I N S I D E
T H E
M I N D S
Developing a
Patent Strategy
Leading Lawyers on Drafting Effective Patents,
Seeking Global Protection, and Navigating
the America Invents Act
2012 EDITION
2012 Thomson Reuters/Aspatore
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Important Considerations for
Patent Strategies
Marina Portnova
Member, Lowenstein Sandler PC
Inside the Minds – Published by Aspatore Books
Introduction 1
Developing a patent strategy tailored to a company’s needs is important for
technology companies at all stages of development. A patent strategy
should take into consideration a company’s available resources, desired uses
of patents, business goals, and competitors’ patent practices, among other
factors. Patent strategies may evolve with a company due to both internal
and external factors. This chapter provides an overview of factors to
consider in developing a patent strategy and changes in the law that might
affect a patent strategy.
Economic Trends Affecting Patent Strategy
Changes in the economy have significantly affected corporate patent
budgets. In particular, due to the recent recession, companies have reduced
the number of patent application filings, abandoned patent applications
deemed outside of key technology areas, and renegotiated rates paid to
outside counsel for patents. However, as the economy improves, we are
witnessing a resurgence in patent filings and patent budgets of technology
companies in some areas.
Economic slowdown has also motivated companies to monetize their
patent portfolios via patent litigation and patent licensing. Additionally, the
recent maturing of certain products and services such as social networking
and mobile computing has caused increased patent litigation activity. For
example, both mobile computing and social networking have tremendous
potential for profit, and hence established market leaders (e.g., Apple and
Microsoft) may attempt to delay more recent entrants (e.g., Google) from
entering the market by bringing lawsuits against them. Furthermore, third
party patent holders, and particularly non-practicing entities, have adopted
aggressive monetization procedures against both the established and
advancing market players in an attempt to gain their own share of the
profits.
1
This chapter was co-authored by Benjamin A. Kimes, an associate at Lowenstein
Sandler PC who practices almost exclusively in the area of patent law. His research,
writing and analysis were invaluable to this project.
Important Considerations for Patent Strategies – by Marina Portnova
Due to the increases in patent litigation and to maintain competitiveness in
the improved economy, many companies have become much more
aggressive in patenting their technology. These trends have put an especially
high demand on both skilled patent prosecutors and patent litigators, and
are likely to have the effect of increasing the cost of patent-related services
in the near term.
Protecting Patents in a New Patent Law Era
Our practice has a strong focus on software patents. Two relatively recent
cases that have had an impact in this area are Bilski v. Kappos, 130 S. Ct.
3218 (U.S. 2010) and CyberSource Corp. v. Retail Decisions Inc., 654 F.3d 1366
(Fed. Cir. 2011). In In re Bilski, 545 F.3d 943 (Fed. Cir. 2008), the United
States Court of Appeals for the Federal Circuit (CAFC) in an en banc
decision applied the “machine-or-transformation test” to hold that a
business method patent was directed to ineligible subject matter. Under the
machine-or-transformation test, a process is patent eligible if the process is
performed by a particular machine or if the process transforms data or an
article from a first state to a second state. See In re Bilski, 545 F.3d at 954. In
Bilski v. Kappos, the Supreme Court confirmed the In re Bilski decision, but
on different grounds. The court in Bilski v. Kappos stated that the machineor-transformation test is merely one tool for ascertaining patent eligibility,
and emphasized that this test is not the sole determiner of eligibility for
patents on processes. See Bilski, 130 S. Ct. at 3221.
The court in Bilski v. Kappos did not provide any viable alternatives to the
machine-or-transformation test. As a result, the USPTO often continues to
rely on this test during patent examination. Thus, at present, the machineor-transformation test should be treated by practitioners as the de facto test
for patent eligibility of software patents and business method patents.
In Cybersource, the Federal Circuit held that if a software method is not
patentable, then a Beauregard claim capturing that method would also be
unpatentable. See Cybersource, 654 F.3d at 1366. In other words, adding a
computer-readable medium preamble to an otherwise non-technological
method will not save a Beauregard claim from a rejection under 35 U.S.C. §
101. Accordingly, the same claim drafting techniques that are used to
overcome rejections to software method claims under 35 U.S.C. § 101
should also be used for Beauregard claims.
