Companies have information that gives each of them a competitive advantage over competitors. Patenting this information is sometimes legally impossible or disadvantageous — patents expire, leaving vitally important information publically exposed.

Some companies choose to treat the information as a trade secret because such a designation can offer legal leverage in certain situations. And unlike a patent, a trade secret can last forever.

A patent expires 20 years from its effective date of filing, and that previously protected invention enters the public domain. With a patent, you’re disclosing how to make and practice an invention in exchange for 20 years of exclusive rights to do so,” says Daniel R. Ling, an associate with Fay Sharpe LLP.

He says many companies, especially smaller ones, don’t often consider the role of trade secrets, but in certain instances companies could be well served by recognizing and protecting such valuable information. But there’s one catch: “You have to take reasonable steps to maintain it as a secret.”

Smart Business spoke with Ling about identifying and protecting trade secrets.

What are some examples of information that could be a trade secret?

Customer and supplier lists, the arrangement of equipment in a factory and certain manufacturing processes are examples of valuable proprietary information that may not rise to the level of something that can be patented. Often, it comes down to that which makes your product better than that of your competitors but can’t be patented because it doesn’t meet the basic legal standards, which are that the invention is new, not obvious, useful and eligible to be patented.

How long does trade secret protection last?

Trade secrets last indefinitely, as long as the information is maintained confidential and the holder of the trade secret continues to take reasonable precautions against disclosure.

How are trade secrets best protected?

There are many methods of protecting sensitive information. If it’s a process that involves multiple steps, a company could isolate the responsibility for each of those steps across multiple locations so the entire process isn’t carried out in one place and a single person isn’t privy to the entire production.

It’s also fairly common to include confidentiality agreements and nondisclosure clauses in employment contracts for not only employees who might be aware of a trade secret in its entirety, but also for employees who may have only some knowledge of the process. Companies with such sensitive information should work with a business attorney to put together those agreements.

What can be done if a trade secret is leaked?

If the trade secret was misappropriated — obtained illegally or otherwise improperly disclosed — there are steps that can be taken to prosecute the perpetrator. The Uniform Trade Secrets Act, the general framework of which has been enacted by 46 U.S. states, offers remedies when a trade secret is acquired through improper means or through a breach of confidence. This can provide some relief to a trade secret holder in the form of injunctive relief (e.g., stopping the use of a misappropriated trade secret), monetary damages and/or attorney’s fees.

However, if the information is developed independently or introduced to the public lawfully, nothing can be done. Further, if the secret that was being held is a patentable idea, another company or individual could secure the rights to it and bar others from acting on it. That’s why it’s important to carefully consider what you hold as a trade secret; if it can be easily reverse engineered it’s not right for trade secret protection.

Regardless of whether the secret got out legally or illegally, once it’s widely disclosed the remedies under the law might not be sufficient to make a company whole again — once it’s out, it’s out. The trade secret holder ultimately has an obligation to take reasonable protective measures to guard its secrets.

Daniel R. Ling is an associate at Fay Sharpe LLP. Reach him at (216) 363-9000 or dling@faysharpe.com.

Insights Legal Affairs is brought to you by Fay Sharpe LLP.

Published in Cleveland

More content is being published exclusively through the Web, which means those seeking to either obtain a patent or attack the validity of a third-party patent need to exercise greater diligence when conducting a patentability or validity search.

“It’s important that the scope of prior art searches, whether used for preparing patent applications or defending infringement accusations, consider Web-based information,” says Mandy B. Willis, an associate at Fay Sharpe LLP.

“Companies need to be more aware of online postings by searching websites when conducting patentability and freedom-to-operate searches,” she says.

Smart Business spoke with Willis about the Web’s impact on prior art and how to apply diligence in this new publishing environment.

How can a solely Web-based reference qualify as a prior art printed publication under the patent laws?

In the past, many companies looked just at patents, patent publications and printed articles when conducting prior art searches. But the court in a recent case, Voter Verified, Inc. vs. Premier Election Solutions, Inc., provided guidance on how to determine whether a solely Web-based reference qualifies as a prior art ‘printed publication.’ The court created a three-part test to make this determination.

What is the test for determining whether an online article qualifies as a printed public document?

The first prong of the three-part test is public awareness. This prong is used to determine if the relevant public is aware of the website which contains the article. And, ‘relevant public’ means persons interested in the technology in question.

The second prong of the test is, having found the website, whether the article can be found by a person exercising reasonable diligence. In one example, this prong can be met if search tools on the website are sufficient to retrieve the article in response to a query using search terms that relate to the subject matter of the article.

And, the third prong is whether the article was accessible to the public before the effective filing date of the patent and/or application in question. This prong is met if the website was undisputedly open to any Internet user by the critical date. A showing of accessibility can be supported if all submissions on the website are treated by the community as public disclosures or if users can freely and easily copy the website content.

To pass the test, all three prongs must be met.

Is evidence of indexing a prerequisite to establishing that an online reference is a printed publication?

The key inquiry regarding whether a solely Web-based reference can be prior art is if the reference is or was sufficiently accessible to the public exercising reasonable diligence. However, it’s not necessary to provide any evidence of how the public located the website or article; the reference just has to have been discovered.

