Occasional musings on innovation impacting legal news....
Innovation Law Update
USPTO Dashboard
Vrooom Vrooom?
The USPTO has introduced a "data visualization center" that includes a "patent dashboard" that is intended to provide the public with a "window to the USPTO". Of note are current measures of patent pendency, such as the backlog of applications (~728,000), how long it takes to receive a first office action (~26.2 months), and the allowance rate (~60%).
Check it out here:
https://www.uspto.gov/dashboards/patents/main.dashxml
Exclusive Designs
Pirate Armour?
A recent study suggests that over 98% of design patent applications are issued by the USPTO without serious legal challenges, thus providing a relatively quick and inexpensive means for discouraging blatant pirates by protecting aesthetic (ornamental) features of a new product.
A Flood of Business Method Patents
Let It Pour
Recent reports suggest that the USPTO has greatly increased the number of business method patents it is issuing, granting over 1000 such patents in the second quarter of 2010, compared to only about 400 in the same quarter of 2009. Most such business method patents involve computer software that solves a business problem.
Business as Usual
No News is good news
Finally, on the last day of its current term, the Supreme Court has issued its long-awaited Bilski Decision. While affirming the Federal Circuit's decision, the Supreme Court held that, while oftentimes helpful, the Federal Circuit's test for determining what processes and methods qualify as patent eligible subject matter (known as the "machine or transformation" test) was simply too narrow to serve as the exclusive test of patent eligibility.
As for the correct test for patent ineligibility, after proclaiming that "ingenuity should receive a liberal encouragement", the Bilski Court left us with little new guidance as to how to spot subject matter that is patent ineligible, only re-affirming that unless a concept is a law of nature (e.g., the universal law of gravitation attraction), a physical phenomena (e.g., snow flake patterns), or an abstract idea (e.g., hedging a bet, as in Bilski), it is patent eligible subject matter.
The take-away point is that generally, business methods, and software-oriented processes, remain patent eligible, provided they are, e.g., novel, non-obvious, and properly described. In other words, it appears that the Supreme Court has encouraged us to get back to business as usual in the patent world.
Chief Judge Outlines Solutions
Mo Money!
The Chief Judge of the Federal Circuit recently outlined his proposal to stem the outflow of jobs, talent, technology, and production from the U.S., which he believes is a huge, but mostly unrecognized threat to our economic security. He suggests the root of this problem is that our patent system is failing. His solution: an immediate capital investment into the USPTO of $1 billion so that it can raise examiner pay, hire more examiners, and fix its computer problems. He also suggests that Congress authorize the USPTO to offer deferred examination, so that applicants can choose to take more time to assess their invention's commercial potential before incurring examination costs. Read the full proposal here: https://www.jptos.org/chief-judge-paul-michel-speech.html.
Patent Grants Up 35% in 2010
Perseverance Pays
Compared to its 2009 weekly average of granting roughly 3200 patents per week, the USPTO has recently ramped up to nearly 4400 patents per week, over 35%, which, if continued throughout 2010, is suggested to be the largest single-year jump in history.
Enforcing in China
...And justice for all?
When does it make sense to seek patent protection in China?
Our experience supporting 4 patent litigations in China since 2006 suggests that, even in clear cases of infringement, foreign patent owners should tread very carefully.
And apparently our experiences are not unique. In an article titled "Intellectual Property In China: Lots Of Theft, But Hopeful Signs", which was posted on March 26 on the website of Investor's Business Daily, Todd Dickinson, a former undersecretary of commerce for IP, now executive director of the 16,000-member American Intellectual Property Law Association in Arlington, Va, was quoted as saying "From the enforcement side, the common wisdom is that IP enforcement still lags significantly in China".
The article reports that "U.S. tech, drug, entertainment and other companies lose billions annually from IP thefts by Chinese firms, Commerce Secretary Gary Locke said during a visit to Beijing in October."
Yet according to Dickinson "It's an evolutionary process, and there are positive signs on the horizon".
For example, the article reports that "The State Intellectual Property Office in February said it was stepping up efforts to raise public awareness of IP rights. It says it's also strengthening patent rules."
Also, "In February, a Beijing court awarded Strix, a British maker of sensors and electrical controllers, $1.3 million in damages and issued an injunction against the Chinese defendants. Strix had sued several local firms for patent infringement on its sensors that automatically shut off a water kettle when it boils. Strix has a 70% share of that global market."
Ask us what we've learned.
Wishful Thinking?
Wink, wink
Earlier this month, U.S. Secretary of Commerce Gary Locke promised the United States Senate that if the USPTO is given its requested FY2011 budget of $ 2.3 billion (up roughly 20% from the ~$1.9 billion budgets for FY2010 and FY2009), the USPTO will reduce total patent application pendency from ~60 months today to 12 months by FY2014.
