June 1, 2011
A patent is a form of intellectual property-and it is often the most misunderstood. For example, take the idea that owning a patent gives you the right to practice (produce or sell) a product or service that uses your patented invention. You do not actually need a patent to practice a new technology that you invented. In fact, the purpose of a patent is to grant you a time-limited monopoly for your invention that prevents others from using it.
It is entirely possible, however, that you may need to license a patent from someone else in order to use your new technology if your invention is an improvement to a previous technology. Unless you take a license from the owner of the underlying technology, you could find yourself being sued for patent infringement. There was a time when many patents were issued for totally new technologies, such as the phonograph, telephone and transistor. In today’s complex world of overlapping technologies built on previous technologies, however, it is not uncommon for a new product to infringe the patents of previous technologies.
The classic example of this is the person who invents a siren for a fire engine. In order to build and sell fire engines with sirens, that person may have to license the patent for the basic fire engine. If they want their fire engine to have both a siren and a flashing light, they might have to license the patent for the flashing light. However, if they decide to simply manufacture sirens and sell them to the fire engine manufacturers, they don’t need a patent. On the other hand, if they want to prevent others from manufacturing sirens, they do need a patent.
Patents are extremely useful to all businesses, whether they’re process manufacturers or producers of discrete products and service organizations. A patent protects a company’s innovative technology by creating an intangible asset that, like real estate or equipment, can be bought, sold, or rented (licensed). A patent enables individual inventors and innovative organizations to invest in research and development, and then have the technology they develop become an asset that produces a return on their investment. The limited monopoly given to patent owners by the federal government is for 20 years from the date of application filing.
Patent RightsA patent is not needed to produce a product or service that uses the new and unique technology that you invented. (“You” can refer to a person or people working for a company, university or other entity.) Securing a patent only protects your invention by giving you the right to determine who can use your patented invention, and it gives you the right to sue any person, business or other entity that uses your patent without your permission for patent infringement.
When a patent is issued by the U.S. Patent and Trademark Office, it identifies the inventor or inventors (the person or people who invented the patented technology). The inventor or inventors may assign the patent to another person or entity, such as a business or university. When engineers, scientists, researchers and other innovators invent something while in the employ of a business, university or other organization, the patent is usually assigned to the employer, which then becomes the owner of the patent.
Some patents are “basic” and address a fundamental or totally new technology, while others are “improvement” patents that cover enhancements to existing technologies. If you have patents for technologies you are not using, they might have applications in other industries. You could monetize what might otherwise be idle assets by selling or licensing your under-performing or unused patents to non-competing businesses to create a totally new revenue stream. While you may be forced to license your patent to a competitor, licensing unused technology to non-competitors does not create competition for your current products and services.
On occasion, companies have managed to cleverly license their current technology to one or more of their competitors just before they introduce a new or improved technology. In this way, their competitors pay them for old technology while the company gains market share and grows its profits with the new technology.
If you do business in countries other than the U.S.-and especially if you have competitors in other countries-you might consider patenting your invention in those countries. U.S. patents only protect against infringers that manufacture or sell products in the U.S., or companies that import them into the U.S. If you sell your products in Europe, for example, and you have a competitor in Germany, you may want to apply for a patent in Germany to protect you should your German competitor infringe your patent and begin producing infringing products in Germany. Keep in mind that it is expensive to apply for a patent. It does not usually make sense to apply for a patent in smaller markets such as Portugal or Greece, for example.
A recently signed treaty among most of the industrialized nations created the Patent Prosecution Highway (PPH), which makes it easier to apply for patents in several countries. You initially apply in the country where the technology was invented, but you can then use some of the documentation used in your home country application to apply for patents in other countries that are parties to the treaty.
Patent vs. Trade SecretSome inventors question whether they should apply for a patent or simply keep their new technology to themselves as a “trade secret.” The downside of a patent is that it is published. In exchange for the limited monopoly you receive with your U.S. patent, you must make your invention public. In pre-Internet days, the U.S. Patent and Trademark Office housed patent libraries in federal buildings across the country where one could view all issued patents. While those patent libraries still exist today, most people simply look up patents online.
