Everything That Can Be Invented Has Been Invented
A Patent Attorney Offers Valuable Tips on How to Avoid Infringement While Gaining a Competitive Advantage
R. Joseph Trojan
R. Joseph Trojan
The difficulty of the subject may explain why only about 25,000 registered patent attorneys practice in the United States—out of a total of roughly 1,100,000 attorneys. The shortage of registered patent attorneys may also be explained by the fact that they are required to have both a science or engineering degree and a law degree before they can apply to the patent bar.
Increasingly, companies ignore the growth of patent law at their own peril. In 2005 alone, the US Patent Office issued 157,882 patents. This annual number has increased by more than 37% in the past 10 years. In 2003, there were more than 256,000 published patent applications.
It is becoming more likely that existing patents restrict the types of technology your company can adopt in response to market changes. This is a long way from the vision of Charles Duell, a former commissioner of patents, who urged President William McKinley in 1899 to abolish the Patent Office, proclaiming, “Everything that can be invented has been invented.”
The increased number of patents represents more than just the explosion in technological innovation familiar to us all. It also reflects a growing recognition among companies of the critical need to legally protect their technology to maintain market share. Sophisticated companies are doing more than just protecting their own technology, also recognizing the importance of patenting products that are most likely to compete with their best products. The strategy is to create a ring of patents around a core product covering all the most likely design-arounds.
Impact of Safety Regulations
Many top rated companies have become third-rate players in their field because they were pushed to the fringe when the latest product trend was positioned in the middle of a minefield of new patents. This is especially true for medical products that are subject to heavy regulation.
When new safety standards are adopted by a regulatory body, it is common for there to be a rush to the Patent Office to patent the most practical modifications of existing technology that will be necessary to meet the new safety standard.
Quite often this race to the Patent Office starts when the regulations are proposed. Those who wait until the regulations are actually issued are frequently too late. The same is true for industries in which standard protocols are voluntarily adopted by all to allow competing products to interact properly. Hence, filing for patents is not optional—it has become a defensive requirement in many regulated industries.
It is rare for one company to acquire such market dominance with its patents that it can push all players out of a particular niche. But it is common for two to four companies that are particularly aggressive in seeking patent protection to push all other players to the fringe in a particular niche. When every percentage of market share counts, this can be critical to the bottom line for your company.
Few companies have standard operating procedures for handling the full range of intellectual property issues involving patents, trademarks, trade secrets and copyrights. The following recommendations are the minimum procedures that your company should have in place for addressing patent issues.
Improve R&D Patent Savvy
It has never been more true that knowledge is power. Research and development (R&D) departments in the medical sector subscribe to journal articles, but that is not good enough in the 21st century. Your inventors should be familiar with the patented technology in their field. They should be making it a regular habit each month to check on-line for the latest issued patents and published applications. It is a good way to light a fire under your own projects by seeing the advances being made by your competitors.
Some smaller companies use the US Patent and Trademark Office Web site to search for patents and published pending applications. The site (www.uspto.gov) is a good place to research the state of the art domestically, but it is not good enough for final decision-making concerning new products. To take your company to the next level, searches must also be done internationally. (Note: The uspto.gov search engine is not set up for international searches—patent examiners use a different search engine that is not publicly accessible.)
In the global economy, overseas companies that have filed for patent protection in their home country can wait as long as two-and-a-half years before they file in the United States. You could be developing a product in 2006 that you believe is original to your company, only to find out in 2009 that a foreign competitor may obtain a patent in the United States that excludes you from the market. Thus, it is critical for your company to monitor the international patent scene in your niche.
To search internationally, you will need to subscribe to delphion.com or micropatent.com or any other comprehensive patent search engine. By having your company monitor patent rights in your field internationally, your inventors can ensure they are on the cutting edge in your niche and avoid infringement of other patents.
Avoid Being Sued for Infringement
We all hear of the major companies that are sued for patent infringement, with devastating results (eg, the Blackberry litigation). There is no excuse for your company ever to be sued for patent infringement. Patents are public documents. As such, their existence is not a secret. Most patent applications are published long before the patent ever issues.
By monitoring the patents and published applications in your field, you can ensure your company is not infringing upon any patents. The need to monitor medical device patent applications as they become published may seem to be an undue burden to your business. To the contrary, it should be viewed as an opportunity to get inside the heads of your competitors—it is a window on their strategic planning. If your inventors are creative, they can use the information to patent the next generation beyond where your competitors are heading.
An extremely dangerous misconception held by many businesses is that if they have a patent on a product, then they cannot infringe on any other patent. This is flat wrong. A patent is the grant of a limited monopoly. It is not a grant of immunity from patent infringement. Your product may be an improvement on an earlier patented invention, entitling you to a patent for the improvement. But your improvement can still be covered by the claims of the earlier patent. You can still infringe, even though your improvement did not exist at the time the earlier patent was granted. This is counterintuitive to many business people, but it is the law.
