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Should I File for a State or Federal Trademark Registration?

FederalTrademark_vs_StateTrademarkNow that you determined that you need to seek a trademark registration. The next question is what type of registration should you seek: a registration from your state or registration from the federal government? The answer is the federal government in most cases and here’s why.

Costs
State trademark registrations cost less. The government fees for state registration depend on the state but tend to be less than a federal registration. For example, an Illinois state trademark application has a $10 registration fee. Whereas a federal trademark application at the United States Patent & Trademark Office has a fee in the range of $275 to $325 per class of goods/services declared in the application.

Geographic scope
The scope of protection provided by state trademark registration depends on the state, but does not extend outside of the boundaries of the state. In contrast, a federal registration provides protection throughout the entire nation. So, while state trademark applications cost less you also get less protection.

Conflict with Federally Registered Marks
One problem with relying on a state trademark registration is that the U.S. Patent and Trademark Office (USPTO) will not check state trademark databases when reviewing applications for a federal trademark registration. Therefore, your state trademark registration will not block a party from obtaining a federal trademark registration on a mark that is the same or similar to yours. If someone has obtained a federal registration before you file and obtain a state registration, their federal registration will trump your state registration. Even if you obtain your state registration before a third party obtains a federal registration, your rights may be limited by the existence of the federal registration. The bottom line is that a state registration will not provide much benefit in the case of a conflict with a federal application or registration.

Problems with State Trademarks: the case of Burger King v. Hoots
The case of Burger King of Florida Inc. v. Hoots, 403 F. 2d 904 (7th Cir. 1968), shows how a state trademark registration will not hold up against a federal trademark registration, even if the state registrant is the first to use the mark within the state. In that case, Burger King (the well-known chain) sued Gene and Betty Hoots for operating a restaurant in Mattoon, IL under the name Burger King.

Hoots started their Burger King restaurant in Mattoon in 1957 and in 1959 they received a state trademark registration from Illinois, without knowledge of plaintiff Burger Kings’ prior use of the same mark. The plaintiff Burger King started in Florida in 1953 and was operating 29 stores in multiple states by 1957. The plaintiff Burger King filed a federal trademark application in September 1958 and received its federal registration over the Burger King mark in 1961. In the same year Burger King opened a restaurant in Skokie Illinois and had knowledge of the Hoots Illinois trademark registration at the time. Burger king continued opening restaurants and had 50 Burger King restaurants in Illinois in 1967.

Basically Hoots was the first to use the Burger King mark in Illinois and was first to register the mark in the State of Illinois.

The court found that the Hoots’ rights to use the Burger King mark were limited to the common law right in the geographic market area about their operation in Mattoon (20 mile radius around the Mattoon location). The court found that federal trademark law trumped state trademark law and the state law could not expand Hoots common law rights. The state registration did not give Hoots the right to operate anywhere in Illinois because that was beyond the area where the Hoots actually used the mark.

Even though Hoots was first to use the mark in Illinois, their state trademark registration was essentially worthless against a federal trademark that was obtained after they started using the Burger King mark in Illinois. This case shows the weakness of state trademark registrations.

Local Businesses and the Internet
If your business is strictly local, you might be considering a state trademark registration. One such example of a strictly local business might be if you have a restaurant and you have no plans to create a chain of restaurants that extended outside of your state. Before the rise of the Internet, the approach of seeking only state trademark protection on strictly local business had more merit (however it still had the risks of conflict with Federal marks listed above).

But now virtually every business has a website that is accessible from anywhere in the world. Therefore if you have a strictly local business and people are searching for your business on the Internet, it’s possible that your business name or trademark will conflict with another business located in a different locale. In other words, the presence and searching on the Internet creates the possibility that strictly local businesses will run into trademark conflicts online that they wouldn’t otherwise encounter. Some search engines attempt to provide search results based on the searcher’s location, however relying on the search engine algorithms to protect your brand is not recommended.

Border issues
Businesses located near the border of their state can also run into problems. State trademark rights do not extend beyond the boundaries of the state. So, if your business is located close to the boundary of your state and another business starts up across the boundary in another state, but close by, your state trademark registration will not be effective to stop them.

Conclusion
State trademark registrations are generally inexpensive but provide few benefits. Therefore if you’re interested in protecting your brand you should consider filing a federal trademark application if your circumstances allow.

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Patent Protecting Your Invention When Launching a Kickstarter Campaign

CF3The problem is that you need to publicize your invention on Kickstarter or Indiegogo or another crowdfunding platform to have money to make and launch your invention, but patent law encourages you to file a patent application before you make your invention public. If you are seeking money to develop and launch your invention, you might not have any money or you might not want to spend any money on a patent attorney before you know whether your product will be commercially successful. On the other hand, a number of Kickstarter campaigns claim the product is patent pending. Here’s how to best protect your ability to obtain a patent on your invention when launching a Kickstarter, or Indiegogo, or other similar crowdfunding campaign.

Crowdfunding Patent Cheat Sheet
For those that don’t want to read this whole article here’s the short answer:

Step 1: Patent Searching. Patents are only granted on new inventions. Just because you don’t see your proposed product on the market, doesn’t mean its new. Many products are described in old patent documents at the patent office, but are not on the market. Hire a patent attorney to do a patent search. If you can’t afford that, do your own patent search to see if your invention is already described in a prior patent or patent application. If doing it yourself, you can word search at the U.S. Patent Office website or you can search by patent class or you can search at Google Patents.

