A Risk of Moonlighting

by Dennis Crouch

Despite California’s policies limiting non-compete agreements, the law still lays an implicit powerful fiduciary duty on employees. The (proposed) Restatement (Third) of Employment Law indicates that competition by current managerial employees violates the duty of loyalty but that a manager has the right to “prepare to compete.”  One question that arises from the facts of the case below is whether an employee who obtains patents on-the-side in preparation to compete is somehow violating his fiduciary duty.

Robert Kulakowski v. Verimatrix, Inc. (Cal. Appellate Ct. 2014) Decision Text

Back in 2000, Kulakowski helped to found Verimatrix – acting as the company’s chief technology officer (CTO) and directing product development. The company makes video encryption security systems known as Conditional Access Systems or CAS.

In his last year with the company, Kulakowski began working on side projects. As part of that process, he was able to modify his IP and non-compete agreement with Verimatrix to clarify that he did not need to disclose to Verimatrix any inventions “conceived, reduced to practiced or developed by [Kulakowski] in [his] own time; without using the Company’s equipment, facilities, or trade secret information; and which is not the result of work performed by me for the Company.”  Meanwhile, Kulakowski founded a new company (Secure TV) in May 2010 also operating in the CAS market but then expressly denied to his Verimatrix boss that the new company was in the CAS market.  In September 2010 Kulakowski left Verimatrix and then filed a patent application known as Dynamic Obfuscation Processing.

This case arose when Kulakowski filed a declaratory judgment action in California state court asking for a ruling that Verimatrix held no right to title or interest in the new patents.

Following a bench trial, the lower court ruled in favor of Verimatrix — holding (1) that declaratory relief is not called for at this time because the patent applications are pending and may still be amended; and, alternatively, (2) that Kulakowski’s claim for equitable relief should fail because of his unclean hands based upon his breach of fiduciary and contractual duties owed to the company while he was still employed.

Seeing some of the logic of the lower court, Kulakowski accepted that the DJ action was not ripe appeal. However, he appealed the unclean portion of the opinion — arguing particularly that the lower court’s DJ decision was effectively jurisdictional with the consequence that the court lacked jurisdiction to then decide the unclean hands defense.  That conclusion follows from the notion that a court who lacks subject matter jurisdiction has no power to make any findings on the merits of a proceeding.

On appeal, the California appellate court rejected Kulakowski’s arguments and affirmed  the lower court ruling.  Here, the appellate court found that the lower court’s first ruling on the DJ action for practical reasons, not for jurisdictional reasons.

If a court decides for practical reasons it is not necessary or proper to grant declaratory relief, there is no jurisdictional prohibition to the court making alternate findings based on the evidence before it.

The case may be revived once the patents issue or a more concrete dispute arises at that point the court will need to address whether the unclean hands decision here has a preclusive effect.  The appellate court expressly refused to “offer any opinion on the extent to which the court’s alternative findings are binding on either party under res judicata or collateral estoppel doctrines.”

Patenting by Entrepreneurs: The Berkeley Patent Survey (Part III of III)

Guest Post by Robert Merges and Pamela Samuelson, UC Berkeley School of Law; Ted Sichelman, University of San Diego School of Law

In our previous post, we discussed some of the major findings from the Berkeley Patent Survey—the most comprehensive survey to date in the United States, probably worldwide, on how patents are used by and affect entrepreneurs, startups, and early-stage high technology companies. (For those interested in more information, a detailed discussion of the survey results is available here; a focused analysis on the drivers of startup patenting, here; and some background on the genesis of the survey, here.)

As we noted at the end of our last post, when asked about the role patents play in directly driving the innovation process, our respondents reported relatively weak effects. As Figure 1 below indicates, executives at biotechnology companies stated that, on average, patents provide slightly less than "moderate" incentives to invent, perform initial R & D, and commercialize products. For software companies, the responses fall to just below "slight" incentives.

Even when respondents are limited to those companies that hold at least one patent or application, the results do not change much. For these patent-holding companies, biotechnology companies report just slightly above moderate incentives and software companies report just above slight incentives for these same innovation-related activities.

Figure 1: The Role of Patents in the Innovation Process

These results are somewhat surprising for biotechnology companies, because anecdotal reports had indicated that biotech companies relied heavily on patenting to protect their investments in R & D. On the other hand, the results do generally accord with anecdotal reports from the software industry.

