US Supreme Court Restricts where Patent Suits Can be Filed

The U.S. Supreme Court interpreted the patent venue statute, 28 USC 1400(b), narrowly to restrict the places were patent suits may be filed in the case of TC Heartland LLC v. Kraft Foods Group Brands, LLC, No. 16-341 (May 22, 2017).

Previously, the Federal Circuitdetermined that section 1400(b) incorporated the broader definition of “residence” contained in 28 USC 1391(c). That broader definition provided that a defendant corporation resides in any judicial district in which the defendant is subject to the court’s personal jurisdiction. The Supreme Court determined that the resident definition section does not apply to section 1400(b) and that a defendant resides, for the purposes of section 1400(b), only in the state where it is incorporated.

Since many corporations are incorporated in Delaware, this ruling is expected to increase the number of patent suits filed there and to reduce the number of patent cases filed in the Eastern District of Texas, which has been a popular patent plaintiffs’ venue.

In addition to the place where the defendant resides, Section 1400(b) also provides that venue is proper where the defendant has committed acts of infringement and has a regular and established place of business. Therefore this second clause of section 1400(b) will likely now get more action. And, courts will have occasion to define the boundaries of what is a “regular and established place of business,” which was not a widely relied upon clause previously.

IPWatchdog and IAM have additional coverage on this ruling.

The US Patent Application Process Flow Chart



Seeking a patent is not a file it and forget it endeavor. Instead, it involves a process where work is likely required in multiple phases. The process of obtaining a utility patent in the US generally involves novelty searching, application drafting, waiting for the patent office to review the application, and negotiating with the patent office about the scope of patent protection. Each of those phases is shown in the U.S. Patent Application Process flow chart above, which I will describe in more detail below.

Patent Novelty Search

The first question is whether or not to have a patent novelty search performed. A patent novelty search is designed to tell you the likelihood of obtaining a patent on your invention. You are not required to have a search performed in order to file a patent application, but it is often recommended. Without a search, you my spend a lot of money filing an application only to find out from the patent office that your patent application is refused because your invention has already been disclosed in the prior art (so it is not new). Read more about patent novelty searching here.

If, at step 10, you decide to have a patent search performed, a search is performed by a patent attorney or patent searcher. To get the most benefit out of a patent search, it is best to receive an opinion from a patent attorney about the likelihood of obtaining a patent in view of the patent search results. After reviewing the search report and discussing it with your patent attorney, at step 12, you decide whether it is worth pursuing a patent application in light of the patent search results.

Sometimes the patent search results reveal a prior art reference that is identical to the invention and it is clear that a patent is not likely to be obtained on the invention. If so, the answer at step 12 is relatively easy, because there’s no option to pursue a patent application. In other cases, an identical result is not found in the patent search results, but one or more results are relatively close to the your invention. When one or more results are relatively close to your invention, the scope of a patent you might expect to obtain could be narrow. If the scope of protection you might obtain is narrow, then you must make a business decision whether pursuing such patent protection is likely to be valuable in light of the patent application expense you will occur in doing so.

If you decide not to pursue a patent, then at step 14, you can either (1) go to market without filing a patent application and compete in the marketplace or (2) decide it’s not worth pursuing this invention further in light of the prior art and focus your efforts on other inventions. This is a business decision. If you decide to proceed to market without a patent application, you might like to consider non-patent options for protecting your invention.

In other cases, the search results are favorable with no very close results.

Patent Application Drafting

If at step 12, the patent novelty search results are favorable, or if you otherwise decide proceed with filing an application, then you move to step 16 where the patent application is drafted. The patent attorney will take the information you’ve given him or her and draft the patent application. This drafting includes preparing or having prepared drawings as well as drafting the written description of the invention, among other parts of the application. The attorney may request additional information from you during the process of drafting the application.

When a first draft of the patent application is ready for review, at step 18, the draft application is sent to you for review. You then read the application carefully. If you don’t have any changes and the application is accurate, complete, and ready to file, then at step 22, the patent attorney files the patent application at the United States Patent and Trademark Office (USPTO).

If at step 20, you would like to provide comments, changes, or additions to the draft patent application, you provide those in writing or orally to the patent attorney. Then the patent attorney goes back to step 16 to draft and revise the patent application according to your feedback. Next, the newly revised patent application is sent to you for further review at step 18. Again you review the patent application and either approve it for filing or provide further comments, additions, changes, or other feedback. If the application is approved for filing, then the application is filed at step 23.  Otherwise the feedback is taken by the patent attorney and incorporated into a further revised patent application. The review and revision process continues until you are happy with the patent application and approve it for filing.

First Provisional Patent Application or Non-Provisional Patent Application

If the patent application filed is a provisional patent application at step 21, then within one year a non-provisional patent application claiming the benefit of that provisional must be filed. If any content of the provisional needs be revised or added to, that can be done at step 22. However, any new subject matter added to the application will not get the benefit of the provisional filing date, because it was not in the provisional. Therefore, it is best to include all the subject matter in your earliest filing. However, sometimes new developments and inventions occur between the time the provisional is filed and the time for filing the non-provisional. If subject matter is to be revised or added to the content of the provisional before the non-provisional is filed, then the process goes back to step 16, 18, and 20 until the you are happy with the non-provisional application. Then at step 23 the non-provisional patent application is filed.

If the first application is a non-provisional, then you proceed directly to step 24 and wait for the patent office to review it.

As you can see, the USPTO does not substantively review provisional patent applications. A non-provisional must be filed for substantive review. Read more about choosing between first filing a provisional or a non provisional application here.