Step 2: Draft and File Provisional Patent Application. If the patent search is clear, hire a patent attorney to draft a patent application on your invention before you launch it on Kickstarter. If you can’t afford a patent attorney, draft and file your own provisional patent application after reading a book or two on patent drafting, like Patent It Yourself.

Step 3: Launch your Campaign. Hopefully it is successful. Carry out the project plan. Begin selling your product and making money.

Step 4: File a Non-Provisional Patent Application. If your product is successful and/or you want to continue seeking a patent, you must file a non-provisional patent application within one year of the filing of the provisional patent application. Use some of the money you made selling the product to hire a patent attorney to do this. DIY on this step is very difficult, harder than any of the of the prior steps. It’s unlikely (not impossible, but unlikely) that you’ll be able to write strong and broad patent claims that will provide you with any value in a resulting patent.

Late to the Party: If you already launched your campaign without filing a patent application, you likely can still file a patent application within one year of your first going public, selling, or offering for sale of the invention. But, you should not rely on the one year grace period if you can avoid it.

Here’s the detailed explanation.

Patent Searching: Is your Invention New?
The first step in the patent process is almost always performing a patent novelty search to see if your invention is new. The patent office only grants patents on inventions that are new.

But you are planning to launch a Kickstater campaign. Kickstarter is for creative projects. So, you don’t have to worry about whether your invention is new or not, right? Not so. You may have done market research that shows there is nothing like your invention on the market. But there are a lot of uncommercialized products described in patent documents that you won’t find on the market.

You can hire a patent attorney to perform a search or you can do it yourself. Patent searching takes time and study to get good at. However, as between doing no search and searching yourself, searching yourself is worth a try.

You can word search at the U.S. Patent Office website. However, presently only patents going back to 1976 are word-searchable at the patent office website. Patents older than 1976 are not word searchable at the patent office website. But all patents are searchable by patent class. You can also search through other search tools, such as Google Patents.

If the search results look good, you can move to the next step: preparing and filing a patent application.

Patent Application Stage
There are two questions at this stage: (1) do I hire a patent attorney or do I do it myself and (2) do I file a provisional or a non-provisional patent application?

Provisional v. Non-Provisional Patent Application
If you must draft and file a patent application yourself, then you should file the application as a provisional patent application (see this article on provisional vs. nonprovisional patent applications). This is true because the USPTO is less likely to object to your submission (because there are lesser requirements for provisional applications) and because you will want to have a patent attorney draft and file a non-provisional patent application on your invention within one year. If you can hire a patent attorney, then the decision whether to go provisional or nonprovisional may depend on some of these factors: (1) whether you anticipate further developing your product, (2) whether your need a patent sooner/faster (non-provisional) or are ok with delaying one year (provisional), and (3) whether you need your upfront cost to be as low as possible (provisional). Here’s how to decide between a provisional and a nonprovisional patent application.

Hire A Patent Attorney v. DIY Patent Drafting
It is recommended to hire a patent attorney. It is hard for someone to write a good patent application on their first try (see the problems that can arise in writing your own patent application).

However, you are seeking funding through Kickstarter, so there’s a chance that you don’t have any money to hire a patent attorney. Or maybe you could afford it, but you take a business risk and allocate such money to other portions of the project. If for whatever reason you decide to skip hiring a patent attorney, you should take a shot at drafting and filing your own provisional patent application, because it has a chance of being better than doing nothing.

There are two approaches to drafting your own patent application. The first is to take whatever technical description you already have written along with any drawings and file them as a provisional patent application along with the provisional application cover sheet. The patent office will not review the content of your provisional patent application and therefore will accept just about anything as a provisional patent application (e.g. scientific papers, marketing sheets, back of the napkin sketches). This first option to just file whatever you have already written is the easiest and fastest option but the worst in terms of your chances of the provisional application “holding up” and being worth anything later.

The better second option is spend some time studying the requirements and form of a proper patent application. You might seek out patent self help books for this purpose, such as Patent It Yourself. These books are not a substitute for hiring a patent attorney, but if you must do it yourself, these resources are a good start so you will have a better chance of writing an application that might be worth something. Again there’s no guarantee that the application you write will hold up, but its possibly better than doing nothing.

Launch Campaign
Now you can launch your campaign. Hopefully it is successful. Carry out the project plan. Begin selling your product and making money.

Non-Provisional Patent Application
After the provisional patent application is filed and your project is launched, if the project is successful and you want to continue to seek patent protection, you will need to have a non-provisional patent application written and filed before the one year anniversary of the filing date of the provisional application. For this you certainly want to hire a patent attorney. Hopefully sales of your product have generated revenue, some of which you can use to hire one.

On the other hand if the project doesn’t take off and you don’t want to continue in the patent process, then you can do nothing and let the provisional patent application expire.

I Launched Without Filing a Patent Application, What can I do?
If you already launched your Kickstarter campaign without first filing a patent application, you may still be able to file. While patent law after the America Invents Act still has a one year grace period for certain circumstances, you should not rely on the grace period if you can avoid it. However, if you’ve already gone public with your invention, you may still file a patent application within one year of first going public, selling, or offering the invention/product for sale.

