent owner get wind of that statement, the patent owner will likely try to hold the entrepreneur to those words.  The patent owner will also likely brush off subsequent exculpatory (and, from their perspective, self-serving) statements.  What a court might do with such statements is yet another matter.
Misunderstanding a patent cuts the other way too.  A premature decision that a patent does not affect you can also cause pain in the form of an otherwise potentially avoidable infringement lawsuit.
Solution: the Villhard Patent Group recommends consulting a patent attorney prior to attempting a prior art search on your own and before drawing any conclusions regarding infringement.  For more information about patents and the patenting process please see www.villhardpatents.com or call us at 512-897-0399.

Sunday, May 15, 2011

Funding Intellectual Property (IP) Protection in Early Stage Companies

Early stage companies face a number of dilemmas over which activities to fund.  Often, the drive to bring that new product (or service) to market consumes the lion’s share of the available funds.  However, often during early stage activities, much of the IP fundamental to the long-term well being of a company comes into being.  Then, a year later (if not earlier) when that fundamental IP faces potential statutory bars to patenting (see The First Three Things That Entrepreneurs Need To Know About Patents) the company finds itself without money to file their patent application(s).
This article suggests one way to avoid this dilemma: include IP protection activities in funding requests.  Few would hesitate to include line items for technology development, marketing efforts, raw materials, etc. in a funding pitch for angel investors or venture capitalists (VCs).  Yet, having sat through many angel pitches, VC competitions, and the like, this author has noted that few early stage companies include IP protection in their list of activities which they would like to fund. 
This seems odd because, if IP serves as a fundamental piece of a business (as it does in many tech-based companies), it seems that it ought to receive funding commensurate with its importance.  Indeed, after having interviewed a number of angels and VCs, the author is left with the impression that they expect early stage companies to protect their IP and to spend sufficient money to do so.  Therefore it makes sense to ask for funding to protect what might turn out to be the crown jewel of an eventual acquisition target: i.e. the technology developed over time by today’s start-up company. 
Moreover, most angels or VCs acting in their enlightened best interest will probably want the technology they fund protected.  We suggest asking for the funds to do so along with your other requests.
For more information about patents or the patenting process see http://www.villhardpatents.com/ or call us at (512) 897-0399.  We at the Villhard Patent Group would be happy to discuss this issue further with you.