shearie.com

‘Intellectual Property (IP) 101‘

IP includes patents, trademarks, & copyrights. A patent gives an exclusive right to an invention. A trademark gives an exclusive right to an indication of source of a product. A copyright © gives an exclusive right to an original work. A service mark gives an exclusive right to a service or origin of a service.

United States copyrights accrue automatically, but a work must be registered ® with the United States Copyright Office to perfect the federal copyright. Trademark rights can also accrue without a federal registration, but those rights are weaker, & a federal registration is preferred in almost all situations.

United States patents & trademarks are obtained by filing an application in the United States Patent & Trademark Office (USPTO). An examiner in the USPTO examines the application for compliance with all statutory requirements. There is more. The USPTO issues complying applications & rejects non-complying applications. Often, a non-complying application can be amended, thereby placing it in condition for allowance. It’s help-ful to discuss possible amendments with the examiner in charge of the application prior to filing an amendment. Discussions with the examiner on how best to amend an application increase the chance that the amendment will result in allowance.

Trademarks & service marks identify your business to the purchaser of your product or service. Your mark allows a consumer to come back to you if he or she likes what you provide. If you have a trademark right, using your trademark prevents some one else from using a similar mark that is likely to confuse the public into purchasing goods from them instead of you.

Patents provide a limited monopoly on your company’s product or process. Monopoly translates into high profit margins due to exclusion of competition. Patents can be easily obtained on any invention that complies with the statutory requirements, which are that the invention is useful, novel, & non-obvious. There is more. The prevailing case law allows patents on just about anything, for example, it allows patents on computer implemented methods of calculating useful results, & on computer implemented methods of doing business.

Obtaining United States patents & trademark rights is expensive, primarily due to the amount of high hourly rate attorney time required to prepare an application & guide it through the USPTO. For patents, part of that cost can be deferred by initially filing a relatively simple provisional patent application. The filing date of a provisional application is prima facie (evidence legally sufficient to establish a fact unless subsequently disproved by additional evidence) proof of the date of invention. A provisional patent application protects for one year the right to pursue patent protection on the novel aspects of a product or process at a very low cost. However – provisional applications do not issue into patents. There is more. They simply preserve the filing date for an invention for up to one year. Within one year of the filing date of the provisional application, it must be followed by filing a more formal US application & any foreign applications in foreign countries in which protection is sought. If the formal applications are not filed, the benefit of the early filing date of the provisional application is lost.

‘Jump on Your Intellectual Property Rights‘

If you’re a startup business searching for financing, you should already have (1) acquired your IP rights (patents, trademarks, & copyrights) & (2) cleared your business of any IP infringement. Investors & competitors respect the value of patent & trademarks & applications for them. Investors should not invest in a startup, unless they’re assured that its product or service isn’t infringing another’s IP rights.

There is a saying in the law, ‘don’t sleep on your rights.’ If you do not affirmatively acquire what could become your patent & trademark rights, you’ll lose the opportunity to do so. To often today a startup is shut down because it’s infringing another’s patent or trademark rights. There is more. That shut down could have been avoided with appropriate foresight. The infringed patent or trademark is one that the startup could have obtained for itself by applying for all those IP rights, ? if it had acted early enough. Alternatively, an early due diligence search could have identified another’s IP rights that covered the proposed product or service, thereby providing time for a design around & negotiations for a license to the problem IP rights.

Patents provide a limited monopoly on your company’s new product or process. Monopoly translates into high profit margins due to a lack of competition. Patents can be easily obtained on almost any product or process that is useful, novel, & non-obvious. Under prevailing case law, usefulness extends to any method of calculating a number that has real world utility, including business methods, & the novelty & non-obviousness requirements are not as high a standard as many people believe.

Trademarks (and service marks) indicate the source or origin of a product or service. Source or origin means that a consumer can identify your product or service in the marketplace, & thereby avoid using another’s similar product or service.

United States patents & trademarks are obtained by filing an application for them in the United States Patent & Trademark Office (USPTO). The USPTO then examines the application for compliance with all statutory requirements, & eventually issues complying applications & rejects noncomplying applications. Obtaining these IP rights is expensive, primarily due to the amount of high hourly rate attorney time required to prepare an application & guide it through the USPTO. For patents, part of that cost can be deferred by initially filing a relatively simple provisional patent application the filing date of which is prima facie proof of the date of invention. A provisional patent application protects for one year the right to pursue patent protection on the novel aspects of a product or process at a very low cost, & it’s accorded respect by inventors & competitors. However – to get a patent, a provisional application must be followed within one year of its filing, by filing a more formal US application & any foreign applications to obtain the benefit of the filing date of the provisional application.

‘Who Owns Your Invention?‘

Who owns your invention? Who owns your employee’s invention? Invention ownership disputes occur all too frequently. However – invention ownership disputes are easily avoidable with the proper foresight & knowledge.

Our legal system presumes that the inventor is the owner of the exclusive rights in her or his invention. How then, does some one other than the inventor obtain the rights to the inventor’s invention? The answer to that question is by an assignment. The assignment can be an express assignment, which is typically a written document evidencing a contract between the inventor & the assignee in which the inventor sells the rights to the invention to the assignee. However – that type of assignment isn’t what leads to ownership disputes. Ownership disputes occur when there is no express assignment & both the inventor & her or his employer think that they own the invention. This is because the presumption that the inventor owns the invention is incorrect in certain situations, even without an express assignment.

