The Patent Light

Yesterday, the House passed the “Defend Trade Secrets Act” (“DTSA”) by a 410-2 vote.  Previously, the DTSA passed the senate.  So, now the DTSA is headed to President Obama who is expected to sign it.  The law is designed to go into effect on the date of its enactment.

The DTSA amends the Economic Espionage Act to create a private civil cause of action for trade secret misappropriation.  Previously, civil trade secret misappropriation has been purely a matter of state law.

Due to the enactment of the Uniform Trade Secret Act in 47 states, there already is a great deal of uniformity in state law regarding trade secrets.  The DTSA is not designed to eliminate or preempt the various state trade secret laws but rather act as an additional layer of protection.  Some question the need for the law.  In reality, Congress can point to this law as proof that they actually did something this election year.

For more information, contact Bill Naifeh at www.naifeh.com.

Many companies or inventors unknowingly engage in activities which essentially forfeit their right to file for a U.S. patent. Patent attorneys call these activities “statutory patent bars” because the patent statute lists several activities which will “bar” an inventor or company from obtaining a patent.

The modern patent statute goes back to 1952. Since 1952, every “barring activity” mentioned in this statute has been heavily litigated and courts have developed a fairly mature and well-defined body of case law interpreting the barring activities and exceptions to the barring activities.

When Congress passed the American Invents Act or the “AIA” which became effective in 2013, the statutory language changed. So, now we have a new list with new terms. Any lawyer will tell you that courts do not always interpret statutory language in a reasonable or predictable manner. Thus, we are now in an era where there is uncertainty regarding the meaning of the new statute because courts have not yet had an opportunity to interpret the new language.

The United States Patent and Trademark Office (“USPTO”) cannot wait on the courts and has to interpret the new AIA statute in order to issue patents. This memo attempts to explain and simplify the USPTO’s interpretation of the patent bars or patent barring activities listed in the new AIA statute. Just remember that the courts are not bound by the USPTO’s interpretation. So, we do not know if a court will agree with the USPTO.

At a risk of oversimplification, the USPTO believes the following list of activities or disclosures bars one from obtaining a patent:

(1) The invention was patented previously anywhere in the world,
(2) The invention was previously described in a document available to the public anywhere in the world;
(3) The invention was previously in public use and the use was known by the public anywhere in the world;
(4) The invention was on sale or offered for sale to the general public anywhere in the world;
(5) The invention was otherwise available to the public anywhere in the world.

However, there are exceptions to the above “disclosures.” The exceptions are:

A disclosure does not bar patentability if made 1 year or less before the effective filing date of a claimed invention where:

(A) the disclosure was made by: (1) the inventor, (2) a joint inventor or (3) by another who obtained the disclosure directly or indirectly from the inventor or a joint inventor; or

(B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the disclosure from the inventor or a joint inventor.

The “exceptions” are designed to give the patent owner a limited one year grace period for his/her own activities.

So, if an inventor (or assignee): (1) publishes, (2) uses in a publicly known way, (3) offers to sell or sell the invention to the public, or (4) makes the invention public more than one year before filing a patent application on the invention, the inventor or assignee loses the ability to file for a patent on the invention.

In this situation the “public” means anyone who does not have an obligation of confidentiality. Thus, if the inventor discloses the invention to a small group of potential investors and the investors have no duty of confidentiality, the inventor has made the invention “public” or a public disclosure.

Although the U.S. provides for a limited grace period, keep in mind that most other countries do not have a grace period. Thus, while the public disclosure in the above example may have started a one year grace period for a U.S. patent filing, the public disclosure destroyed the inventor’s ability to file in Europe and other regions who does not have a grace period. If foreign filing is important, you should forget about the U.S. grace period.

Additionally, the inventor or assignee will be prevented from obtaining a patent if a third party (who has independently invented the invention or a similar invention) files for a patent before the inventor or assignee files for their patent. In other words, the first person to file an application is entitled to receive the patent. This is another major change of the AIA. Previously, the first person to invent was entitled to receive the patent.  So, under the regime of the AIA, it is even more important to file early and often to prevent others from racing to the patent office.

For more information contact Bill Naifeh at www.naifeh.com.

