On October 30, 2008, the Court of Appeals for the Federal Circuit in a nine-to-three decision in a case entitled In Re Bernard L. Bilski and Rand A. Warsaw, affirmed a decision by the U.S. Patent and Trademark Office Board of Appeals and Interferences that a process patent directed to a method of managing risk in the commodities market is not subject matter that patent laws have been designed to protect.

Under § 101 of the Patent Statute:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvements thereof, may obtain a patent therefore, subject to the conditions and requirements of this title.

The Court effectively held that the word “process” used in the statute must involve “a transformation of an article to a different state or thing”, and that purported transformations of business risks in the commodities market does not involve physical objects or substances.  As such, the Court determined that the claims in the Bilski patent application did not define a process that constituted patentable subject matter.

The dissenting opinions were critical of the legal analysis by the majority, but did not differ on the outcome that precludes Bilski from securing a patent on his particular method for hedging risk in commodities trading.

Tom Nikolai                 (612) 392-7307           Tom.Nikolai@nm-iplaw.com

Recently Google^® announced its 10 to the 100^th Power Project calling for “ideas to change the world”.  Google^® will be committing $10 million dollars to implement projects it selects.  The topics for idea suggestions are interesting and include age old questions such as:  how can we help connect people, build communities and protect unique cultures?  How can we help people provide for themselves and their families?  How can we help more people get better access to education?  How can we move the world toward a safe, clean and inexpensive energy?  How can we promote a cleaner environment?  How can we help individuals lead longer, healthier lives? Or, how can we help ensure that everyone has a safe place to stay?  These questions all lend themselves to potentially patentable inventions. 

The website related to the Google’s^® Project 10¹⁰⁰ website makes no reference to patent rights concerning any idea submission, who would own any patentable inventions or if patent protection would be sought either in the United States or abroad.  Further, the website does not advise those invited to submit ideas that the very submission of their ideas and inventions to Google^® could adversely impact available patent rights. 

For example, under Section 102(b) of the U.S. Patent Code, a person is barred from obtaining a patent if the invention was (i) patented or described in a printed publication in this or a foreign country, or (ii) in public use or on sale in this country, more than one year prior to the date the application for patent in the United States is filed.  The patent laws of many foreign countries do not afford this one year grace period.  For these and other reasons we typically advise clients to consult with us before making any public disclosure of an invention.  We can then properly advise the client, based on the nature of the invention and the countries where patent publication may be of interest, how to proceed under United States and foreign statutes and international treaties to preserve the write to patent and timely file the papers necessary to secure the patent.  Such consultation should occur before any submission to Google^® is made to ensure the submitter understands his rights and the impact the submission can have on these rights. 

Google’s^® offer may be enticing but, like a lottery, only a few of the people of the many likely to submit ideas will share in the money.  Anyone submitting an idea should evaluate whether their idea warrants protection and seek legal advice to ensure their right to protection is not lost.

Jim Paige          (612) 392-7310           Jim.Paige@nm-iplaw.com

So you have a great idea, a revolutionary idea, an idea that could be worth a fortune.  What is the best way to protect the idea so that you can profit from it?

That depends.  U.S. law provides several forms of intellectual property protection.  The right form(s) of protection will depend on the nature of the information to be protected and how it will be used.

• Patent rights protect inventions for a limited period of time.
• Trade secret rights protect confidential information from unlawful disclosure for so long as the secret can be kept.
• Copyrights protect original works of authorship fixed in a tangible medium of expression.
• Trademark, service mark and trade name rights protect words, phrases, pictures, symbols, shapes or other means identifying the source of origin of goods or services.
• Semiconductor works protect mask works fixed in a semiconductor chip product. 

It is important to remember that the various forms of intellectual property protection are not mutually exclusive.

In fact, all may apply to a single product launch.  For at least a period of time, information related to the nature of the product, how it will be priced and how it will be sold must be kept secret.  Even after launch, business information surrounding the product and business plans related to the future are to be held in confidence.  Thus, securing and protecting trade secret rights is important.  The product may involve one or more inventions related to how it works and even how it looks.  Thus, utility and design patents may be available to keep others from using such inventions.  If the product includes semiconductor chips, mask work protection may be available.  Every product has a name and many can be readily identified by their ornamental features or the features employed in packaging.  Trademark and trade dress rights therefore come into play.  Various pieces of literature are typically associated with the product launch including advertising pieces, instruction manuals and software code, all of which give rise to copyright protection.

With each new product introduction, two basic questions need to be asked.  Will I be infringing any intellectual property rights of others? And how can I best protect the substantial investment I am making to bring the product to market?  The earlier these questions are asked, the better.  We, of course, would appreciate the opportunity to help you find the right answers.

At Nikolai & Mersereau we can help you sort out these issues and select the most appropriate types of protection for your ideas. 