Conclusion
The above guide provides the you with options, depending on the available resources, to patent protecting your invention when launching a crowdfunding campaign for products (and certain types of services).

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Seventh Circuit Questions Usefulness of Trademark Surveys

CrackerBarrelThe Cracker Barrel Old Country Store (CBOCS) is a well known chain of restaurants. Kraft is a well-known manufacturer of food products sold in grocery stores, including a variety of packaged cheeses. Some of the packaged cheeses are sold under the trademark “Cracker Barrel.” Kraft sued CBOCS when it discovered that CBOCS planned to sell food products, such as packaged hams, in grocery stores under its logo, “Cracker Barrel Old Country Store.” Kraft Foods v. Cracker Barrel Old Country Store, No. 13-2559 (7th Cir. 2013).

Kraft objected only to the sale of products under the mark “Cracker Barrel Old Country Store” in grocery stores. It did not object to the sale of such products in the CBOCS restaurants or online. The district court granted a preliminary injunction prohibiting CBOCS from selling food products under the Cracker Barrel Old Country Store mark in grocery stores. The Seventh Circuit Appeals court agreed and upheld the injunction.

The 7th Circuit strongly questioned the usefulness of surveys in trademark lawsuits. Generally in a trademark dispute the question is whether there is a likelihood that the consumer would be confused to believe that the product/service of the junior user originates from the same source as the senior user’s product/service. One piece of evidence that a party may put forth is a survey of relevant consumers for showing whether confusion is likely.

Expensive Surveys
The problem with survey’s, aside from the issues identified by the Court, is that they can be expensive. An expert must be hired. The expert must plan a survey relevant to the case. The survey must be conducted. Then the expert must prepare a report with conclusions from the survey. Then the other party has the right to depose and otherwise attack the survey and its conclusions. All of the expert cost associated with surveys can total from $20,000 to over six figures depending on the case.

The Opportunity to Forgo Surveying
The court’s negative view of the value of surveys, as explained below, is helpful for litigants with limited budgets. If a litigant can dispense with the need to conduct surveys, the litigant can reduce costs substantially. Yet, forgoing evidence that could be supportive of the party’s position is always a risk. However, a party may decide to forgo a survey, particularly in the 7th Circuit in view of this Kraft Foods case.

General Problems with Surveys
The court started off with an overview of the problems with relying on surveys in trademark cases. The court stated that “Consumer surveys conducted by party-hired expert witness are prone to bias.” Citing several academic articles, the court continued, “There is such a wide choice of survey designs, none foolproof, involving such issues as sample selection and size, presentation of the allegedly confusing products to the consumers involved in the survey, and phrasing of questions in a way that is intended to elicit the surveyor’s desired response– confusion or lack thereof–from the survey respondents.”

Further referring to the academic articles, the court stated, “Among the problems identified by the academic literature are the following: when a consumers is a survey respondent, this changes the normal environment in which he or she encounters, compares, and reacts to trademarks; a survey that produces results contrary to the interest of the party that sponsored the survey may be suppressed and thus never become a part of the trial record; and the expert witnesses who conduct surveys in aid of litigation are likely to be biased in favor of the party that hired and is paying them, usually generously.”

The court concluded that generally, “All too often experts abandon objectivity and become advocates for the side that hired them.” This makes logical sense. A party will not hire an expert to give them a conclusion that damages the party’s position.

Professional Expert Witnesses
Turing the the survey in the Kraft Foods case, the court noted that Kraft’s Expert, Mr. Poret, appeared to be “a professional expert witness.” The court said that it would not hold this against him. However noting that Poret appears to be a professional expert witness implies a negative connotation. This appears especially evident when read in context with the court’s citation to academic literature to support the proposition that too often become advocates for the side that hired them.

Kraft Survey Problems
The Poret survey was conducted online via email. Poret emailed photos of CBOCS sliced spiral hams to 300 american consumer of whole-ham products and then asked in the email whether the company that makes ham also makes other products, and if so what products. About a quarter of the respondents said the company makes cheese. However the court was not convinced by this result noting that consumers could have guessed that the company makes other products because many companies have multiple product lines. Then the consumer could have guessed that the company made cheese.

Next, Poret showed “a control group of 100 respondents essentially the same ham, but made by Smithfield–and none of these respondents said that Smithfield also makes cheese.” The court noted that “Poret inferred that the name ‘Cracker Barrel’ on the ham shown to the 300 respondents had triggered their recollection of Cracker Barrel cheese, rather than the word ‘ham’ being the trigger.” The court found that the relevance of this conclusion was obscure. The court stated, “Kraft’s concern is not that people will think that Cracker Barrel cheeses are made by CBOCS but that they will think that CBOCS ham is made by Kraft, in which event if they have a bad experience with the ham they’ll blame Kraft.”

Validity of Online Surveys Questioned
Also the court question the validity of online surveys when drawing conclusions about products purchased in person in a store. The court said, “it’s very difficult to compare people’s reactions to photographs shown to them online by a survey company to their reactions to products they are looking at in a grocery store and trying to decide whether to buy.” The court continued, “The contexts are radically different, and the stakes much higher when actual shopping decisions have to be made (because that means parting with money), which may influence responses.” Online surveys are less expensive than in-person in-store surveys. However, this opinion counsels away from using online surveys when the products at issue are purchased in-person in a retail location.