Non-Disclosure Agreements (“NDAs”) or Confidentiality Agreements are probably the most overused and abused of all commercial contracts. Businessmen and engineers often sign NDAs and then freely disclose business plans, trade secrets, and ideas to patent to potential “business partners” because they believe they are fully protected by the NDA. However, NDAs vary widely in the scope of their protection. Some NDAs offer powerful protection, but many NDAs offer very little practical protection. In fact, agreeing to some NDAs may be worse than no agreement at all.

Unless the party disclosing the confidential information clearly understands the scope of the NDA he or she is about to sign, the disclosing party may be revealing confidential information without adequate legal protection. This is especially true when the disclosing party uses a NDA from a previous situation or pulls down an NDA from the Internet.

When reviewing an NDA that you are about to sign, ask yourself the following questions:

Does the NDA obligate the Recipient’s subsidiaries and contractors?

Does the NDA require the Disclosing Party to mark the information as confidential? If so, are you really going to mark every correspondence with them as “Confidential.”

Does the NDA require the Disclosing Party to document conversations as confidential? If so, are you really going to document all of your conversations?

Does the NDA state “non-use” obligations in addition to “non-disclosure” obligations? If not, do you want them to be able to use your information for any purpose or do you want to limit how they use your information?

Are the exceptions to the definition of Confidential Information too broad?

Does the NDA allow for the independent development of competing products?

Should there be a no reverse engineering clause?

Does the NDA require a return or destruction of all materials?

Does the NDA contain an indefinite term for secrecy requirements? If so, the NDA may not be valid in many states.

What state law will be used to govern and interpret the NDA?

Where will any dispute resolutions occur? If out of your city or state, do you really want to fund litigation to enforce this NDA in another state?

Does the NDA have an arbitration clause?

Does the NDA provide for Injunctive Relief?

Does the NDA have any clauses that you do not understand?  If so, contact your lawyer or read the ebook: A Simplified Guide to NDAs.

For those interested in single short book explaining the patent process and what it means to own a patent, “A Simplified Guide to the Patents” is now available in ebook form on Amazon.  The link to the book is here.

This book is intended for entrepreneurs, small business owners, general practice lawyers, investors, and others who need a realistic overview of the patent process.  This book offers a somewhat simplified, but realistic explanation of an extremely complex and changing area of law.  It is not a “How to Draft a Patent Book.”  Instead, it discusses what to expect as one goes through the process.  For more information contact Bill Naifeh at www.naifeh.com.

In my last two posts, I discussed cost considerations for obtaining a United States patent.  However, I did not discuss prices and I know that most readers of this blog would like to see “ball park” estimates.

First, it is essential to understand that with patent applications you will always “get what you pay for” as I explained in my previous posts.  Second, the type of invention and the degree of complexity are probably the next most important cost considerations.

Unfortunately, clients almost universally believe that their inventions are relatively simple and can be easily described and claimed in a few hours.  This is almost always wishful thinking and, thus, totally false.  In fact, if clients reviewed other patent specifications in their area, they would find that that there are a lot of drawings and a large amount of text creating a document that is largely incomprehensible by anyone not familiar with in the intricacies of patent law.  Furthermore, as explained in previous posts, small clients often need greater protection and, thus should expect to incur greater costs.

Statistics indicate that the average U.S. patent costs $36,000 over the 20 year life of the patent.  This number includes application, issue, and maintenance fees paid to the patent office, prosecution costs (preparing responses to patent office rejections), and initial patent application preparation and filing.  Typically, the initial patent application preparation is about half of this cost.  So, if the average patent costs $36,000, the average cost for patent application and filing is about $18,000.  However, this number represents an average cost.  As stated previously, the type of invention and the degree of complexity are probably the most important factors in determining costs.

Below is rough guidance regarding estimating the costs for the preparation and filing of a non-provisional application:

The above table does not include the costs of patent searching or filing provisional patents.  Often clients can file a provisional patent application for about a third to three quarters of the costs for filing a non-provisional application.

It is also important to note that the above costs are from historical and personal observations and do not represent the costs that my firm charges.  Again, they are only meant to provide the reader with ballpark or order of magnitude estimates.  The reader should talk to a competent patent attorney for estimates involving a specific invention or technology.  For additional questions, contact Bill Naifeh at www.naifeh.com.