Inventors can bring a new product to market before the patent is issued; once the patent application is filed, the inventor can then mark the products that use the patent as “Patent Pending.” One benefit of this practice is that it might force a competitor to think twice about copying an invention for fear that once the patent is issued, they’ll be sued for patent infringement. If your patent is not issued, however, you need to remove “Patent Pending” from your products and that could cause some embarrassment.
A trade secret involves literally keeping your invention a secret. Reasonable precautions need to be taken to ensure that your trade secret remains, well, secret. Examples include limiting access to the technology to as few people as possible, and making sure that drawings, formulas, schematics and other documentation are literally kept under lock and key. Employees who come in contact with the secret technology should sign confidentiality agreements, and details of the secret should only be released on a need-to-know basis.
The downside of a patent is that it is published, while a trade secret is not. However, patents provide recourse if someone infringes the patent. On the other hand, if someone cracks your trade secret, reverse-engineers it or simply invents it on their own, you have no recourse against the infringer. Before you make the decision to patent your new technology or keep it as a trade secret, consider how difficult it would be for a competitor to reverse-engineer it and how likely it is that someone might independently invent it.
Patenting Your InventionIf you decide to apply for a patent, it can be beneficial to use the services of a patent practitioner, agent or attorney. In order to receive a patent, you must convince the U.S. Patent and Trademark Office that your invention meets the statutory requirements to receive a patent: It must be “novel” (a new invention that did not previously exist), it must be “useful” (have a practical application), and it must be “non-obvious” (not something a “person skilled in the art” would have figured out himself or herself). By “skilled in the art” the patent law means a person with expertise in the technology covered by the patent and a person familiar with all prior art relevant to that patent.
Both patent agents and patent attorneys have passed the Patent Office Bar Examination, but a patent attorney is also a member of the bar of one of the 50 U.S. states or the District of Columbia. Patent agents and patent attorneys know the patent application (or “patent prosecution”) process, so they are also referred to as “patent prosecutors.”
Whether you choose a patent agent or patent attorney, an experienced patent professional can craft and file your patent application based on your description (and the patent prosecutor’s subsequent understanding) of your invention. The challenge is to have claims that are neither too narrow nor too broad. Your claims may have to be narrow to avoid prior art. Such narrow claims might cover a very specific invention, but could be easy for competitors to work around when designing their own product or process. However, claims that are too broad could result in your patent application being rejected. A competent patent prosecutor should be able to draft patent claims that provide just the right amount of information to support your business and protect against infringers.
For the best results, choose a patent practitioner with experience in the same field of technology as your invention. Patent attorneys and patent agents can generally grasp technologies other than their specialties, but choosing a patent practitioner who is already conversant in your area of technology is often a wise investment.
Is Your Invention Patentable?The “prior art” search (also known as a novelty search or patentability search) and its resulting patentability opinion is another important step. This search, which is a good idea though not legally required, consists of combing the Patent Office’s collection of prior patents, published articles, brochures, schematics and other documentation to find information that relates to your invention.
The aim of the search is to find evidence that the invention you’re trying to patent either lacks novelty (i.e., it’s not really new) or is obvious in light of what’s been done before. This is not something you want to find, but it is better to discover it before you file your patent application so you can avoid the loss of time, effort, manpower, resources and money that result from having an application rejected.
Your patent practitioner should have a prior art search conducted. The results help the patent attorney or patent agent focus on the most patentable aspects of your invention. Knowing the prior art enables the patent practitioner to write the claims around previous inventions and avoid the non-novel or obvious aspects of your invention.
Can a Process be Patented?One of the biggest controversies about patents in the last few decades concerns “business method” patents and whether or not they should exist. True to their name, these patents generally cover methods of doing business, mostly in fields of industry such as finance, tax compliance, insurance and-more recently and most significantly-e-commerce and the Internet in general, as well as software.
Business method patents are not a new phenomenon. The first U.S. patent of this type was granted in 1799 to Jacob Perkins of Massachusetts, who had invented a method of “Detecting Counterfeit Notes.” (Unfortunately for history buffs, the 1836 Patent Office fire destroyed the Perkins patent, along with many others.)