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We have been successful in addressing the USPTO rejections in view of
Bilski and Cybersource by drafting claims that recite particular machines
performing some or all operations of the software or that clearly show a
transformation of data from an initial state to a final state. Overall, we do
not believe that these decisions have substantively affected the patentability
of software inventions. Rather, they have introduced additional
requirements to claim drafting for software inventions and emphasized the
importance of providing sufficient support for these additional elements in
the specification of a patent application.
Another significant change in the patent law is the American Invents Act
(AIA), which was enacted on September 16, 2011. The America Invents
Act is a substantial overhaul of the US patent system. The AIA makes many
changes to the current patent system, including several post-grant review
mechanisms allowing third parties to challenge another’s patent, banning
the practice of patenting tax strategies and restricting the practice of
plaintiffs in infringement cases joining together large groups of defendants
who may have no business relation to each other. However, the biggest
impact of the AIA is the transition from a first to invent system of priority
to a first to file system, which is an attempt to bring the US in line with the
rest of the world.
Under the current patent system, an inventor who invents a technology first
but files a patent application on that technology after another inventor may
nonetheless be entitled to a patent on that technology. However, in a first
to file system, the first applicant to file a patent application for a new
technology is entitled to a patent regardless of who invented the technology
first. This significant distinction with the current law is slightly dampened
by allowing inventors to publish an article on their invention prior to filing
the patent application, provided they file the application within a year of the
publication. However, an article published by an unaffiliated third party on
the same invention, prior to the inventor’s own disclosure or filing date,
may prevent the putative patentee from obtaining patent protection.
The first to file patent rules are scheduled to take effect in March 18, 2013,
giving companies some time to adjust their patent strategy. Many
technology companies have begun to address these changes by
implementing shorter deadlines for application filings. We also now
Important Considerations for Patent Strategies – by Marina Portnova
strongly recommend that companies start invention mining early in the
design phase rather than waiting for a prototype to be created or code to be
completed. For example, a company might file a collection of patents
around a new product while the product is at the initial idea phase, and then
file additional patents covering the product as details are worked out (e.g.,
as a prototype is developed and then as a final consumer product is
developed). This strategy will allow companies to get earlier priority dates,
and as a result, broader patents, on new products and obtain patents
focusing on specific implementations to strengthen their patent portfolios.
Such a strategy can make it difficult for competitors to design around a
company’s patents.
International Patent Filing Trends
Foreign patent filing trends have been, and continue to be, industry specific.
Often companies only file in countries where the company or its
competitors have a large market presence and/or in countries where the
companies and its competitors will manufacture their products. In
semiconductor manufacturing, for example, the trend has been to increase
filings in Asia (e.g., Korea, Japan, Taiwan, and China) due to an ever
increasing role of this region in semiconductor manufacturing.
As to software companies, we have witnessed some of them scaling back
their foreign filing activities. This is due to the added expense of
prosecuting patent applications abroad and the differences in treating
software patents in various countries. Therefore, companies frequently
decide to refrain from foreign filing and focus on US patent applications.
Technology companies that are less cost-conscious continue to be
aggressive in international patent filings. One reason for this is the ability to
bring a lawsuit against US competitors outside of the United States, as it
may be easier to obtain an injunction and the litigation process may be
significantly shorter in some foreign countries than in the United States. For
example, there are currently several major lawsuits filed abroad by and/or
against US companies, including a lawsuit in Germany between Nokia and
Apple, and lawsuits in Australia and Germany between Apple and Samsung
(in which Apple recently obtained an injunction to stop the sale of Samsung
tablets in those countries). Depending on the outcome of these pending
Inside the Minds – Published by Aspatore Books
cases, we may see a significant increase in foreign filings by major
technology companies.
General Considerations in Developing a Patent Strategy
When developing a patent strategy, a company should first determine how
it intends to use its patent portfolio. In particular, the company should
determine whether a patent portfolio will be used offensively (e.g., to assert
against others or as revenue generation), defensively (e.g., to counterclaim
against a competitor who filed a suit first or to prevent competitors from
developing similar products), to attract VC investments, etc. Next, the
company needs to identify its key business goals, including technology areas
of interest, current and future products, competitors and partners, and
geographical markets. Finally, the company needs to determine what budget
can be allocated for patent work. Once these key parameters are decided,
the company can identify what inventions to file patent applications on,
how many patent applications to file and where to file the patent
applications.
