Use the Power of Patents to Protect Your Discoveries and Inventions

In this segment we’re going to talk about patent law, a very powerful remedy that’s available to innovators. So first of all, looking at the definition of patents, we see that the invention has to be useful. Novel, and by novel we mean worldwide. And not obvious to a person, who has what we call ordinary skill in math art or in math field. So the notion here, is the willingness to give you a company, an absolute monopoly, a legal monopoly over an invention, is because you’ve given back to us, the public, something that is useful, something which is so new, it doesn’t exist anywhere else in the world.

And it isn’t just the next step or an obvious step in a particular field. Under patents, the inventions are all disclosed. So there’s information in the patent application. There’s information that’s disclosed in the patent prosecution phase, and in the ultimate patent that issues. So the idea here is that even though a legal monopoly can seem to be at one level harmful to the public, because it puts the power in one company to make or use or sell an invention. The countervailing thinking is that it really helps the public because you’ve brought this new thing to us, and you’ve taught us the background and how to use it.

It’s also true, under patent law, that even if you’re not the original inventor of a particular device, or material, you can develop an incremental step, a new improvement to existing technology. And that new improvement can itself be patentable. This is an important point, if you’re thinking of developing some kind of invention that another larger player in your field would want to buy from you. So if you can find a way to improve upon an existing patented product, even if you can’t make that product because of the existing patent, you could control the ability of the owner of that patent to move into a particular field by patenting the next level of improvement.

Recently in the United States, we just mean about ten years ago, the patent act was amended and the United States joined most of the rest of the world in issuing patents to the person who was the first to file. Not necessarily the person who was the first to invent. Now, to claim ownership of an invention you still have to have invented it. You can’t have misappropriated from a third party or copied from a third party. But until a few year’s ago, if you secured a patent all the way through the patent process and you’ve secured a patent. Someone who invented it prior to you could have your patent invalidated. That is no longer true.

So what this means for companies who wish to secure patents in the United States, get your application on file. Patent law, though very powerful, doesn’t protect everything. Here’s a list Of what US patent law does not protect. And indeed this is typically true around the world. So you can’t get a patent on natural phenomena. And we don’t just mean lightning and thunder and wind. We mean natural phenomena that occur in the body. And there was recently United States Supreme Court had upheld patents that were based upon genetics. When the courts concluded that what was being patented and what had been patented was simply naturally occurring events, scientifically occurring events. You can’t get patent protection for printed matter.

That’s why when you have printed matter you have to think about a copyright.

Abstract ideas. This is the bullet point, which has really become a dagger in the heart of many software patents. Over the last few years, since the United States Supreme Court ruled in a very significant patent opinion that many of the processes that were the subject of software patents were just ideas. They just happened to be an idea that used a computer to carry out the idea. I think the last estimate was well over 60% of the software patents that have been challenged in the last few years have been invalidated. So think about that, companies put a lot of time and money Into securing patents and they are dropping like flies when they cover software.

Indeed scientific principals as we were discussing earlier when it came to notions of the body. Patent is not available. Patent protection not available, for scientific principles or laws of nature. Or merely because you take an algorithm and happen to embody it in hardware, firmware or software. So we have three kinds of patents. Utility patents, which are very common, they cover useful articles. Machines, manufacture, compositions of matter. Several years ago I had a client that developed a synthetic macromolecule, created a new form of matter and received a patent on that molecule.

Design patents, very, very popular these days because of the popularity of mobile phones, of products that are used by consumers where elements of the product are novel but not necessarily useful, they’re ornamental, they’re aesthetic.

We see cars. Often cars and the exterior of cars can be protected through product trade dress and through design patents. And then plant patents. Obviously this is an area that’s been very controversial as some plant patents cover genetically modified crops and creates cultural issues over the question of what happens when some of the seeds of those plants purchased by one farmer blow into the field of another farmer and indeed some of the owners of plant patents have sought to prevent people from growing crops when the seeds are covered by plant patents.

So a patent lasts, now, 20 years from the date the application is filed. It used to be 17 years from the date a patent issued. This is the US time period. Internationally, patents can range from 14 years to 20 years. And in some countries certain kinds of patents, such as software patents can be a much shorter time period than patents on other products or machines.

When a patent expires It’s over, meaning anyone can manufacture that product. They don’t need to ask permission, they don’t have to pay a fee. That is the whole point underlying patent protection. You get a monopoly for a period of time, and then the public is free to use it. And there are many fields, in particular. In particular, the genetic pharmaceutical field, where competitors wait anxiously for the day that patent expires. And they will have in the marketplace, as soon as possible, sometimes the next day, drugs that are the generic equivalent of the patented drugs. Of course, depending on the product that you have, you may have to secure regulatory approval well in advance of the expiration of that patent.