Side-by-Side Statististical Sales Data Also Questioned
The court proposed using statistical sales data as an alternative to a survey. But then concluded that such statistical sales data would likely lack reliability necessary to support a basis to refuse “granting preliminary injunctions in trademark cases.” The proposed statistical data process would involve analyzing the actual sales of the two products at issue in the real world. “…in some of [the stores] Kraft Cracker Barrel cheese would have been displayed side by side with CBOCS hams plus similar meat products sold at comparable prices, while in other stores the cheese and hams would have been displayed in different areas of the store, and still other grocery stores would have carried CBOCS hams but not Kraft Cracker Barrel cheese.” The court stated that by examining the greater sales, if any, that “CBOCS hams obtained by proximity to the Kraft Cracker Barrel label, an expert witness might be able to estimate the extent of consumer confusion.” The greater boost in sales in those CBOCS hams in proximity to the Kraft Cracker Barrel cheese, the greater likely association of the CBOCS hams with the marker of the Cracker Barrel cheese. Still the court discounted this method in this scenario, stating, “nor have we such confidence in the reliability of such a study that we would think it an adequate basis for refusing to grant preliminary injunctions in trademark cases.”

Expert Testimony on Buying Habits And Consumer Psychology Suggested
There was one type of evidence that court would consider. The court noted that testimony of “experts on retail food products about the buying habits and psychology of consumers of inexpensive food products” would be illuminating in trademark cases. The court cited an academic article providing that “neither courts nor commentators have made any serious attempt to develop a framework for understanding the conditions that may affect the attention that can be expected to be given to a particular purchase.”

Conclusion
The courts criticism of trademark surveys is a benefit to litigants on a limited budget. While forgoing potentially favorable survey evidence is a risk, the opinion in this case provides authority for calling into question the other party’s survey conclusions.

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Mercedes Successful Invalidating Driver Sleepiness Detection Patent

USPat6313749_Fig1The case of Ibormeith IP LLC v. Mercedes-Benz USA, LLC, Dkt. No. 2013-1007 (Fed. Cir. Oct. 22, 2013) is another case where means-plus-function claims were found invalid for lack of an adequate algorithm/structure disclosed in the description of the patent.

Ibormeith sued Mercedes alleging that Mercedes vehicles having an Attention Assist feature infringed U.S. Patent No. 6,313,749. The ‘749 patent is titled, “Sleepiness Detection for Vehicle Driver or Machine Operator.” The ‘749 patent is directed to monitoring conditions affecting or behavior reflecting a vehicle driver’s sleepiness. Then issuing a warning to the driver before driving is unduly impaired.

Sleepiness Warning
The patent discloses monitoring that takes into account sleepiness factors including, as summarized by the court, “natural body-clock (circadian rhythm), the magnitude and number of corrective steering action the driver is taking, the cabin temperature, the monotony of the road, and how long the driver has been driving.” The factors are “individually weighed, according to contributory importance, and combined in a computational decision algorithm or model, to provide a warning indication of sleepiness.”

Means Claims Language
Claim 1 provided this means clause: “…computational means for weighting the operational model according to time of day in relation to the driver or operator circadian rhythm pattern(s) and for deriving, from the weighted model, driver or operator sleepiness condition and producing an output determined thereby…” Claim 9 provided this means clause: “…computational means for computing steering transitions and weighing that computation according to time of day, to provide a warning indication of driver sleepiness…”

Lack of Structure In Specification
The court recited the rule for means-plus-function clauses: “For a claim to be definite, a recited algorithm, or other type of structure for a section 112(f) claim limitation, need not be so particularized as to eliminate the need for any implementation choices by a skilled artisan; but it must be sufficiently defined to render the bounds of the claim–declared by section 112(f) to cover the particular structure and its equivalents–understandable by the implementer.”

However the Federal Circuit found that these means clauses if the ‘749 were not tied to a structure or defined with sufficient particularity in the specification. As a result the requirements of 35 USC 112, sixth paragraph were not complied with and the claims were held invalid.

The specification provided a formula in table 10 that provided “sleep propensity algorithm – definition “S mod = S circ + S zerox + S rms + S light + S temp + S sleep + S road + Strip.” However, Ibormeith’s expert provided that the algorithm was not based on a simple adding of already weighted inputs. This approach was likely taken to insure that the claims were interpreted broadly enough to cover Mercedes vehicles.

The court recognized that under Ibormeith’s interpretation a person of ordinary skill in the art would need to devise his or her own method for determining driver drowsiness based on the factors. The court concluded that “[a] description of an algorithm that places no limitations on how values are calculated, combined, or weighted is insufficient to make the bounds of the claim understandable.”

Drafting Tips: Provide at Least one Non-Means-Plus-Function Claim Set
This is another in a string of cases where the court has found that means-plus-function claims are invalid in technology related patents where the description fails to provide a sufficiently detailed explanation of the algorithm/structure corresponding to the means clause in the patent. It is better to avoid means-plus-function based claim limitations in at least one claim set, if any. Drafting at least one claim or claim set not including a 112(f) or 112, sixth paragraph claim avoids indefiniteness problems associated with means-plus-function claiming.