Jim Nikolai       (612) 392-7302           Jim.Nikolai@nm-iplaw.com

Inventors often ask:  “When do my patent rights take effect?”  Or, “When can I sue a potential infringer?”  Regardless of how the questions are phrased, an inventor’s rights in a U.S. Patent are not enforceable until the patent issues.

However, an inventor can choose to have his application published 18 months after the priority date.  By doing so, the inventor may be able to claim provisional rights under 35 U.S.C. § 154(d).  This statute gives a party applying for a patent the opportunity to obtain a reasonable royalty from any person who, during the period beginning on the date of publication of the application for such patent until the issuance of the patent:  (1) makes, uses, offers for sale or sells in the United States the invention claimed in the published application; (2) imports such an invention into the United States; (3) uses, offers for sale or sells in the United States products made by a process as claimed in the published patent application; or (4) imports into the United States products made by a process as claimed in the published patent application.  Provisional rights may only be asserted after the patent is actually granted and only when the claims of the issued patent are “substantially identical” to the claims of the published patent application. 

In applying the “substantially identical” standard, one must consider whether the scope of the claims is identical and not merely whether the words have been changed.  In a recent case, Pandora Jewelry, LLC v. Chamilia, LLC, 2008 U.S. District LEXIS 61064 (D. Md., August 8, 2008), the Court considered an amendment to the claims to overcome the Patent Office’s rejection based upon prior art.  While the Court stated there was no per se rule an amendment to a claim made to overcome a Patent Office rejection based on prior art precludes a finding of valid provisional rights, the Court did decide the claims were substantively changed from the claims published and thus no valid provisional rights existed. 

This case and other related cases present a quandary to patent applicants and their attorneys.  How does one draft application claims broadly enough to ultimately secure the full scope of patent rights available without running the risk of losing provisional patent rights?  One of my very first mentors used to tell me, “if you get a first action allowance and don’t have to amend the claims then you drafted the claims too narrowly.”  Yet under Pandora, any amendment could potentially destroy the provisional patent rights leaving the applicant with no protection after publication of the application until the patent is granted.

This quandary can best be resolved by striking a genuine balance in drafting the claims.  Some claims in an application can be drafted broadly enough, in the first instance, to capture the full scope of available patent rights even at the risk of amendment.  Other claims in the same application can be drafted more narrowly in the hope they will be allowed without amendment to preserve provisional rights.  The provisional rights can then be enforced against one practicing the invention of those narrower claims during the period between the publication and the patent grant.  Proceeding in this fashion requires either substantial skill or finesse in claim drafting or a significant budget since Patent Office fees are based on the number of claims in an application.  We, of course, try to rely on skill and finesse when possible.

Jim Paige          (612) 392-7310           Jim.Paige@nm-iplaw.com

Our associate in the U.K., Potter Clarkson, prepared the following explanation of why there is an advantage, once a European Patent is granted, to perfecting coverage in most, if not all, of the member countries. We felt that the information should be passed on to our clients as well.

“All of the European Union (EU) countries (plus various others) can be designated on an EPO application, on payment of appropriate fees.  When a patent is granted, the applicant must decide the countries in which to process the patent.  Clients are sometimes concerned about the effect of not having patent protection in all of the EU countries.

The basic position is that a patent in a given EU country, if it is valid and infringed by the product in question, can be used to prevent not only unauthorised manufacture in that country but also unauthorised imports from another country (whether part of the EU or not).  However, products that are put on the market in any EU country by, or with the consent of, the patent proprietor are regarded as being “authorised” and may thereafter move freely within the EU. 

This is illustrated by the following scenario:

The EPO patent is processed into Germany but not Greece.  In Greece, competitors can therefore sell the product.  They may do so at a lower price than the patentee would charge.  In order to compete in that country, the patentee has to lower his prices.  In Germany, however, where the market is protected by the patent, the patentee can charge a higher price.

The EU rules concerning exhaustion of rights mean that the patentee cannot then prevent his own low-priced product being bought in Greece and shipped to Germany and thus effectively competing with his higher-margin product in that country. 

He can, however, as noted above, prevent the competitor’s product being imported into Germany.  In addition, the potential impact on the German profit margins can be avoided if the patentee chooses not to sell his own product in Greece.

In summary, therefore, the disadvantage of not pursuing patent protection in all EU countries (apart from the obvious one of not being able to prevent local competition in the countries without a patent) is that it can hinder one’s ability to charge different prices in different parts of the EU market for the same product.

N.B. This is a simplified review of the situation, applicable to most inventions, and intended specifically to help our clients decide the countries into which to process a granted EPO patent.  It is not intended to be a comprehensive account of the concept and practice of the exhaustion of IP rights and, in particular, it does not address global issues.  In addition, special factors can influence particular products, for example medicines, the price of which may be governed at least in part by national health authorities.

Clients should ask us for specific advice on any particular situation that affects them”.

Tom Nikolai                 (612) 392-7307           Tom.Nikolai@nm-iplaw.com