Patent Basics – Klinck LLC

Patent Basics

Patents protect inventions. In many respects, a patent is the strongest form of intellectual property protection available. Obtaining a patent is not an easy task, however, and it will generally be a costly affair.

In some industries (e.g., the pharmaceutical market) patent protection is an absolute must. In other industries (e.g., the software industry), patents tend to play a lesser role. Regardless of your industry, however, you will need to address patents to be truly successful. In this chapter, I set out the basics of patent law, addressing the basic questions.

What Is A Patent?

A patent is a piece of intellectual property that is issued by the United States through the actions of the Patent Office. A patent grants its owner the exclusive right to make, use, sell, offer for sale, and import the invention into the United States for a limited period of time. Thus, a patent provides an inventor with a limited monopoly on his or her invention.

The United States patent system is the implementation of the Patent Clause of the Constitution. By providing limited monopoly rights to patent owners, the system is intended to induce inventors to disclose their inventions in written form. The purpose of the system is to provide incentives for inventors to innovate and to disclose their innovations to the public. The system attempts to strike a proper balance between inventors and the general public. Through a delicate balance – a balance that Congress continually updates – the system ensures that inventors have financial incentives to develop and disclose novel inventions without providing these inventors with too much power over the market or the ability to prevent market participants from reasonably continuing to operate and build the overall economy.

What Assets Can Be Patented?

Under the Patent Act, new and useful inventions can be protected by patents. There are three categories of patents: utility patents, design patents, and plant patents. These categories protect different types of inventions (or elements of products) and have different rules that apply to them.

Utility Patents

A utility patent covers an invention’s structure and function. In other words, these patents are related to how a machine works or how a task is performed rather than to any “design” elements. The Patent Act defines four categories of inventions that qualify for utility patents: processes, machines, manufactures, and compositions of matter. These four categories cover nearly any potential invention. Utility patents are the most common types that are issued (with over 9 million issued to date).

The most common sub-types of utility patents are those that cover a process (i.e., a series of steps to perform a function) or a machine (i.e., nearly any physical device).

Utility patents are valid for a term of 20 years from the date the patent application was filed.

Design Patents

Inventors can also obtain a patent for an “original and ornamental design for an article of manufacture.” Design patents cover the appearance of the item, not its functions. Design patents are less common than are utility patents but have a number of potential benefits. While a design patent covers appearance, it must still meet the strictures for granting a patent (e.g., novelty and nonobviousness).

A design patent is valid for fourteen years after it is issued.

Plant Patents

An inventor who discovers or invents (and asexually reproduces) a new and distinct variety of plant, can obtain a patent for that plant variety. Plant patents are the least common type of patent and cover a distinct, new variety of plant. Many farmers and research institutes spend considerable time and resources developing new varieties of certain plants (e.g., hops used for brewing beer), and they can receive a patent for these innovations.

Like a utility patent, a plant patent is valid for twenty years from the date the application that led to its issuance was filed.

What Are The Requirements For Protection?

In the next section, we will cover the procedural requirements to obtain a patent, but there are also substantive requirements that limit what types of inventions are eligible for a patent. These requirements fall into three categories: (a) patent eligible subject matter, (b) novelty, and (c) non-obviousness.

Patent-Eligible Subject Matter

To qualify for a patent, an invention must fall within one of the patent-eligible subject matters. The definitions of what inventions qualify for utility patents, design patents, and plant patents set out the basic categories of inventions that are patentable.

While the descriptions of the patent-eligible subject matters seem relatively straightforward, the courts have developed a number of exceptions and tests to determine whether an invention is patent-eligible.

The Supreme Court has recognized three specific exceptions to patent-eligible subject matter: (1) laws of nature, (2) physical phenomena, and (3) abstract ideas. These exceptions have bedeviled courts. Drawing the line between a patent-eligible invention and these non-patentable areas is not always clear. Since 2010, the Supreme Court has invalidated patents related to “hedging” in financial transactions, calculating the proper dosage of medication, isolating naturally occurring DNA strands, and intermediating settlements of financials transactions.

The courts have established a two-step process for “distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent eligible applications of these concepts.” First, courts determine whether the claims are directed to a law of nature, natural phenomenon, or abstract idea. If not, it is patentable. Second, if the claim is directed to one of these non-patent-eligible subjects, the court looks to decide whether the elements of the invention “transform the nature of the claim” to something that is patentable. This second steps looks to determine whether there is some inventive concept that transforms the invention into something concrete rather than abstract.