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Trademark Application Problems: Wrong Owner Named

While the United States Patent and Trademark Office (USPTO) provides online forms that appear to make it easy to file a trademark application, there are several portions of the application that can trip up an inexperienced applicant. One of those areas is the owner portion. The USPTO requires that the correct owner of the trademark be specified in the application to register the trademark. This sounds easy but in many cases it is not, as will be shown below.

Individual and Partnership Owner Problems
Take the case of American Forests v. Barbara Sanders, 1999 TTAB LEXIS 529 (TTAB 1999). In this case, Barbara Sanders filed a trademark application to register LEAF RELEAF to be used with the goods of leaf bag equipment. The application named herself individually as the owner/applicant.

Later another company, American Forests, filed an opposition seeking to prevent Barbara Sanders from receiving a registration over LEAF RELEAF. American Forest alleged (1) that LEAF RELEAF was confusingly similar to its trademarks GLOBAL RELEAF and RELEAF and (2) that the application named Barbara Sanders as the applicant/owner but that Sanders did not have a bona fide intent to use the mark. The second issue is the focus of this article. During a deposition Barbara Sanders admitted that she intended to use the LEAF RELEAF, not by herself individually, but together with her husband. In other words she intended to sell products under the LEAF RELEAF together with her husband in a partnership and not on her own.

It is a general principle of law that when two or more people join together for the purpose of making a profit, they have formed a partnership. This can be true even if there is no written agreement between the two or more people. Further, Barbara Sanders used the word partnership to describe her and her husband’s affiliation regarding the products to be sold. Therefore, the proper applicant for the trademark application was the partnership comprised of Barbara Sanders and her husband.

Section 1 of the Trademark act requires that the application be filed in the name of the trademark owner. When the owner named on the application is not the person or entity that intends to use the mark or actually is using the mark, then the application is void and the registration will be refused. See also Trademark Manual of Examining Procedure § 803.06.

In the American Forests case, Barbara Sanders’ application was found to be void and Sanders lost the opposition and her application. The rule is rather strict. You see here even though Barbara Sanders was going to be using the mark (together with her husband), she was not the proper owner because it was actually a partnership between her and her husband that was legally recognized as intending to use the mark.

Start-up Owner Problems
Another situation where this issue arises is in start-ups. Often an entrepreneur will come up with a name for their company or product before the company (LLC or Corporation) is legally formed. Once a name is chosen early filing of an intent-to-use trademark application is encouraged so that someone else doesn’t file an application on the same or similar name and block you from using your name. However, if an entity is not yet formed, filing an application in the name of a non-existent entity is not a good idea. And, if the individual does not intend to sell products/services himself or herself before the legal entity is formed then, like in the American Forests case, the individual or individuals would not be proper applicants.

Who is the Owner?
A good question to ask to determine the owner is: who will receive revenue from the first sales? If it is a company, then the company should be the applicant. If the company is not formed, then it may be necessary to first have the company legally formed. Then a trademark application can be filed in the name of the company that will own, control, and realize revenue from the sale of products/services under the mark.

Exceptions for Minor Errors
Some exceptions exist that allow minor errors in the owner’s name to be corrected. However it is best to ensure the owner is properly named. You should contact a trademark attorney to determine whether errors in your case are correctable.

Conclusion
Circumstances of your company or start-up enterprise need to be considered in order to determine who should be named as the owner on a trademark application and whether other steps (e.g. forming the legal entity) are needed before a trademark application is filed.

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Protecting Unpatentable Inventions

Not every invention is patentable. Yet, inventors and companies may decide to proceed to market with an unpatentable products or services. This article will explore other intellectual property protection options that exist beyond patents.

Build a Brand
In many cases customers purchase a product or service because it is provided under a recognized brand name. This may be true regardless of whether the product or services is patented. Therefore you may decide to choose a strong trademark for the product or service. Then you can market that trademark so that customers associate that trademark with the type of product or service you are selling. The goal is to build a brand so that consumers will seek out that brand when purchasing your goods or services. In this way customers will choose your brand of product, even if there are competitors selling the same or similar products/services.

The brand can be built around a product/service name or around a company name or both. If the names used in your branding are unique (they should be), then you can seek to obtain a federal trademark registration which will provide additional benefits. The trademark rights built around your product or service will not prevent competitors from copying the product or service. Yet it will prevent them from using your trademark or a similar mark. The strategy of building a brand is designed to draw customers to your brand regardless of the competition.

Copyright
It may be possible to protect your invention under copyright law. However, copyright protects the expression of an idea but not the idea itself. Therefore if you write software creating a new type of application, copyright protection will protect you from direct copying of the software. But it cannot prevent others from copying the idea and writing their own implementation of that idea. The copyright protection extends somewhat beyond identical copying, but the point is that copyright provides narrow protection of the expression of an idea as compared to patents.

Trade Secret
When an invention cannot be patented, it might be protectable as a trade secret. Not all inventions are capable of being protected as a trade secret. A trade secret may generally be understood as something that has economic value, is not generally known, and is subject to efforts to maintain it as a secret. Therefore, if the invention is embodied in a product that is distributed to the purchasing public and whom can reverse engineer or discover the invention by inspecting the product, then it is unlikely that the invention can be protected by a trade secret. However, if the invention is capable of being maintained in secrecy, then trade secret protection might be relied on.

Contract
It is possible to draft a contract that requires the party receiving the invention to keep it confidential and not disclose it to others (similar to an NDA). This is more likely to occur with business to business transactions where the sale involves significant money or resources to execute or implement. The other party would need to agree to such a confidentiality term.