In continuing this series of posts, let me describe two scenarios:  (1) a doctor walks into my office with an idea for a new medical instrument.  During the initial interview, he draws a freehand sketch and instructs me to draft a patent application; and (2) an engineer sends me a complete “invention disclosure” providing a detailed description of his invention, a PowerPoint Presentation describing the invention for investors, accompanying drawings, a Solid Works “edrawing” computer model, known prior art, and procedure detailing how to use the invention.

Assuming the level of complexity between the two inventions is about the same, which application will be less expensive?  Obviously (in my mind at least), the engineer’s invention will be cheaper to draft and file – by thousands of dollars.

While it is true that I have to wade through a lot of information from the engineer, more information is always better.  Furthermore, it is quicker to cut and paste sections of existing text than to draft from a blank computer screen. (By the way, this situation is entirely hypothetical – in my experience, engineers also hate to write.)

In the doctor’s situation, before I begin drafting, I will have to research existing inventions, medical procedures, etc.  I will also instruct either an outside draftsman to produce patent drawings or have a paralegal produce a 3D model in Sketchup.  Researching takes time and time costs money.  Furthermore, because I am not a doctor, I might miss an important nuance about the invention or the method of using the procedure.

Thus, a well-considered, clearly written, comprehensive invention disclosure can reduce patent costs and result in better patent protection.  In principle, no one knows more about an invention than the inventor.  If the patent attorney is to perform a proper patentability search, evaluate the search, and do a good job of preparing and prosecuting the patent application, it is critical that the inventor provide the attorney with specific written guidance in the form of an invention disclosure.  Most patent attorneys will provide invention disclosure forms as well as the appropriate instructions.

As discussed in my previous post in this series, a patent is a trade you make with the government.  The government grants you a monopoly for your invention.  In return, you must increase public knowledge.  For you to increase public knowledge, the patent application must contain enough detail to teach others how to make and use your invention.  Patents which just describe an idea, without teaching others how to make and use the invention, are invalid or can be invalidated.

So, just presenting an idea to your patent attorney will force him to develop the idea into an invention (if he is doing his job).  This will be an expensive endeavor. While most patent attorneys are engineers, we are not efficient engineers and we are expensive.  Thus, it almost always less expensive to either develop the idea into an invention yourself or pay an engineer to develop the idea.

The patent disclosure does not need to be as detailed as a performance specification, but it should contain enough detail so that a person of ordinary skill in the art can make and use the invention after reading the disclosure.

Thus, providing a detailed disclosure will increase the quality of the patent and be less expensive than just presenting an “idea” to your patent attorney.

For more information, contact Bill Naifeh at www.naifeh.com.

This is a difficult question to answer for a variety of reasons.  First, patent costs vary based on differences in technology.  Second, patent costs vary due to the intended use of the patent and the client’s requirements.

By way of background, patents are not like copyrights or trademarks in that if you are the first to think of and use a logo, you own rights in it.  Patents are only granted if your invention increases the general knowledge of the public (at least theoretically).  In order to increase the general knowledge, a patent application must do more than simply present an idea.  By law, the patent application must teach others skilled in the art how to make and use the invention.  In exchange for the increase in public knowledge, the inventor is granted a monopoly which is (theoretically) proportional to the increase in public knowledge.

Some areas of technology simply require more drawings and descriptions to enable “one skilled in the art” to make and use an invention than other technology areas.  Drawings and descriptions are expensive and costly – especially if an attorney drafts them.  Obviously, the longer the application, the more costly, it will be.

A simple mechanical invention with a short specification will likely be much less expensive to draft than a complex biotech invention.  On the other hand, in my experience, simple inventions with short specifications are typically harder to get allowed.  It seems that U.S. patent examiners have a bias against short applications.  It almost appears that the examiners require the applicant put in a certain amount of “sweat” labor into the application.  So, I often advise clients to “beef up” their shorter descriptions in order to overcome the examiner’s bias against short applications.  A short application can be beefed up by adding more embodiments or by making the invention part of a system or “kit.”  (These are often useful for legal reasons too).  The more description added, the higher the costs.  This means that often simple inventions become expensive.

With rising hourly legal rates, some law firms have extolled the benefits of short applications.  Generally, however, I believe short applications are not as strong and do not provide the depth and flexibility needed if the patent is used in licensing or litigation.  For instance, the majority of patents typically asserted by successful NPEs have lengthy specifications. (Lengthy specifications are usually harder to invalidate and provide support for numerous continuations.)