The question of whether a patent claim involves patent-eligible subject matter can be one of the most complex questions in patent law and is a rapidly evolving area of the law. Trying to fully capture it here would be a fool’s errand (and anything written here might be eclipsed by new decisions within a short time). Suffice it to say that this is an issue that you will face as you seek to patent inventions that are not clearly physical products or machines.

Novelty

An inventor is not entitled to a patent unless the invention is “novel.” To qualify as novel, an invention must not be the same as something described in a prior publication or in prior use:

  • Prior Publication – An invention is not new if it was patented or described in a printed publication prior to the date of the invention.
  • Prior Use – An invention is not new if it was used by others prior to the date of the invention.

Whether by publication or by use, the novelty analysis focuses on whether each and every element of the claimed invention was present in the prior invention. If your invention has even a single element that is different from the prior publications, it will qualify as novel.

One issue that bears mentioning is how your prior disclosure of your invention affects the analysis. There is a concept known as the “on-sale bar” that covers situations in which the inventor discloses or sells the invention before filing for a patent. Under the Patent Act, disclosures by the inventor (or an entity related to the inventor) will not create an obstacle to obtaining a patent so long as the patent application is filed no later than one year after the first inventor.

Put another way, if an inventor discloses his or her invention publicly more than one year before filing for a patent, the invention is not eligible for a patent. Thus, entrepreneurs need to be cognizant to file patent applications as soon as possible.

Obviousness

The final substantive requirement of patentability is that the invention must not be “obvious” in light of what was known before the patent application was filed. Determining whether an invention was “obvious” is not an easy task. The analysis focuses on the scope and content of what was known before, the differences between the prior art and the invention, and the level of ordinary skill of people in the field. The analysis is meant to be flexible. It is often difficult to banish “hindsight bias,” as inventions often appear obvious after they are made.

An invention might be deemed obvious based on a single prior publication and/or invention. If an invention merely adds an obvious component or swaps out some known feature from a prior invention, it will not be patentable.

An invention also might be deemed obvious based on a combination of elements in multiple prior publications and/or inventions. The question is not simply whether every element of the invention was previously known, the question is whether there was a “teaching, suggestion, or motivation to combine” the elements of the multiple prior publications and/or inventions. This teaching, suggestion, or motivation does not need to be explicit, but there must be some basis to conclude that a person of ordinary skill in the field would have been motivated to combine the elements.

The obviousness analysis also must consider any relevant objective evidence that tends to prove that the invention was nonobvious. Because the technical obviousness analysis will always be shaded by hindsight, objective evidence about the obviousness or nonobviousness of an invention can be some of the most compelling and relevant. The courts have recognized a number of “secondary considerations” of non-obviousness, including commercial success, long-felt need, failure of others, copying, and unexpected results:

  • Commercial Success. The commercial success analysis focuses on the question of whether a product that embodies the invention disclosed and claimed by the patent is commercially successful (generally proven through significant sales). The commercial success of the invention tends to provide objective evidence because it shows demand for the invention. In light of this demand, the failure of the market to provide the product before tends to prove it was not obvious.
  • Long-Felt Need. Evidence that there was a long-felt need for the invention (or to solve the problem addressed by the invention) will serve as strong evidence that a patented invention is not obvious. The evidence of the long-felt need demonstrates that there were market forces that would encourage those skilled in the field to solve the problem. The lack of a solution in the face of this long-felt need demonstrates that the solution was not obvious.
  • Failure of Others. The failure of others is closely related to the long-felt need consideration. Evidence that a market participant tried to solve the problem and failed, can be some of the most convincing evidence of nonobviousness. In such cases, the patent owner is not merely relying on the fact that others were motivated to solve the problem: instead, the owner is relying on direct evidence of an attempt to solve the problem and the failure to do so. This failure is strong evidence that the ultimate solution contained in the patent was not obvious to those skilled in the art.
  • Copying. Evidence that market participants sought to copy a product that embodies an invention tends to support a finding of nonobviousness. Evidence of “copying” generally requires proof that a market participant (or multiple participants) actively sought to copy an actual product on the market. Thus, mere infringement is insufficient.
  • Unexpected Results. Courts also consider whether an invention (or a combination of multiple prior art references) had an unexpected result. This analysis will often focus on the teachings of the prior art and on the question of whether the results were truly unexpected in light of what was known. When there is evidence that a particular invention had results that were not anticipated based on the prior art references, this evidence provides objective evidence of nonobviousness.