If your company finds a patent or patent application that worries you, then that is the time to consult a patent attorney. It is never recommended that you attempt to determine the scope of protection granted by a patent (even though technical experts within companies frequently believe they can, with uneven results). The scope of protection granted by a patent is found in the patent claims. Interpreting patent claims is what drives some judges to declare patent law as the metaphysics of the law.
Each patent claim in a patent is a single sentence, describing the word fence that protects the invention from trespassers. Some word fences are large, comparable to a huge ranch. But the ranch might be useless in the middle of the desert. Others are narrow, but might be at the cutting edge of a technology comparable to beachfront property. The rules governing patent claims are complex. This is one part of the process best left to your patent attorney.
Before committing to production of any product, be sure to have your patent attorney do a comprehensive search to confirm there are no infringement problems. If a problem is found, all is not lost—several options are usually available. Brainstorming to design around the patent is the most obvious first step. If a practical design-around is not possible, licensing is a serious option that should be considered. In some cases, purchase of the patent may be an option. In other cases, an attack on the validity of the patent can be made in the Patent Office.
Obtaining Protection: Timing Is Critical
We’ve covered proactive steps to avoid patent infringement. Now it is time to go on the offensive. Obtaining your own patent rights can boost the bottom line tremendously. Timing is critical to patent filings. “File early and often” is frequently heard as good advice. While that may be good advice, it is not economical.
What is economical is to present any improvements in your products to your patent attorney. A good patent attorney should be able to tell you the scope of protection he or she can obtain for you after conducting a prior art search. In other words, the patent attorney should be able to tell you how big of a word fence you likely to get to keep out trespassers. Based on the likely scope of patent protection, you can intelligently decide whether the patent would be valuable to you.
If your company wants to protect its products overseas, it must file the patent applications before there is any public disclosure of the product. Most countries will not grant a patent if there is a public disclosure of the invention before the US filing date.
The next set of rules only applies if your company is certain that it is only interested in patent protection in the United States. Under the American rule, you are given one year in which to test the success of your product in the market to determine if you really want to file for patent protection. You must file your patent application within one year of your first public disclosure or offer for sale.
For example, if you show your new product at a trade show or offer it for sale to a hospital in a letter, then you have started a one-year clock ticking to file your patent application. If you do not file within one year, your patent rights are lost.
For many companies, there may be a need to publicly test the product before it can be determined if the invention will actually work. Testing may require a public use of the invention, such as in the use of a new surgical tool during an operation. This is called the Experimental Use Exception.
Such public testing does not start the one-year clock ticking to file your patent application. But as soon as it is clear that the invention works, the one-year clock immediately begins ticking. This can be very tricky. A judge can later decide that your patent is invalid if he or she concludes that your clock was ticking for more than a year—and you just could not hear it. The lesson is that filing early is better.
Another reason to file early is that if another company is developing the same technology, the first to file is presumed to be the true inventor. It is always amazing how often different companies operating independently arrive at the identical solutions at the same time. The company that files first is given procedural advantages in the Patent Office during the fight to determine which company should be given the patent. This is another reason to file early.
Patent Ownership Rules Are Counter-Intuitive
The rules governing the ownership of patent rights are counter-intuitive to many business people. Let us take an example of two surgeons who jointly develop a new knee replacement. Surgeon Smart and Surgeon Smarter start a company to market their new product. They never assign the patent to the company. They get in a fight that ends their collaboration.
Surgeon Smarter starts a new company selling the knee replacement. The company is a huge success. Smart hears of Smarter’s success and demands half of the profits. Smarter refuses to give Smart a dime. The judge agrees that no money is owed to Smart because either co-inventor can independently sell the invention without paying anything to the other under US patent law.
But Smart is not completely out of luck. BIG Corporation begins infringing the knee replacement patent. Smarter finds out from his patent attorney that he cannot sue the infringer unless he gets Smart to join in the lawsuit with him. Smart tells BIG that if BIG will pay him a royalty, he’ll refuse to join Smarter’s lawsuit. BIG agrees to the royalty.
Soon Smart is making more in royalty payments from BIG than Smarter is making from his sales of the knee replacement. Smarter demands a share of the royalty action from Smart. Smart tells Smarter that he does not owe him a dime, which is true. Who’s smarter now?
To avoid these kinds of problems, the lesson here is clearly obvious: there must be a written agreement concerning profits early on. Alter-natively, the patent should have been assigned to the company that the investors jointly owned.
In the context of employees hired for the purpose of inventing, the rights belong to the company. But the employment agreement should still spell out the details. If the employee leaves the company and refuses to sign the assignment of patent rights, there needs to be a written agreement to show to the Patent Office that the employee had an obligation to assign the rights.
While all important aspects of patent law cannot be covered in one article, implementation of the basic principles described here will set your company on the road to building a solid patent program.