Negotiating (a.k.a Patent Prosecution)

Once the non-provisional  patent application is filed (or design patent application), at step 24, you and your patent attorney wait for the USPTO to examine the patent application. Once received the results of USPTO’s examination are received, you enter the negotiation phase with the USPTO. Patent attorneys call this negotiation phase “patent prosecution.”

Restriction Requirement / Election

First an examiner at the USPTO will determine whether you tried to claim too many inventions in one patent application. If the Examiner believes you have, he or she will issue a restriction requirement. The restriction requirement can be issued in writing or by phone to your patent attorney. If USPTO did not issue restriction requirements, patent applicants could put multiple different inventions in one application. The restriction requirement practice is designed to ensures that the USPTO need only consider one invention per application.

If you receive a restriction requirement on your patent application, then at step 27, you’ll need to elect among the various inventions and claims groups designated by the patent examiner. At that time, you (through your patent attorney) can also object to the restriction requirement and argue that it is  not a proper restriction requirement.

If the restriction requirement is not withdrawn or overturned following an objection by the applicant, or if the applicant chooses not to object, the examiner will examine only the elected invention and corresponding claims. In some cases, unelected inventions can be rejoined in the same application later in the negotiations. In other cases, you must file one or more divisional applications to cover those unelected inventions. The divisional application(s) are provided priority back to the filing date of the original application(s). Therefore, electing among the designated inventions does not mean that you will lose the unelected inventions, if those inventions are rejoined or pursued in divisional applications.

Substantive Examination

After the election or if no restriction requirement is made, the examiner will substantively examine the patent application to determine whether the claimed subject matter in the patent application is new in relation to the prior art and whether the other requirements for patenting are met. The USPTO will issue an “Office Action” explaining the results of their substantive examination.


If the patent application is allowed on the first review by the patent office, then at step 26 a patent is very likely to be granted at step 29 if the issue fee is paid at step 28. This is known as first office action allowance. First office action allowance is not very common.

Also, the USPTO can withdraw allowance of application prior to a patent issuing, if they believe the allowance was a mistake. It is not common for an application to be withdrawn from allowance by the USPTO.


A study of 20,000 patent applications in 2010 found that between 73% and 96% of the utility patent applications received a rejection on the first review by the USPTO (the first office action). Therefore, it is common for a patent application to be at least partially rejected upon first review. It is further common for a patent application to be allowed after one or more rounds of negotiation following the first rejection. Therefore, it is very common for patent applicants (through their patent attorney) to negotiate with the USPTO in order to obtain a granted patent. A first rejection is usually not the end of the road, it is the beginning of negotiations with the USPTO.

If the patent application is rejected in whole or in part, then at step 30, your patent attorney will review the content of the office action which explains the rejection(s). The patent attorney will also review the prior art references (e.g. prior public patents and patent applications) cited in the office action. The patent attorney will then assess the office action and provide the you  with the your options at step 32 for responding.

As you can see in the diagram at step 34, there are at least four potential options after an office action rejection: drop the application at step 42, draft and file a written response at step 36, request an interview at step 38, or file an appeal at step 40.

1. Drop and Abandon Patent Application

Sometimes the client will decide to drop the application at step 42 in light of the office action. This may be due to the client’s decision, separate from the patenting process, that the invention no longer warrants pursuing patent protection. This may be due to the lack of commercial success of the invention or other business happenings related to the invention or the applicant.

In other cases, the prior art cited by the examiner may be such that the likelihood of obtaining a valuable patent is not high and the client does not want to spend further resources in an attempt to obtain a patent. This may happen in the case where a patent novelty search was not performed before filing the patent application.

In other cases, the prior art cited by the examiner may narrow the scope of the subject matter that could reasonably be protected by a resulting patent to the extent that such protectable subject matter  is not commercially valuable enough to the client to continue pursue the patent application.

If you decide to drop the patent application, a response will not be filed to the office action. After the time period for response has expired the patent application will be abandoned and no patent will issue from it (unless properly revived based unintentional abandonment by petition).

2. File Written Response

If you decide to have a response drafted and filed, then at step 36 the patent attorney will prepare a written response to the office action. The patent attorney may amend the claims to avoid prior art, provide arguments why the examiner’s interpretation of the prior art or the examiner’s assertions are incorrect, provide a declaration from the inventor regarding aspects of the invention, and/or present other arguments or evidence related to the patentability of the claimed invention. The you may provide feedback regarding the written response to the office action. After the office action is filed, you will wait for a subsequent USPTO office action at step 24.

It is not unusual for the applicant to need to file responses to multiple office actions.  Therefore, the applicant will may through steps 24, 26, 30, 32, 34, 36 and back to step 24 more than once (optionally including one or more rounds of interview at steps 34, 38, 44) .

In some cases, the applicant’s response to the first office action will overcome the prior art references cited by the examiner in the first office action. But the examiner has the option to search for additional prior art references to meet the claim limitations added in the first response. So as long as the applicant is making changes to the claims, the USPTO examiner has the opportunity to search and present new prior art references and arguments addressing those added or changed claim elements.

3. Interview with Patent Examiner

If you decide to proceed with an interview, the patent attorney will contact to the examiner at the USPTO and request an interview on a particular date and time agreeable between the examiner, patent attorney, and sometimes the patent applicant or inventor.

An interview provides the the patent attorney and the applicant/inventor the chance to orally discuss the patent application, the office action, the prior art cited in the office action, possible amendments to the claims to overcome the prior art, and other evidence relevant to the patentability of the invention defined in the claims. Sometimes the patent attorney will send proposed amendments to the patent examiner before the interview occurs. The interview can be held by phone conference or can be held in person at the USPTO’s offices.