Indexing allows the interested public to locate an article on a website and can be a relevant factor in proving accessibility, but it’s not an absolute prerequisite. Accessibility is based on a host of facts and circumstances surrounding a reference’s disclosure.

Must the disclosure in the online reference be identical to the claims in a patent application or an issued patent to qualify as prior art?

No. Under section 103 of the patent laws, the disclosure in an online reference must only make the method or system of the claim obvious, either alone or when combined with another reference, to one of ordinary skill in the art. It does not have to be identical to the language in a patent application, just similar.

What can a company do to protect its patents from being invalidated or itself from being accused of infringement?

In the event that a patent holder accuses you of infringement, you can try to invalidate that patent with a prior art, which could be a Web-based article. Therefore, document your search strategy and the search terms you use to find the reference to support a showing that the prongs can be met.

If you are building a patent portfolio and/or applying for a patent, expand your patentability search to online publications. If you’re aware of postings that can be cited against your claims during prosecution, you can craft stronger claims earlier in the patent process, which can save you time and money.

Mandy B. Willis is an associate at Fay Sharpe LLP. Reach her at (216) 363-9000 or mwillis@faysharpe.com.

Insights Legal Affairs is brought to you by Fay Sharpe LLP.

Published in Cleveland

Challenging a patent is a strategic decision made by a individual or business and can be done for a number of reasons and at various stages of the patent process — such as during the patent “pending” phase or after the patent has been granted and issued. However, challenging a patent before or after granting is expensive and could have some pitfalls, such as potentially making the challenged patent more resilient to validity assertions if a challenge fails.

Smart Business spoke with James Scarbrough, a partner with Fay Sharpe, LLP, as well as law clerks Matt Burkett and Erik Keister, about strategies for challenging patents and when it’s appropriate to do so.

Why would someone challenge a patent?

There are several reasons to challenge a patent. For example, someone can challenge a patent if they think that the person(s) that obtained the patent stole or copied the invention from them. Another reason to challenge a patent is if there is a concern that a product or process may infringe one or more claims of the patent. Also, if a person has been accused of infringing a patent, and the person wishes to prevent or end a lawsuit or encourage a patent license agreement, the person may then challenge the patent. A patent or pending patent application can be challenged through the U.S. Patent and Trademark Office (PTO) as an alternative to court litigation.

How does a patent challenge work?

One type of challenge can be made after a patent application is filed but before a patent is granted or issued. This particular challenge is called a pre-issuance submission. Documents that can be considered prior art, such as another patent, a published patent application, or any other printed publication of potential relevance can be submitted to the Patent Office. The person submitting the prior art must also provide a concise description of relevance of each document. The submission must occur before a notice of allowance is mailed or the later of two events: (a) six months after the application is published, and (b) a mailing of a first Patent Office Action in which one or more claims are rejected.

The entity whose patent application is being challenged can submit a response to the challenge, but is not required to unless requested by the Patent Office.

Another type of challenge proceeding is called a derivation proceeding. In a derivation proceeding a person may challenge a patent or pending patent application if they think that an inventor in an earlier filed patent application derived the claimed invention from an inventor of their patent application. Any such petition may be filed only within the one-year period beginning on the date of the first publication of a claim to an invention that is the same or substantially the same as the earlier application's claim to the invention.

A third type of challenge is called a Patent Post-Grant Review. A Post-Grant Review is performed once a patent is issued and must be done within the first nine months of the grant date of the patent.  A patent owner is given three months to respond after the review request before the Patent Office decides to proceed forward with the review. The patent owner has one opportunity to file a response or amend claims. The challenge can be based on several factors within patent law, such as patentability, anticipation, obviousness, or indefiniteness.

What happens if you win a challenge? And, if you lose?

Winning a challenge could result in the patent being invalidated and any products or processes thought to infringe the patent claims can then be freely produced without threat of a lawsuit or legal action with regard to the challenged patent. A successful outcome might also result in the patent claim scope being limited such that a competitive product can be manufactured or sold without concern of infringement. Winning the challenge could also stop a lawsuit from being filed or a pending lawsuit that has been filed against the challenger. If a challenge is lost, i.e., the patent or patent application survives the challenge, the challenger could potentially be found liable for infringement in a pending or subsequently filed lawsuit. Additionally, a patent that survives a challenge may become stronger in that it has survived a review against additional prior art.

What’s the difference between challenging a patent before or after it has been granted?

When challenging a patent application before a patent is issued via pre-issuance submission, the challenger submits prior art and then is not involved in the process after that point. A pre-issuance submission can be made by anyone before a patent is granted.

When challenging a patent after grant, it depends on the timing whether it is before or after nine months since the patent had been granted. A Post-Grant Review can be performed if it is less than nine months after grant of a patent. A Post-Grant Review is advantageous in that the patent can be invalidated on more grounds and there is a lower burden of proof. Which challenge is appropriate depends on the timing of the challenge, the basis for the challenge and the person or entities making the challenge.

What costs might a company incur by challenging a patent?

