Many patent applicants enjoy the fact that the USPTO lists all cited and considered references on the face of each patent. That listing provides an apparent presumption that the newly patented invention is a step beyond anything found in those references. Economists have even shown that patents with more cited references tend to be relatively more valuable. Patent applicants are also under a duty to submit prior art references that are material to patentability. 37 C.F.R. §1.56.
A negative side of citation is now emerging. Recently, copyright owners have begun trolling non-patent prior art citations to see whether any of their works were copied and submitted to the USPTO. Of course, following standard law firm practice additional copies were likely generated for the file and for review by the inventors or attorneys. These copies may be hard copes or electronic versions, but as MegaUploads can now attest, that makes no difference in copyright law. Statutory damages for copyright infringement range from $750 to $150,000 per work. The exact figure is largely within the discretion of the judge and is based upon what the "the court considers just" and whether the infringement was willful.
A number of scientific journals have begun to threaten law firms and their clients for submitting copies of journal articles to the USPTO. The typical cease & desist letter that I've seen says something like the following:
"We've been trolling through USPTO records and found that you submitted a copy of one of our articles articles to the USPTO and we suspect that you maintained other copies in your files and distributed additional copies within your organization. These actions constitute copyright infringement and are not fair use. We will sue you unless you come into compliance with our CCC licensing scheme."
To be clear, the focus in the letter is on copies being submitted to the USPTO as well as copies retained in the file and distributed internally.
I looked-into the CCC automated licensing system and found that they offered the right to make copies of a NATURE article (one of the journals taking action) for $32 per copy.
USPTO Response: In a surprisingly bold statement, the USPTO's General Counsel Bernie Knight released a statement late last week indicating the USPTO's belief that submission of unlicensed copies of copyrighted materials to the USPTO for the purpose of complying with Rule 56 cannot create copyright liability because that action is fair use under 17 U.S.C. 107. This issue previously arose when the USPTO was building the PAIR electronic record system. It was because of potential copyright concerns that the USPTO decided not to make available non-patent prior art through the PAIR system. However, the USPTO has offered its position that it is fair use for the agency to charge a fee to make and distribute paper copies of the copyrighted works (as part of the file history).
The USPTO took no position on whether applicant's creation of file-copies and internal distribution of copies also qualify for the fair use defense. In addition, applicants who have obtained limited licenses to works may be under a contractual duty to avoid making further copies even if those copies would have been fair use.
How much money?: On an annual basis, I would estimate that at least five hundred thousand journal articles are submitted to the USPTO for consideration. Each submission probably results two local copies for the file & review by the attorney, inventors, and others in addition to the submitted copy. That takes the annual licensing market to around $50 million. Not a tremendous amount for a nationalmarket, but that may be enough to save the struggling scientific journal industry.
Fair Use: An interesting aspect of fair use analysis is that the outcome can change based upon market conditions and general custom. Here, for instance, if it is very easy to obtain a license by simply paying a fee online and a number of patent applicants begin paying that fee regularly, an action that was once considered fair use may again fall under the copyright infringement umbrella.
How will your firm respond? Should your engagement letter be amended?