This does not work with consumer goods because the product often needs to be marketed broadly and publicly where the invention details may be disclosed.

Conclusion
There are a number of alternative approaches to protection when your invention is not patentable. While each alternative is not a complete substitute, the options above may provide some protection when proceeding with a product or service in the absence of a patent, depending on the circumstance.

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Problems with Requiring an NDA Before Pitching Your Invention

At the outset of product / service development there is often a tension between the desire to keep the invention confidential and the desire to know whether there will be sufficient interest in the invention from customers or those who might make and sell it to customers. Therefore the issue arises as to how to protect an invention early in the product development, partnering, or sale process.

There are three ways of proceeding: (1) first file a patent application before any disclosures to third parties, (2) disclose to a third party only after obtaining a signed nondisclosure agreement (NDA), (3) disclose without an NDA or application filed and hope for the best. The first is the most preferred and the last approach is not recommended.

Difficulties with NDAs Before Sales Pitch
Disclosure of an idea to another party that is under a written obligation (e.g. NDA) to maintain that idea in secret, generally will not be considered a public disclosure that would negatively impact your patent rights. However, if you are attempting to approach a company to (1) convince them to make and sell your product and give you a royalty or (2) to sell a product you will make, it may be very difficult to get them to sign an NDA or other legal agreement before you tell them anything about your invention.

This is true because, unlike when you are approaching an engineering firm, here you are not offering to pay the other party any money. You are essentially saying, “I have a great product or service that will make you money, but before I tell you anything about it, I need you to sign this legal agreement.” This is a difficult selling approach.

If they sign that agreement and then find out that your product is very similar to something they are already working on this creates a problem because you may assert that when they come out with that product that they copied your invention. Or if they just don’t like the idea, they are still encumbered by the NDA for any further developments. It would seem that there’s little incentive for them to sign an NDA with you, especially if they receive many similar solicitations from other inventors or companies. Therefore, if your sales pitch starts by requiring the recipient to sign a legal agreement before further discussions, you may not have very many takers.

If you do get the other party to sign an NDA, you should know that NDA’s are not self enforcing. Therefore, if the other party breaches the NDA it will be necessary for you to spend money in the form of legal fees to enforce the agreement or to recover damages. As such, you should investigate the trustworthiness of the other party.

Patent Application Filed First
The first option, having a patent application filed first, is the safest approach. Patent law encourages early filing of patent applications. This assumes that the invention is develop sufficiently to support a patent application filing. See this article on whether your product needs further development before filing a patent application.

If your product needs further development and such development requires the assistance of outside engineers or product developers, then you should use a written nondisclosure agreement when engaging such outsiders to help develop the invention. Also, you should ensure that the terms of any engagement with such providers specifies that you will own any developments and inventions that they might create under the engagement. Outside engineers and product developers are generally more willing to sign an NDA, because you are usually paying them money in return for their services. Further, their business revolves around developing products and they should be used to signing such agreements.

Regarding marketing, if a patent application, preferably one drafted by a patent attorney, is filed that adequately covers your invention then from a patent perspective, you are no longer required to keep your idea secret. You may instead may go exploit your idea publicly. In fact, as it can take years to obtain a patent, inventions are usually commercialized and marketed after a patent application is filed but before a patent is granted.

Conclusion
It can be difficult to engage in a sales approach with another when your first request is to sign a legal agreement before providing information. Having a patent application filed before making a sales pitch is generally the best approach. Service providers, such as engineers and developers, are generally more likely to sign an NDA as they are being paid for their work and they may regularly assist in invention development.

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Can I Add New Invention Developments to My Previously Filed Patent Application?

Many times a company or individual will further develop a product / service / invention after a patent application is filed on the original invention. In that scenario the question arises whether the further development (new developments) can be added to the original patent application or otherwise be protected by the original patent application. Generally, new matter, not supported by the original application, cannot be added to a patent application after the application is filed. However, there are a number of ways to protect new developments after a patent applications filed on the original invention.

Covered by the Original Patent Application
The first step is to determine whether the new developments are covered by language in the originally filed patent application. Your patent attorney will generally attempt to draft a patent application that covers your idea and provides reasonably broad protection at the outset within the bounds of known prior art. Therefore your first application might be written in such a way as to cover the new development. If the original application was written broadly enough to cover the new developments a decision might be made that an additional patent application filing to cover the new development is not necessary.

It is sometimes a difficult decision whether to file a new application with the new development. It’s possible that the original patent application includes broad language that would cover the new development but the original application does not include specific details describing all the various components of the new development. In this scenario where the new developments are broadly covered but not specifically described, there is a risk that the broad language can not be used in a claim because of limiting prior art that requires more specific language not coving the new development.

If they novelty search was performed, the patent attorney may know well the boundaries of the prior art in order to assess whether or not the specific details of the new development are necessary in a patent application. However if a search was not performed it is oftentimes not known the prior art that the examiner will use, and therefore not known whether more narrow specific language would be necessary. In many cases, a new application can be pursued out of caution if the inventor/company determines there is a business case justifying the costs of a new application.

New Application
If it is determined that the original patent application does not cover the new development or that the new development has an importance such that additional details regarding the new development should be included in a patent application, then filing a new patent application should be considered. Often times such a new patent application will include much of the subject matter of the original application in addition to the new developments.

