Thursday, March 31, 2011

New Patent Law – First to File

The Senate on March 8, 2011 voted 95-5 to pass the historic patent reform bill (S23) changing the US patent system from first to conceive to first to file. The House will soon issue its own reform bill. To take effect, the two versions will need to be reconciled by committee and approved by the president.

The final version is not yet available. Therefore this newsletter discusses the Senate bill and what it means for the little inventor. Its many provisions include the following:

· Change from first to conceive to first to file

· Change in the grace period

· Micro-entity status for reduced fees

First to Conceive vs. First to File

Until the change in the law takes effect, the US remains the only country in the world where the person who first conceives of an invention is the legally recognized inventor. If an inventor files after someone else, the current law provides for a mechanism called interference that allows the inventor to prove by means of documentation, such as log books, receipts, and affidavits, that he was the first to conceive. Interference can be complicated, expensive and uncertain. According to U.S. Patent Office director David Kappos, the probability of interference, especially for small inventors, is exceedingly small - not worth the complications of the first to conceive law.

The new law will recognize the first person who files as the legal inventor. Many analysts disagree with director Kappos and believe that it will encourage a rush to the patent office with half-baked inventions and poorly drafted applications and that it will hurt small inventors not supported by the legal and technical resources of large corporations.

Grace Period

Currently an invention cannot be patented if the inventor has publicly disclosed it more than 1 year earlier. Public disclosure can occur by a public use, public sale, a publication, or a patent (MPEP2133). If the disclosure is within the year, the inventor can still patent it in the U.S. In contrast, most countries disqualify inventions immediately after publication. This time interval called the “grace period” is of great benefit to small inventors who often need to refine their prototypes and test the market before they file.

The new law provides a much weaker grace period protection than the current law. While it recognizes the first to file, it also states that a public disclosure within one year of the filing date does not count as prior art to the invention.

This provision allows the inventor to lock in his rights to the invention by issuing a defensive publication. In doing so, he bars anyone else from patenting his invention – except himself.

Unfortunately, such a publication will prevent him from obtaining a patent in most other countries. In the US, it will start the clock ticking and commit him to file within one year or lose all his rights.

In summary the inventor will have to make a choice:

  • Either to publish early and thereby commit himself to file within a year, losing his international rights and possibly tipping his competitors at a crucial time,
  • Or not to publish and risk being preceded by someone else at the patent office.

It will still be possible for him however, to divulge his invention to others without starting the one year clock, if he does it on a confidential basis. To protect himself, he should have a non-disclosure agreement and record his invention with a time stamp service such as

The loss of the grace period will significantly impact the small inventor. It is extremely important for inventor associations to lobby their congressional representatives to maintain a strong grace period.

Micro Entities

As per the current law, the patent office charges regular fees to large entities, that is, organizations with more than 500 employees, and up to 50% reduced fees to small entities, with 500 or less employees.

The new law defines micro entities for the purpose of further fee reduction. To qualify as a micro entity and inventor cannot have any of the following:

  • 5 or more patent applications,
  • a gross income exceeding 3 times the most recently reported median household income; and
  • his invention assigned or conveyed to a larger entity.

Other Changes in the Law

The new law provides for other changes such as:

  • An ombudsman for resolving conflicts between inventors and the Patent Office.
  • Greater control by the Patent Office of its finances.
  • Satellite offices outside Washington DC.
  • USPTO authority to prioritize the examination of inventions of national importance (such as invention related to energy, water, etc).
  • Post grant review for business method patents – a mechanism for infringers to petition for a review of patent claim validity.
  • Elimination of the lack of the best mode disclosure as grounds to invalidate a patent.

For archived newsletters and a lot of information for the small inventor go to:

If you have any question you can contact me at (858)259-2226 or email me at

This newsletter should not be construed as being legal advice. ©2011 by George Levy

Monday, March 7, 2011

Defensive Publications, Trade Secrets, NDA’s and Time Stamping

Patents are not the only method of protecting intellectual property. Other methods include Defensive Publications, Trade Secrets, and Non-Disclosure Agreements.