An employer of one who is ‘hired to invent’ owns the rights to the inventor’s inventions. There is more. The Supreme Court came to that conclusion in the Standard Parts Co. v. Peck case in 1924. However – that is the extreme case, since the vast majority of employees are not employed to invent. What about an employee employed to design or construct, such as an engineer? An employee employed in a field of endeavor in order to design or construct isn’t equivalent to an employee employed for the purpose of invention. That was the conclusion reached by the Supreme Court in U.S. v. Dubilier Condenser Corp. in 1933. However – that conclusion leaves open the question of who owns the invention made by the engineer. The outcome in each ownership case depends on the relationship between the employee, the employer, & the circumstances of the invention.

Even if it turns out that the employee owns her or his invention, if the employee used the employer’s materials or equipment during working hours to make the invention, the law grants the employer a nonexclusive license to the invention. That has been the law ever since the Supreme Court Lane & Bodley Co. v. Locke case in 1893.

It should be apparent that the very best way to avoid an ownership dispute is to reduce to a written contract between the employee & the employer who owns the rights to any inventions made by the employee, & that agreement should be defined as early as possible in the employee employer relationship.

‘Does Your Company Have the Patent Licenses it Needs?‘

It is fundamental that one thing every company needs are the rights to use the property it owns & to produce & sell the products & services it provides. Virtually every product is protected by patent rights, which raises the fundamental question: Does your company have the patent licenses it needs? This article gives the ‘short course’ allowing you to address that complicated question!

First, each country has its own patent system. Therefore, the license to make & use equipment in one country doesn’t necessarily provide the same license in another country (more on this issue later).

It is basic patent law that a patentee’s exclusive right under his United States patent is exhausted by his first sale of a product covered by his patent. That is what the United States Supreme Court held in Adams v. Burke, 17 Wall 453 (1883). However, that holding assumes that no license terms were stated. When no license terms are stated & it’s the patentee selling the product, a complete license under the patent with respect to the sold product is implied by operation of law.

Subsequent cases note that the patentee has the right to restrict the license granted upon the first sale of a product covered by the patentee’s patent. That is what the United States Supreme Court held in General Talking Pictures Corp. v. Western Electric Co., reh’g, 305 U.S. 124, 127, 39 USPQ 329, 330 (1938). Thus, if there is an explicit license, then the terms of the license govern.

If there is a restrictive license under a United States patent, then the terms of the explicit license define the scope of the license. Violation of valid license conditions entitles the patentee to a remedy for either patent infringement or breach of contract. That is the conclusion of the Court of Appeals for the Federal Circuit (CAFC) in Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700, 24 USPQ2d 1173 (Fed. Cir. 1992). The CAFC is the court in the United States that hears appeals from all of the trial courts & from the United States Patent & Trademark Office on issues of patent law.

Moreover, restrictive license provisions that constitute a misuse of the patent are unenforceable. Misuse of the patent means that the restrictive license has imposed a condition that, in effect, (1) broadens the scope of the patent beyond what its claims cover & (2) is anti-competitive. That is what the CAFC stated in Windsurfing Int’l, Inc. v. AMF, Inc., 782 F.2d 995, 1001-02, 228 USPQ 562, 566 (Fed. Cir. 1986).

Several cases deal with the issue of the scope of a license granted by a patentee to a manufacturer of patented products. In these cases, the manufacturer has sold product covered by the patent to third parties, & the patentee has sued the manufacturer & the third party for patent infringement. That is what happened in Intel Corp. v. ULSI System Technology Inc., ___ F.3d ___, ___, 27 USPQ2d 1136, 1139 (Fed. Cir. 1993). See also Lisle Corp. v. Edwards, 777 F.2d 693, 227 USPQ 894 (Fed. Cir. 1985). In these cases, the issue is: Did the license restrict the manufacturer from making & selling to a third party product covered by the patent? While each of these cases depends upon its own facts, my impression is that the courts narrowly construe the license provisions to favor allowing the manufacturer to sell products covered by the patent to a third party. Therefore, great care should be exercised when drafting this type of licensing agreement.

Many companies are interested in the effects of a license on importing product into the United States. In that situation, the scope of a license depends upon the terms of the license. However – note that an explicit license under a foreign patent isn’t necessarily a license under a corresponding (i.e., claims covering the same invention) United States patent. In actual fact, rights of a licensee under a foreign patent have no bearing on the rights accorded under United States patent laws. There is more. That is what the United States Supreme Court held in Boesch v. Graff, 133 U.S. 697 (1889). Moreover, this issue (right to import product based upon a foreign license) was raised in a relatively recent case in the United States International Trade Commission (ITC). The ITC hears certain patent infringement cases involving imported products. In the In re Reclosable Plastic Bags, 192 USPQ 674 (US ITC 1977), the ITC stated that:

Since the reclosable plastic bags at issue are protected by a U.S. patent (reissue patent No. 28,969), no foreign license on the same product can interfere with the rights granted the U.S. patentee by U.S. patent laws. [At page 679.] This statement means that the ITC construed an explicit provision to a license under a corresponding foreign patent to imply no license under the United States patent. Therefore, foreign manufacturers that wish to license a United States patent need to carefully draft their agreements & explicitly state certain rights under the license to ensure that they have those rights.

Rick Neifeld is a Ph.D. (in Physics) patent attorney & managing partner & President of Neifeld IP Law, PC, whose URL is www.Neifeld.com. Neifeld IP Law is located near the USPTO, & it specializes in U.S. & international patent protect ion, licensing, advise, & counseling, & specialty matters at the USPTO.

Rick is also a patent interference practitioner, former Chair of the Interference Committee of the AIPLA, & co-owner of the patent related services provided at www.PatentValuePredictor.com.

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.