Software companies should also consider open source license issues when
developing a patent strategy. Although open source licenses do not prohibit
obtaining patent protection, they may restrict how patents associated with
software covered by the licenses can be asserted. Accordingly, a software
company should determine whether its software may be subject to open
source licenses and what specific open source licenses the software may be
subject to.
Working Successfully with Large and Small Companies
The extent of outside counsel involvement in developing a patent strategy
depends on a company’s sophistication level. For instance, a major
technology company with a large team of patent attorneys may only need
outside help with reviewing invention disclosure forms, identifying bar
dates and inventorship issues, preparing patent applications, prosecuting
pending patent applications, and assisting with continuation and foreign
filing decisions. When working with a large or medium-size company that
has a small group of patent attorneys, outside patent counsel may be a more
active participant in the patent process. In particular, in addition to the
Important Considerations for Patent Strategies – by Marina Portnova
responsibilities outlined above, outside patent counsel may also conduct
invention mining sessions, advise patent committees regarding patentability
and usefulness of identified inventions, provide patent training to engineers,
and provide advice on patent portfolio enhancement.
With small companies and start-ups, the role of outside patent counsel may
be even more extensive. For smaller clients, we typically need to meet with
key executives to develop an understanding of the company’s business and
patent portfolio goals and the company’s financial situation. We will also
have periodic meetings with technical people who create intellectual
property assets of the company to mine inventions covering core
technologies, products, and processes of the company. Additionally, we
may evaluate identified inventions based on patent portfolio goals. For
example, we may analyze competitor products to determine the value of an
invention intended for revenue generation, or we may evaluate impact of an
invention on the patent portfolio of a potential aggressor if the invention is
intended for defensive purposes (e.g., to counterclaim against the potential
aggressor). We may further assist with prioritizing the inventions,
determining an appropriate patent strategy for individual inventions (e.g.,
whether to perform a prior art search, file a provisional or non-provisional
application, designate for foreign filing, etc.), and preparing and filing patent
applications.
Patent Drafting Process
The goal of a patent application drafter is to capture a technical idea such
that the patent application may lead to maximum protection for the covered
invention. In order to achieve this, a patent attorney has to be able to
understand the technology, know patent law, and clearly describe the
invention in accordance with the principles of patent law.
One of the key steps in the patent drafting process is an invention
disclosure meeting. To have an effective meeting, it is advantageous to
become familiar with the technology area prior to the meeting. This ensures
that an attorney will know what questions to ask to clarify novel aspects of
the invention, gain a full understanding of the invention, and probe
inventors for alternative implementations. An attorney should also identify
whether there has been or will be any company activity (e.g., offers to sell a
Inside the Minds – Published by Aspatore Books
product or public disclosure of a product) that imposes a legal deadline for
filing a patent application. If an invention was developed abroad or at least
one of the inventors resides in a foreign country, an attorney may determine
whether there are any issues with respect to filing this patent application in
the United States (e.g., when an inventor resides in a foreign jurisdiction
that requires a foreign filing license).
A software invention often includes components that are performed by
different devices (e.g., a client and a server) that may be owned or operated
by different entities. When drafting claims for software inventions, a patent
practitioner should separate functionalities performed by individual entities
to ensure that a claim can be directly infringed by a single legal actor to
whom each and every one of the infringing elements of an accused system
or process may be attributed.
When preparing drawings for a software invention, it is advantageous to
illustrate machines and the overall computer architecture of the system
executing inventive software components to provide support for
Beauregard claims and to tie software operations to hardware in view of
Bilski and Cybersource. It is also advantageous to include a detailed
description of the overall computer architecture explaining how hardware
components are connected to perform the invention. It is further preferable
to include a high-level flowchart that illustrates the overall functionality of
the invention and more detailed flowcharts further expanding on the
individual steps of the high level flowchart. When describing flowcharts, a
patent practitioner should explain how the invention operates from the
perspective of the computer, not the perspective of the user. In addition,
for inventions directed to presentation of information, it is beneficial to
include screenshots illustrating how the information is presented.