Fees for the different types of challenges vary, and can range from $180 for every 10 documents submitted in a pre-issue prior art submission, to $60,000, which is the estimated cost of preparing a petition for derivation. And those figures may not take into all costs incurred, such as attorney fees. Ultimately, a company has to do a cost/benefit analysis to determine whether it’s worth spending the money to file a challenge, weighing the risks of not filing and possibly being exposed to liability.

James E. Scarbrough is a partner with Fay Sharpe, LLP. Reach him at (216) 363-9141 or jscarbrough@faysharpe.com.

Insights Legal Affairs is brought to you by Fay Sharpe, LLP.

Published in Cleveland

Intellectual property (IP) might be one of the most valuable assets of your company. But if it’s not protected, you can be foregoing a significant advantage in the marketplace.

There are four major IP categories:

  • Patents, which protect inventions;

  • Copyrights, which protect artistic forms of expression;

  • Trademarks, which protect brands; and

  • Trade secrets.

Generally, the types of IP small businesses may be interested in protecting are unique to the kind of company and its core competencies. For example, businesses that are predicated on developing new products or technology will be interested in patent protection, while another business may be identified by its brands and would want to protect those through trademarks.

However, John P. Cornely, of counsel at Fay Sharpe, LLP, says it’s important to take a close look at everything — from catalog photographs to manufacturing processes — to ensure the security of all of your IP.

Smart Business spoke with Cornely about successful strategies to identify and protect IP.

How does a small business identify and track its IP?

In a small business, to some extent, you have IP being created by many people in your organization at many points in the workflow cycle. You want to be systematic about identifying your IP. When it comes to patents, consider using an invention disclosure form. These forms can be made available to employees, especially those involved in the invention creation process, and are used to collect the data necessary for completing a patent application — inventor’s names, the date the invention was created, a description and/or drawings of the invention and the location of records that support the invention, such as a hard drive or lab notebook.

Encourage your inventors to use the forms and have regular sessions to review inventions and the potential for protection. Regular review meetings can also assist in identifying and/or ranking the relative importance of multiple inventions.

This form system can be used with other types of IP to identify creations and have a way to systematically collect information about them.

What are important inventions to protect?

It’s most important to protect those that make a product stand out in the market. As a small business, maybe you don’t have the resources to file 100 patent applications and might only be able to do a couple each year, so it’s critical to identify where to best apply your resources. Find the aspects of your products that make them more valuable and desirable in the marketplace. Think of it in terms of what features of your products your competitors would like to copy and select strategic patent protections that will keep your competitors from doing so.

Should companies federally register their trademark?

Yes. There are procedural benefits to registering your trademarks that will help in potential infringement actions.

When you start using a trademark in commerce you naturally gain common-law rights whether you’ve registered the mark with the federal government or not. However, one of the problems is those common-law rights are limited to the geographic area in which you’re doing business. So if you’re selling a product in Cleveland, Ohio, under a specific mark, you only have common-law rights in Cleveland. A federal trademark registration extends your rights nationally. Further, federal registration of your trademark provides you with procedural benefits if there’s an infringement action.

And, much like patents, you want to register those marks and brands that are most important to you if your resources are limited.

What can a company keep as a trade secret?

Sometimes there may be an idea that’s not a good fit for patenting or that you don’t want to disclose, for example, like a process of manufacturing a product. Trade secrets are great tools for protecting some ideas because, theoretically, the protection can last forever while patents commonly expire after 20 years. However, the secret generally has to be something no one else can easily discover, for example through reverse engineering; you have to treat it cautiously and control its dissemination. Many small businesses may think they have trade secrets, but since they are not effectively treating them as such that information won’t enjoy the legal status of trade secret, which has certain advantages.

Some things are easy to keep secret, such as formulas and manufacturing processes, because only a few people have or can discover that information. If the information can be discovered from viewing or reverse engineering your product, you won’t be able to keep that a secret. One risk is that if your secret is discovered legitimately then you’ve lost your trade secret status, but if someone were to uncover your trade secret through theft or breach of contract, then you have a case.

How does a small business secure rights to the company’s IP from its employees and contractors?

While this is important, it’s also often overlooked. You want to have some language in your employee or contractor agreements that details ownership of any IP rights. Contrary to what some might think, it’s not always the small business that owns the rights to IP developed by contractors. For example, when hiring a contract photographer to take pictures for your website, the copyright for the work (i.e., the photographs) stays with the photographer unless you have a written agreement that says otherwise. That also extends to contract programmers who can retain the copyright for developed software absent a sufficient written contract to the contrary.

In general, it’s a good rule to have your agreements explicitly spell out IP ownership rights in writing up front.

John P. Cornely is of counsel at Fay Sharpe, LLP. Reach him at (216) 363-9000 or jcornely@faysharpe.com.

Insights Legal Affairs is brought to you by Fay Sharpe, LLP

Published in Cleveland

The changes occurring with the implementation of the America Invents Act (AIA) are important for the United States and for anyone thinking about filing a patent application. The AIA puts the U.S. on the same first-to-file patent system as the rest of the world. This means that the first person to file a patent application is the first to invent. However, because of the changes, companies need to be more vigilant about their inventions and act quickly when they have something patentable, especially in industries that are highly competitive.