At step 44, if the interview is a success, then the examiner will issue a notice of allowance  allowing the patent application to grant into a patent. This process can take a number of forms. In some cases, the examiner will be convinced by the applicant’s argument regarding the allowability of the claims without further amendment. In other cases, the examiner and the applicant may come to an agreement about modifications to the claims  or other actions that would result in an allowance of the application. Sometimes the examiner will put through those amendments directly by way of an examiner’s amendment. Other times the applicant will need to file a written response making the amendments that were agreed to lead to allowance.

In other cases, there is no agreement resulting from the interview, but often the applicant’s attorney learns information from the interview that will help prepare a response or decide whether it is time to appeal. If the interview does not result in an agreement for allowance, then the patent attorney proceeds to step 32 to advise the client about the options in light of the interview. Then at step 34 the client can choose among the options. It is unusual for another interview to immediately follow a prior interview. So after an interview, the options typically are to prepare and file a written response, drop the application, or pursue an appeal.

4. Appeal

Generally, when it appears that no further amendment or argument with the examiner is likely to result in an allowance of claims acceptable to the client, it may be an appropriate time to pursue an appeal. The appeal process is started by filing a notice of appeal at step 40. Then the appeal process proceeds at step 46. A discussion of the appeal process will be provided in a separate post. Obviously, an appeal can result allowance of the patent application, which would then proceed to step 28, although not shown in the flow chart above.

Allowance of Application and Patent Grant

When the USPTO is willing to allow the patent application to issue as a patent, either at step 26 or following a successful interview at step 44, the USPTO will issue a notice of allowance. The notice will indicate the application is allowed and will require the applicant to pay a government issue fee a set time period (usually within three months) of the date of the notice of allowance. At step 28, the issue fee is paid by the applicant (or the applicant’s attorney on behalf of the applicant). Shortly thereafter a patent is granted at step 29. After a utility patent is granted, maintenance fees must be paid at predefined intervals to keep it alive.

While each patent application is different, the flow chart and description above provide a summary of the various steps and decisions that might arise in pursuing a patent application in the US.

Patent Drawings: System Diagrams


When drafting an patent application that has components communicating or connected to each other or to a network, one or more figures showing system level interactions between the components should usually be included. Such figures are common in patents directed to software, methods, computers, or other electronics. As the Manual of Patent Examining Procedure provides, “In a typical computer [patent] application, system components are often represented in a ‘block diagram’ format, i.e., a group of hollow rectangles representing the elements of the system, functionally labeled, and interconnected by lines.” MPEP 2164.06(c).

One requirement in writing a patent application is to enable one skilled in the art area of the particular invention to be able to make and use the invention without undue experimentation from reading the patent application (which later may be come a patent). Drawings are a component of a patent application that convey to the reader, together with the written description, how to make and use the invention.

There are many different ways of representing system information in drawings. Why one patent shows a system drawing in one manner and anther patent shows a system drawing in a different manner is, many times, simply the result of the drafter’s choice. Often there is a choice of whether a particular detail is shown in drawings or is described in the text description only of the patent application. There is no bright line rule for making this determination. It may depend on the invention, the known prior art, the drafter’s preference, and/or other factors. When in doubt as to whether a detail needs to be shown in the drawings, show it in the drawings.

Below are a few examples of system drawings from US patents and published patent applications. After reviewing many different system diagrams you will get a feel for the variety in patent drawings.

Figure 1 of U.S. Patent Application Publication No. 2016/0062845 (the ‘845 publication) provides an example of a system diagram showing a number of different types of client devices 102, 108, 110 that can connect to the network 114.

U.S. Patent Application Publication No. 2016/0062845

Figure 1 of US Patent No. 9,271,260 shows a basic system diagram. User devices 106A, 106B, and 106N are shown in two-way communication with a base station 102. The base station is shown in communication with a network 100. Note that the user devices a represented as as rectangle and not in 3D as is the case in Figure 1 of the ‘845 publication above.

US Patent No. 9,271,260

Figure 1 of U.S. Patent No. 9,277,582 provides another example of a relatively simple system diagram where the user device 106 is within range of each base station 102A and 102B.

U.S. Patent No. 9,277,582

Figure 1 of U.S. Patent Application Publication No. 2016/0066134 provides another example of a system diagram where the venue 110 is shown as a three dimensional representation of a building. Three dimensional representation is usually not required, unless there is something important about the invention that needs to be demonstrated in in 3D.


U.S. Patent Application Publication No. 2016/0066134

Figure 1 of U.S. Patent No. 9,227,535 provides a more detailed system diagram. It is possible that some complexity could have been removed from this figure and put into additional figures. For example, the details within items 30 and 40 could have been omitted from figure 1, but provided in other drawings in the application. Whether detail is provided in one drawing or is conveyed through multiple drawings is often a matter of the drafter’s choice.

U.S. Patent No. 9,227,535

Figure 1 of U.S. Patent No. 9,306,668 discloses a system of networked balloons. But the details of the balloons are not shown in figure 1. Instead they are shown in figure 3.

Figure 1 of U.S. Patent No. 9,306,668


The balloon in figure 3 is labeled 300, which is different from the the labels of 102A, 102B, etc. in Figure 1. But the text description of the application provides that balloon 102A of figure 1 could be the balloon 300 shown and described in figure 3.

U.S. Patent No. 9,306,668

Figure 1 of U.S Patent No. 9,307,269 provides another example where components have shown internal additional details, such as the clients 123 and the Video Hosting Service 100.

U.S Patent No. 9,307,269


Figure 1 of U.S. Patent No. 9,277,363 shows the use of ellipses in drawings. The ellipse between server 120A and server 120N indicates that other servers can connected to network 140A.