The authors of the 2008 Berkeley Patent Survey report are not all of one mind about how to interpret the incentive effect findings of our study. Some of us would discount these results in that they reflect the perceptions of executives about how patents work, and might not accord with economic reality. Specifically, while these executives may have understood our questions, they may not have fully comprehended the role patenting plays in the innovation process, which is often subtle. For instance, in an earlier post we noted important secondary effects of patents, such as attracting capital and enabling arm's-length transactions. These effects may contribute enough of a "plus factor" to make certain projects viable, even if executives do not think of patents in those terms. In other words, if patents are effective in garnering investment capital—which is then used to perform R & D—although executives might not view patents as the immediate cause of innovation, patents might still play an important role in the innovation process that is not fully reflected in our study results. Yet, others of us are more willing to give credence to the perception of entrepreneurs who report that patents provide weak to moderate incentives to invest in innovation. Who are we as scholars to say that they are incorrect in their assessment about the importance (or not) of patents?

We acknowledge that our analysis to date of the study results do not allow us to say one way or the other whether the views of the executives accurately reflect the economics of the patent system. Thus, it would be wrong to conclude, as one commentator has, that one of the key findings of our study is that patents "play essentially no role in fostering innovation among startup companies . . . outside biotech and other limited areas." In the same fashion, it may also be wrong to conclude that the executives taking the survey were not fully aware of the economics of patents, and the reality is that patents play a major role in promoting innovation. Rather, based on our study results, one can draw competing inferences that explain the results. As such, we come to no conclusions in this article regarding the actual role patents play in fostering startup innovation (or not).

To be sure, relying on other evidence, several of us have expressed views on the topic elsewhere. Unfortunately, even combining this additional evidence with our study data does not definitively answer the question. The data, however, present an interesting paradox: If executives believe that patents provide relatively weak incentives to innovate, why are so many startup firms seeking them? Our first post indicated that securing financing was a reason why many firms reported seeking patents.

Reinforcing that finding is another significant result. Our survey asked entrepreneurs to report their views on the importance of patents to potential funders, such as venture capitalists (VCs), angel investors, other firms, commercial banks, and friends and family. Our respondents indicate that many potential investors with whom they negotiated said that patents were important to their investment decisions. Of companies negotiating with VC firms, 67% report that these firms indicated that patents were an important factor in their investment decisions.

Interestingly, this result was not just driven by biotech and medical device firms. Broken down by industry, the figures were 60% for software companies, 73% for biotech, and 85% for medical devices. Respondents also report that substantial percentages of other types of investors, such as angels, investment banks, and other companies found patents important to their investment decisions.

In our view, this last finding may help to explain why many high tech startups seek patents, even though their executives report that patents provide relatively weak incentives to innovate. Raising money, rather than invention itself, may be the key.

Of course, this conclusion begs the question of why patents are important in the startup financing process in the first instance. Like the innovation incentives issue, the authors are not in full accord on the explanations here. One possible interpretation is that startup executives are generally unaware of the link between patents and success in the innovative process, which results in financial markets selecting those companies that patent more heavily. Another interpretation is that patents serve important functions not related to the innovation process, such as helping to prevent infringement lawsuits, providing leverage in cross-licensing negotiations, and acting as "signals" of firm competency, which drive investment. A third interpretation may be that investors want startups to patent so there will be some marketable assets if the companies fail in the market. And these interpretations are not mutually exclusive. Unfortunately, as we indicated earlier, our analysis cannot resolve this dilemma. We hope that further research by us and others ultimately will make progress in doing so. In the meantime, we believe our study offers one of the most important resources for understanding the effects and use of patents by entrepreneurs.

Patenting by Entrepreneurs: The Berkeley Patent Survey (Part II of III)

Guest Post by Robert Merges and Pamela Samuelson, UC Berkeley School of Law; Ted Sichelman, University of San Diego School of Law

In our previous post, we discussed three major findings from the Berkeley Patent Survey—the most comprehensive survey to date in the United States, probably worldwide, on how patents are used by and affect entrepreneurs, startups, and early-stage high technology companies. As we noted in that post, the survey collected responses from over 1,300 companies less than ten years old (hereinafter, "startups") in the biotechnology, medical device, software, and hardware/IT sectors. In this post, we discuss three additional major findings. (For those interested in more information, a detailed discussion of the survey results is available here; a focused analysis on the drivers of startup patenting, here; and some background on the genesis of the survey, here.)

Our fourth major result is that our respondents—particularly software companies—find the high costs of patenting and enforcing their patents deter them from filing for patents on their innovations (see Fig. 1 below). Given the reported importance of patents to startups not only in the financing process, but also for strategic reasons—especially for increasing bargaining power—these cost barriers are worrisome.

