Patent Law – Eisenberg F11
“Congress shall have Power … To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” – CONSTITUTION, Art.I, Section 8
I. PROTECTION OF IDEAS
a. Principal Question: What’s the best way to protect an invention or innovation?
b. If an innovation isn’t covered by patent law, can it or should it get protection?
i. States have used a common law hybrid of property, torts and contract to extend protection
ii. Does raise preemption issue as overlaps with federal patent system
c. Patents (federal law) are not the only regime, and others include:
i. Unfair Competition
1. Int’l News Service v. AP (2d Cir. 1918): Suit brought by AP against INS to keep them from pirating their news. AP argues that they (1) have a property right in news and (b) INS’s actions constitute unfair competition. INS argues that property right can only be maintained by (1) confidentiality or (2) copyright.
a. RULE: INS should be restrained from appropriating AP news because it is unfair competition to take another’s end product and profit from it (not fair to “reap where you have not sown”)
b. Unfair competition is actionable because it is considered undesirable to gain advantage over your competitor in this way (looking at it from an equitable perspective)
c. Judges take 3 different approaches to this problem (remains the 3 stances frequently found in IP disputes, and foreshadows main themes in IP law!)
i. J. Pitney says there is a “quasi-property” interest (as btwn. the two parties) and there is also a tort (unfair competition).
1. Theme: continual trade-offs between incentivizing innovator and inhibiting dissemination of information into public domain.
ii. J. Holmes rejects quasi-property idea, rejects the idea that its unfair competition – say the problem is principally that they are not crediting AP as the source! (“misappropriation and misrepresentation”)
1. Theme: Have to find a way to reduce free-rider problems.
iii. J. Brandeis says there is no qualified or absolute property right; even if there was a qualified right, courts are ill-equipped to decide what it is; AND even if courts do handle it, injunctions aren’t the way to do it.
1. Theme: Debated about the role of Congress and the courts
2. Sears Roebuck v. Stiffel (U.S. 1964): Stiffel Co. had design and mechanical patents on a “pole lamp.” Sears decided to make an identical lamp which it sold more cheaply. Stiffel contends that Sears infringed its patents and that it engaged in unfair competition under Illinois law. D/C found the patents invalid but found Sears guilty of unfair competition.
a. RULE: A State cannot under some other law, such as forbidding “UNFAIR COMPETITION,” give protection of a kind that clashes with the objectives of the federal patent laws.
b. The Constitution [Art. I, §8, cl.8] empowers Congress “to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
c. The Supremacy Clause [Art. VI, cl.2] makes laws enacted pursuant to constitutional authority the SUPREME law of the land.
d. A State could not extend the life of a patent beyond its expiration date, nor give a patent on an article that lacked the level of invention required for federal patents, and still act consistently with the Supremacy clause.
e. A State MAY require that goods be appropriately labeled to prevent customers from being misled as to the source of the product and to prevent misleading purchasers as to the source of the goods.
3. Compco v. Day-Brite (U.S. 1964): Compco’s predecessor began making and selling light fixtures very similar to Day-Brite’s. Day Brite alleged that Compco had copied its distinctive design so as to deceive purchasers, and had thus unfairly competed with Day Brite.
a. RULE: Affirmation of Sears – State law that provides protection for items not protected by patent law is preempted by federal law
b. If a design is not entitled to a design patent or other federal statutory protection, then it can be copied at will!
c. A State MAY impose liabilities on those who sell copies with the intent to deceive the public and thus “PALM-OFF” the copies as the original, and require precautions in labeling.
4. Reconciling INS with Sears and Compco:
a. Cases all ask how much room do courts have to rule on unfair competition claims that encroach upon federal patent laws?
b. By 1964, the Court was showing a strong IP bias in interpreting the patent laws, in order to advance free competition.
i. Very different from Pitney’s “reaping where they have not sown” protectionist idea.
c. Now we’ve kind of swung the other way – Court is not as hostile to patent rights (although some might argue there are trends back toward Black’s anti-protectionist opinion in Sears)
ii. Trade secret – Usually used for ideas that if exploited can lead to big commercial gains
1. Why might you actually prefer trade secret protection instead of a patent?
a. May provide a longer term of protection against effective competition (e.g. Coca-Cola recipe is protected by trade secret!)
b. Really only viable if your product cannot be discovered through reverse engineering.
c. Otherwise, lasts as long as you are able to maintain secrecy.
d. Protection begins immediately – patent protection may take several years.
2. Why might you NOT want a trade secret?
a. Not a property right against the world (not exclusive)
b. If someone can reverse engineer your product, they are free to use it without liability, because there has been no wrongdoing.
c. May be hard to maintain secrecy if there is a lot of employee turnover in your industry, or if you must market your idea to attract consumers
d. Difficult strategic choice of when you want to use trade secrets and when you want a patent – most people use some combination of the two.
3. It use to be that trade secrets were protected by the common law contained in the Restatement – but now a majority of jxn have implemented statutory provisions based on the Uniform Trade Secrets Act.
a. Restatement of Torts §757, comment b: A trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers.
b. Uniform Trade Secrets Act (USTA): defines trade secret as information, including formula, pattern, compilation, program, device, method, technique, or process that:
i. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
ii. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
iii. ** USTA definition is arguably broader than the Restatement.
4. The garden-variety trade secret case is where an employer is suing an employee that has left to go work for another company and has divulged trade secrets.
