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Agency, Partnership and the LLC
South Texas College of Law Houston
Field, Ted L.

Patent, Field, Fall 2012
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Main Sources of the Law
1.       US Constitution. Art. I. §8. Cl. 8.: confers upon Congress the power “to promote the progress of science and the useful arts, by securing for limited times to…inventors the exclusive rights to their…discoveries”
2.       Federal statutes – 35 USC §101 et. seq.
3.       Federal regulations – 37 CFR §1.1 et. seq.
4.       Federal judicial precedents
What Is A Patent?
1.       A patent is a “negative right”: a limited open monopoly to exclude others from making, using, selling or importing that which falls within the claims of the patent
2.       Patent holder may exploit a patent but may not infringe the rights of other patent holders
3.       Patent generally enjoys 20-year term, non-renewable; extension of up to 5 years based on PTO delays
What is Patentable?
1.       Patentable: any new, useful process, machine, article of manufacture, or composition of matter or any new, useful improvement – §101
2.       Includes:
a.        Process: including business, artificial intelligence and mathematical processing-related inventions
b.       Product: a composition of matter; a manufactured item (non-natural, product of human effort); a machine; a non-naturally occurring plant
c.        Design: the non-functional aspects of objects of utility, e.g., auto hood ornaments
                                                   i.      Rationale: incentive to beautify objects of utility
                                                 ii.      Limitation: term of design patent is shorter (14 years)
3.       Not Patentable:
a.        Laws of nature
b.       Abstract ideas
c.        Naturally occurring plants or animals
d.       Things that are copyrightable (generally)
Analyze Patentability
1.       Must be “new” (i.e. not published or known to public) §102; must not be found in “prior art”:
a.        “Prior art” includes anything found in previously issued patents, published patent applications, published articles, white papers, lecture slides, even sales brochures
b.       Discussions of an invention under a NDA is not “public disclosure”
c.        “Public disclosure” of invention, even if by theft or contract breach, defeats eligibility for patent unless patent application has been filed
2.       Must be “useful” (i.e., the invention must teach a specific or demonstrable utility) §112
3.       Must be “non-obvious” §103
a.        Invention must have an “inventive step”
b.       Does not require a “flash of genius”
c.        Obviousness analysis does not apply a mechanical rule: must consider whether the invention results from “inferences and creative steps that a PHOSITA would employ,” including things it would be obvious to try
d.       Distinguish: a skilled mechanic’s work vs. a true invention
e.        Statutory test of obviousness:
                                                   i.      Survey the scope and content of prior art
                                                 ii.      Analyze the differences between the invention and prior art
                                               iii.      Determine the ordinary skill that is part of the art
f.         Secondary considerations, including the John Deere factors that examine:
                                                   i.      Whether the invention addresses long-unmet needs
                                                 ii.      Extent of resources devoted to solving the problem
                                               iii.      Number of people attempting to solve problem
                                               iv.      Commercial success (how much the invention displaced prior solutions)
Legal Date of Invention
1.       US Patent law protects the person who invents first, not the person who files first
2.       Several ways to establish date of invention:
a.        The date of invention is recorded in a tangible medium (e.g., a drawing or specification [best if signed by an independent witness])
b.       The date the invention was built – i.e., “reduction to practice”
c.        The date the patent application is filed, treated as “constructive reduction to practice”
Application For Patents
1.       To apply for a patent:
a.        Prepare a clear written description of the invention (patent application), which provides a “full teaching” of the invention so that another could make or implement it
b.       File with PTO
                                                   i.      The application
                                                 ii.      The fee
                                               iii.      The declaration of inventorship
2.       Application must name the actual inventors
a.        Multiple inventors may exist if they contributed to the actual claimed invention, even if some did not work together or did not intend to co-create
3.       The patent application is not penalized for the inventor’s lack of formal education or ignorance of technical terms
4.       Inventors may represent themselves in the patent process or may employ an attorney or agent admitted to practice before the PTO
5.       Prudence suggests filing an application before publicly disclosing the invention; some inventors, however, test sales volume of invention before committing the funds to apply and prosecute the patent, given the “limited monopoly” the patent provides; consider, however, forfeiture of foreign novelty if sales of invention occur prior to patent filing
Provisional Patent Applications
1.       US law permits filing a “provisional application” for a reduced fee and without formal requirements (i.e., claims not required)
2.       Provisional applications are not examined and are not made public
3.       A provisional application is useful to obtain a priority date recognized in the US and under the Patent Cooperation Treaty (PCT), so long as a US non-provisional or PCT patent application is filed not later than 1 year after the provisional filing
Patent Prosecution
1.       Patent prosecution refers to process of patent application and examination by the PTO
a.        The process is adversarial
b.       A patent examiner evaluates the merits of the application