But the point is that some companies will actually develop their technology by looking at the patterns that will be expiring over the next year or two, and thinking how they can build upon that invention and have a commercially, competitive product that has new inventions contributed by that company, based upon inventions that have just expired. And indeed for our clients who are thinking of International patent protection. There is the patent cooperation treaty, which is a rather complex process that gives you an opportunity when you have filed a patent application in one country to extend that patent application several years down the road to other countries getting the earlier filing date. Remember of course patents are national in scope.

There is no such thing as an international patent, although there is an international patent treaty. Patent applications are reviewed by the examiners in each country and we have to meet the standards required by each of those countries in order to get a patent. We see these days that there are many companies that have secured, let’s say US patent protection. And find that their competitors are going to countries where that client has no protection. China is a prime example. And they are contracting with the fabricators and manufacturers to manufacture a product which would be infringing if done in the US, but there is no patent on that product in China. So it is perfectly legal to manufacture that product.

All a client can do if it has a US patent is keep an eye on the borders. And the importation because a US patent will allow a company to prevent the importation of goods that infringe that patent.

Patenting is very expensive. We were talking earlier, copyright protection is between $30 and $65 per copyright application. Trademark, few hundred dollars for filing fees and a couple thousand dollars for attorney’s fees. Trade secret, there’s not necessarily any fees associated with it at all because there’s no registration. But patent fees in the US range from maybe $4,500 for an attorney’s fees for a ver simple patent, to a couple hundred thousand dollars for very complex patents, often in the pharmaceutical field. But why do companies secure patent protection? Well first of all, it is a legal monopoly. There is no such thing as independent creation being a defense. So unlike copyright, unlike trade secret, with a patent it is, indeed, an absolute monopoly.

The sole right to make, or use, or sell, or import, that patented invention. So it’s a huge competitive advantage. In the US there is no requirement that you actually use the patent. This is different from, for example, in Europe, where a certain period of time, typically 3-5 years of non-use can allow someone to challenge the validity of the patent. So in the US you can have, if you wish, a huge patent portfolio not exploited at all. And wait until someone else moves into that field and then either negotiate with them or sue them for a licensing revenue. We have a term that we use in the US, we call them trolls. Now they like to be called non-practicing entities.

We call them trolls because the notion is they are like those nordic sagas where the trolls hide under the bridge, and it isn’t until you cross the bridge, they jump up to charge you a fee. But the notion is, they have the patent ownership, and if you want to exploit that invention, you need to negotiate with them. Indeed you can license patents, and that can be a great source of revenue. And companies can often find a way that an invention has application for other products and other geographic areas, and can be the basis of licensing revenue.

If you have patents, you can sometimes enter into a contracting relationship with a competitor and you’ll be able to either compete directly with them or to license your patents to them. And divide up the field in a way where you’re going to get a share of a certain segment of the market that you might not otherwise get, because your competitor needs to use that patent to sell that product. Patents can also be used to establish a defensive legal position. I saw this used a few years ago. I was meeting with a client who had been sued for patent infringement. It’s a rather large company, they had their own in-house patent counsel.

And I recall his first statement at the outset of that meeting, where he turned to one of his engineers. And he said, you go through our patent portfolio. And you find not only patents that cover what we’re manufacturing here. You find patents that that plaintiff is probably violating, meaning that there were enough patents on enough products that this attorney felt there was a good likelihood. I don’t mean that they have patents that covered what they were doing. They might be able to bring a counter claim against the plaintiff. Field good defense is a good offense. Or is it the best offense is a good defense, or in this case it works both ways because you can bring a counter claim.

Then of course, because a patent is a legal monopoly, indeed you can simply prevent someone from using that technology. You don’t have to license it. Patents are often used to value a company for purposes of an acquisition or making an investment. And this is an area of business and business law that I think is quite curious because sometimes investors or even acquirers are more dazzled by the number of patents than really investing the time to understand the quality of the patents. So for example, I can think of a client who had a patent on a particular tool, and it was a very clever tool. And it was very successful in the marketplace.

And they promoted the existence of the patented product, it was a matter of advertising and making an impression on the public. But if you actually studied the patent, it covered a very, very narrow part of that tool. And it was pretty easy to engineer around that invention. So although it was a matter of company pride and although it was true as a matter of marketing to be able to assert we have these patented products. Before you acquire the company, because of the patents, look carefully at the quality of the patents. And then finally, having patents can indeed support a culture of innovation. It’s a way of signalling to employees, we’re innovative. We’re a company that’s creating something new.

I can think of one client of mine when you walk into their waiting area, they have a huge wall with copies of their patents that are highlighted with beautiful lighting and it’s a way of showing visitors to the company. We’re innovative and we’re very proud. Now we’re talk about how patents apply to our workforce.