Patent Reform – Presentation by Director of USPTO

Director David Kappos of the US Patent Office made two consecutive presentations on Thursday April 29, the first at the San Diego Inventors Forum and the second for the San Diego Intellectual Property Law Association. His mission: to improve the US Patent Office. The following are some of the proposed changes to patent law that he discussed:

Emphasis on Innovation
Director Kappos remarked that “innovation is the only sustainable source of advantage for world economies” and noted that IP is becoming the “world’s currency of innovation.” The proposed reform at the USPTO is based on this assumption.

Extension of provisional patents to 24 months

After filing a provisional application, applicants will be allowed to file a non-provisional applications and postpone paying the search and publication fees ($270 +$110 respectively for a small entity) by one year. Applicants would still be required to pay the non-provisional filing fee of $165 immediately and sign an oath or declaration. In addition the non-provisional would be published after 18 months from the filing of the provisional. This measure effectively provides an extension of the provisional patent process by allowing inventor to postpone paying for a full non-provisional application. More information can be found at:

http://www.uspto.gov/patents/law/notices/75fr16750.pdfhttp://www.uspto.gov/patents/law/notices/75fr16750.pdf

Ombudsman Pilot Program

This program is designed to enhance the USPTO's ability to assist applicants and or their representatives with issues that arise during patent application prosecution. More specifically, when there is a breakdown in the normal prosecution process, the Ombudsman Pilot Program can assist in getting the process back on track. The Ombudsman Pilot Program is not intended to circumvent normal communication between applicants and or their representatives and examiners or Supervisory Patent Examiners (SPEs). More information on this program can be found at http://www.uspto.gov/patents/ombudsman.jsp.

Micro Entities

Currently the fees are structured for two business classes: small entities (for example organizations with 500 or less employees) and large entities. Filing fees for small entities are half of that for large entities. The new bill creates a third class: micro-entities which should benefit from a 75% fee discount. A micro-entity is defined in the bill rather narrowly. The inventor must have filed fewer than 5 prior patent applications, the application must be unassigned or assigned to an entity with 5 or fewer employees, and the inventor (if unassigned) or the assignee must have a gross income less than 2.5 times the average gross income from the prior year as reported by the Department of Labor.

First to Invent vs. First to File

According to Director Kappos, “first to file” vs. “first to invent” is a non-issue and for all practical purposes, the US is already operating as a first to file patent system. According to him the likelihood is 0.01% that two inventors files their invention nearly simultaneously and rely on the first to invent criteria during interference proceedings. In those situations, the first to file usually wins. In 2007 the total number of interference cases for all applicants, of all sizes that were decided based on a priority claim was 7! Moreover, of those 7 cases, only one case involved a small or medium sized entity. Therefore “first to invent” is a complication not worth perpetuating. Director Kappos makes simplifying but invalid assumptions. For a good rebuttal go to patentlyo.

Interviews with Examiners

Mr. Kappos is encouraging early interviews with examiners and has set forth provisions that encourage examiner-initiated interviews. Also, the USPTO has been holding additional interview practice training for examiners.

Green Tech

A new program “Green Tech” has been unveiled at the USPTO, with the mission to drive innovation in the green technology sector, increase U.S. competitiveness in green technology, and create green jobs. It is a pilot program designed to reduce the average processing time of green technology patent applications. Through this program, applications already on file in certain green technology areas will be eligible to be accorded special status and examined on an accelerated basis. To be eligible, applicants must file a no-cost petition for special status and indicate how the invention materially contributes to environmental quality, the discovery or development of renewable energy resources, more efficient utilization and conservation of energy resources, or greenhouse gas emission reduction. You can get more information at http://www.uspto.gov/patents/init_events/green_tech.jsp ,

For archived newsletters and a lot of information for the small inventor go to: www.patentsandventures.com.

If you have any question you can contact me at (858)259-2226 or email me at glevy@patentsandventures.com.

This newsletter should not be construed as legal advice. ©2010 by George Levy

Patenting Software and Methods of Doing Business

Modern developments such as computers, the Internet and the greater complexity of our economy have lent more importance to the development and patent protection of new business methods and complex computer software. The number of awarded software patents has skyrocketed in recent years, growing from about 3000 in 1990 to 16,000 in 2005. However, these awards have been controversial. Over the years, the courts have swayed back and forth, alternating between being permissive and being strict in granting such patents. Should these inventions be protected by patent law?

The patent law states

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.(35USC 101)

Business methods and software can be viewed as processes and processes, according to the law, are patentable. But then, why this ambivalence? It all hinges on how the word “process” is defined. Depending on how this word is interpreted, your invention may or may not be eligible for patent and as an inventor you need to know why.