U.S. Patent No. 9,277,363

Figure 1 of U.S. Patent No. 9,307,466 discloses another example of a system diagram. Sometimes wireless communication is shown by a lighting bolt like symbol. However, a line with arrowhead could also be used in combination with a written description describing the communication between the two components being conducted wirelessly.

U.S. Patent No. 9,307,466

Figure 1 of US Patent No. 9,307,045 discloses another example of a system diagram. A cloud it often used to indicated a computer network, such as network 125.

US Patent No. 9,307,045

Figure 1 of US Patent No. 9,306,893 discloses a system diagram where the communication channels 111-a, 111-b, 111-c, etc are labeled with text. This is not required. Instead, nature of the communication at 111-a, 111-b, 111-c, etc could have been described in the text description.

US Patent No. 9,306,893

These are just a few examples of system drawings.

The first drawing at the top of the post is from U.S. Patent No. 9,307,033.

Do I Need a Patent to Sell My Product or Service?

No. You are not required to obtain a patent in order to sell a product or service embodying your invention. Many products and services are sold that are not patented.

A U.S. patent provides the right to stop others from making marketing, selling, or importing your invention in the United States. Therefore a patent may provide you a competitive edge against your competitors in the marketplace. But, a patent is not a grant of permission to make your product or provide your service. A patent will not protect you from claims of infringement by others.

For example, assume that your product is A+B and you obtain a patent on A+B. Then John who owned a prior patent on invention “A” sends you a letter alleging that your product A+B infringes his patent for A because your product includes “A.” You cannot use your patent on A+B as a defense. This is true because patents can be used offensively (to stop others from making, selling, etc. your invention) not defensively (to prevent others from claiming your product infringes their prior patent). However there may be other defenses that you could assert, such as that the patent on A is invalid.

In order to be sure that your product or service will not infringe another party’s prior patent, you need a clearance or freedom to operate opinion. In order to prevent others from copying and selling your invention you need a patent or you need to pursue other non-patent options. However, there is no requirement that you obtain a patent in order to sell a product or provide service. You may choose to proceed without a patent and compete in the marketplace.

My Competitor Has a Patent, Will My Product Infringe?

PatentPending“Its patented.” “They have a patent on it.” “It’s patent pending.” “You cannot sell that because I have a patent on it.”

Many statements get thrown around in the marketplace about patent rights.

But what do these statements mean? Are these statements being used correctly? What rights does the competitor actually have?

If you are faced with claims that a competitor has a patent or has patent pending, you want to know the impact to your business and your ability to compete.

Does my competitor have a patent or just a pending application?

Often times you hear “I have a patent” or “It’s patented”, when the competitor merely has a patent application filed. Also, “I have a provisional patent” is often used. But there’s no such thing as a provisional patent. The speaker probably means “I have a provisional patent application.”

So the first step is to determine whether the competitor has a granted patent or only a pending patent application.

Patent law encourages patent owners to mark their products/services with an indication that the product/service is covered by a granted patent. If you have a patent number then it’s obvious that there is a patent. However, you need to make sure the number is a patent number for a granted patent, and not a patent application number or a patent application publication number.

Granted patents look somewhat similar to published patent applications. So, published patent applications are often believed to be issued patents, but the published patent application is merely a pending application that might or might not become a patent.

Not every patent application results in a patent. Even if the competitor has a pending patent application, the competitor might not ultimately obtain a patent.

On the other hand the competitor might indeed obtain a patent. Therefore, it is important to investigate claims that a product is “patented” or that a patent application is filed.

But, don’t give up at the mere mention of a patent. The competitor might not obtain a patent, as I mentioned. Or the competitor might only get a very narrow patent that doesn’t cover your product.

How do I know whether a patent application has been filed?

If the product or product packaging or advertising material related to the product or service provides “patent pending,” that’s a good indication that a patent application has been filed on at least some part of the product or service.

However, sometimes product or service material is not marked with “patent pending.” So the absence of “patent pending” alone is not enough to know you are in the clear.

Another way that you might find out that the competitor has a patent application is if you hear this from others in the industry or marketplace.

Once you have some indication that a patent application is filed, you can do a search of the published patent applications to determine whether the application in question is publicly available.

Patent applications are generally secret (not published) for 18 months after they are filed. So it’s possible that you won’t be able to find the competitors patent application even though it is filed.

My competitor’s patent application is secret: What can I Do?

If you know or suspect that the competitor has a patent application filed, but you can’t find the competitors patent application, then it’s possible that the application is secret.

If the application is secret, you can have a prior art search performed to determine if there are any safe harbors that will give you freedom to operate.

What is a prior art safe harbor?

Safe harbors are often found in descriptions of old expired patents. Safe harbors can also be found in  other publications and other prior art. Since patents are only granted on inventions that are new, expired patents disclose configurations that are not capable of being patented without new additions or features. These areas that are not capable of being patented are the safe harbors.

It is not possible to “re-patent” an invention. But, it is possible that a competitor or third party could come up with a new variation, new feature, or other new attribute of an old invention that could be patented. Even if the competitor gets a patent on the new variation, new feature, or other new attribute, that patent could not cover the old unmodified invention described in the old expired patent.

So you have to look at old patents very carefully to determine what is a safe harbor, i.e. what cannot be  patented because it is old.

The end goal of a prior art safe harbor analysis is to determine whether your product is squarely described in an old expired patent(s) (or other prior art) so that it is unlikely that your competitor’s patent application could cover your product.