Another cost factor is that different clients use patents differently.  For instance, the goal of many large companies with thousands of patents is to keep costs down for every patent or patent application.  No one single patent will be that important to them.  Consequently, these clients want what is called “defensive” patents.  (If they are sued by a competitor, they can counter sue by claiming infringement of 20 to 50 patents.  Since no one can defend against so many patents, a settlement involving cross licensing is often reached.)  In this scenario, the quality of each patent, although important, is not as paramount because each patent is likely to be just one of a large group of asserted patents.  Obviously, this scenario only works when the defensive patent owner has a very large number of patents in their portfolio and, thus, is able to claim infringement of many patents.

On the other hand, a small start-up company will only have a few patents in their portfolio.  Consequently, the patent quality must be paramount – especially if they go up against an industry giant.  Obviously, patent quality is often a function of the time involved in its preparation.  The longer a patent application takes to draft, the better the quality is likely to be (as a general rule). In the legal world, time equates to cost.

This often means that a small company (who is likely to use its few patents offensively) should expect to pay more per patent (for better quality) than large companies who can also rely only on the quantity of their patents.

For more information, contact Bill Naifeh at www.naifeh.com.

As of August 4, 2014, the U.S. Patent and Trademark Office (USPTO) will be instituting new access control procedures that may affect visitors to the USPTO campus in Alexandria, Virginia, as well as visitors to USPTO’s satellite offices in Denver and Detroit.

These changes are the result of the Federal Government’s enforcement of the REAL ID Act, which enacts one of the key recommendations of the 9/11 Commission.  The Act establishes minimum security standards for state-issued driver licenses and identification cards and prohibits Federal agencies from accepting those documents for official purposes unless the Department of Homeland Security (DHS) determines that the state meets the minimum standards.

As of April 21, the following states do not meet the REAL ID standards:

• Alaska
• American Samoa
• Arizona
• Kentucky
• Louisiana
• Maine
• Massachusetts
• Minnesota
• Montana
• New York
• Oklahoma
• Washington

Visitors to the USPTO with state issued identification from these states must present alternate forms of identification to facilitate access.  Three of the states listed above offer an Enhanced Driver’s License that is identifiable by an American flag on the license; they are New York, Minnesota, and Washington.  USPTO will accept the Enhanced Driver’s Licenses from those states.

DHS currently accepts other forms of Federal-issued identification in lieu of a state-issued driver’s license, such as a:

• Passport
• Passport card
• DoD’s CAC
• Federal agency HSPD-12 ID
• Veterans ID
• Military dependents ID
• Trusted Traveler card – Global Entry, SENTRI, or NEXUS
• Transportation Workers Identification Credential (TWIC)

For visitors using state-issued ID to access the USPTO, only driver’s licenses or identification cards from states that meet Federal standards will be honored.  USPTO will continue to accept other forms of government-issued identification, including Federal employee badges, passports, military identification cards, or Enhanced Driver’s Licenses as noted above.

If visitors do not have acceptable identity documents, the person to be visited at USPTO will need to provide an escort in order for the visitor to access the USPTO. The visitor must be escorted at all times while in USPTO secured areas.

The Supreme Court reverses the Federal Circuit’s Indefiniteness Standard in a decision likely to negatively impact patent owners.

As many know who have been involved in patent litigation, it is often impossible to determine claim meaning in some patents.  This uncertainty makes patent claim construction extremely difficult – both for the lawyer advising a client and the district judge.  It also allows certain patent owners (usually trolls) to file outlandish patent infringement lawsuits based on poorly worded and vague claim interpretation.

The uncertainty existed despite the definitiveness requirement in the Patent Act which requires that a patent specification “conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as [the] invention.” 35 U. S. C. §112, ¶2.  The uncertainly existed because the Federal Circuit’s standard to determine indefiniteness under this §112 requirement was whether the claim is “amenable to construction.”  In my view, this is a much lower standard than the statutory language requires.

In Nautilus, Inc., v. Biosig Instruments, Inc., the Supreme Court reversed the Federal Circuit’s standard and held that a patent is invalid for indefiniteness if its claims, read in light of the patent’s specification and prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.