History

The first financial patent was granted on March 19, 1799, to Jacob Perkins of Massachusetts for an invention for “Detecting Counterfeit Notes.”

A patent, possibly the first software one, was granted on August 17, 1966 in the United Kingdom for a method of efficiently managing a computer memory for a mathematical algorithm. It was titled “A Computer Arranged for the Automatic Solution of Linear Programming Problems.”

Infamous “Method of Doing Business” Patent

One of the most talked about patents of all time was the one-click patent awarded to Amazon in September 1999. This patent allowed Amazon’s customers to make a purchase with a single click of the mouse without having to re-enter their credit card information. After a reexamination of this patent, the patent office in October 2007, accepted some of the claims and rejected others, thus limiting the scope of the invention.

Last Court Decision

On October 30 2008, the pendulum swayed back toward a much stricter interpretation of the law as the courts came up with a long-awaited decision. The Federal Circuit handed down its “en banc” decision in In re Bilski. This ruling invalidated many business-method patents granted in the last decade. What

does this latest ruling mean if you wish to file a patent for a software process or for a method of doing business?

Patentable Subject Matter

Processes that transform material articles such as iron ore, or food ingredient, from one state or thing to another, are patent-eligible.

Processes that transform non-material articles such as electromagnetic signals or electrons flowing through a wire, are patent-eligible. However, given the uncertainty in the courts it is better to associate those processes with actual material objects such as radio receivers or computer memories.

Processes moving bits of information around in a dedicated machine such as the microprocessor running your car’s ignition system are potentially patentable but the bit processes need to have tangible results.

Non-Patentable Subject Matter

Processes such as algorithms transforming bits of information from one format to another in the memory of a general purpose computer are non-patentable. These include, for example, financial or scientific data computation. Processes taking place in a human brain (i.e., ideas) are not patentable. Non-patentable subject matter includes (but is not limited to):

• Laws of nature
• Natural phenomena
• Scientific principles
• Abstract ideas

To be safe, always tie the process describing your business method or the software that you have invented to a material transformation or to a particular machine.

For archived newsletters and a lot of information for the small inventor go to: www.patentsandventures.com.

If you have any question you can contact me at (858)259-2226 or email me at glevy@patentsandventures.com.

This newsletter should not be construed as legal advice. ©2010 by George Levy

Getting Technical Help

You have a great idea but you don’t have the technical know how to move forward and you need the help of savvy professionals to guide you. What do you do? Several private companies, government organizations and university resources are available for you to draw on:

Universities
You can get inexpensive help from engineering students by funding their research projects. Make sure you have well written specifications for what needs to be done. These specifications will become a statement of work for the students. UCSD provides inventors with a well defined mechanism for submitting proposals. UCLA accepts industry sponsored research. UC Berkeley provides a Web site to allow the public to search its faculty according to the desired field of expertise.

Private Invention Developers
Private companies can also help you with your invention. The best way to get a referral to a competent invention development company is to attend a local inventor’s group.

National Laboratories
If your invention is hi-tech you can get help from national laboratories established by the US government. They house world class facilities and employ more than 30,000 scientists and engineers performing cutting edge research in a wide range of scientific disciplines. Some of these laboratories include:

The Ames Laboratory is a national center for the synthesis, analysis, and engineering of rare-earth metals and their compounds. Ames conducts fundamental research in the physical, chemical, and mathematical sciences associated with energy generation and storage.

The Argonne National Laboratory is one of the Department of Energy's largest multidisciplinary research centers. Argonne research falls into five broad categories: basic research, scientific facilities, energy resources programs, environmental management and National security.

The Brookhaven National Laboratory conducts research in the physical, biomedical, and environmental sciences, as well as in energy technologies and national security and builds and operates major scientific facilities available to university, industry and government researchers.

The Idaho National Laboratory is a science-based, applied engineering national laboratory dedicated to supporting the U.S. Department of Energy's missions in environment, energy, science and national defense.

The Lawrence Berkeley National Laboratory conducts unclassified research across a wide range of scientific disciplines with key efforts in fundamental studies of the universe; quantitative biology; nanoscience; new energy systems and environmental solutions; and the use of integrated computing as a tool for discovery.

The National Energy Technology Laboratory assures that U.S. fossil energy resources can meet increasing demand for affordable energy without compromising the quality of life for future generations of Americans.

The National Renewable Energy Laboratory develops renewable energy and energy efficiency technologies and practices, advances related science and engineering, and transfers knowledge and innovations to address the nation's energy and environmental goals.