Another of our survey questions revealed that the average out-of-pocket cost for a respondent firm to acquire its most recent patent was over $38,000. This figure is significantly higher than the averages for patent prosecution reported in the literature, which vary from a low of $10,000 to a high of $30,000.

Our respondents also offer a variety of other reasons for not patenting, including the ease of competitors designing around a potential patent and the belief that the innovation was not patentable (both of which are more salient for software companies) as well as the reluctance to disclose information in a patent and a preferred reliance on trade secrecy (which are more salient for biotechnology companies).

Figure 1. "For your last innovation you did not patent, which if any of the following influenced your company's decision?"

A fifth major finding is that although many respondents report licensing in patents from others, most of them did so to acquire technology, with fewer seeking licenses to avoid a lawsuit. So, while we find that 15% of technology companies licensed in at least one patent, there are industry differences.

Specifically, among biotechnology companies, while 37% had licensed in at least one patent, for their last license, 81% did so to acquire technology, and only 30% to (sometimes also) avoid a lawsuit. Among software firms, only 8% report taking at least one patent license, with 79% taking such a license to (at least in part) gain information or know-how. In each sector, less than 10% of companies taking licenses report licensing only to avoid a law suit.

When we restrict our focus to only venture-backed companies, inbound licensing is much more prevalent, with 37% of all companies licensing in a patent. However, there is once more wide variation from one industry to another. While 89% of venture-backed biotechnology companies licensed in at least one patent, only 12% of similarly-funded software companies had reported as much. Also, while only 3% of these biotech companies that had licensed at least one patent reported licensing in their last patent only to avoid a lawsuit, 22% of such software companies reported as much.

Last, we asked how much of a role patents play in the steps of the innovation process, from invention to R & D to the commercialization of products and processes. Somewhat surprisingly, the responses on the whole are rather tepid. For instance, biotechnology companies report that patents provide closer to a "moderate" than a "strong" incentive to engage in the innovation process. Among software companies, the results are even more striking, with them reporting that patents provide less than a "slight" incentive. These findings raise questions about the importance of patents to innovation for entrepreneurs and startups. Indeed, the results have spurred some vigorous debate in the blogosphere of late, and we devote our entire next post on Patently-O to discussing them in detail.

Patenting by Entrepreneurs: The Berkeley Patent Survey (Part I of III)

Guest Post by Robert Merges and Pamela Samuelson, UC Berkeley School of Law; Ted Sichelman, University of San Diego School of Law

Why do entrepreneurs and startup companies file for patents? Why not? How often do startups acquire patents from others? How important are patents in fostering innovation at startups? In helping them raise financing? In providing leverage in cross-licensing negotiations? Are entrepreneurs and startups subject to patent thickets?

These and many related questions were the subject of the Berkeley Patent Survey—the most comprehensive survey to date in the United States, probably worldwide, on how patents are used by and affect entrepreneurs, startups, and early-stage high technology companies. Funded by the Ewing Marion Kauffman Foundation—and conducted by us, along with Robert Barr (Executive Director of the Berkeley Center for Law & Tech and former VP of IP at Cisco) and Stuart Graham (then a professor at Georgia Tech's College of Management, and currently Chief Economist of the USPTO)—the survey collected responses from over 1,300 companies less than ten years old (hereinafter, "startups") in the biotechnology, medical device, software, and hardware/IT sectors.

In this first post of three, we briefly review three major findings from our initial analysis of the survey about the frequency of patenting among high-tech startups, why startups seek patents, and how they rate patents and other strategies for attaining competitive advantage. In the next post, we'll discuss some reasons startups give for not seeking patents and why they sometimes license-in patents from other companies. In the last post, we'll specifically address startup perceptions about the incentives that patents provide for engaging in innovation as well as the perceived importance of patents in securing outside investments. The investment incentive role of patents has been not only a subject of enduring interest in the patent field generally, but also an important topic of interest of late at the Department of Commerce and PTO. (For those interested in more information, a detailed discussion of the survey results is available here; a focused analysis on the drivers of startup patenting, here; and some background on the genesis of the survey, here.)

First, startups hold many more patents and applications than previously believed. Instead of asking companies how many patents and applications they actually hold—like we did—earlier studies solely used the PTO databases to determine portfolio size. Unfortunately, these databases are unreliable, because the assignee records—particularly for patents acquired from founders and third parties—are incomplete. Our more complete data shows that about 40% of our respondents hold patents or applications, with the figure rising to about 80% for startups funded by venture capital firms.

