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Patent Law Basics

Intellectual property results from exercise of the faculties of the mind. For example, intellectual property may be any useful, new and nonobvious apparatus, process, article of manufacture, chemical composition, product design or biological plant. These forms of intellectual property are protected by the patent law. In addition, improvements made to existing apparatus, processes, articles of manufacture, chemical compositions, product designs and plants also can be protected by the patent law. Patent law permits the owner of the patent to exclude all others from making, using, offering for sale, selling and importing what is patented.

Subject Matter
With respect to the patent law, not every idea is patentable.  For example, patentable subject matter must fall within one of the four statutory categories defined by the patent statute. That is, the patentable subject matter must be a process (for example, computer software for operating an inkjet printer or a unique business method for distributing inkjet printers to retailers), machine (for example, an inkjet printer), article of manufacture (for example, an inkjet printer cartridge), or composition of matter (for example, chemical compounds such as ink used in the inkjet printer cartridge) in order to receive patent protection. Thus, literary works, such as books, are outside these four categories and are not protectible under the patent law. Rather, literary works are protectible under copyright law. Trademarks are protectible under trademark law.

Even if the subject matter of the proposed patent is within one of the four statutory categories, the subject matter of the proposed patent may have been judicially excluded from patent protection because it includes a law of nature, abstract idea, natural phenomenon or new plant discovered in the wild. Subject matter that falls within one of these four judicially-excluded areas is not patentable unless it recites some practical application of the law of nature, abstract idea, natural phenomenon or new plant. In other words, laws of nature (E=mc2), abstract ideas (a mathematical algorithm), natural phenomena (a new mineral discovered in the earth) or a new plant discovered in the wild are not protected. However, practical applications of laws of nature, abstract ideas, natural phenomena or new plant in commercial products are protected.

What is a Patent?
A patent is a right represented by a document issued by the federal government to an inventor. The patent describes what the inventor believes to be his invention. In order to qualify for patent protection, the invention must be useful (it must work and not defy the laws of physics such as perpetual motion machines), new (nothing exactly like it must have previously existed) and nonobvious (e.g., combining prior art elements according to known methods to yield predictable results).

Also, under U.S. patent law, an inventor has one year after the first public disclosure or offer for sale of a product embodying his invention to file a patent application. Although there are specific exceptions to this general principle, such as experimental use of the invention occurring in public, an inventor who does not file for patent protection within this one year window loses all right to obtain patent protection covering the invention. The day this one year window closes is referred to as a "statutory bar date." Thus, the inventor should be leery of publicizing his invention to friends, venture capitalists and potential licensees without an obligation of confidentiality on their part, such as a written confidentially agreement. To do otherwise may start the running of the one year clock.

Types of Patents
There are three types of patents as follows: utility patents, design patents and plant patents. Utility patents are granted for apparatus, articles of manufacture, chemicals and processes and have a life of 20 years from the filing date of the patent application. The only exception regarding the 20-year life of a utility patent is for a filed utility patent application pending on June 8, 1995 and for issued patents that were still in force on June 8, 1995. In this case, the patent term is either 17 years from the issue date or 20 years from the filing date, whichever term is longer.

Design patents protect the design and appearance of an object and have a life of 14 years from the date the design patent issues. Plant patents cover plants which can be duplicated through asexual (without seeds) reproduction. Plant patents have a life of 20 years from the filing date of the application for the plant patent. With regard to the life of a plant patent, the exception mentioned in the preceding paragraph regarding the life of utility patents also applies to plant patents. It should also be noted that intellectual property protection for plants duplicated through sexual (with seeds) reproduction are protected under the Plant Variety Protection Act, which is administered by the U.S. Plant Variety Protection Office rather than the U.S. Patent and Trademark Office. When the life of a utility, design or plant patent expires, the public is free to exploit the patent.

Patent Law
Many an inventor is surprised to learn that owning a patent does not grant him the right to exploit his own patent. Under the patent law, a patent merely grants the owner of the patent, or exclusive licensee of the owner, the right to exclude all others from making, using, offering for sale, selling and importing what was patented. Thus, if a competitor infringes the patent, the patent owner may successfully sue the competitor for patent infringement in order to exclude the competitor from exploiting the patent by making, using, offering for sale, selling and importing what was patented. The converse is also true. That is, if the inventor infringes a patent held by the competitor, then the competitor may successfully sue the inventor for patent infringement in order to exclude the inventor from exploiting the competitor's patent. The brief example described below may make this clearer.

Assume Inventor A was issued a broad patent for a ball point pen that deposits ink deep into the fiber of a sheet of paper, so that forgers will find it difficult to erase a signature or date on a document and substitute a different signature or date. Inventor B was issued a patent for an improvement to the ball point pen, so that the pen will write when held upside-down.

If inventor B practices his invention, he will necessarily infringe Inventor A's patent because Inventor B's invention is an improvement to Inventor A's basic invention that is covered by Inventor A's patent. Conversely, if Inventor A practices Inventor B's improvement, then Inventor A will infringe Inventor B's patent. Thus, neither inventor A nor Inventor B can exploit his own patent without infringing the patent of the other party. A solution to this conundrum is for one party to purchase the patent of the other party. Another solution is for each party to obtain a license from the other party. This is commonly referred to as "cross-licensing". Yet another solution might be for one party to file a civil suit to have the patent of the other party invalidated or declared unenforceable.