“There needs to be a plan of action,” says Sarah S. Brooks, an Attorney at Stradling Yocca Carlson & Rauth. “Have a patent attorney lined up and have someone monitoring the technical department so your company can file right away. This might involve restructuring the company’s reporting chain.”

Not adapting to the new rules could mean someone else claims your invention first.

“If you don’t file and you’ve got something on the market that you’re selling, there’s nothing stopping another company from taking that and filing their own patent application and they’ll be the presumptive owner. So there are serious consequences for not filing right away,” she says. “If this occurs, there is a process called a derivation proceeding that could help you if you can show that the patent applicant derived its invention from you, but you will have an uphill battle because you have to prove this by substantial evidence and it may be difficult to get this evidence.”

Smart Business spoke with Brooks about the AIA and what companies should do to prepare for the changes it brings.

What is the AIA?

The AIA, passed in 2011, is the biggest change to U.S. patent law since the 1950s. The U.S. Patent and Trademark Office (USPTO) has a backlog of patent applications, and the new law is an effort to streamline the patent system.

The major change coming through the AIA is to move to a first-to-file system, which aligns the U.S. system with what the rest of the world uses. Previously, the U. S. was on a first-to-invent system, which meant that even though you didn’t submit your application first, you could prove you were the inventor by going through an interference proceeding to determine the proper inventor. However, interference proceedings were contributing to the backlog in the USPTO. Therefore, the AIA attempts to streamline the process with the derivation proceedings previously

mentioned.

What are the key changes in the act that companies should know about?

In addition to the first-to-file provision, which takes effect March 16, 2013, there will be a significant change affecting the grace period for public uses, patents, publications and sales. Previously, you had one year from a prior patent, publication, public use or sale in which to file your patent application. Now, that grace period has been eliminated with just a few exceptions. The one-year grace period now only applies to prior sales and publications of the inventor, not to prior sales and publications of others. In addition, the AIA also bars someone from getting a patent if his or her invention is sold anywhere in the world by anyone other than the inventor before a patent application was filed.

One more change, meant to streamline litigation, is a new proceeding called a post-grant review. Through this, a third-party can claim your patent is invalid on any grounds within nine months of the patent being issued. Post-grant reviews will offer a cheaper solution than standard litigation in the courts and may be used instead of re-examinations, which are similar but don’t operate within the same time frame.

Finally, the AIA allows a company to file a patent in its own name if the invention has already been assigned to the company or if the inventor is obligated to assign the patent to the company. This eliminates the need to file assignments with the USPTO.

How does the AIA change the way companies should conduct business going forward?

You can’t sit on your invention, especially with the rush to the patent office seen in certain industries, like the smartphone industry. Previously, you could go through an interference proceeding to prove you were the first to invent, but that’s been eliminated and replaced with the derivation proceeding in which it will be harder to prove you are the true inventor.

Filing for a patent quickly won’t be a problem for big companies that have the infrastructure already in place. It will be problematic for smaller companies and independent inventors because they don’t have their own in-house legal department and the process is expensive. Therefore, you’ll likely need to line up a patent attorney.

You also have to be careful of another bar to your patent. If someone other than the inventor is making, using or selling an invention or publishing information about it, there is no one-year grace period for this type of prior art. Prior art is all public information disclosed about an invention before a given date.

Will the AIA simplify or make the patent system more complex?

It will likely do both. It will simplify and streamline the process in some ways, such as possibly increasing the speed with which applications are granted. But while people and companies are getting accustomed to the new rules and what they mean, there might be an increase in litigation. Further, although there has been lots of publicity about the AIA, most of the news is about the change to the first-to-file system, not the other changes coming that are just as important and have to be dealt with.

Sarah S. Brooks is an Attorney at Stradling Yocca Carlson & Rauth. Reach her at (424) 214-7025 or sbrooks@sycr.com.

Insights Legal Affairs is brought to you by Stradling Yocca Carlson & Rauth

Published in Orange County

Intellectual property (IP) is an area regularly overlooked; however, this is a pivotal area of law, especially for entrepreneurs and mid-size businesses.

“We often get calls once a client has already landed in some sort of IP trouble, but many of these issues could have been averted through some simple diligence early on,” says Salil Bali, an Intellectual Property Litigator at Stradling Yocca Carlson & Rauth.

Bali says many people are overwhelmed by the topic and might think it to be in the purview of larger companies.

“Surprisingly, for small businesses, this is an area we have seen affect them the most, and often this impact is significant,” he says.

Smart Business spoke with Bali about the importance of protecting your intellectual property, regardless of the size of your company.

What types of businesses are most at risk when it comes to IP?

Most people, when they think about IP, assume it pertains just to tech-based innovations. However, at some level, every company has IP rights to protect. In today’s world, fewer companies have tangible assets such as equipment, manufacturing facilities or real estate. Instead, the vast majority of companies today have most of their assets based on IP rights. This includes the ‘mom-and-pop’ yoga studio that needs to protect its name, all the way to the biotech company that has inventions to protect. No matter what type or size company you have, there are aspects of IP law that touch your company and those rights need to be protected.