As expected, this figure varies widely by industry—for example, 97% of venture-backed biotechnology companies hold patents or applications, while only 67% of venture-backed software startups do. And among the general population of software startups responding, the rate was only about 25%. In terms of raw numbers, among biotechnology companies, those with patents and applications have about 13 on hand, with the number rising to about 20 for medical device companies, and falling to about 7 for software companies. In sum, many startups are filing for patents and hold greater numbers than previously believed, though most software companies have never filed for patents.

Second, startups report that they primarily file for patents to prevent against copying of their innovative products and services (see Fig. 1 below). This holds true across all industries and by a variety of other company characteristics, such as age and revenues.

Respondents also note that filing for patents to improve their chances of securing investment and generating a liquidity event (such as an IPO or being acquired) are between moderately and very important reasons to file. In addition, the respondents state that a moderately important reason to file patents is for strategic reasons, such as defending against and preventing patent lawsuits as well as increasing negotiating leverage.

Figure 1: Reasons to File for Patents

Our third major finding concerns startup executives' perceptions of the effectiveness of patents and other methods of providing competitive advantage. Interestingly, responses vary widely (see Fig. 2 below). Biotechnology companies rate patents as the most effective means of capturing competitive advantage, more effective than first-mover advantage (though the differences are not statistically significant), trade secrecy, reverse engineering, copyright, and other means. Software companies, on the other hand, rank patenting dead last in providing competitive advantage.

Figure 2: Measures of Capturing "Competitive Advantage" from Inventions

In sum, the 2008 Berkeley Patent Survey has found that startups are patenting more than previous studies have suggested; that patents are being sought for a variety of reasons, the most prominent of which is to prevent copying of the innovation; and that there are considerable differences among startups in the perceived significance of patents for attaining competitive advantage, with biotech companies rating them as the most important strategy and software companies rating them least important.

Our next post will delve into reasons high tech entrepreneurs gave for not seeking patents for recent innovations and for licensing of patents from other companies.

Independent Inventors: Five Ways to Reduce the Cost of Patenting and Get a Better Patent Application

Patent Attorney Mark Bergner provided the following five points that may help independent inventors control the cost of their patent application.   

Many small inventors contact me for preparing a patent application and asking that costs be kept to an absolute minimum. Recognizing that most such inventors do not have a great deal of money, I usually offer the following advice:

1) Provide me with the best write-up that you can up front with some illustrative (even hand-sketched) diagrams, along with any design documents you may have.

Often, inventors will provide a one-page summary or a sales brochure of their invention that leaves out a significant amount of detail. It is going to drive up costs if I have to drag each and every relevant aspect of the invention out. Additionally, there may be ample design documents that are provided to me after a significant amount of work has already been done. It will take much more effort for me to integrate this newly added information with a nearly complete draft specification than it would have taken if all information had been provided up front.

2) Try to do as much of the work as you can yourself.

I tell clients that I am knowledgeable in patent prosecution, but generally not knowledgeable about the subject matter of the invention. It will cost considerably more if I am required to do extensive research in the field of the invention in order to fill in a sparse invention disclosure. I will often point inventors to a patent in their general field and suggest that the detailed description and figures shown in the patent provide roughly the level of detail needed for their patent application. While I am not expecting draftsman-quality drawings and use of the words “wherein” and “said” in their description, I am expecting something more than a 3-block single figure illustrating a complex client-server architecture.

Also, there are many inventors who are wonderful technical people, but simply cannot communicate well in writing (that’s why they majored in physics and not journalism). It might be a good idea for such an inventor to work with someone (under a confidentiality agreement) who can write well to prepare an initial description. I had an inventor who enlisted the support of a graduate student at a significantly lower hourly rate than I charge. Although I can get all of the relevant information by talking with the inventor in person and over the telephone, if that is the sole means that I have of obtaining descriptive information, it is going to cost more. If the inventor has difficulty in communicating ideas and concepts both in writing and orally, it is going to be a very expensive patent application–no two ways about it.

3) Provide me with a nearly completed concept of the invention.

Nothing drives up costs more than to have the inventor continue to invent as the application is being drafted. One common issue: if a patent attorney does a good job with the subject matter, the draft of the patent application may be the first time the inventor has ever seen his idea expressed in such a clear and organized manner. This may spawn the inventor to come up with alternate embodiments or to provide other features that might prevent a design-around. While I generally expect some minor refinement of an inventive concept during the course of preparing the application, the addition of completely new or different embodiments will substantially increase costs.

4) Answer any questions provided in a draft clearly and completely.