With all the secondary considerations, the courts have made clear that these factors are relevant only to the extent there is a connection between to the claimed invention and the secondary consideration.

How Do You Obtain A Patent?

Inventors (or assignees) obtain patents through an administrative procedure before the United States Patent and Trademark Office (“the Patent Office”). The Patent Office procedures are complex and have many traps for the unwary. In fact, lawyers must take a special exam – referred to as “the Patent Bar” – to be allowed to practice before the Patent Office.

This Resource is meant to provide a basic overview of the process, not an in-depth description of the process. To understand the nuances of the process, you should consult with a patent attorney.

Provisional Patent Application

Inventors have the option to file a “provisional” application up to one year before filing the formal application. A provisional application serves as a placeholder, maintaining the inventor’s place in line. The requirements for a provisional application are relatively limited. The provisional application will generally include a written description of the invention and little else. Thus, unlike a full application, a provisional application does not need to include an abstract, drawings, or claims.

A provisional application will not itself turn into a patent, no matter what happens after it files. Instead, a provisional application can serve as a placeholder to which a later application refers. Thus, a later filed application can “claim priority to” a provisional application. This will give the later filed application the benefit of the date the provisional was filed for procedural purposes.

Although provisional applications do not have the same requirements as non-provisional applications, it is important that they be drafted with care. A later filed application will get the benefit of the filing date of the provisional application only for inventions that are adequately described in the provisional application. Thus, it is important to draft a provisional application with as much information as possible to ensure that inventions protected by subsequent applications receive the benefit of the earlier filing date.

Filing a provisional application does not begin an administrative proceeding before the Patent Office. While the Patent Office assigns numbers to these applications, it does not review them or process them further.

Non-Provisional Application

A non-provisional patent application is what officially begins the administrative process to obtain a patent. These applications include:

  • A written document including the specification (written description and claims);
  • Drawings (where necessary);
  • An oath or declaration by the inventor(s) stating that he or she believes himself or herself to be the original inventor (or joint inventor) of the claimed invention and a statement that the application was made with his or her authorization; and
  • Filing, search, and examination fees.

The specification that is submitted with the application should include multiple sections. Nearly every application will need to include: (a) the title of the invention, (b) cross references to any related applications, (c) background of the invention, (d) a brief summary of the invention, (e) a brief description of the drawings, (f) a detailed description of the invention (including the drawings), (g) the claim or claims, and (h) an abstract of the disclosure. There are additional requirements for patents that relate to inventions that were created as part of federally sponsored research or joint research agreements.

Examination/Prosecution

After the application is filed, it will be assigned to a patent examiner. At that point, the examiner will begin the examination process. Specifically, the examiner will review the application to determine if it has all the necessary parts and to ensure that it meets the various procedural requirements for patentability. The examiner will also conduct a search for prior patents and publications that are relevant to the application and will then examine the application to determine whether ti meets the standards of novelty and non-obviousness.

After the examiner has completed the examination he or she will issue an “office action,” which sets out the results of the review. This first office action will almost always reject the patent application for one reason or another (although some applications are allowed at the outset).

In the face of a rejection, the inventor (hopefully through counsel) will submit a response. This response might contain argument, an amendment to the claims, and any other information or changes necessary to resolve the issues set out in the office action. Often, the inventor with amend the claims to address the examiner’s objections but will also present arguments about why the invention was and is patentable.

The back-and-forth between the inventor and examiner (a/k/a examination or prosecution) will often continue through multiple rounds. Assuming that the examiner ultimately concludes that the patent should be issued, the Patent Office will issue a “notice of allowance.” At that point, the inventor will pay the required fees, any minor technical issues will be corrected, and the patent will issue.

If the inventor is not able to convince the examiner that a patent is issued through the prosecution process, the inventor has the right to appeal the decision – first within the Patent Office itself and eventually to the United States Court of Appeals for the Federal Circuit.

Who Owns A Patent?