Subsequent Provisional Application
If the original patent application was a provisional patent application and the new development has come to light within one year of the filing date of the original patent application then there is an option to file the new development as a provisional patent application. It is possible that many provisional applications can be filed on new developments during one year beginning from the date of the first application filed.

On or before the one year anniversary of the filing date of the first provisional application, a non-provisional application can be filed with the subject matter of the first and one or more intervening provisional applications. In other words, all of the provisional application subject matter can be rolled into one non-provisional application as long as that one non-provisional application is filed within one year of the earliest filed provisional application. Alternatively, multiple non-provisional applications can be filed containing the subject matter of corresponding provisional applications.

Continuation-In-Part Application
Often times it is suggested to file a continuation-in-part (CIP) patent application so that the new subject matter can be included with the subject matter of the originally filed patent application while claiming priority to the original application. This can be done in the case that the originally filed patent application was a non-provisional application.

However many times filing a CIP application provides the inventor or owner with no additional benefits and shortens the patent term of the resulting patent, when compared to filing a new application that does not claim any priority to the original patent application.

CIP applications may be advisable when the application will include claims directed to both the original subject matter and separate claims directed to the original subject matter plus the new developments. Determining whether a CIP is appropriate is a complex issue that involves the determination of claim strategy and filing dates. Therefore you should work with your patent attorney to determine whether a CIP is the right strategy for you.

Non-Provisional Application
If the new development is new and patentable over the disclosure in the original patent application, then a new non-provisional application could be filed containing the new developments without claiming priority to the original application.

Conclusion
New matter not supported by the original disclosure in the original patent application generally cannot be added to that original patent application after the patent application is filed. However, as explained above there are numerous options for covering new developments that arise after a first patent application is filed on the original invention. You should consult with a patent attorney on whether the subject matter of your new development is covered by the original patent application filed, or whether filing a subsequent provisional, filing a continuation in part application, or filing a new non-provisional application is the appropriate path for your circumstance.

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Do I Qualify for Small Entity Fees at the USPTO?

The USPTO has three fee categories: large entity, small entity, and micro entity. Previously I wrote about micro entities that usually get a 75 percent reduction from the large entity fees. If you don’t qualify as a micro entity, you might qualify as an entity, which usually gets you a 50 percent fee reduction.

USPTO rule 37 C.F.R. 1.27 defines which persons, small businesses, and nonprofit organizations qualify as a small entity. An owner of a patent application or a patent is entitled to small entity status only if, the owner is:

  • A person … meaning any inventor or other individual ( e.g., an individual to whom an inventor has transferred some rights in the invention) who has not assigned, granted, conveyed, or licensed, and is under no obligation under contract or law to assign, grant, convey, or license, any rights in the invention. An inventor or other individual who has transferred some rights in the invention to one or more parties, or is under an obligation to transfer some rights in the invention to one or more parties, can also qualify for small entity status if all the parties who have had rights in the invention transferred to them also qualify for small entity status either as a person, small business concern, or nonprofit organization under this section.
  • A small business concern . . . meaning any business concern that:
    • (i) Has not assigned, granted, conveyed, or licensed, and is under no obligation under contract or law to assign, grant, convey, or license, any rights in the invention to any person, concern, or organization which would not qualify for small entity status as a person, small business concern, or nonprofit organization; and
    • (ii) Meets the size standards set forth in 13 CFR 121.801 through 121.805 to be eligible for reduced patent fees.
      • Section 13 CFR 121.802 provides that a small entity small business concern is an entity that has 500 or less employees, including affiliates and,
      • has not assigned, granted, conveyed, or licensed (and is under no obligation to do so) any rights in the invention to any person who made it and could not be classified as an independent inventor, or to any concern which would not qualify as a non-profit organization or a small business concern under this section.
      • The definition of who counts as an employee and an affiliate for the purpose of determining the 500 employee limit is defined by several Small Business Association regulations. See, e.g. 13 C.F.R. 121.103, 121.106. If your business, including employees of any affiliate, subsidiary, or parent company, has near 500 employees, it is best to pay the large entity fee.
  • A nonprofit organization … meaning any nonprofit organization that:
    • (i) Has not assigned, granted, conveyed, or licensed, and is under no obligation under contract or law to assign, grant, convey, or license, any rights in the invention to any person, concern, or organization which would not qualify as a person, small business concern, or a nonprofit organization; and
    • (ii) Is either:
      • (A) A university or other institution of higher education located in any country;
      • (B) An organization of the type described in section 501(c)(3) of the Internal Revenue Code of 19 86 (26 U.S.C. 501(c)(3)) and exempt from taxation under section 501(a) of the Internal Revenue Code (26 U.S.C. 501(a));
      • (C) Any nonprofit scientific or educational organization qualified under a nonprofit organization statute of a state of this country ( 35 U.S.C. 201(i)); or
      • (D) Any nonprofit organization located in a foreign country which would qualify as a nonprofit organization under paragraphs (a)(3)(ii)(B) of this section or (a)(3)(ii)(C) of this section if it were located in this country.

Federal Government
If a person or small business concern licenses rights in an invention to the federal government/agency, then depending on the circumstances that person or small business concern may or may not qualify as a small entity. Generally the federal government or agencies of the federal government are not considered small entities. MPEP 509.02. Therefore, licensing to the federal government might prohibit you from claiming small entity status.