Defensive Publications

The inventor can preempt anyone else from patenting his invention by publishing a detailed description of it. In doing so he loses all exclusive rights to it, and so does everyone else. The invention enters the public domain and can be used freely by anyone. There are many reasons why someone may use this approach. For example the owner of an idea may have no business incentive to market a cure for disease afflicting an underdeveloped country because the profits would be too small. Instead, he may decide to make the cure public for the purpose of generating goodwill for the company.

Yet another reason for publishing an idea without a patent is if the marketing time window is very small. For example, the idea may involve a fad, such as a line of fashion with an estimated lifetime of a few months. This is too short for a patent to be awarded and generate revenues.

A more sinister reason for making an idea public is to impair a competing company suspected of employing the idea as a trade secret in the manufacturing of a product in which the inventor has no interest. Making the idea public can open the floodgate of competition against the competitor and reduce its resources and ability to compete against the inventor.

Trade Secrets

Alternatively, an inventor can protect an invention as a trade secret. To qualify as a trade secret the invention must not be generally known to the public, must provide an economic advantage to the owner over competitors or customers, and must be subject to reasonable efforts to maintain its secrecy. He can protect its confidential information through non-compete and non-disclosure contracts with its employees or consultants. In addition, the owner must be actively using it, otherwise the invention is considered to be abandoned and the inventor automatically loses all rights to it. An example of a trade secret is the Coca Cola formulation.

Trade secrets arise out of state laws and not out of federal laws. Most states have adopted the Uniform Trade Secrets Act (UTSA). Only Massachusetts, New York, New Jersey, North Carolina, and Texas have not adopted the UTSA. So, the law may vary slightly from jurisdiction to jurisdiction.

The law of protection of confidential information effectively allows a perpetual monopoly in secret information. Therefore trade secrets do not expire as do patents. However, the lack of formal protection also means that a third party may independently duplicate, use and patent this information.

What if this third party now sues the original holder of the trade secret for infringement? The original holder can defeat the lawsuit by showing that he knew of, and was using the invention all along, before the patent was filed, and therefore that the patent owner is not the first inventor of the invention. The patent would then be declared invalid and enter the public domain for everyone to use freely. The Coca Cola Company may be facing this situation if the recipe in inventor John Pemberton's papers is found to be authentic.

Non-Disclosure Agreements

Another method of protecting intellectual properties includes Non-Disclosure-Agreements. An NDA is a legal contract between at least two parties that specifies confidential information that the parties wish to exchange, usually for the purpose of entering a business relationship. In an NDA the parties agree not to disclose this information to any third party.

NDA’s can be unilateral, meaning that information is transferred in only one direction, or mutual, when information is transferred both ways. Often, companies require employees to sign NDA’s as a condition of their employment.

Companies deeply knowledgeable in the technology of an invention may not be willing to sign an NDA with an inventor because the NDA may represent an obstacle to their own research. In this eventuality, the best approach for the inventor is to file a provisional patent application and then transmit information to the company. This application is proof that the inventor is the first one to have conceived of the invention.

An example of NDA can be found at Patents and Ventures.

Time-Stamping and Document Registration

Other methods of proving inventorship include document registration and time stamping. In document registration as offered by Creative Registry, the document is uploaded to a web site and kept there until the need arises to prove inventorship. In time stamping, a software application appends a non-modifiable time stamp to a document to certify that this document was generated at a particular date. Companies offering this service include Read Notify and Secustamp.

Such protected documents do not constitute patent applications and may be voided if the inventor cannot show due diligence in pursuing the invention.

For archived newsletters and a lot of information for the small inventor go to:

If you have any question you can contact me at (858)259-2226 or email me at

This newsletter should not be construed as being legal advice. ©2009 by George Levy