What are some common intellectual property issues entrepreneurs should recognize?

The four main areas of IP affecting business today are trademarks, copyrights, patents and trade secrets. Companies need to be aware of all four areas and how to protect themselves with regard to each.

Trademark law deals with the protection of a word, name, symbol or device used to indicate the source of the goods or services. The purpose is to distinguish from other similar goods or services and prevent public confusion. When determining your brand or company name, you should perform trademark clearance to ensure you don’t infringe on pre-existing marks and that your desired mark is strong and protectable. Discussing such issues with a trademark attorney early on can minimize exposure and create IP assets for a company right out of the gate.

Copyright law deals with the protection and permissible uses of original works of authorship, including photographs, videos and written documents. These issues often arise with hastily launched websites, when companies start loading copyrighted images or text without first getting permission or the appropriate licenses. This could lead to cease-and-desist notices and claims for damages. Similar issues can arise with the use of personal likenesses, especially those of celebrities.

Patent law grants an inventor the right to exclude others from making, using or selling his or her invention. If you have an innovative idea, it’s important to talk with an attorney to determine what is patentable and whether or not your idea infringes on other patents. Doing this early diligence can protect your idea from being abandoned to the public domain or help you sidestep and minimize potential litigation exposure.

As far as trade secrets, companies need to be mindful about how they manage information to make sure secrets stay protected. Early-stage companies often aren’t careful about employment contracts and what information is being divulged to whom. This lack of discipline can adversely affect the company’s ability to claim trade secret protection. If you share sensitive information without outlining the recipient’s duties to hold it in confidence, you can lose the ability to protect your trade secrets.

What are the potential consequences of ignoring intellectual property issues?

The risk of not protecting your mark is that someone else assumes a similar name and thus limits or destroys the value of your brand. Though there may still be recourse, it becomes an uphill battle. An infringement lawsuit by a trademark holder for your use of a confusingly similar mark could cost your company its brand and/or logo, the goodwill associated with them and subject you to potential damages.

The risk with copyright infringement is financial penalties. Unlike patent and trademark laws, there are express damages written into the copyright statute that can be considerable.

The consequence for infringing on a patent is litigation, which may result in an injunction preventing further sales or use of the infringing product. Damages and costs in such cases can quickly add up. Conversely, if you fail to seek patent protection for your innovation, you could permanently lose your ability to protect your invention. When you have a new idea, there are key timelines you should be aware of that can be impacted by public disclosure and sale. You must act quickly to secure your idea or you could lose your rights, even if your invention is otherwise patentable.

With trade secrets, it’s simple: If you don’t protect them, you lose them. As soon as a secret enters the public domain, it’s gone.

How could these problems be avoided?

Often, talking with someone who is knowledgeable can help you understand how to protect yourself from infringement. The costs associated with protecting yourself are proportionately low and can have a big impact on your company’s valuation when you’re looking for funding. The stronger your IP portfolio is, the stronger your company is. However, if these issues are ignored, it can become a costly distraction for you and your company. Taking steps early on to make sure your IP house is in order can pay dividends.

Salil Bali is an Intellectual Property Litigator at Stradling Yocca Carlson & Rauth. Reach him at (949) 725-4278 or sbali@sycr.com.

Insights Legal Affairs is brought to you by Stradling Yocca Carlson & Rauth

Published in Orange County
Tuesday, 21 August 2012 10:04

Common misconceptions about patents

Patent law is one of the most complicated areas of law. Not only does a patent combine both law and technology, patent laws are also developed from many sources, such as the US Patent and Trademark Office and the federal courts from all over the US. It is only natural that many inventors and entrepreneurs are confused with its nuances and complexities.

Below are some of the common misconceptions about patents:

1. If I obtain a patent, I have a right to use and sell the invention.

A patent provides the right to exclude others from making, using or selling the patented invention. Many companies find this very valuable, as they can expand or preserve their market shares, demand licenses or royalties, and prevent competition. A patent does not provide a license to use, make or sell a product. Having a patent does not guarantee that you will not be exposed to any liability for infringing other peoples’ patents. You do not need a patent to manufacture or sell a product. However, you will not have any exclusivity, and any company can compete with you. Many investors do not like to invest in non-patented ideas or businesses of start ups, as they are afraid that bigger and well established companies can freely compete against them.

2. I must have a prototype before I can apply for a patent.

If you can describe your invention such that a person skilled in the art listening or reading your description can make and use your invention without much experimentation, then you are ready to apply for a patent. Obtaining a prototype may be good in terms of refining the manufacturing process or ironing out any flaws of the concept, but it can be very expensive and can take some time. Many companies that file patent applications do not have working prototypes.

3. I can stop an infringer with a "patent pending."

A patent pending merely means you have a pending patent application that still needs to be examined by a patent examiner. Since your invention has not been proven to be novel and to meet the other requirements to obtain a patent, you really have not perfected or cemented your exclusive rights. Your  patent pending may, however, allow you to seek for retroactive damages if you obtain a judgment for patent infringement against infringers, for instance, all the way back to the time your application was first published.