The inventor (or inventors) owns a patent (or patent application) unless and until the inventor transfers the rights to someone else. A transfer of patent rights is referred to as an “assignment.” In most contexts relevant to entrepreneurs, the rights to inventions created by employees are transferred to the company. The company then generally takes the responsibility for applying for the patent and handling all future issues related to the patent.

Assignments must be in writing and must expressly transfer the rights at issue. The writing requirement comes up most frequently in the context of employment agreements. As discussed more fully later in the book, an employment agreement must expressly assign all inventions, rather than state that the employee will or shall transfer the rights to inventions.

What Are The Parts Of A Patent?

An issued patent has a number of relevant parts, including the cover page, the drawings, the written description, and the claims.

The Cover Page

The cover page of a patent includes a number of parts, including the patent number, the date of issue, the patent’s title, the inventor(s), any assignee at the time of the issuance, the application number, the filing date, information about related earlier publications and foreign applications, a list of patents and other publications cited as prior art, an abstract, and a copy of one of the drawings.

The title and the abstract often provide a good starting point for understanding what the invention is. As discussed below, however, the patent is ultimately judged based on the claims, not on the abstract or title.

The Drawings

The Patent Act provides that the inventor should include drawings to the extent necessary to provide an understanding of the invention. Most patents will include a number of drawings. These drawings can be used to illustrate the “prior art” systems and/or to illustrate the invention that is claimed by the patent. These drawings can be relatively crude, or they can be highly detailed.

The drawings are described in the written description of the patent. To facilitate the written description, the drawings will have numbers that correspond to structures and/or steps in the drawings. These numbers are then included in the written description so that it is clear which part of the drawing is being described. The numbers also help create continuity between drawings. If the same number appears in multiple drawings, the structure (or step in a process) that is being referred to is the same in each drawing.

The Written Description

A patent will also include a written description of the invention. The purpose of the written description is to provide some background about the invention, to describe the invention, and to help describe how to make the invention. The written description generally includes the following: the background of the invention, a brief summary of the invention, a brief description of the drawings, and a detailed description of the drawing/invention.

The background section will generally explain the problem the invention is intended to solve and explains how others have tried to address the problem. This will often involve a description of prior patents and publications, as well as a description of why these prior inventions do not properly solve the problem. This background is helpful for putting the invention in context and can help in understanding exactly what the patented invention actually is.

The remaining sections of the written description describe the invention itself and the drawings.

The description of the invention will often focus on only one or a handful of the “embodiments” of the patent. In other words, the description will generally focus on particular versions of the invention, rather than all the possible iterations of the invention. The written description will often include one or more specific statements that the invention should be understood to be applicable even to embodiments that are not expressly described. These statements are used to help inventors capture the fullest extent of their inventions within the claimed monopoly.

The description will include a detailed description of the drawings with reference to the numbered structures. The description will generally breathe life into the drawings and will help explain how each drawing fits into the overall invention.

The Claims

The specification concludes with what is claimed by the inventor. The claims are numbered paragraphs at the end of the patent that define the particular scope of the invention. Strictly speaking, the invention that is protected by the patent is defined exclusively by the claims. Thus, the owner of a patent has the exclusive right to make, use, sell, offer for sale, and import any product that contains all of the elements defined by a single claim of the invention. The claims are what technically define the scope of the protection granted by a patent.

A claim can be either independent or dependent. An independent claim stands alone and defines an entire invention. A dependent claim, on the other hand, refers to another claim. The dependent claim might add an additional element or define an invention that includes only a particular embodiment of the broader claim.

Claims are also generally broken down into two categories: system claims and method claims.

In broad terms, a system claim defines a physical thing. A system claim might cover a product, a machine, or any similar physical invention. In the context of products and machines, the invention often includes elements that relate to the functionality of the invention, but purely functional claiming is not allowed.

A method claim is a claim that relates to a process for performing a function or task. While a method claim will often define steps in reference to physical things (e.g., entering data using a computer keyboard), the patent is not claiming the physical structure. What is claimed is the process, not the thing.

Maintenance Fees

The obligations do not end when a patent is issued. Patent owners are required to pay maintenance fees at various points during the life of a patent. If the patent owner fails to pay these fees, the patent will expire before it otherwise would. As you build an intellectual property plan, you should include provisions to ensure that you pay the maintenance fees in a timely manner.