However, there are some exceptions for certain licenses. For example, a “person” under the above definition that licenses rights to a federal agency under Executive Order 10096 may still qualify as a small entity. Further a small business concern or non-profit may still qualify as a small entity if they license to a Federal agency resulting from a funding agreement with that agency pursuant to 35 U.S.C. 202 (c)(4).

Loss of status
Once small entity status is claimed it will continue in an application until an issue fee is due or maintenance fee is due. 37 C.F.R. 1.27(g)(1). Therefore, a new determination of small entity status needs to be made at the time issue fee is due or maintenance fee is due. A notice of loss of small entity status must be filed, if such status is lost, when paying an issue fee or maintenance fee. The paying of the large entity fee alone is not sufficient. Id. at 1.27(g)(2). A new assertion of small entity status is required in any continuation or divisional application. MPEP 201.06(c)(VIII).

Erroneous Claims
Claiming small entity status when an applicant or patent owner is not entitled to it could be considered fraud on the patent office and could negatively impact the owner’s patent rights. 37 C.F.R. 1.27(h). Therefore it is important to ensure that a claim for small entity status is made only when the owner qualifies.

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File Patent Applications Early and Do Not Rely On AIA Grace Period

Before the America Invents Act (AIA), an inventor had a one year grace period between the time of first public disclosure by the inventor of the invention and the time a patent application was required to be filed.  A grace period is provided under the AIA, but for the reasons explained above, the best practice is to avoid relying on the grace period and to file an application early before public disclosures or uses.

Explaining The Grace Period
The grace period provided in 35 USC 102(b)(1)(A) provides that the inventors own disclosure made less than one year before the filing of a patent application will not be prior art against the inventors patent application. Sections (b)(1)(B) and (b)(2)(B) provide that if the inventor (or a third party who obtained the subject matter from the inventor) first discloses the subject matter, then later disclosures (or later filed third party application) of the same subject matter within a year will not be prior art against an inventor’s later filed application on that subject matter. Section (b)(1)(B) and (b)(2)(B) therefore purportedly provides a later filing inventor the ability to overcome a prior disclosure (or patent application) by a third party.

For example, if an inventor Joe publicly disclosed an invention having A, B, and C. Then a subsequently filed US patent or published application by another inventor Bob discloses A, B, C, and D. Under the 102(b) grace period exception, only element D of Bob’s intervening application would be prior art against Joe’s later filed patent application. Bob’s application could not be relied to reject A, B, and C of Joe’s patent application.

But there’s a catch.

Narrow Grace: Only Identical Subject Matter According to USPTO
The USPTO interpreted the law to require the third party’s disclosure be the “identical subject matter” of the inventor’s invention. 78 CFR 11061. This is a narrow view of what prior disclosures can be overcome. Under the prior law, any disclosure including both identical disclosures and disclosures that were not identical, but were an obvious variant, could be excluded as prior art by proving an invention date (with diligence) before the date of the third party disclosure.

Now, under the AIA, the USPTO concluded that the grace period does not cover obvious variants only identical subject matter disclosure. There is debate whether the USPTO is correct. However, it will likely take years before a court rules on whether the grace period should cover obvious variants.

In response to comments made during rule making, the USPTO clarified that there is “no requirement that the mode of disclosure by an inventor or joint inventor be the same as the mode of disclosure of an intervening disclosure (e.g., inventor discloses his invention at a trade show and the intervening disclosure is in a peer-reviewed journal).” 78 FR 11035, 11079. The USPTO further stated that there is no requirement that the disclosure by the inventor or a joint inventor be a verbatim or ipsissimis verbis disclosure of an intervening disclosure in order for the exception based on a previous public disclosure of subject matter by the inventor or a joint inventor to apply. id. The USPTO further stated, “the exception [grace period] applies to subject matter of the intervening disclosure that is simply a more general description of the subject matter previously publicly disclosed by the inventor or a joint inventor.” 78 FR 11035.

So the disclosure does not have to be verbatim, but how far from verbatim can we go? In other words, how “close” does the disclosure need to be to the inventor’s invention for the grace period exceptions to apply? No one knows at this point.

The Problem Illustrated
How would a problem arise? Consider this example. Matt publishes the details of his invention on the Internet. Jake reads Matt’s disclosure and thinks of a way to improve Matt’s invention in an obvious way. Jake publishes the obvious improvement to Matt’s invention within one year of Matt’s first publication. Matt then files a patent application on his invention within one year of his first publication of his invention on the Internet.

The USPTO might reject Matt’s patent based on Jake’s publication, given that Jake’s publication (of the obvious improvement) was not identical to Matt’s invention. This is true even though Jake’s improvement is based on Matt’s first publication of his invention on the Internet.

Conclusion: File Early
Given the USPTO’s interpretation of the grace period exception, it is important to file a patent application early. Further, if there is ongoing development for an invention, the ongoing developments should be covered by subsequent patent filings as they are invented or refined so that the new subject matter will have the benefit of an early filing date. The problems is that you don’t know what others might independently be doing independently or after seeing your disclosures.

If you have disclosed your invention, you’re not necessarily out of luck given the grace period. But you are in a riskier position. The safest approach is to file early and do not rely on the grace period.