5. Trade Secret litigation is VERY AGGRESSIVE in the BEGINNING!
a. Lots of fighting over TROs, preliminary injunctions, motions to dismiss, etc. in order to prevent harm to company.
b. Have to act quickly, otherwise it will be hard to keep it a “trade secret”
c. Information Asymmetry: When enforcing IP suits through the courts, one side generally has much more information than the other – becomes a question of how much is necessary to disclose in order to prevail! (see this in Litton)
i. So it may seem ridiculous when Litton says that they have “thousands” of trade secrets and not specifying, but the issue is that they don’t know WHAT exactly Sundstrand is using and doesn’t want to have to disclose everything in order to litigate!
6. E.I. DuPont DeNemours Co., Inc. v. Christopher (5th Cir. 1970): Defendants were employed by unknown 3rd party to take aerial photographs of the DuPont plant that was in construction. Plaintiffs argue that since the construction exposed the process that would enable a person to deduce their secret process for making methanol.
a. RULE: If one takes reasonable steps to protect the trade secret then another who uncovers the secret through improper means and discloses it without a privilege to do so is liable to the other.
b. Improper means does not need to be the breach of a confidentiality agreement or something illegal.
7. Litton Systems v. Sundstrand (Fed. Cir. 1984): Litton makes and sells ring laser gyroscopes (RLGs) for missile guidance. Former Litton employees went to work for Sundstrand and noticed 6 items in Sundstrand’s RLGs began to bear resemblance to items used by Litton! Litton filed complaint, alleging misappropriation of trade secrets and requesting a preliminary injunction to prevent irreparable harm.
a. RULE: Public knowledge, even if it occurs in a confidential context, can never form the basis for trade secret.
b. The broad areas of knowledge that Litton said was “trade secret” could all be interpreted as public knowledge.
c. POLICY: Employee mobility is common, and courts don’t want to restrict it!
iii. Contractual agreement (Express, Implied, Quasi-K) to keep something secret, etc.
1. Legally enforceable but very high-risk so difficult to get
2. Van Rensselaer v. GM (E.D. Mich. 1962): Ms. V sent suggestions to GM, who said they would consider the ideas but would only be liable to the patent laws. She said ok, then sent along her ideas which GM then rejected ideas as old. Ms. V then filed a claim that GM had used her ideas
a. RULE: If a person shows information not in confidence, then that person is not taking reasonable steps to protect the information, so trade secret is waived.
b. There was no express or implied K here, because there was no manifestation of mutual assent between the parties.
c. No quasi-K here either – Quasi-K is not a real K at all, but is a term used by the court to denote a recovery imposed by law where justice so requires to prevent unjust enrichment, even though
over decorative rather than useful creations
3. Plant Patents – cover living plants
b. Patent Prosecution
i. “Prosecution” is the application process – the average time from filing to patent issuance is typically 2-3 years.
1. Prosecution is best described as a series of negotiations between the examiner and the inventor or the inventor’s attorney (or patent agent).
2. Lengthier prosecutions are common when two or more inventors are seeking to patent the same invention, in which case the PTO must declare an interference.
ii. “Interference” – when the PTO has 2 similar applications, the PTO must determine which inventor has priority to the patent right.
1. Interferences are a result of the U.S. policy of awarding patents to the first to invent instead of to the first to file (as in most other countries).
iii. Two types of applications may be filed:
1. Non-provisional Application: Must include a specification concluding with at least one claim, drawings, and an oath that she believes herself to be the “original and first inventor,” and must be accompanied by the appropriate fees.
2. Provisional Application: Must have a specification (and drawings if necessary) but need NOT include any claims or an oath by an applicant – acts as a placeholder.
a. Quick and inexpensive means of establishing an early domestic priority date.
b. May also be relied on as a priority date for the subsequent filing of foreign patent applications (in accordance with Paris Convention)
c. So long as the invention claimed in the non-provisional patent app is adequately supported by the disclosure of the provisional app. then can get the benefit of the earlier provisional app’s filing date.
d. Patent’s expiration date will be 20 years after the later non-provisional application filing date! So does not reduce the patent term.
iv. Each applicant is entitled to have his or her application considered twice before the examiner imposes a final rejection.
v. Once the claims have been rejected, the applicant has three choices.
1. Abandon the application
2. Appeal the examiner’s second rejection to the Board of Patent Appeals and Interferences (BPI)
a. All decisions are subject to review both administratively and judicially
b. The BPAI provides the main administrative route for appeal.
i. If the BPAI confirms the examiner’s decision, then the applicant may seek judicial review in the Ct. App. for the Federal circuit, or by commencing a civil action in district court.
c. District court route is rarely taken, since all appeals go to the Federal Circuit anyway – typically only used when the applicant needs to present new evidence, which cannot be introduced in a court of appeals.
d. The decisions from the Federal Circuit may be appealed on writ of certiorari to SCOTUS.
e. In any case, the Courts afford some deference to the agency’s decision and only review for “clear and convincing error.”
3. Continue the application through a continuation
a. Historically, if a patentee’s claims were rejected that they were required to file a new application that was treated as a continuation of the original application.
b. If same claims, treated as though it was filed on the date of the prior application.
c. If the applicant changed the disclosure, then the new application was called a continuation-in-part.
d. Purpose of filing a new application was to generate another fee in order to pay the examiner’s salary.
e. In 1999 amendments to the Patent Act, Congress authorized the PTO to allow continued examination of an application for a fee and removed the requirement to re-file.
vi. If the examiner believes the application contains more than one invention, then it invokes a restriction requirement, and the applicant must then elect which of the multiple inventions to pursue in the original application.
1. Non-elected claims must then be filed separately in a divisional application.
vii. If a patentee believes that their patent claims are too broad or too narrow, they may seek a reissue of the patent, so long as the deficiency in the original occurred “without deceptive intent.”