4. I must have a patent search done prior to filing my patent application.

A patent search is not mandatory. However, it is worthwhile to do, as it may save you time, resources, and money. The patenting process can be expensive and can take over three years. You should try to determine your chances of obtaining a patent. After all, you do not want to spend the time, resources, and money only to find out that your idea has been practiced before.

5. All patents are the same.

Whether you are trying to protect your invention or you are trying to make sure you do not infringe on another’s patent, you need to know what each type of patent means. Design and utility patents protect different aspects of an invention, and they provide different scopes of protection. Design patents only protect the way articles look, their shapes, configurations, or their ornamentations. Utility patents, on the other hand, protect the way articles are used and the way they work. From the standpoint of protecting your invention, design patents may be very easy to be avoided and thus offer very limited protection. From the standpoint of making sure you do not infringe on another’s patent, utility patents may require that you consider various types of infringement. They may require that you review their file histories and consider their related counterparts, such as continuation and divisional applications.

6. If I modify a patented product by 10, 20, or 30 percent, I will be free from patent infringement liability.

There are various ways a patent can be infringed — literally, by equivalents, or by contributory infringement. Literal infringement means the claim language of the patent directly corresponds to the infringing product. Thus, if you do not review the claims of a patent, you may never know whether you infringe it regardless of how much you have modified your product. Even if you have reviewed the claims and believe that there are differences between the claims and your modified product, you may still infringe by the doctrine of equivalents. Under the doctrine of equivalents, if your modified product contains elements identical or equivalent to each claimed element of the patented invention, your product still infringes the patent.

7. As an owner of the company or as a research supervisor, I should always be listed as an inventor to my employees' inventions.

It is crucial to name the right inventors on a patent application. A patent can later be invalidated if it did not include the right inventors. An inventor in the patent sense must have contributed to the conception of the invention. Patent owners and inventors should not be confused. If the idea was conceived by an employee, you should have the employee assign his rights to the company. This is the proper way of making sure that the company will own the rights to the invention, and not by adding yourself as an inventor simply because you own the company. If the idea was conceived by a lower ranking employee, it does not mean that you have to list the employee’s supervisor as the inventor. The key is to determine who contributed to the conception of the invention that is claimed in the patent application.

Because there are many misconceptions about patents, it is important to seek the advice and guidance from a registered patent attorney.

Roland Tong is a Senior Patent Attorney at Brooks Kushman, PC and can be reached by phone at (213) 622-3096 or by email at rtong@brookskushman.com. Brooks Kushman, PC (www.brookskushman.com) is a full service intellectual property law firm in Detroit and in Los Angeles with attorneys having advanced degrees in various technical fields.

Published in Los Angeles

Determining who can lay claim to an invention under patent law can be difficult. In the U.S., the key factor is contribution to the conception of an invention.

“Reduction to practice is typically irrelevant for purposes of determining inventorship,” says John M. Ling, a partner with Fay Sharpe LLP. “Rather it is conception that is the threshold criterion for determining inventorship.”

Smart Business spoke with Ling about inventorship and idea conception.

How is conception defined and determined?

Simply, it is who had the idea. When one or more parties were tasked with solving a problem, and they arrive at the solution to the problem, then the invention is born.

A person who contributed to the conception is an inventor whereas a person who did not is not. Merely being in the room when the idea is born is not enough.

There is also an oath and declaration that is signed when the patent application is filed. The patent office will presume that anyone whose signature is on that document is an inventor.

It’s a good strategy to memorialize conception. If a couple of engineers in the R&D department conceive of an invention at a meeting, it’s a good idea to get them to draft a paragraph or two describing the invention in broad strokes, sign and date it, and have a department manager sign and date the document as a witness.

What has to be done to prove creative contribution?

It seems counterintuitive that conception could be a joint endeavor. But the doctrine of joint inventorship permits multiple parties to claim inventorship on a patent application, so long as they contributed to the conception of the claimed invention.

Inventor A bounces an idea off inventor B, who has an idea to help improve the first idea. If that’s what ends up being claimed in the patent application, they are co-inventors.

The claims are a series of short paragraphs at the end of the application that describes succinctly and specifically what the inventor believes he has created. For example, there might be 20 claims in a patent application, and if inventor A conceived and contributed to claims one through 19 and inventor B only contributed to claim 20, inventor B is still a co-inventor.

It should be noted that if claim 20 is deleted or otherwise amended to remove the subject matter that inventor B contributed, then inventor B should be removed as an inventor. Conversely, if someone should have been named as an inventor but was not, that person should be added. If the correct inventors are not listed on a granted patent once it has been issued by the patent office, a door is opened for third parties to attack the validity of the patent. But as long as that error occurred without deceptive intent, the patent holder has a right and opportunity to correct the inventorship listed on the patent.

What steps should an inventor take before collaborating with another party?

In cases where an inventor has conceived an invention but wants to collaborate with a second party, such as an engineering firm to help reduce it to practice, it is recommended that the inventor work with patent counsel to file a provisional patent application for the invention before any collaboration takes place. That provisional application can be seen as a placeholder. It gives you a filing date for your invention, and then you have 12 months to file a non-provisional conversion application.