2.       Application should include these elements:
a.        Title
b.       Cross-relation to other patents
c.        Statement regarding federally sponsored research or development
d.       Background of invention
e.        Brief summary of invention
f.         Brief description of drawings (if any)
g.        Detailed description of invention
h.       The claims of the invention
i.         Abstract
3.       PTO publishes applications 18 months from first priority date, unless applicant timely requests non-publication
4.       Re-issue: allows later correction of defects in original patent
5.       Re-examination: allows third party to request a limited examination of an existing patent
6.       Judicial review: US COA for the Federal Circuit provides appellate review of patent decisions
Patent Infringement
1.       Infringement: when a non-owner of a patent makes, uses, imports, offers to sale or sells a validly patented item, design or process without the owner’s authorization – §271
2.       Statute of limitations: no time limit exists for bringing suit for infringement, but recovery limited to monetary damages calculated for the 6 years prior to filing lawsuit
3.       First sale rule: the patent holder’s rights do not extend beyond the “first sale” of the patented item; the buyer of a patented item may use or re-sell the item; the buyer may repair a patented item, provided the repair does not constitute “making” the item
Elements of Proof of Infringement
1.       Determine the scope of patent’s “claims” (a question of law for a judge; may be determined in Markman pre-trial hearing)
2.       Determine if the accused infringement falls within the scope of the “claims” (a question of fact that may be decided by a jury)
Types of Infringement
1.       Literal infringement: when the accused item overlaps the “claims” of the patented item
2.       Under the “doctrine of equivalents,” the accused item infringes the patent if the item performs substantially the same function in substantially the same way to accomplish substantially the same result
3.       File wrapper estoppel: any changes to the patent application made during the course of prosecution cannot be argued or disputed after the patent issues; changes made to narrow the claims prior to issuance of the patent cannot later be challenged
Types of Infringers
1.       Direct infringer: one who makes, uses or sells the patented invention without permission
2.       Indirect infringer: one who encourages others to infringe
3.       Contributory infringer: knowingly offers for sale, or supplies, item whose only use is in connection with a patented invention
Defenses to Infringement Actions
1.       Invalidity of the patent (note that an issued patent is presumed valid)
2.       Patent misuse: unlawful extension by the patent owner of the limited monopoly conferred by the patent
3.       Prior use defense: applies where commercial use of the business method more than a year prior to the earliest filing date of the patent, then such user may be allowed continued limited use – §273
4.       “Experimental use” defense (highly limited): applies if the use is non-commercial, not business related, to satisfy curiosity or philosophical inquiry only
Remedies in Infringement Actions
1.       Injunctive relief – §283
a.        Preliminary injunctions are disfavored are rarely granted; require “a clear showing” (i.e., that it is “beyond question” the patent is valid and infringed)
b.       Permanent injunctions are not automatically granted, even upon proof of infringement; court must evaluate factors:
                                                   i.      Irreparable harm
                                                 ii.      Inadequacy of remedy at law
                                               iii.      Balance of hardship
                                               iv.      Public interest
2.       Compensatory damages: lost profits, but no less than reasonable royalties; pre-judgment interest normally awarded
3.       Enhanced damages (up to trebling at court’s discretion): where compensatory damages inadequate or infringement was willful
4.       Costs – §284
5.       Attorney’s fees: awarded only in an “exceptional case” to the prevailing party (e.g., a case of knowing infringement, fraudulent patent acquisition or lack of good faith belief patent is valid and infringed)
Overview of Intellectual Property/Patent System
4 Types of IP Protection
1)      Trademark (®)
a.        Purpose
                                                               i.      to protect consumers
                                                             ii.      word, name, symbol, device
                                                           iii.      identifies & distinguishes source of goods
b.       Protection is not limited in time
2)      Copyright (©)
a.        Protects:
                                                               i.      original works of authorship;
                                                             ii.      fixed in tangible media;
                                                           iii.      of expression
b.       Protection lasts for the life of the author plus 70 years
3)      Trade Secret
a.        Protects:
                                                               i.      Something that has commercial value from the facts of it’s secrecy;
                                                             ii.      Is the subject of reasonable effort to protect
b.       Ways to misappropriate
                                                               i.      Theft/illegal acts
                                                             ii.      Breach of confidential relationship (may mot be contractual)
                                                           iii.      Other improper means
c.        Protection is not limited in time
4)      Patent
a.        Types:
                                                               i.      Utility patents protect

nism, device, engine)
3.       Manufacture
a.        The production of articles for use from raw or prepared materials giving those materials new forms, qualities, properties, or combinations, whether by hand labor or machinery Diamond v. Chakrabarty;
b.       Anything made for use from raw or prepared materials. American Fruit Growers.
