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.

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.

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.

Why Should Small Business Owners Spend the Money to Try to Get a Patent?

Since typical patent trials cost millions of dollars and take years to pursue, many business owners forego the expense of filing patent applications.  However, having the option to sue your competitors for patent infringement happens to be only one reason for obtaining a patent.

First, many investors (e.g. angel investors or venture capital firms.) want to see that you not only have an idea for a good product (or service) but that you also have a good management team, a market that you are developing, and entry barriers to protect your market.  Entry barriers come in many forms including your goodwill, your talents and technical expertise, and your intellectual property (IP) among others.  Because patents allow you to exclude others from using your patented ideas in the market, patents help you hold the attention of these investors. 

Secondly, if your exit plan includes selling your business or offering equity in it, many potential buyers also want to see entry barriers.  These players might also be big enough that they can enforce your patents with law suits.  Your patents can therefore represent significant assets in the deal for these big players.  As a result, patents help hold the attention of your potential buyers too. 

Additionally, patents give you an advantage when a potential customer/competitor makes a make-buy decision.  If you have a patented product in the market your patents will influence their decision if they are at all savvy (assuming that you have made them aware of your patents).  As a result they will be more likely to buy the product from you than if you had no patents. 

That is not to say that patents can guarantee these results.  However, owning patents (at least when compared with doing nothing) increases your chances of obtaining these results.

For more information regarding patents and patent applications contact The Villhard Patent Group at http://www.villhardpatents.com/ or call (512) 897-0399.

Provisional Patent Applications: Cheap “Protection” or Dead Man’s Curve?

You get what you pay for.  Case in point: provisional patent applications (with one notable exception related to the America Invents Act (AIA)). 

U.S. law allows inventors to file “provisional” patent applications for a modest fee.  Since the costs for provisional applications beat the costs for regular patent applications by quite a bit, many entrepreneurs speed down this fork in the road assuming that they are “protected” (more on this later) and that they can easily convert their provisional applications into regular applications before the one year deadline for doing so.   

Here is the catch.  The claims of a patent application should define the invention while the remainder of the application should support those claims.  Provisional applications however rarely contain claims.  It should surprise no one then that provisional applications often gloss over or skip important points (in part) because these applications fail to define the invention with well-crafted sets of claims. 

Moreover, instead of supporting the claims, provisional applications often restrict what protection might subsequently be available.  For instance, provisional applications usually include large quantities of “patent swearing.”  Many of these English words have dual meanings.  In everyday, technical, and/or contractual language these terms convey what ought to be done to create a product (or service).  But, when read by a patent attorney (working for a competitor) these terms take on different legal meanings which can allow use of the idea potentially without infringement.  Worse still, even well-drafted regular applications which arise from poorly drafted provisional applications can legally inherit the flaws of the provisional applications. 

This is not to say never file a provisional application.  If you find yourself up against the guard rail of an offer-for-sale or public disclosure deadline (see previous postings) then filing a provisional application can make sense.  If the intent is to obtain cheap protection, though, entrepreneurs risk skidding over the cliff at Deadman’s Curve. 

Of course, the AIA threw in a new wrinkle.  Time is now of the essence in filing patent applications due to the first-to-file provisions of the AIA.  Because of this alone, and despite their shortcomings, provisional patent applications serve to get an early filing date and should be considered as soon as an entrepreneur realizes that an idea has commercial potential.  But, to plug the holes in them, entrepreneurs should also consider having a regular, non-provisional, patent application prepared and filed within a reasonable time following the filing of their provisional application.  Otherwise, the gaps in their provisional applications will cause those provisional applications to be little better then weak guard rails on dead man's curve.

For more information please contact Bob Villhard at bob@villhardpatents.com or 512-897-0399 or visit http://www.villhardpatents.com/.

How to Avoid Triggering Deadlines For Filing Patent Applications

Last week, we discussed some ways in which entrepreneurs can effectively lose the right to pursue patent protection for their potentially patentable ideas.  Namely, by offering a product or service for sale (e.g., launching a commercial website incorporating the idea) or publicly disclosing an idea entrepreneurs can cause that idea to become “prior art” against subsequently filed patent applications. 

So how can an entrepreneur avoid these harsh penalties?  First, you can avoid publically disclosing a concept until you are willing to start the U.S. grace period (and instantly lose potential rights in some countries).  If your business plan requires early disclosure to others (e.g., potential vendors, suppliers, etc.) then obtain their signatures on a good non-disclosure agreement (NDA) before making a disclosure whenever possible.  Also, mark all documents, drawings, prototypes, alpha/beta versions, etc. with warnings such as “Proprietary” or “Confidential.”  Plus, before holding discussions, verbally confirm that the other party understands that the information you are about to share is proprietary.  These steps will usually exempt the disclosure from the public disclosure rule.

As to the offer to sale issue, plan accordingly.  If you must make your first offer to sell a product or service incorporating a potentially patentable concept, make sure that you at least have a provisional patent application on file before doing so.  This means that you will need to be speaking to a patent attorney at least 3-4 months in advance of tyour first offer for sale (and/or any attempt to commercialize the idea.  You will also need to have adequate funds budgeted for the drafting process. 

Of course, the world is not perfect and entrepreneurs sometimes find that they have already made an offer for sale or made a public disclosure.  In the next posting we will discuss some strategies for dealing with these situations.  Until then, if you have a specific situation which you would like to discuss, please contact m at bob@villhardpatents.com or visit http://www.villhardpatents.com/.

The First Three Things That Entrepreneurs Need To Know About Patents

Note: This article has been updated to account for the America Invents Act

The first three things that entrepreneurs need to know about patents involve how entrepreneurs can lose the right to pursue patent protection.  First, in the U.S., the law provides that a “public disclosure” of a potentially patentable concept starts a one year grace period for the filing of a patent application directed toward the disclosed concept(s).  After the grace period expires, the disclosed information becomes “prior art” against the concept.  In other words, the applicant’s own work invalidates the patent application (if filed after the grace period).

It used to be that, similarly, an “offer to sell” a product/service incorporating a concept would also kick off a one year grace period.  But the America Invents Act (AIA) probably changed that.  Under the most common interpretation of the AIA, the grace period for offers for sale has been eliminated.  While the courts might revive it, entrepreneurs cannot count on that.  For planning purposes they should avoid making even their first offer for sale until they have a patent application filed.  

Foreign countries have different rules related to these two “statutory bars.”  For instance, many foreign countries have no law regarding offers to sell.  On the other hand, in many countries, a public disclosure of a concept operates instantaneously to bar a patent covering it. 

While this posting is a good starting point on this subject, much remains to be discussed.  For instance, the next posting will address how entrepreneurs can avoid the harsh results of these rules.  Accordingly, if you have a specific issue related to these statutory bars discuss it with a patent attorney in private.  In closing, the first three things that entrepreneurs need to know about patents are:

1)      Entrepreneurs should guard against publicly disclosing their potentially patentable concepts.

2)      Entrepreneurs should avoid offering products/services which incorporate these concepts for sale until they have filed a patent application. 

3)      Otherwise, they might jeopardize their right to pursue a patent in the U.S. and/or other countries.

We at the Vilhard Patent Group would be happy to discuss these aspects of the law with you.  For more information visit our website at www.villhardpatents.com, contact us at contact@villhardpatents.com or call us at (512) 897-0399.