The Oak Ridge National Laboratory conducts basic and applied research and development to create scientific knowledge and technological solutions that strengthen the nation's leadership in key areas of science; increase the availability of clean, abundant energy; restore and protect the environment; and contribute to national security.

The Pacific Northwest National Laboratory delivers science-based solutions to the Department of Energy's major challenges of expanding energy, ensuring national security, and advancing mission-driven science through outstanding staff and R&D capabilities, excellent operations, and high-value partnerships.

Sandia National Laboratories develop science-based technologies that support national security through science and technology, people, infrastructure, and partnerships.

The Savannah River National Laboratory is recognized as a world-class center of excellence for the development and application of innovative science and technology solutions.

The Department of Energy website was an excellent resource for the information in this newsletter and will provide you with information about other national laboratories.

For archived newsletters and information resources for the small inventor go to: www.patentsandventures.com.

If you have any question you can contact me at (858)259-2226 or email me at glevy@patentsandventures.com.

This newsletter should not be construed as any form of legal advice. ©2009 by George Levy

Profits, Pitfalls and Perils of Partnerships

Why form a partnership?
A primary reason for forming a partnership is finding yourself in a situation where you have a wonderful project and limited resources. No matter how good your idea might be, if you don’t have the means to bring it to fruition, you are likely to fail. In this situation, a reasonable option is to associate yourself with a partner, someone different from yourself who can complement your talents and capabilities. For example if you excel in science and engineering, pick someone adept at hobnobbing with people, who can be pivotal in bringing your idea to market. Your partner will also share the burden and responsibility of your business and will provide you with a good sounding board to test your ideas.

What are the steps involved?
Persons planning to go into a partnership should be willing to sit down and plan this arrangement carefully. One significant reason for caution is that, like proprietorships, the law does not distinguish between a partnership business and its owners. One may be placing personal assets at risk while taking on the potential liability for the other partner’s actions. Therefore, partners should have a legal agreement that sets forth how decisions will be made, profits will be shared, disputes will be resolved, how future partners will be admitted to the partnership, how partners can be bought out, and what steps will be taken to dissolve the partnership when needed.

If your partner is not a co-inventor of your invention, consider assigning some equity of your invention to him. Having ownership in the invention may give him the incentive to contribute to the business to the best of his abilities.

Filing an Invention Assignment with the USPTO
When an agreement is in place, describing how the invention is to be divided, file it with the US Patent Office. This step will formalize the assignment of the invention.

Other Options
Instead of a partnership consider forming a corporation to which you would assign your invention. You and your associate would then receive a certain number of shares and own the invention according to the allocated shares. Forming the corporation and assigning the invention to it requires the drafting of a business contract which should be performed by an attorney.

When to Set up Agreement?
It is best to set up all business agreements at the onset of an ongoing relationship. Too often co-inventors attempt unsuccessfully to draft an agreement between themselves after most of the development and marketing work has been completed. Egos and greed can get in the way of cooperation and the result can be a feud with usually disastrous results.

What are the risks involved if there is no agreement?
In the absence of an agreement between the inventors, the US Patent Office and the Courts consider each inventor to own 100% of the invention. In other words each inventor has the full right to license or sell the invention.

If the inventors are feuding, then there is a significant likelihood that they will attempt to undermine and compete with each other in the marketing and selling of their license rights. The sad result: they both lose. “Conflicts waste time and money, erode focus and strategic direction, cause emotional and financial pain and destroy businesses and reputations” writes George Gage the author of The Partnership Charter: How to Start Out Right with Your New Business Partnership (or fix The One You’re In). The best advice is to try to reach an agreement: a piece of something is better than 100% of nothing.

How to Select an Associate?
If you are contemplating forming a partnership or a corporation, be careful with whom you associate. Gage lists seven cautions that would-be and existing partners should consider:

1) If you think you are not “partner material,” don’t take the partner path.
2) Use extreme caution when selecting a partner.
3) If you don’t really need a partner, don’t get one.
4) If it doesn’t feel good before you start, follow your gut and don’t do it.
5) Don’t be fooled into thinking that legal agreements and documents will keep you out of trouble with one another.
6) If you currently have a partner, and it does not feel like a positive working relationship, don’t just ignore it. Try to fix things.
7) If there are unanswered questions or vague boundaries and responsibilities with current partners, address these issues while you are still getting along.

For archived newsletters and a lot of information for the small inventor go to: www.patentsandventures.com.

If you have any question you can contact me at (858)259-2226 or email me at glevy@patentsandventures.com.

This newsletter should not be construed as legal advice. ©2010 by George Levy