Assigned to Biosig Instruments, Inc., the patent in dispute (U.S. Patent 5,337,753, the ’753 patent) involves a heart-rate monitor used with exercise equipment.  Prior heart-rate monitors, the patent asserts, were often inaccurate in measuring the electrical signals accompanying each heartbeat (electrocardiograph or ECG signals) because of the presence of other electrical signals (electromyogram or EMG signals), generated by the user’s skeletal muscles, that can impede ECG signal detection. The invention claims to improve on prior art by detecting and processing ECG signals in a way that filters out the EMG interference.

Claim 1 of the ’753 patent, which contains the limitations critical to the case, refers to a “heart rate monitor for use by a user in association with exercise apparatus and/or exercise procedures.” The claim includes, among other elements, a cylindrical bar fitted with a display device; “electronic circuitry including a difference amplifier”; and, on each half of the cylindrical bar, a “live” electrode and a “common” electrode “mounted . . . in spaced relationship with each other.”

Biosig filed a patent infringement suit, alleging that Nautilus, Inc. sold exercise machines containing Biosig’s patented technology. The District Court, after conducting a “Markman” hearing to determine the proper construction of the patent’s claims, granted Nautilus’ motion for summary judgment on the ground that the claim term “in spaced relationship with each other” failed §112, ¶2’s definiteness requirement.

The Federal Circuit reversed and remanded, concluding that a patent claim passes the §112, ¶2 threshold so long as the claim is “amenable to construction,” and the claim, as construed, is not “insolubly ambiguous.” Under that standard, the Federal Circuit determined, the ’753 patent survived indefiniteness review. As noted above, the Supreme Court correctly reversed and finally added “teeth” to the definiteness requirement of the patent act.

This decision may affect thousands of claims.  It also might affect thousands of licenses and previous analyses because patent lawyers, in performing invalidity analysis have previously had no choice but to follow the Federal Circuit’s holdings and have often ignored the definiteness requirement of the Patent Act.

The Nautilus decision will also make invalidity of patents much easier – especially in administrative procedures before the patent office such as covered business method review and inter partes review.

The cost of a provisional depends on the invention.  An invention that takes 20 drawings to describe will cost more than an invention that takes 3 drawings to describe.

A provisional must meet most of the requirements of a regular utility patent.  In other words, the provisional must contain a written description of the invention (not just a description of the idea underlying the invention) and enable one skilled in the art to make and use the invention by reading the specification and drawings of the patent application.  If these requirements are not met, the provisional may not provide any patent protection.

In fact, the only theoretical difference is that a utility application must have claims where a provisional is not required to have claims.   However, under the relatively new American Invents Act, there are references to the claimed invention.  So, many lawyers have been including claims in a “full provisional.”  Furthermore, if international protection is important, the provisional must have claims to be recognized by foreign patent offices, such as the EPO.  (If foreign filing is important, the provisional should actually have “European Style” claims so that Europe will accept the filing date of the provisional.  A discussion of an “international” ready provisional is beyond the scope of this post. Just remember that if foreign filing is important, the provisional should cost more and be adapted for acceptance later by other patent offices.)

From a practical perspective, the client should think of the full provisional as a first draft of the utility application.    A “US only” provisional should have all of the required substance, but can forgo some of the formalities because the provisional will not be examined.  So, if the costs of a utility might average $1000/page of drawings, the costs of a provisional might average $700/page of drawings.

Additionally, because of the “first to file” provision of the AIA, it is important to get applications on file as soon as possible.  U.S. inventors and companies no longer have the luxury of waiting and relying on evidence such as inventor’s notebooks.  Consequently, many lawyers have been using the concept of filing at least two provisionals.  The first provisional is a “quick and dirty” filing or presentation of an idea, but may not fully describe or enable the invention in as much detail as a full provisional.  Hopefully, the first provisional might poison the waters for your competition and give you a first priority date (depending on the detail of the description).  However, because the application may not have been fully thought out, the first provisional might not convey the patent rights of a full provisional.  The theory is that it can’t hurt and might help.  So, the process is to file the “idea provisional” within days of receiving the invention disclosure, then immediately (or as soon as practical) follow up by filing a full provisional.   The costs of the these “idea provisionals” are around $1500.

In sum, the costs for filing a “US only” provisional application can be estimated to be:

First or “idea” provisional           $1500

Second or “full” provisional        $700/per page of drawings (assuming at least 5 drawings).