Although admirable, this "promise" appears to be impossible to fulfill, unless the US ignores its 100+ year old obligations under the Paris Convention and eliminates the ~15 year old statutory right to file a provisional patent application.
Valuing IP Assets
IP owners increasingly recognize the compelling reasons for periodically obtaining updated valuations of their IP assets and their business plans for exploiting those assets. Such valuations identify the returns potentially available from various levels of investment in, and business development activities involving, a given IP asset, taking into account the relevant risks. As a result, proper IP asset valuations help owners determine to what degree they should pursue, or continue pursuing, protection and/or exploitation of that asset.
We have the tools and knowledge to properly value your IP assets and associated business plans. Contact us for details.
Slow Going
Although it is often the only way to move a recalcitrant patent examiner, appealing claim rejections to the USPTO's Board of Patent Appeal and Interferences (the "Board") has its downsides, including cost and delay. In a recent report, the Board reports that their average pendency has jumped by nearly 30% over the past year, and is expected to grow further.
On a positive note, in addition to telling the patent examiner to pick a new path (which often is to allow the application to issue as a patent), those who win before the Board are also awarded with a Patent Term Adjustment to extend the term of the resulting patent by the amount of time spent waiting for the Board's decision.
Golden Age for Inventors
Smart Ideas Needed
CNN reports that a "golden age" for inventors has arrived, proposing that "Businesses want to pull themselves out of this economic slump, and they're looking for smart ideas". But before disclosing any innovation, it usually wise to have appropriate intellectual property protections in place.
Smooth Sailing
All Aboard!
A recent report suggests that the USPTO issues design patent applications relatively quickly - roughly 50% within 12 months, and 90% within 24 months. Design patents can protect only the aesthetic aspects of an innovation, not the utilitarian or functional features.
Underdog Trounces Microsoft
Goliath Takes a Hit
In 2007, i4i, a 30-person document collaboration firm based in Toronto, sued Microsoft for infringing i4i's US patent (filed in 1994, issued in 1998), whose claims are directed to editing XML, a programming language for controlling how a document's contents are displayed. In August, a Texas trial court ordered Microsoft to pay roughly $300,000,000 in damages and issued an injunction, requiring Microsoft to remove the infringing code from its Word products. In December, the Court of Appeals for the Federal Circuit upheld the trial court, chalking up a big win for the little guys.
Caught in the Cookie Jar
Swiper, nO Swiper
In 1999, Congress instructed the USPTO to extend the term of each issued patent to account for any delays during prosecution caused by the USPTO (offset by delays caused by the applicant).
In Wyeth and Elan Pharma International, Ltd. v. Under Sec. of Commerce for Intellectual Property (2009-1120, 7 January 2010, precedential), the USPTO's reviewing court, the Court of Appeals for the Federal Circuit found that the USPTO had been taking a "strained interpretation" of that law, that is, the USPTO's approach "cannot be reconciled with the language of the statute", and was effectively swiping a portion of the term extensions to which certain patent applications were entitled. Hopefully, the Court's decision will keep the USPTO out of this particular cookie jar.
No Photo Required
Rest that Camera?
Once the USPTO issues a Notice of Allowance for a trademark registration application, if not already done, a Specimen of Use, showing the mark as used with the identified goods/services in interstate commerce, must be submitted by the applicant. For years, the USPTO has mandated that for goods, a website-based specimen must include a picture.
But as a holiday gift to U.S. trademark owners, the Court of Appeals for the Federal Circuit (In re: Michael Sones, 09-1140, 23 December 2009 (precedential)) struck down the picture requirement, stating "we see no reason why websites must necessarily have pictures to associate a trademark with the goods being sold".
Instead, the new "test for an acceptable website-based specimen, just as any other specimen, is simply that it must in some way evince that the mark is 'associated' with the goods and serves as an indicator of source."
Patent Markdown
Caveat Venditor
A recent decision (Forest Group v. Bon Tool, 09-1044, 28 December 2009, precedential) from the Court of Appeals for the Federal Circuit (the appeals court that hears all patent cases, and sits just below the U.S. Supreme Court in the federal court hierarchy), clarified the civil penalty (up to $500 per article) for falsely marking a patent number on goods as applying to each article falsely marked.
To put this decision in context, assume I manufacture a type of widget that is covered by my U.S. patent #1,234,567, and each widget I manufacturer is marked with that patent number. Assume also that on 31 December 2009, that patent expired, yet in January 2010, I continued using my same tooling to manufacture and subsequently sell 10,000 widgets, each bearing the patent number. Although the penalty for this false patent marking is at the discretion of the trial judge, I can be held liable for up to $5,000,000 ($500 per widget sold). Ouch!
On the other hand, if I fail to mark my widgets with that patent number while the patent is in force, I might not be able to recover damages from an infringer.
Given this tension in the marking requirements, caveat venditor, let the seller beware. So you don't get caught in the traps, feel free to ask us about reviewing your products for proper patent marking.
Facelift
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