My competitor’s patent application is publicly available

If the patent application is publicly available, you can have a patent attorney review the contents of the patent application to determine what the competitor is seeking patent protection on.

It is often difficult to predict exactly what patent coverage the competitor could obtained under a pending patent application. This is because the patent applicant can amend the claims of the patent application during the negotiation stage (prosecution stage) with the Patent Office. Amendments to the claims often change the scope of patent protection claimed. Therefore analyzing a pending patent application is somewhat like hitting a moving target, i.e. it can be difficult to predict the scope of the patent claims.

However, as described above, a prior art search can be conducted to determine the safe harbors that provide you freedom to operate.

My competitor has a patent

If you know the patent number of the competitors patent, a patent attorney can review the patent to determine whether it could potentially cover your product/service and create a risk of patent infringement.

This analysis involves reading the patent and understanding the meaning of the claim terms, as well as studying the file history where the applicant communicated with the patent office about the patent application. Often the analysis also includes reviewing prior art patents to determine what is old (a safe harbor) and cannot be covered by the patent.

If it appears that one or more patent claims covers your product, it is possible to do a prior art search to determine whether or not those claims are valid.

If prior art discloses all the elements of the competitor’s patent claim at issue, then it is possible to obtain an attorney’s opinion that the claim is not valid. This is called an invalidity opinion. If the patent claim is not valid, it should not be able to be enforced against you.

However, there’s always a risk that the patent owner could disagree with your invalidity position and could sue you. Patent claims are presumed to be valid. So, the burden is on you to show that the patent claim is invalid.


Claims that your competitor has patent rights should be investigated. This article covered some of the steps one might take when faced with a competitor’s patent claim.

Photo credit to flickr user zepfanman under this creative commons license. The photo above is cropped from the original photo.

How to Obtain Broad Patent Protection: Describe Alternate Versions of the Invention

US4743262_WrittenDescriptionClients often wonder why a patent application on a relatively simple invention is relatively long. The answer is that even the most simple inventions are not simple to describe properly in a patent application.

To write a strong patent application, the invention needs to be described to a level of detail that many clients would not have thought necessary.

Its not unusual that a client brings a 3 to 5 page provisional patent application that the client wrote themselves, and the non-provisional application I write is at least three to four times as long, or 15 to 20 pages or more.

This is why DIY patent applications are difficult to write well (but there are options and trade-offs when money is tight).

The details and length are necessary because that content lays a foundation for a potentially broad patent. That detail in the patent application should include, were possible, a description of alternative ways of making and/or using your invention.

Patent attorneys call these alternative ways of making and/or using your invention, different or alternate embodiments of the invention.

To illustrate why it is important to describe alternative ways of making and/or using your invention, we can look at the case of Tronzo v. Biomet, Inc., 156 F.3d 1154 (Fed. Cir. 1998).

Describing Only One Way of Making/Using Your Invention is Limiting

In the Trozno case, the patent owner obtained Patent 4,743,262 (the ‘262 patent) on a cup for a hip replacement device. The parent patent application of the resulting the ‘262 patent only described the cup as a “conical cup.” The patent claim did not include the conical limitation for the cup. So the patent claim was to a generic cup, without limitation to the shape of the cup.

The defendant’s device used a hemispherical cup.

So the question was whether the description of “conical cup” adequately supported the claim to a generic cup.  If so, the claim would cover more than just conical cups but would cover cups of other shapes, such as the defendant’s hemispherical shaped cup. If not, the claim was not entitled to the filing date of the parent application for failing to comply with the written description requirement.

The written description requirement in patent law provides that the patent application must “contain a written description of the invention, and of the manner and process of making and using it.” Courts have said to meet the written description requirement that application must reasonably convey to one of skill in the art that the inventor possessed the claimed subject matter at the time the application was filed.

In the Trozno case, the court found that the parent application only described one shape of cup, the conical shaped cup. The patent owner’s attempt to claim the broader generic cup was overreaching beyond was described in the application. The end result was that the claims were invalid and did not cover the hemispherical cup in the product provided by the defendant.

Describe Multiple Variations of Your Invention and Its Components

How could this have been avoided?  In reasoning that the ‘262 patent only covered conically shaped cups, the lower court noted that the patent application did “not attempt to identify other, equally functional shapes or talk in terms of a range of shapes.”

There you have it. The court tells you how to get broader coverage. You get broader coverage by  providing a description of a number of different shaped cups in the application.

The application might have used language such as, “a cup is provided, the cup may comprise a rounded shape, a hemispherical shape, conical shape, a cylinder shape, an elliptical shape” etc. Of course, it is important to list shapes or variations that would actually work in the invention. But the point is that you want to list alternate variations of the components and aspects of the invention.

When listing the generic component “cup” along with various options for the shape of the cup, this enables you to write boarder claims. Boarder claims provide you with a stronger patent because you may be able to use broad language in your patent claims, e.g. the broad generic “cup” vs. the limited “conical cup.”

Product Licensing Performance Guarantee: Make Sure Your License Has One

GuaranteeYou develop a useful product. Let’s say its a needle for performing biopsies. You file a patent application on your invention.

Then you approach a medical device company and enter into a license agreement where the company receives exclusive rights in the invention in exchange for a royalty on each product sold.

Years pass and the company still has not fully developed and marketed the invention. You sue the company for not doing enough to get your product to market. But you lose because the license agreement contained no performance guarantees requiring the company to meet minimum sales or use best efforts to make, market, and sell the product.

This is similar to what happened in the case of Beraha v. Baxter Health Care Corporation, 956 F. 2d 1436 (7th Cir. 1992).

