Prof. Lefstin, Fall 2013, Patents and Trade Secrets
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Theory and Structure of the US Patent System
·        Overview and Theory of the Patent System
o   Intro
·        Patents typically provide legal monopoly (right to exclude) but not a practical/economic monopoly
§ usually substitutable products available in the market, however not true for some industries (pharmaceutical)
§ Blocking patents: package of patents that secure ability to operate in a sector/industry (license pools)
§ Ex: Engine patent to A; improved engine patent to B.
·        B cannot build their product b/c within scope of A's patent, must license from A
·        Objective of patent law is to offer a potential financial reward as an inducement to invent, disclose info, invest capital in innovative/commercialization process, and to facilitate efficient use/manufacture through licensing (all of which confers benefit to public, contributes to progress of the Arts)
·        US Const Art 1 § 8
§ Patent Law in US is utilitarian based (for benefit of society) rather than natural rights based (inventor owns his invention, sweat of brow)
·        Society grants property rights to incentivize creation and development
·        European IP based on natural rights, protects the rights of creator to products of his mind
§ Incentivizes expedited development: Not concerned with who true inventor is (especially with AIA first to file), but rather when/how fast invention is developed
o   Economics of Patent Law
·        Information is non-rivalrous and non-excludable
§ Non-rivalrous: many can benefit from info w/o interfering in benefit others get from the same info
§ Non-excludable: once info is disclosed, extremely difficult to exclude others from using
§ Arrow's Info Paradox: inherent conflict between policy desire to disclose info and inventor's need to limit access/use
·        Without a property right, transaction costs to utilize info is prohibitively high for inventor
·        Impedes public benefit from progress of science/arts
§ Costs of patent system: Free-ridership kills incentive to disclose invention
§ Costs of patent System: risk of reduced output, excessive prices and dead weight loss
·        Resolve under investment by offering quid pro quo for disclosure of invention: Society gets disclosure, inventor gets short term exclusive right
·        Economic Theories
§ Incentive to Invent
·        Due to public goods nature of info, w/o prospect of a property right inventors would be unable to recover R&D costs b/c 3rd parties could copy invention and compete w/inventor w/o fixed costs
§ Incentive to Disclose
·        Property right will induce inventor to seek patent protection, and disclose inventions/information pursuant to patent law disclosure requirements, can be used for positive social value
·        Weakness: info disclosed in patent is not instruction manual, only useful to OSA; and trade secret is still an available option that yields no disclosure
§ Incentive to Innovate
·        Innovation = invention + commercialization
·        Patent serves as signal between parties and coordinates the innovation process
·        Weakness: commercialization/licensing invention/patent is not always patent holder's objective (trolls)
·        Structure of the Patent System and the Patent
o   The Patent Document and Process of Obtaining Patent Rights
·        Patent acquisition process (PTO)
§ 3 types of patents: utility, design, and plant (90% are utility so only discuss that)
·        Design: new ornamental designs applied to a useful article (Apple v Samsung)
·        Simply covers the way that it looks: must be new, original, and ornamental
·        For design patent infringement AND validity analysis: “ordinary observer”
·        So similar to ordinary observer as to mistake one fake for patented design, and buy by mistake
·        Only infringement if the accused item embodies the design or imitation
·        Must view in light of the prior art: when claimed design Is close to the prior art, small differences between claimed and accused are important to observer.
·        Utility patents: most patents
·        Single item can embody both utility and design patent
§ Application Contents: 2 types: regular application and provisional application
·        General application: Require Specification, drawing, and oath
·        Specification:
·        Written description (disclosure)
·        Claims (invention is limited/defined by the claims)
·        General claim structure: Inverted pyramid
·        Provisional application
·        Does not require a claims, only spec
·        Critical now in “first to file” system
·        Can file, get filing date, and then let sit up to 1yr
·        All later claims limited to SM disclosed in the provisional application
·        Provides time to decide whether to convert into general application
§ Patent term and issue
·        Pre-1995: term is 17yrs from issue
·        Led to patent submarining (push the application process until field develops and then get patent to issue, and demand licensing fees)
·        1995 on: term is 20yrs from date of application
·        Publishing of patents
·        Before 1999, patent applications were not published until issued
·        1999 on: patent applications publish 18mos after filing (unless abandoned pre-18mos)
·        Patent Enforcement
§ Patent infringement action in Dist Crt
§ I
ed it's safe for human use. P proposed treatment for new purpose (ADHD), approved by FDA for investigation in human clinical trials, and patent application filed.
§ Rules:
·        Patent statute requires the patent specification disclose a practical utility for invention
·        Utility: assume specification satisfies 101 utility UNLESS there is a reason for OSA to question truth of utility or scope (cold fusion)
·        Enablement: Spec which contains teaching of the manner/process corresponding to invention assumed to satisfy 112 enablement UNLESS reason to doubt objective truth of statements supporting enablement.
§ Analysis:
·        P didn’t know tomoxetine would be successful for treatment of ADHD when application filed (no known utility). However, PTO policy to give presumptive weight to utility if FDA (especially trained in the arts) gives approval for human clinical trials; drug presumably has predicted utility. (key distinction with Brenner)
·        PTO examiner did not doubt described utility; no challenge by PTO, so no shift of the burden of proof of utility to applicant
·        Patent describes and enables the utility of tomoxetine to treat ADHD, and disclosure is not on its face contrary to generally accepted scientific principles.
·        In re Fisher, CAFC 2005 (specific utility)
§ Facts: Precise structure or function of the genes or proteins encoded by the genes that the claimed ESTs can hybridize/identify are unknown. Application discloses that 5 ESTs can be used in many ways, including 7 examples. PTO concluded that claimed were generally applicable to any EST (not specific)
§ Rule: Brenner test: no quid pro quo benefit to society from substantial utility to justify granting of property right to inventor (no useful product, just idea)
·        Substantial utility: claimed discovery must offer significant and presently available benefit to the public (must be real world use);
·        Court likes PTO: usefulness only in a research setting does not confer real world use. PTO must distinguish between specifically identified substantial utility and inventions whose asserted utility requires further research to identify or reasonably confirm (no utility).