Often I will prepare a draft application with a number of questions or comments, requesting clarification or additional detail. Some questions are intended to solicit lengthy responses, but only a bare minimum is provided or, worse, the information provided is completely non-responsive. Example: “You indicated that a series of messages flow between the client and server in order to implement the invention, but you have not provided any description as to what these messages are or what they contain. Can you please provide me with a detailed description of these, possibly with a table or diagram?” The entire reply received back: “The messages contain information that allows the server to act on client requests.” Very often I have an inventor who promises to do most of the work themselves, only to put forth a minimal effort when asked to provide additional information.

5) The costs of obtaining a patent, even a relatively complex one, pale in comparison to the costs you will encounter in trying to commercialize your product.

I know I’m in trouble with an inventor if I throw out a fair cost estimate for preparing an application and the inventor breaks out in a cold sweat and starts suggesting a cost that is 50% of the estimate. It’s one thing for an experienced business professional to haggle for lower costs, but in most situations involving the individual inventor, there is a significant lack of appreciation for what it will cost to do prototyping or pilot production runs, legal costs associated with non-disclosure agreements, trademarks, production and supply agreements, Underwriters Laboratories certification, FDA approval, etc. In the vast majority of cases, it is very expensive to bring an inventive idea to the marketplace, and the patent costs are typically a minimal part of those costs. If the inventor is not prepared for the entire undertaking, he is probably not going to willingly and cheerfully pay the bills, regardless of the quality and efficiency of the work done.

Dear Patently-O: How Do You React to the Following Letter

Dear Mr. Crouch:

I am a solo physician and inventor. I am wondering if you can point me in the generally right direction to resolve this issue.

I went to a large, well-respected, nationally-known firm to file a patent application for an invention. The invention is not that complicated. It’s mechanical rather than electrical or chemical; in fact, I can make prototypes in my kitchen fairly quickly. The invention mostly relies on a new combination of existing devices/technology.

My attorney knew from the start that I am a solo inventor and under a tight budget. The final fees were astronomical. I paid them at the time because the lawyer had obviously worked hard and I had agreed to pay the hourly rate she had quoted. However, I recently discovered that the application is much, much longer than patents of similar complexity, and the fees I paid are much higher than for similar patents.

To give you a comparison, based on a word count, my patent application was literally twice as long as Dean Kamen’s patent for an early Segway device in 1994. My fees were three times as high as another firm (Cooley Godward) says to expect for fees for most routine patents (other than for complex patents such as biologics, pharmaceuticals, etc.).

My current plan is to go back to this attorney and have a frank discussion with her, and to ask for a partial refund. If she refuses, I plan to go to the state bar and file a complaint.

Is this the right way to go about this? Are there any precedents for recovering fees in this sort of situation in a way that won’t tie me up in further legal fees?

Many thanks,

____ ____ M.D. (anonymized at the author’s request)

Co-Inventors Contribution Must Be “More Than The Exercise of Ordinary Skill”

Oren Tavory v. NTP (Fed. Cir. 2008)(nonprecedential)

In March 2006, RIM settled its patent dispute with NTP for $600 million+. In the wake of that settlement, Tavory filed an inventorship claim against NTP arguing that he was a co-inventor of at least one of the NTP patents. The district court dismissed the case – finding that Tavory did not provide “sufficient independent evidence to corroborate his inventorship allegations.” On appeal, the Federal Circuit affirmed in NTP’s favor.

Back in the late 1980’s and early 1990’s Tavory worked with Tom Campana as a computer programmer for Telefind. While there, Tavory developed a computer program to facilitate an e-mail-to-pager system. He was also part of a team that created the pager-to-laptop e-mail system. Telefind ran out of money in 1991 and Tavory left for greener pastures. When Don Stout later filed Campana’s patent applications, he appended a copy of the code that Tavory had co-authored. During the RIM trial, Tavory testified for NTP. At that time, he did not claim inventorship.

Correcting Inventorship: An issued patent is presumed to name the correct inventors. Thus, an inventorship challenge must bring “clear and convincing evidence” that the newly surfaced inventor “contributed to the conception of the claimed invention.” “Simply reducing to practice that which has been conceived by others is insufficient for co-inventorship.” Under the clear and convincing standard, the inventorship challenge “must be corroborated by independent evidence.”

Contribution Must Be “More Than The Exercise of Ordinary Skill”: Tavory suggested that his contribution was the claimed “interface switch.” However, the Federal Circuit rejected that claim because (1) Tavory did not prove that the “interface switch itself was not in the prior art”; and (2) Tavory likewise did not prove that “his alleged contribution to the claimed invention—the interface switch—was the result of anything more than the exercise of ordinary skill in the art.” Consequently, “he has failed to establish co-inventorship.”