Provisional Patents and Design Patents
Filing a provisional patent application is often a useful strategy for start-up
companies, which tend to be more cost-conscious and frequently do not
have sufficient human resources to devote to the patent process. A
provisional patent application allows a company to preserve an earlier filing
date at a minimal expense and delays a much more significant expenditure
associated with a nonprovisional application by one year. A provisional
Important Considerations for Patent Strategies – by Marina Portnova
application is especially useful if it provides a detailed description of the
invention and preferably explains valuable alternative implementations.
With respect to large companies, provisional applications are typically filed
for time sensitive inventions to preserve patent rights in the US (e.g., when
it has been almost a year since the relevant product release) or to enable
patent protection outside the United States (e.g., when the invention is
about to be disclosed by the inventors or sold by a company). When the
first to file provision of the new Patent Act becomes effective (March 16,
2013), technology companies may become more aggressive in provisional
patent filings to preserve an earlier filing date.
Another type of IP protection is a design patent. A design patent does not
protect functionality, but rather protects an ornamental design of what is
illustrated in the design patent. While protection afforded to design patents
is limited, they may still play an important role in building a patent portfolio
due to their low cost, ease of preparation and shorter pendency in the
USPTO. For example, a design patent may be used as a marketing tool to
mark a product as “patent pending” or “patent issued,” or to provide
protection for technology that may be considered obvious with respect to
functionality. Additionally, design patents may be used to protect IP that
would not qualify for a utility patent. In Egyptian Goddess v. Torkiya, 543 F.3d
665 (Fed. Cir. 2008), the Federal Circuit substantially modified the design
patent infringement test, adopting the “ordinary observer” test, which made
design patents much more attractive for technology companies. In
particular, companies now often compliment utility patents with design
patents to obtain more diverse protection for their IP. We recommend
filing design patents not only to protect ornamental designs of physical
devices, but also to protect graphical user interfaces (GUIs) of important
software products and services of the company.
Creating an International Patent Strategy
An international patent strategy is important for large multi-national
corporations that use overseas markets for their products. If a company
manufactures its products abroad but uses the United States as the primary
market, the company may not need to file internationally and may rely on
its US patents that provide the ability to prevent importation into the
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United States. International patents are often unnecessary and too
expensive for smaller companies and startups.
When developing an international patent strategy, a company should first
identify foreign countries appropriate for foreign filing based on existing
markets and future market opportunities. When the market of the company
products is focused on a few countries (e.g., Japan, China and Korea), the
company should file directly in these countries rather than filing a PCT
application to save money and time, and to get that application placed
directly into examination queues. Alternatively, if the company is uncertain
about its future markets, it is advisable to file a PCT application, which
delays the most significant foreign filing costs by at least eighteen months.
Patent applications likely to be filed abroad should be drafted using clear,
concise and preferably simple language (if possible) to reduce translation
problems. Translation errors are a pitfall that can increase the number of
communications between a foreign Patent Office, a foreign attorney and a
US attorney and can adversely affect the scope of patent protection in a
foreign country. Additionally, when it is known in advance that a patent
application will be foreign filed, it is preferable to prepare a separate set of
claims for each international filing in accordance with the legal requirements
of a corresponding country. For example, claims of a European patent
application should focus on solving a technical problem in a non-obvious
way and claims of a Japanese patent application should focus on software
implementation of functions that were not previously performed by
hardware.
Furthermore, foreign filing must be performed within one year of an
earliest US priority date. It is important to make foreign filing decisions in
advance of this one-year mark to eliminate expedited translation fees and
late fees for submitting required documents (e.g., executed powers of
attorney and assignments). In addition, reducing the number of claims and
using multiple dependency claims may result in significant cost savings,
especially in Europe and Japan.