Many business methods hover in the gray area of patentability because they would not pass the “machine or transformation test” (MORT), which requires an invention to either be tied to a particular machine or transform an item from one state to another. By that reasoning, process manufacturing methods are usually patentable if they truly transform material from one state to another, and as long as they meet the other previously mentioned patentability requirements.
Enforcing the PatentIt’s important to make sure that your patent has actually been infringed before you take action. It’s not enough that a competitor’s product or process does approximately the same thing as yours; to infringe one of your patent’s claims, the device must meet each and every limitation of that claim.
It’s best to have a patent professional take a look at your patent and the allegedly infringing product to determine whether infringement is really taking place. Look for a patent litigator or IP enforcement firm that will take the case on a contingency basis, with no upfront cost to you. Whether you proceed through trial or settle the case, their fees and expenses will come out of the proceeds from the settlement or damages award. Needless to say, a litigator or patent enforcement firm that works on contingency won’t take your case unless they believe it has considerable merit.
Should you discover that a person, business or other entity is using your patented invention without a license from you, you might think the logical thing to do is to confront the infringer, threaten a lawsuit, and insist that they either cease their infringing ways or take a license. However, doing so may give them grounds for filing a declaratory judgment lawsuit against you.
By filing a preemptory lawsuit against you, the infringing party becomes the plaintiff and you become the defendant. Whenever possible, you want to be the plaintiff so you and your attorney control the timing and location of the litigation, as well as who is sued. As the plaintiff, you can select the venue (location of the court) for the trial, and, in the case of multiple infringers, you can decide which patent infringement lawsuits will be filed and in what order.
Whenever infringers are contacted, they almost always respond in the same way: they insist that they are not infringing your patent and that your patent is not valid anyway. In a declaratory judgment lawsuit, the accused infringer will seek an order from the court declaring that the patent is invalid or not infringed. You will have the opportunity to defend yourself, but by filing the lawsuit first, the infringer is on defense while you are on offense.
To achieve the best results when enforcing your patent, find an experienced patent litigator or a patent enforcement firm that has a proven track record of producing settlements for patent owners. Some patent attorneys only prosecute patent applications, while some both prosecute patent applications and are patent litigators. Some patent litigators specialize in litigation, and there are patent enforcement firms that, as the term implies, specialize in the enforcement of patents for inventors and businesses, providing a comprehensive package of services that includes managing and financing a patent enforcement campaign on a 100% contingency basis.
You may also be entitled to injunctive relief if you practice your patent. If you produce or sell a product or service that uses your patented invention, one remedy that may be available to you-in addition to compensation for the use of your patent without your permission-is a court injunction instructing the infringing party to cease production and sales of the infringing product. In addition, if your legal team can prove willful infringement, you may be entitled to up to treble damages.
If you are able to prove infringement of your patent, compensation is based, in part, on what the infringer would have paid you had they licensed your patent in the first place. Just as most civil litigation does not go to trial but is settled out of court, the same is true of most patent infringement lawsuits. Patent infringement lawsuit settlements are often based on a reasonable royalty that is applied to the unit or dollar sales of the infringing product (or some other measure of the patent’s use). The settlement might include a payment for past infringement of the patent, and then either a license by the infringer under which the infringer (now a licensee) pays a royalty over the remaining life of the patent. Alternatively, the infringer may estimate sales of the infringing product over the remaining life of the patent and settle the lawsuit with a lump-sum payment.
The question of enforcement raises a peculiar, but not uncommon, situation. Company A, a small business, owns a patent that is being infringed by Company B, a huge corporation. Does Company A really want Company B to cease production and sales of the infringing product, or is Company A better off letting Company B sell the infringing product so it can collect royalties on all those sales? Patents-as well as politics-can make strange bedfellows.
For more information, contact General Patent Corp. at Montebello Park, 75 Montebello Rd., Suffern, NY 10901; phone (845) 368-4000; email firstname.lastname@example.org; or visit www.generalpatent.com.