If collaboration alters the invention slightly, and as a result the collaborator wants to be listed as an inventor, the inventor has the provisional application to fall back on. It provides a measure of protection for them. That approach will mitigate inventorship ambiguity down the road and help determine the fruit of the collaborative efforts, as opposed to the original inventor’s contribution.

Also, as a result of the recently passed America Invents Act, the U.S. will become a ‘first inventor to file’ country on March 16, 2013, meaning that the first inventor to file a patent application for a given invention is entitled to the patent once it issues. Presently, an inventor filing in the U.S. has a one-year grace period from an earliest date of disclosure of the invention to file an application therefor. Unlike other first to file countries, that grace period will be retained when the U.S. becomes a first inventor to file country on March 16, 2013, in order to protect inventors from having their own inventions used against them as prior art. However, filing provisional applications (or even a full non-provisional application) early and often remains the best strategy for obtaining an early filing date and protecting your invention.

What are shop rights?

Shop rights are an implied license that permits an employer to use but not sell a patented invention of an employee when the invention was made within the scope of that person’s employment but with the financing and/or resources of the employer.

We recommend employers have their employees sign an employment contract that includes an assignment clause whereby the employee is required to assign to the employer his or her interest in the invention produced as a result of the employee’s employment.

That means if an employee is hired to improve fuel efficiency and he files for a patent on improving fuel efficiency, the assignment clause ensures that the patent rights belong to the employer. However, if the employee files a patent application for a spoon handle with a unique bend in it, that is likely not within the scope of his employment.

Absent such a contract and the assignment of the invention to the employer, the courts will typically analyze the circumstances of how the invention was made to determine whether the employer has a right to use the invention, and they will look at whether the invention falls into the scope of the employee’s employment, and whether the employer provided funding, tools, or resources, without which the inventor would have been unlikely to make the invention.

In those cases, the employer may have shop rights, despite the lack of contractual obligation on the part of the inventor to assign the rights to the employer, but it should be noted that those rights are generally nontransferrable. The shop just gets to use the invention — it can’t sell or license it or obtain any of the other good features that come with patent protection.

John M. Ling is a partner with Fay Sharpe LLP. Reach him at (216) 363-9000 or jling@faysharpe.com.

Published in Cleveland

In today’s global marketplace, many U.S. companies have the desire to claim a position at the forefront of innovation. However, if your company is developing innovative ideas, it also has a higher level of exposure to the risk of patent or copyright infringement.

“A lot of companies think they have the coverage for this exposure, but they really don’t,” says Phil Coyne, a vice president with ECBM Insurance Brokers and Consultants. “Copyright and patent infringement coverage is usually limited in a standard commercial general liability policy, if it is included at all.”

By taking steps to protect your intellectual property, you can achieve an offensive position within your market, and use those protections defensively to keep others from encroaching on your market.

Smart Business spoke with Coyne about how to protect your patents and copyrights.

Why is patent and copyright infringement important?

With the increasing use of the Internet, e-commerce, technology and a global marketplace, and with many companies using these tools for their advertising and sales, there is a higher exposure to patent and copyright infringement claims.

Companies need to protect themselves from these exposures because infringement claims can have several negative consequences for a business. First, costly lawsuits can be avoided and, second, a copyright infringement claim can do irreparable damage to a company’s brand and its reputation with customers.

Is there coverage available for patents and copyright?

The simple answer is yes, but it is a little more complicated than that. While many companies may believe that they have coverage under their standard commercial general liability policies, that coverage is very limited in nature.

To trigger coverage for copyright infringement, an insured must first demonstrate that the injury occurred during the policy period and that it arose in conjunction with its advertising activities. The typical policy has an intellectual property exclusion, and there is not coverage for patent infringement.

In response to the exposure and gap in coverage in this area, the insurance industry has developed various policies. There are specialized policies available for coverage of copyright infringement outside of your advertising activities. There are also specialized policies available for patent infringement.

Examples of these policies are:

* A defense and indemnity policy that is designed to cover claims brought against an insured for its activities regarding use, distribution, advertising and/or sale of its product. This type of policy usually covers the insured’s liability for defense costs, damage awards and settlement payments. Defense costs typically erode the limits of coverage.

* Infringement abatement coverage. This type of policy covers the insured’s costs in bringing and prosecuting litigation against alleged patent infringers. Infringement abatement policies typically cover 75 to 80 percent of the litigation costs but do not cover liability for judgments or damages. Also, the insurer will share in any recovery achieved.

* Patent defense only, or patent infringement defense costs reimbursement, is a type of policy that provides coverage for an insured’s defense costs in patent litigation but does not provide for damage awards against the insured.

How can a company ensure that its patents and copyrights are protected?

There are two main steps companies must take. First, analyze this additional risk and exposure. Second, have an internal companywide intellectual property compliance program. If you do not have one already set up, begin developing one immediately. These programs will enable companies to do two very important and necessary jobs in the risk prevention process — both safeguard their intellectual property and help ensure that they do not infringe on the intellectual property rights of others.

What do companies need to know about an intellectual property compliance program?