Judge Newman concurred with this result, but would have decided the case on laches (based on the long delay in making the claim) and estoppel (based on Tavory’s silence during the NTP trial).


Federal Circuit Affirms that Lucent’s $1.5B Patent Victory is Gone

Lucent v. Gateway, Dell, & Microsoft (Fed. Cir. 2008)

Lucent’s two patents cover a compression method for MP3 digital audio files. The case originally resulted in a $1.5 billion jury award for Lucent. The district court, however set aside the jury verdict. That decision is affirmed here on appeal. Lucent’s problems stem from (1) joint ownership of its ‘080 patent and (2) failure to provide even one specific instance when the Microsoft’s encoder actually infringed the ‘457 patent.

“Lucent has failed to provide sufficient evidence to establish that the High Quality encoder actually runs on Windows Media Player and thus it would be too speculative to conclude that Windows Media Player necessarily infringes the ‘457 patent.”

This case provides important lessons for both inventorship and proving infringement. More to come.

Cornell wins $184 Million in Damages for Past Infringement by HP

Federal Circuit Judge Randall Rader has been sitting by designation as a district court judge in the Northern District of New York.  His case is an epic patent battle between Cornell University and Hewlett-Packard (HP), and the jury trial recently concluded with an $184 million calculated as 0.8% of HP’s $23 Billion in sales.

The patent — No. 4,807,115 — issued in 1989 and expired during the seven years of litigation. It is directed toward an internal computer messaging mechanism that boosts the function of multi-processor computers.

Interestingly, Cornell and HP had discussed a licensing agreement as early as 1988 (even before the patent issued). In 1997, Intel licensed the ‘115 patent for use in its Pentium Pro chips.

Unpublished Thesis: In a pre-trial decision, Judge Rader denied Cornell’s motion in limine and allowed HP to show the jury an unpublished masters degree thesis as 102(b) prior art.  The court found the thesis publicly accessible because the thesis had been cited in a later article that was in the same area of technology as the issued patent (analogous art.).

“After weighing all the circumstances of accessibility, this court views as vitally important the citation of this scholarly work in the Tjaden-Flynn article.”

Inventor Rewards: Unlike most companies, universities generally offer a percentage royalty cut for its employee-inventors. Professor Torng, the inventor of the ‘115 patent, will reportedly receive 25% of the award (if it is ever paid). Torng has announced that he’ll only keep a few million and donate the rest (perhaps over $30 million) to charity.

The post-trial decisions and eventual appeal should be interesting.

Patent Reform and the Ethos of the American Inventor

PatentLawPic138Although I understand the reality that most patent prosecution is handled on behalf of corporate assignees, I still hold a special place in my heart for the maverick American inventor.  Some might understand the slight pangs I felt when reading the inventorship section of the Senate report on patent reform.  The report suggests eliminating from the law “the antiquated notion that it is the inventor who files the application, not the company-assignee.” Perhaps it is time my thoughts of the American inventor to go the way of the Wild West and horse drawn carriages.

The Bill (S.1145) is intended to fix an understandable problem — that of inventors who fail to fulfill their contractual obligation to assign patent rights to the Corporate owner.  This is a serious problem as shown by the current issue of IPToday which includes a full-length article describing the complex set of hoops currently required to overcome these so called “problem inventors.” [LINK]

Beyond the sound-bites, the specific reform provisions are not so bad. The revised statute would allow an “obligated assignee” to file the patent application on its own behalf. An inventor’s oath is still required unless the “obligated inventor” is either unable or unwilling to sign. Under the provision, a patent cannot be challenged as invalid or unenforceable based on a corporations mistaken claim that the inventor had an obligation to assign.  The savings clause appears to also include protection against mistakes in correctly naming inventors in the application.

Priority to Foreign Application Requires “Inventor’s Knowledge or Consent” at the Time the Foreign Application was Filed

PatentLawPic009Boston Scientific SciMed v. Medtronic Vascular (Fed. Cir. 2007).

SciMed’s patent application was originally filed by a European company (MinTec) in February 1994 as an European Patent Application. At that time, however, the inventors (Cragg & Dake) had not yet assigned rights to MinTec. Cragg assigned his rights a few months later. Dake did not assign his rights until 1996.

Medtronic has a US priority filing date of June 1994 on the same invention. In the interference, the question is whether a US patent applicant claim priority to a foreign application filed by an entity that was not acting on behalf of the US applicant at the time of filing? CAFC Answer: No priority unless foreign application was filed on behalf of the US applicant.