Provisional Patent Applications
This discussion would be incomplete without at least a passing mention of provisional patent applications, which are sometimes called the "poor man's" way to obtain fast patent protection. In this regard, some inventors cannot immediately afford the fee an attorney charges for preparing and filing a regular patent application. Attorney fees for preparing a regular patent application can range from approximately $3,500 to $15,000 or more. This is in addition to the government regular application filing fee. To avoid some of these costs initially, the inventor may decide to file a provisional application. Current government fees to file regular patent applications are found at the USPTO website.

The current government fees for a large entity, small entity (an individual or a business having fewer than 500 employees), or a "micro entity" to file a provisional patent application are provided at the USPTO website. The provisional application need not have any particular format and can be something as simple as a brief description of the invention and any sketches or informal drawings necessary to understand the invention. Thus, the inventor may even opt to quickly gather these materials and file the provisional patent application himself. If an attorney prepares the provisional application, then his or her fee is typically about one-third to one-half the fee to prepare and file a regular patent application. In either case, the inventor would then have 12 months before being required to file the regular patent application to avoid all loss of patent rights. The inventor should file the regular patent application as soon as possible within the 12-month time period required by law.

As indicated in the preceding paragraph, a patent applicant is entitled to claim the benefit of an earlier provisional patent application filing date when he files the corresponding non-provisional regular application, which must be filed not later than 12 months after the provisional application filing date. Thus, filing a provisional application can give the inventor up to 12 months to market test his invention and/or raise capital before investing in the cost of filing a non-provisional regular patent application. Also, filing a provisional application allows the inventor to avoid losing all patent rights due to exceeding a "statutory bar date". In other words, if the inventor procrastinates and even waits until the day before a statutory bar date to seek patent protection, he may nonetheless file a quick provisional patent application in time to preserve his patent rights. A statutory bar date arises 12 months after the date of offering for sale, selling, public use or publication of the invention.

The corresponding non-provisional regular patent application would benefit from filing the provisional application in the following three ways:

  • Patentability would be evaluated as though filed on the earlier provisional application filing date
  • The resulting publication of the regular patent application or finally issued patent would be treated as a reference against other patent seekers as of the earlier provisional application filing date so as to prevent other patent seekers from being issued patents covering the same subject matter or subject matter that is obvious in view of the invention being patented, and
  • The twenty-year patent term would be measured from the later non-provisional regular application filing date. A provisional patent application also allows filing without a formal patent claim, oath or declaration, or an information disclosure statement. In addition, a provisional patent application allows the words "Patent Pending" to be applied to products. Certain formalities, such as the names of all inventors, inventor addressees, title of the invention, etc., must be included in the provisional patent application.

On the other hand, there are disadvantages to filing a provisional patent application. For example, the patent applicant should make sure that the provisional patent application is written properly so as to meet the "best mode" and "enablement" requirements of the patent law at the time the provisional application is filed. The provisional application must meet these requirements in order that the later filed non-provisional regular application can benefit from the earlier filing date of the provisional application.

Sometimes the provisional application does not meet the best mode and enablement requirements because the provisional application was not written properly. In this case, the earlier filing date and money spent on filing the provisional application are lost because the provisional application is defective and has no legal effect. Obtaining a patent is still possible, however, if the regular patent application is filed before the statutory bar date. Also, another scenario applies to filing a defective provisional patent application. In this regard, assume the defective provisional application is filed before the statutory bar date but the regular patent application is filed after the statutory bar date. In this scenario, the earlier filing date of the provisional application is lost because it was defective and any patent issuing on the regular application is invalid because the regular application was filed after the statutory bar date. In this case, all patents rights are lost.

Due to the disadvantages associated with provisional patent applications, inventors are often advised to avoid filing provisional patent applications, if possible. In fact, many intellectual property attorneys refuse to file provisional patent applications if there is enough time to file a regular patent application before a statutory bar date. That is, many intellectual property attorneys believe the disadvantages to filing a provisional application probably outweigh the advantages. An inventor should consult an intellectual property attorney as soon as he believes there is a patentable invention, so that there is enough time to file a regular patent application rather than a provisional patent application.

Costs To Obtain Patent Protection
Total costs to obtain patent protection during the entire patent process can range from $6,000 to $12,000 or more, including filing fees and attorneys' fees. Even after the patent issues, the U.S. Patent and Trademark Office will charge patent "maintenance" fees, which are provided at the USPTO website. Payment of patent maintenance fees keeps the patent in force.

Nonetheless, a patent creates a barrier to market entry by competitors and may well be worth the cost. Therefore, a patent can serve as a useful tool to protect market share or create a dominant position in the marketplace. Also, a patent can be a useful tool for raising venture capital because the financial risk to the venture capitalist is reduced due to the market "monopoly" the patent provides. In addition, banks may be willing to lend credit using intellectual property as collateral. Depending on the financial health of the business, a well thought-out patent portfolio could be a wise strategic investment.

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