Enforcing A Patent

Under the Patent Act, the patent owner has the exclusive right to make, use, sell, offer for sale, and import products (or methods) that embody the invention set out in the patent. Patent infringement litigation is a legal dispute in which a patent owner alleges that an accused infringer is making, using, selling, offering for sale, or importing the patent owner’s invention. A patent owner that succeeds in the litigation will be entitled to recover damages.

The patent owner’s primary burden is to prove infringement. To meet this burden, the patent owner must prove that the accused infringer has made, used, sold, offered for sale, or imported products that infringe at least one claim in the “patent-in-suit” (i.e., the patent under consideration). In order to meet this requirement, the patent owner must “prove that the accused product or process contains…every limitation of the properly construed claim.”

The accused infringer will generally deny that it infringes and will raise one or more defenses. Accused infringers generally assert that the patent-in-suit is invalid. The Patent Act sets out a number of technical requirements for a patent, including (among others) the requirements for a definite statement of what is claimed, a written description of the invention, and a description that will enable others to create the invention. An accused infringer may also make more substantive challenges, including assertion that the invention does not relate to patent-eligible subject matter, is not “novel,” or was “obvious.”

Accused infringers will sometimes also raise one or more equitable defenses. These defenses stem from the patent owner’s conduct, either during the Patent Office proceedings or after becoming aware of the accused infringer’s conduct. If an accused infringer can prove misconduct, undue delay, or other related claims, the patent owner may not be able to enforce the patent.

Assuming that the patent owner successfully proves infringement and overcomes all the defenses raised by the accused infringer, the patent owner will be entitled to damages. A patent owner that produces products and competes in the market will have the option of recovering “lost profits” damages: damages that are calculated based on the extra profit that the patent owner would have made but for the accused infringer’s actions. For patent owners that do not produce products (or cannot prove lost profits), damages will be calculated on a “reasonable royalty” method. Reasonable royalty damages are intended to approximate what the patent owner and accused infringer would have negotiated in a hypothetical negotiation that occurred immediately before the infringement began.

A number of special remedies are available in certain circumstances:

Injunctions – When a patent owner can demonstrate that it will be irreparably harmed by allowing the accused infringer to continue to make, use, sell, offer for sale, or import infringing products, it may be able to obtain an order that requires the accused infringer to cease the infringing behavior going forward.

Treble Damages – A patent owner may seek up to treble (triple) damages in cases in which it can demonstrate that the accused infringer willfully infringed the patent.

Fee Awards – Courts have the authority to award attorneys’ fees to the prevailing party in cases that they deem to be “exceptional.” These fee awards tend to be entered when patent owners take an unreasonable position and continue to assert infringement in the face of evidence that they will have no chance of success.

Provisional Rights – In certain limited circumstances, a patent owner may be able to obtain damages for a period before the patent was issued.

Patent litigation has its own unique cadence. In general, a patent infringement lawsuit will involve several phases:

Pre-suit – Patent owners and their lawyers will conduct significant due diligence efforts to determine whether other parties are infringing and whether the likely outcome of a lawsuit will justify the time and expense of proceeding. The parties will sometimes engage in negotiations during this period.

Filing, Answer, and Initial Procedures – A patent owner initiates patent infringement litigation by filing a complaint. The accused infringer will file an answer (and potentially a counterclaim). After these initial filings, the parties and the court will confer to set a schedule for the case.

Claim Construction – Relatively early in the proceeding, the court will conduct claim construction proceedings. The parties will often bitterly dispute the meaning of certain claim terms, as the result of the claim construction can be dispositive (i.e., one that may help to resolve the dispute).

Discovery – This is the period during which the parties obtain documents, written information, and testimony from each other and from third parties.

Expert Discovery – The parties to patent infringement litigation will almost always retain the services of multiple experts. Each party will generally have at least one technical expert and one damages expert.

Motions Practice – The parties often file motions for summary judgment and motions to exclude some or all of the expert testimony proffered by the opposing party.

Pretrial – The parties work cooperatively to identify the evidence that will be introduced, the issues that are not in dispute, and the instructions that should be read to the jury as part of the trial.

Trial – The parties present their evidence to the judge and jury. Most issues are presented to the jury to decide, while some “equitable” issues (discussed in Chapter 7) are decided by the judge.

Post-trial and Appeal – Parties often file post-trial motions asking the judge to change something about the jury’s decision. The party that ultimately loses can appeal the case to the Federal Circuit.



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