Don’t Rely on Oral Assurance as a Substitute for a Performance Guarantee

The Beraha case demonstrates that one of the most important terms in licensing your invention or product is a performance guarantee. A performance guarantee protects you if the other party (the “licensee”) buries your invention or does not do enough to market or sell it.

In the Beraha case, Beraha originally proposed a license agreement that contained a guaranteed minimum annual royalty of $50,000 per year after the first year. However, Baxter responded with a proposal that eliminated the guaranteed minimum annual royalty and increased the royalty advance to offset the removal of the minimum guarantee.

At first Beraha refused to sign the revised proposal from Baxter because it did not contain a minimum guarantee or a best efforts clause. However, during a phone call with a Baxter Vice President and without committing to any specific level of effort, the VP said he would send Beraha a letter . On the basis of the assurance that a letter would be coming, Beraha signed the exclusive license with Baxter, which contained no performance  guarantees.

The letter Beraha later received said “…Although we work in an environment that is always subject to changing conditions, you can be assured that our present intent is to do our very best to make this project a success…” However, this letter had no effect on the license agreement that was already signed. This is due in part because the license had a merger clause. Most license agreements have a merger clause, which basically says that “no matter what I said before, the only terms that matter are the terms written in this license agreement.”

The court found that Beraha could not inject a best efforts clause into the agreement when it did not provide one and when the minimum sales provision was removed during negotiation.

The court left open a possibility that Beraha could recover if it could show that Baxter breached its obligation to act in good faith and fair dealing. But, there’s no surety that Beraha could recover under that theory because the court said, “the jury could find that Baxter did not breach the contract even if it exerted no efforts at all to develop the Beraha needle if Baxter can show that its decision to exert no effort was reasonable under the circumstances.”

You do not want this to happen to you. Therefore, your license agreements should have a performance guarantee. Performance guarantees come in several forms.

Minimum Sales Requirement

The best approach is to provide a clause that requires the other party (the licensee) to hit minimum sales in a defined period of time. For example, as in the first proposed agreement in the Beraha case, the minimum can be in the form of a guaranteed minimum annual royalty payment. This requires that no matter what the sales are during a given period, the other party must pay at least the minimum during that period. If the guarantee is $50,000 per year, then you are guaranteed at least that amount even if the unit sale royalties do not reach that amount.

Also you can provide the guarantee in units of product. So you can say that the annual minimum unit sales is 50,000 units. If the royalty rate is three percent of the net sale price, and you know the net sale price, then you can calculate the annual minimum in dollars.

Consequences if Minimums are not Met

What happens if the minimums are not met?

If the license provides that you are paid the minimum no matter what the sales are maybe you don’t care if target sales are not met. However, if you want to see your product succeed in the marketplace you might want to provide a provision that cuts off some or all of the licensee’s rights if the minimums are not met.

One example is a license that provides for termination if the minimums are not met for one or more periods. When the license terminates you can approach other companies to make and/or sell your product. Another option, is that an exclusive license can be converted to a non-exclusive license if the minimums are not met. This means that the first licensee can continue to mark and/ sell your product, but that you can go to other companies and have them make or sell your product as well. When the agreement is non-exclusive you can cut deals with multiple companies to sell your product.

Best Efforts

One alternative to defining the minimum dollars or units per period, is a license that provides this: “the licensee agrees to use its best commercial efforts to make, market and sell the product.” Sometimes “reasonable” is substituted for “best”. Regardless, see how wishy-washy that phrase is? What does “best/reasonable commercial efforts” mean? How will it be measured? A best efforts clause is an invitation for a dispute (e.g. a lawsuit) because it is uncertain what best commercial efforts means.

It is better to specify what activities are desired, such as minimum sales, a list of marketing activities, and/or other requirements.

Do not rely on oral assurances that the licensee will use their best efforts to make, market, and sell your invention or product. Put concrete numbers and activity requirements in a product or invention license.

Photo credit to John Walker under this creative commons license. The image above is cropped in from the original photo here.

What is a NDA (NonDisclosure Agreement)?

NondisclosureAgreement2A NonDisclosure Agreement (NDA) or Confidentiality Agreement is a written agreement where one or more parties agree to keep information that is disclosed confidential. Generally a NDA will be used when one party wants to disclose confidential information to a second party. Occasionally, a mutual NDA will be needed if both parties intend to disclose confidential information to each other.

Patent Law and Disclosures
Prior to the enactment of the America Invents Act (AIA), the United States provided a one year grace period which requires that within one year after certain activities, such as a public disclosure of the invention, a patent application must be filed or the inventor is prohibited from filing a patent application. The AIA made changes to the law which raised doubts about how and under what circumstances the one year grace period applies. The new AIA provisions have not yet be interpreted been a court.

Therefore, it is now best to file a patent application in the U.S. before any non-confidential disclosure. Further, most foreign countries do not provide a grace period and require a patent application to be filed before any public disclosure. Therefore, in order to best protect your ability to seek patent protection, it is a best practice to have a NDA signed by any person or party that you intend to disclose your invention to before a patent application is filed. However, if a disclosure has been made without an NDA, check with a patent attorney, as you still may have an option to file a patent application.

Examples Scenarios
While the safest approach is to have a patent application filed at the earliest time before any disclosure, there may be scenarios where you believe it is necessary to disclose an invention or other confidential information to a third party before a patent application is filed. For example, it may be necessary to engage an engineer to assist in creating CAD drawings of your invention. Further, it may be necessary or desirable to work with a manufacturer or designer to develop a prototype of the invention before filing a patent application. The inventor may also need to disclose the information to bankers, venture capitalist, other financial backers, or potential business partners in order to move forward with the inventors business or to otherwise exploit the invention. In these and other scenarios it is important that the inventor or invention owner obtain a signed NDA from the party that is to receive confidential information about the invention so that the disclosure does not negatively impact your ability to seek patent protection.