Working with the USPTO and Patent Examiners
The USPTO has been encouraging increased use of interviews between
patent practitioners and examiners to expedite and improve the patent
Important Considerations for Patent Strategies – by Marina Portnova
process. In many cases, we have found it helpful to schedule an examiner
interview in response to the first office action to explain the invention to
the examiner. Once the examiner understands the invention, the examiner
will perform a more focused prior art search and may be more likely to
work with the applicant to identify patentable subject matter. Examiner
interviews are also very useful at a later stage (e.g., after a final office action)
to point out deficiencies in the examiner’s rejections or discuss claim
amendments that will either overcome cited art or bring the application into
condition for allowance. Under certain circumstances, it may be helpful to
request that a supervisor participate in an interview with the examiner (e.g.,
when an examiner needs the approval of a supervisor before an agreement
can be reached).
When communications with the examiner via interviews and written
responses are unsuccessful, we recommend using the ombudsman program
as an alternative to appeals. The ombudsman acts as a neutral third party
that attempts to resolve disputes between the applicant and the examiner
and to expedite the patent examination process. We have successfully used
the ombudsman program to get applications allowed that had been stalled
for years.
Another relatively new expedited patent prosecution procedure is a patent
prosecution highway. Using the patent prosecution highway, an applicant
who has filed a patent application in multiple countries can have claims that
are allowed in one of the countries become allowed in the other member
countries. This can speed up the patent prosecution for such related cases
as well as reduce patent prosecution costs.
The AIA has also introduced a new prioritized patent examination
procedure that promises a final disposition (either an allowance or a final
rejection) for a patent application within twelve months of filing. Expedited
examination will be afforded to patent applications filed with a request for
prioritized examination.
The above changes in the Patent Office clearly demonstrate the intent of
the USPTO management to improve the patent process. Patent
practitioners should take advantage of this trend to obtain faster, cheaper
and better patents for their clients.
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Conclusion
We believe that the America Invents Act will encourage companies to file
patents early and more often. The improving economy will also promote
increased patent filings, and court decisions in Bilski and Cybersource that
removed the uncertainty with respect to software inventions should result
in increased software patent filings. In addition, the trend toward increased
patent litigation will motivate companies to focus on filing more targeted
and higher quality patents. Furthermore, recent changes in the USPTO
resulting in improved communication between the applicant and the patent
examiner will make it possible to reduce the pendency of patent
applications.
The above changes in the patent industry have introduced serious
challenges for patent practitioners. Not only do practitioners need to focus
on satisfying increased client demands with respect to patent filings, they
also have to stay on top of technology-related changes (i.e., what new
products are coming out, and what new companies are trying to expand
into certain technology areas). In addition, practitioners should stay abreast
of court decisions related to patent law, as well as the interpretation and
application of recent patent reforms, to produce quality patents. Moreover,
it is advantageous to be involved in frequent interactions with examiners
and to be aware of new expedited patent prosecution procedures to satisfy
client demands for obtaining faster, cheaper and more valuable patents.
Key Takeaways
•
•
Identify the most important areas of technology for a client
company to develop a patent strategy. Also predict areas where the
company may expand in the future and become familiar with its
competitors’ products in those areas that the client is or may
become involved in.
Develop an understanding of a smaller company’s market space,
the area of technology that the company is focused on, who the
company’s competitors are, and what goals the company has with
respect to its patent filings—i.e., whether it plans to monetize its
inventions or if the company is filing solely for defensive purposes.
Important Considerations for Patent Strategies – by Marina Portnova
•
•
•
•
Go over certain product features that the inventor believes to be
novel, and then make a decision regarding whether those features
are patentable. Based on company priorities and resources, decide
which of these features should be pursued for patenting, and which
should either not be pursued at all or pursued at a later time.
Consider if there is an overseas market for the company’s product
and/or if a competitive product is being manufactured abroad. If
either of those two situations applies, then the client should
consider international filings.
When drafting software patent applications, provide sufficient
description of hardware executing inventive software components.
Draft claims that can be directly infringed by a single legal actor.
During prosecution, conduct examiner interviews to expedite
allowance and obtain better claim coverage. When interactions with
the examiner do not produce a desired outcome, consider
participating in the ombudsman program as an alternative to
appeals.
Marina Portnova is a member of the law firm Lowenstein Sandler PC in the intellectual
property section of the firm’s tech group. Ms. Portnova provides strategic guidance to
technology-based companies in building and managing their patent portfolios, including
identifying technical advantages and implementing programs that capture these advantages
as patents.
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