There are four aspects of an intellectual property compliance program that companies should strive to understand and implement.

First, it should consist of a clear statement of the company’s policies and procedures regarding intellectual property and its use and development.

Second, it is necessary for personnel to have a clear understanding of their responsibilities and duties.

Third, a successful property compliance program needs a formal training portion to help employees learn about these issues.

And finally, the company must continue to monitor and update its program and all related procedures.

Are there any legal changes businesses should be aware of?

Congress just passed the America Invents Act effective Sept. 16 that is supposed to speed up the U.S. Patent and Trademark office so that the U.S. will be more aligned with the international marketplace regarding patent applications. Even though the process has been streamlined and this law is designed to try to eliminate cases of litigation and patent law, it could cause a potential increase in the number of claims as companies rush to file claims to either take advantage of the old law or the new law.

Phil Coyne is a vice president with ECBM Insurance Brokers and Consultants. Reach him at (610) 668-7100 or pcoyne@ecbm.com.

Published in Philadelphia

The America Invents Act, passed Sept. 16, 2011, contains reforms that will affect businesses in many ways, including how they must pursue patents. One of the goals of this legislation is to standardize U.S. law with the way the rest of the world handles patents. The change that is receiving the most attention is the switch from first-to-invent rights to first-to-file. The new system goes into effect in March of 2013.

“The U.S. has its own version of first-to-file,” says Timothy E. Nauman, partner with Fay Sharpe LLP. “But generally, it will be similar to what the rest of the world has been doing. The patent will be issued not to who first thought of the new idea, but to who filed first.”

Smart Business spoke with Nauman about what you need to know about the changes, and how they may affect your business.

Have any of the act’s reforms gone into effect already?

Yes, a few. Accused patent infringers used to be able to claim the plaintiff’s patent was invalid because it didn’t describe the ‘best mode’ of practicing the invention. ‘Best mode’ as a defense is no longer supported by the patent act.

Second, there was a provision that allowed any third party to bring a lawsuit indicating that a patent owner was mis-marking its patents. For example, a manufacturer may make a product for which the patent expired years ago. However, the mold was never changed, so the expired patent number still shows up on recently manufactured products.

Someone figured out that you didn’t have to suffer competitive injury to file a false marking lawsuit. Companies grew tired of dealing with constant lawsuits, and there was a backlash. Now, you have to actually be competitively damaged to sue.

How will the act affect patentability or patent validity claims?

There are new procedures for challenging the patentability of an invention or to challenge the granting and validity of a patent. These changes aren’t going to be enacted until September, 2012.

One of the new procedures is the post-grant review process, a nine-month period in which a patent can be challenged. This is similar to what is called an ‘opposition’ overseas. For example, this provides a way to challenge the patent at the administrative level instead of going to court. This is useful, because going to court can be an expensive proposition and time-consuming.

For businesses, this opposition process could be looked at as a hassle, but it could also be considered helpful in removing the garbage from the family of valid patents. If your patent survives the challenges provided by these new processes, it’s probably a good patent. If your invention is worthy of a patent, it would likely pass these challenges anyway.

How will the act change the way rightful patent owners are determined?

The U.S. has always used a first-to-invent system. In that system, if you came up with an idea, and I came up with the exact same idea completely independent of you, and we each file a patent application, generally, the patent is awarded to the person who is determined to have been the first-to-invent.

You and I could end up in an interference proceeding, in which the Patent Office or the Court would evaluate the evidence of first-to-invent. We have to show when we first conceived the invention, when we reduced it to practice, and how diligent we were.

Inventors keep notebooks with this information, which are signed and dated by a lab partner or someone else who works closely with them. You can also prove you came up with the invention on a particular day by showing an e-mail that describes the invention. The e-mail recipient will be able to corroborate that evidence. Without evidence, you could lose to a party that conceived or reduced the invention to practice after you.

The switch to a first-to-file system is designed to simplify the process, and will make U.S. patent laws similar to procedures in most other countries in the world.

How will the change from first-to-invent to first-to-file change the way U.S. businesses operate?

Some will tell you the change to first-to-file doesn’t mean a thing for big businesses, because multi-national companies file applications around the world anyway. They have already been dealing with a first-to-file system in other countries. The fact that first-to-file is being enacted in the U.S. won’t change how these companies pursue patents.

Others will tell you there is a bit more urgency, an added pressure to reduce the time from when an invention is conceived to the time the patent application is filed to minimize the chance of a competitor filing first on a similar invention.

Newspapers have reported that this was a friendly patent act for the little inventor. The fees may have gone down some for them, but one potential problem is that the small inventor may have to invest in filing an application a little quicker than they would have wanted. This is no small issue, especially when you consider the thousands of dollars it costs to file and pursue an application. In the past, a patent attorney may have encouraged the inventor or company to test the market for six to nine months to see if there is a demand for the product, get a business plan ready, then decide whether or not to file. Today, a patent attorney may tell them to push their timeframe up a bit to complete a patent filing.

Timothy E. Nauman is a partner with Fay Sharpe LLP. Reach him at (216) 363-9136 or tnauman@faysharpe.com.

Published in Cleveland
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