NDA Provisions
A NDA generally has several components. A NDA will identify the parties to the agreement. It will identify the information that the disclosing party(ies) deem confidential. It will identify information that will not be considered confidential, if any. It will require that the receiving party maintain the information disclosed by the disclosing party in confidence and to take reasonable steps to ensure that the information is not disclosed. Often the NDA provides provisions that the information can used for (1) specific purpose, such as for the purpose of evaluating potential business and/or investment relationships with the Disclosing party or (2) more generally, only for the sole and exclusive benefit of the Disclosing Party.

Some NDAs have a specific time frame where the NDA is effective, such as for 3 years. Other NDAs provide a time frame that extents indefinitely.

Trustworthy Receiving Parties
NDAs are not self-enforcing. Therefore, you should endeavour to disclose confidential information only to those that are trustworthy. If the party that you are disclosing to breaches the NDA, you will be forced to hire a lawyer and take action against that person. This can be disruptive and time consuming. Therefore, it is generally worth investigating the trustworthiness of anyone you will be disclosing confidential information to under an NDA.

Having a written NDA signed is an important first step before disclosing confidential information to others before a patent application is filed.

Photo credit to flickr user DaveBleasdale under this creative commons license.

Licensing an Invention: Lessons from Nikola Tesla

TeslaNikola Tesla was reduced to taking work as a day laborer digging ditches after previously working as an engineer with the Edison Company and then being forced out of a company he started with two other investors. He was down on his luck, unable to find work as an inventor or engineer.  He was broke and despondent describing this time as “a year of terrible heartaches and bitter tears.” He lamented that all of his high education in science and mechanics was “a mockery.”

But in the midst of this hardship he did not give up on inventing. He continued his work and filed a patent on a hydromagnetic motor. Opportunity would come through an unexpected place–through a network connection prompted by the mere discussion of his hydromagnetic motor invention on the ditch digging job. This story shows the need for carrying on in the face of adversity.

Nikola Tesla is an inventor best known for his contribution to the design of alternating current (AC). His work on the AC motor and AC power allowed for transmission of power for longer distances. His AC systems provide a foundation for the AC power systems used today. His work on AC electricity brought him recognition and wealth in his 30’s, but in his forties his stature fell somewhat by his actions and efforts related to the wireless transmission of power. Bernard Carlson’s biography,  Tesla: Inventor of the Electrical Age, provides a detailed look at Tesla’s life and work.

The success in licensing rights in Tesla’s AC motor and AC power system patents to the Westinghouse Electric Company provides potential lessons for licensing an invention and taking it to market.

 1. Use your Network to Find A Partner

While Tesla was working day labor digging ditches, as explained above, Tesla told the foreman about his invention efforts on the hydromagnetic motor. The foreman then introduced Tesla to Alfred Brown, who was the senior Western Union Manager. Brown knew he needed the business help of Charles Peck, who he knew previously. Brown was technically oriented and Charles Peck was business savvy.

Peck and Brown agreed to cover Tesla’s development and patenting costs. They also provided him with a salary of $250 per month. The three agreed to split the profits in thirds with a third to Peck and Brown, a third to Tesla, and a third reinvested in future developments. Before focusing on AC motors, Peck and Brown first encouraged Tesla to work on a pryomagnetic generator.

Not every inventor needs a financial/business partner but sometimes its helpful. You never know who in your extended network can help. Its not clear that Tesla was asking for help from the foreman. It appears that he was merely talking about his invention. Tesla was able to talk freely about his thermomagnetic motor invention because he had already filed a patent application on it. Sometimes you might want to keep your invention confidential even after filing a patent application for business or competitive reasons (not patent reasons). But in other cases, talking about the invention after filing a patent application in conversations with others can produce unexpected positive connections and results.

2. Know When To Pivot

Tesla’s efforts at making a pyromagnetic generator ran into problems. As Carlson recounts, Tesla was “[d]istressed that he was an able to perfect this invention, [and] Tesla feared that Peck and Brown might abandon him….” But they did not. Peck had confidence in Tesla. Peck encouraged Tesla to focus his work on an electric motor.

Peck likely encourage Tesla to work on electric motors, because he was aware of the market at the time. Carlson writes, “Peck and Brown were probably comfortable with Tesla investigating motors because of the growing discussion in electrical circles about using motors in central stations.” It can be difficult to know where to pivot to. But it is important to be aware of the market developments, which can indicate where to turn next.

3. Have Something to Show

Tesla had to convince Peck and Brown that he should work on AC motors rather than DC motors. Nearly all of the central stations in the U.S. in the mid-1880’s were running DC not AC. The DC generators and the copper distribution network required Edison to sell DC systems in densely populated areas. Westinghouse therefore saw an opportunity to design AC systems that could serve dispersed populations profitably.

In order to convince Peck and Brown that AC was the way to go, Tesla devised a demonstration. The demonstration had a similar purpose as Christopher Columbus’s alleged demonstration to Queen Isabella where Columbus allegedly stood an egg on its end in order to convince the Queen to finance Columbus’ ships.

To demonstrate the power of AC rotating magnetic current, Tesla attached a four-coil magnet to the underside of a table. He placed a copper plated egg and several balls on top of the table. Tesla applied two out-of-phase currents to the magnet, which caused the egg to stand on end and caused the egg and the balls to rotate on the table top. Tesla explained that the spinning was caused by the rotating magnetic current. Peck and Brown were then impressed and supported Tesla’s work on AC motors.