Under the court’s ruling here, 35 USC 119(a) provides a personal right to the inventor. Consequently, there must be a “nexus…between the inventor and the foreign applicant at the time the foreign application was filed.” That nexus requires at least “knowledge or consent” of the inventor.

“Indeed, as a matter of pure logic, an entity could not have filed a foreign application “on behalf of” an inventor without the inventor’s knowledge or consent; that the foreign application may have been filed in accordance with the laws of the country in which it was filed has no bearing here.”


“[A] foreign application may only form the basis for priority under section 119(a) if that application was filed by either the U.S. applicant himself, or by someone acting on his behalf at the time the foreign application was filed.” (emphasis in original)


  • This decision [LINK]: Scimed Life Sys., Inc. v. Medtronic Vascular, Inc., — F.3d — (Fed. Cir. 2007).
  • Final BPAI Decision: Patent Interference No. 104,192, Paper No. 187, 2001 WL 1339890 (B.P.A.I. July 21, 2001).
  • Trial Court Decision: Scimed Life Sys., Inc. v. Medtronic Vascular, Inc., 486 F. Supp. 2d 60 (D.D.C. 2006).


Women as Patentees

Patents are intended to lure potential inventors into the business of innovation.  The truth is, however, that very little is known about how patents really drive innovation.

Historically, only a very small number of women have obtained patents. Data from historic studies:

  • 1790 – 1895: About 1% were granted to women;
  • 1905 – 1921: About 1.4% were granted to women;
  • 1954: 1.5% of issued patents included women inventors;
  • 1977: 2.6% listed one or more women as inventors;
  • 1996: 9.2% listed one or more women as inventors.

Since patentees do not list their sex, all of these studies rely upon segregating inventors according to traditional first-names.

2006: In my own recent study, I looked at a sample of 150,000+ patents issued between 1999 and 2006.  I then made a list-ranking of first-names of first-listed inventors. Can anyone guess how many of of the top-100 inventor-names were traditionally female names???


Patently-O TidBits — King of the Submarine.

Bill Friedman filed his patent application on October 23, 1936 on a new cryptographic system. The patent finally issued some 64 years later as U.S. Patent No. 6,130,946. Can you find any currently viable patent with an earlier filing date?


* This tidbit came from the great discussion ongoing at the Patent Information User’s Group about record-holding patents (longest pending, most claims, etc.). 

UPDATE: A reader found Patent No. 6,097812 by the same inventor.  It is still viable, but the filing date was July 25, 1933!

PTO Requests Model of Warp Drive Invention

The Worsley-Twist warp drive does not depend upon traditional emissions of matter to create thrust.  Rather, the drive creates a change in the curvature of the space-time continuum — thus allowing travel by warping space-time.  Worsley & Twist patent application recently suffered another setback. The Examiner has now requested a working model:

Applicant is required to furnish a model of the instant invention. 35 U.S.C. 114. See Also 37 C.F.R. 1.91.

Among other rejections, the Examiner has asserted a rejection under 35 U.S.C. 101 for lack of utility — finding that the invention is inoperable.



More Interesting Patent Applications (From Keith Nagel)

  • U.S. Pub. No. / Title

Hamlet, on filing a response with the USPTO

Angela Horne is a patent agent at Quine IP Law Group.  As can be seen from her prose below, she is also a talented Shakespearean.  In this Scene, young Hamlet is debating his next course of action:

To file, or not to file (today): that is the question
Whether ’tis easier on the budget to file
The current draft without further extension;
Or instead, to take more time to review,
And by reviewing, further revise the arguments…
To file, to wait for the Examiner to review
At last; and by calling before two months is up, forestall
The heart-ache and the thousand muttered curses
That a Final Office Action is heir to. ‘Tis a consummation
Devoutly to be wish’d.
To file the response, to follow up with a call;
To call, perchance to get the case allowed: aye, there’s the rub;
For in that Notice of Allowance, what claims to next pursue
When we have the current claim set allowed, 
Must give us pause…

Ms. Horne’s prose also reminds me of the Roach Trap patent application that was filed in the mid 1800’s by D. Breed of Washington DC.

To all those whom it may concern:
By this description, you may learn
That I, D. Breed, a District man,
Have made invention of a plan,
Both new and useful, of a trap
For catching roaches while you nap.

In setting forth my new invention,
Of first importance I would mention
My trap’s a novel earthen cup
Outside of which the roach creeps up
And, jumping in to eat molasses,
The well glazed mouth he ne’er repasses.