4.       Composition of Matter
a.        All compositions of two or more substances and all composite articles, whether they be the results of chemical union or of mechanical mixture, or whether they be gases, fluids, powders, or solids. Diamond v. Chakrabarty.
b.       Biotech and products of nature
                                                               i.      Bacterium genetically modified to consume oil did not occur in nature, i.e. it was a product of human ingenuity, thus it was patentable. Diamond v. Chakrabarty.
                                                             ii.      A naturally occurring genetic sequence or chemical by itself is not patent eligible, but SCOTUS and Rader held that an “isolated or purified” version of the gene would be.
Note: Generally, SME is not an issue because the courts interpret §101 broadly – “anything under the sun made by man”
Things Held Not Patentable:
1.       Laws of nature: fundamental truths, physical phenomenon
2.       Abstract ideas
3.       Naturally occurring items
a.        But they can be made patentable by
                                                               i.      Purifying and isolating the item
                                                             ii.      Synthesizing the item that does the curing
                                                           iii.      Process patent
ROL: Patents are not available for ‘products of nature’ per se, but they may be obtainable once significant artificial changes are made to that natural substance.
1.       Diamond v. Chakrabarty
2.       Mayo v. Prometheus – 3 Steps
a.        Administering
b.       Determining
c.        Wherein
3.       Association for Molecular Pathology
a.        DNA molecules, when isolated, are valid subject matter
                                                               i.      cDNA
                                                             ii.      Longer strands
b.       Method claims
                                                               i.      Involving merely a “comparing” or “analyzing” step – Not SME
                                                             ii.      Involving “screening” in addition to “comparing” – SME
Computer Related Cases
1.       Benson – abstract ideas are not patentable
2.       Diehr – process using software is patentable
3.       Bilski
a.        MOT Test is not the sole test for patentability, but merely a useful and important clue
b.       Business methods are potentially patentable
4.       CLS Bank
a.        Discretion to consider invalidity provisions in any logical order
Note: A process is synonymous with a method, or a series of steps for accomplishing some result.
Computer Related Inventions  & Algorithms
ROL: While abstract laws of science are ineligible, their application to make new machines or technical processes would qualify as patentable. Diamond v. Diehr.
Diehr Court: “Although unapplied mathematical algorithms, formulas, and equations are considered unpatentable abstract ideas, the presence of such mathematical subject matter in a patent claim does not necessarily deprive the claim of potential patentability…Claims must be analyzed as a whole, not dissected into their component parts…”
Note: Computer software is a set of machine readable instructions capable of performing a particular task
·         Protected by both patent and copyright law
·         Opponents argue that computer related inventions have more in common with abstract principles and mental steps which do not get patent protection
Mathematical Formulas
ROL: Patentable claims do not become invalid because they include mathematical formulas
ROL: “A mathematical formula, having no substantial practical application except in connection with a digital computer, cannot be patented.” Gottschalk v. Benson
Business Methods
ROL: “A process or method of doing business or operating a business is potentially patentable, just as is a method for doing anything else, so long as the claimed method is not an unapplied, abstract idea or concept.” State Street Bank.
Compare State Street Bank explicitly confirmed the patent eligibility of computer‐implemented inventions ‐ a program (using an algorithm) that reallocated investment income to maximize tax benefits ‐ because the system produced useful, concrete, and tangible results
With AT&T Corp. v. Excel Communications held (algorithm) method of inserting data into a long distance call record to facilitate billing was solely an exchange of information, NOT a physical