Tesla learned from this that to sell others on his invention he had to provide a demonstration or a show. I think this is likely true for many inventions. It harder to sell an invention without a prototype or a demonstration that allows others to see how it will work. Oral and written descriptions often do not have the persuasive power of a prototype or demonstration that others can see and touch. In Tesla’s case the demonstration was not even a motor. Instead the rotating egg showed the power of AC. Since a motor’s function is to rotate an output shaft the rotation of a metal egg was a sufficient proxy to achieve the desired interest from Brown and Peck.

4. Have a Story to Tell

Every successful inventor must tell a story that sells the invention to financial backers, other companies, decision makers, and/or the ultimate consumer. As Carlson stated, “no idea, no invention goes anywhere unless one is willing to tell a story about it, a story that another person finds interesting and persuasive.”

Not only did Tesla have something to show, he had a story that accompanied the demonstration. His story tied his invention to a famous figure, Columbus, who achieved what others thought was not possible–sailing west without falling off the flat earth–and in doing so, made a remarkable discovery, America. The implicit link that Tesla made was that if Peck and Brown got on board with AC, they would be associated with an endeavor that would change the world.

5. File Patent Application(s)

After Tesla developed a prototype model polyphase AC motor in his lab, he proceeded to file a patent application. And instead of filing multiple applications on individual motor designs, he and his patent attorney Parker Page filed one comprehensive patent application that included not only a new AC motor, but also a new system of electrical power transmission. According to Carlson, this was a bold and unusual move at the time. However, now it is quite common to file a patent application covering an overall system.

As Tesla did, the safest position is to file a patent application before going public with the invention. In the U.S. (but not most foreign countries) there is a one year grace period, but its best not to rely on it if you don’t need to.

6. Build Your Reputation, Obtain Social Proof

Brown and Peck decided on a strategy of patent-promote-license regarding Tesla’s inventions. They decided that in order to successfully promote Tesla’s inventions, Tesla needed to gain recognition in the field. Tesla had not previously joined any trade organizations or been involved in the electrical engineering community. First, they obtained the endorsement of a known exper in the field, Professor William Anthony. Tesla demonstrated his AC motor to Anthony and Anthony was impressed. Anthony then spread the news about Tesla’s motors to his fellow engineers and discussed the motors in a lecture he gave at MIT.  Therefore, the endorsement of Anthony provided the initial social proof within the relevant community. Then, Peak and Brown contacted the technical press and Tesla’s inventions received favorable coverage there. Then Tesla was invited to give a lecture on his motor and system of electrical power transmission at a meeting of the American Institute Electrical Engineers. This set the stage for the licensing of the patents to Westinghouse.

Not every invention requires a strong technical reputation in order to gain recognition with the intended audience. However, you need to have an understanding of what your audience expects in order to gain their attention and have them take you seriously. Tesla gained the social proof within the required group in order for his invention to be taken seriously. You need to figure out what social proof and reputation is necessary or helpful in promoting your invention. And as Telsa’s experience shows, you don’t have to have a preexisting strong reputation, you can build one when you need it.

7. Make the Sale

Ultimately Peck worked out a license of the patents to the Westinghouse Company for what amounted to $200,000 over ten years. More work had to be done in the development of Tesla’s AC power systems at Westinghouse, but licensing was a step along the path that ultimately put Telsa’s power systems in commercial use.

Peck died later and Tesla was unable to find someone like Peck who could guide his inventive efforts and help sell his later inventions. Therefore, Tesla is often known for his later inability to successfully commercialize his inventions after the AC motor/power invention. Yet, as shown above, Tesla benefited from the partnership with Peck and Brown. They were able to successfully guide the licensing of this inventions related to AC power. Of course, not all inventors require a business partner. But inventors and entrepreneurs sometimes forge relationships that foster a balance between creativity/imagination and business.

Do I need a utility patent or a design patent?

Design patents protect the visual ornamentation embodied in an article of manufacture (e.g. a product). In other words, a design patent protects the way a product looks. This is in contrast to a utility patent that protects a process or the way a product functions or operates.

The Ordinary Observer
The protection afforded by a design patent is quite narrow as compared to that provided by a utility patent. Design patents are effective at preventing direct knockoffs. Courts have set out an ordinary observer test for determining whether a design patent covered a product, e.g. whether the product infringed the design patent. The court will consider whether the product and the design shown in the drawings of the design patent are substantially the same in the view of the ordinary observer.

What do your customers care about?
If customers would be satisfied with a competitor’s product that has an appearance that is not substantially the same as your product, then a design patent may not provide a large competitive advantage. However, design patents are particularly useful for product the visual appearance of products where the appearance an important factor in the purchasing decision of a customer.

Protecting Unique Portions of Product
Design patents can be drafted to cover not just the entire visual appearance of a product, but also a portion of the visual appearance of a product. In this way, the most unique portion of the product can be protected regardless of the more usual or unimportant portions of the product.

Protecting an Invention with Design and Utility Patent Protection
When concerning whether to seek a design patent or a utility patent, it is important to consider whether you would like to stop competitors from copying the visual appearance of your product (design patent protection) or the functional features of your product (utility patent protection). You might decide that you want to prevent competitors from copying the visual appearance and the functional features of your product, in which case you would file a design patent application and a utility patent application on your product.

A design patent (1) is relatively inexpensive compared to a utility patent, (2) protects the visual appearance of a product or a portion of a product, (3) is effective for preventing or stopping direct copying of the visual appearance of the product, (4) has a 14 year term, and (5) does not require the payment of maintenance fees after the design patent is granted.