In drawings, figures one and two
Show simple forms, yet something new;
The first has rough outside or way;
The next, an inclined path at A.
The central stem (in dots you see),
Is crowned with bowl like half a pea,

To hold molasses, say a drop,
And smoothly glazed from base to top.
But this is no essential thing:
Without it, the roaches spring.
If in the bottom of the cup
You place the sweet whereon they sup.

The figure three shows a form unique
Of which in highest praise I speak;
‘Tis glaze on in and outer sides,
Except between the handle strides
Where creep the roachies up a track
Without fear of sliding back.

In figure four, at B, a spout
Is made, to wash dead roaches out;
This form is glazed entire within,
also the mouth up to the brim
but on the outer side, all round,
No trace of glazing can be found.

In five and six, a septum, C,
Cuts full two thirds the cup from three,
The smaller part has open door
At letter D, close to the floor,
And inclined way to top of cup
Where Mr. Roach with cane walked up;

Nor needs his wife or child his hand
To reach the highest brink and stand,
A little trip is balance hung
May o’er the mouth of cup be swung;
But that, an almost useless thing,
To save expense, away I fling.

Of varied traps, with spiral walk
And sundry forms, I yet might talk —
Of clay or other mortar made
To suit the fancy or the trade:
Forms now conceived, yet not revealed,
That sleeping lie to fancy’s field.

From this description,you may make
Whatever form you choose to take,
From figure one to six, made part
Of this to aid the potter’s art,
I recommend said figure three
Of porcelain, like cup for tea.


As manufacture new, I claim
Said pottery trap, or porcelain.


A day of thanks

I hope that everyone has a happy Thanksgiving. Even if you are not in the U.S., I suggest that you take the day off to celebrate.  Although I love turkey, I hope that you don’t deep-fry yours.

The U.S. Patent and Trademark Office Joins in the Celebration of Thanksgiving
Recognizes patents and trademarks related to Thanksgiving

The Department of Commerce’s United States Patent and Trademark Office joins in the celebration of Thanksgiving by recognizing some patents and trademarks associated with this festive holiday.

Food often takes center stage at Thanksgiving, and there are many well-known Thanksgiving-related products protected by patents and trademarks. One way to spend more time with family and less in the kitchen cleaning up is by using a disposable cooking pan (patent #5,628,427) or a cooking jacket (patent #4,942,809) for the turkey, ham or roast. One non-traditional, but increasingly popular, way to cook a turkey is deep-frying, and one type of equipment used in this preparation is protected by patent # 5,758,569.

Some well-known trademarks associated with turkey and dressing, must-haves at many Thanksgiving tables, are Butterball (registration #1151836) for turkey products and Stove Top (registration #0949459) for stuffing. What holiday feast would be complete without cranberry sauce such as Ocean Spray (registration #2150919)? Desserts are always the final complement to a Thanksgiving feast. For those that do not bake their own, Sara Lee’s slogan for its pies and cakes, “Nobody Doesn’t Like Sara Lee,” is protected by trademark registration #1885156.

These patents and trademarks, as well as the more than six million patents issued since the first in 1790 and the 2.3 million trademarks registered since 1870, can be seen on the Department of Commerce’s U.S. Patent and Trademark Office web site at www.uspto.gov.

Patentable Subject Matter?


If you are already looking for a Christmas present, you might find a good one for your brother in U.S. Patent No. 6,966,840. The patent is titled “Amusement device that senses odorous gases in a bathroom.”

With all this question of patentable subject matter — perhaps this would have been a candidate for rejection. . . . Proposed revision to Diamond v. Diehr: “anything under the sun made by man [excluding bathroom related novelty devices].”


Branding-Energy of the Volkswagen Beetle

ScreenShot012I have been planning a post about U.S. published application No. 2005–0055221 for ages, but I just could not find any words to describe my emotions.

The abstract reads:

A branding-energy amplifier for amplifying the branding-energy of the Volkswagen Beetle. Branding-Energy Amplifier established upon the principle of Node Plurality.

As explained in the specification:

Branding EnergyIf you were to see a singular Marilyn Monroe walking down the street, you probably would notice.  If, however, you were to see 88 Identical Marilyn Monroes’s single filing fashionably in parade-dress parade, you would likely stop whatever you were doing and stare in exasperated amazement wondering all the while what in the world was going on. . . . By extension then, a Volkswagen beetle limousine with 88 humps, does not look the same, does not function the same, and is, in fact, not the same, as a Volkswagen beetle with 1 hump because they do not share identical Automotive DNA.

View the patent: DOWNLOAD.  The warp-drive has nothing on this one.