Brilliant New Book on Ethics in Prosecution 2015 Edition Out Now!

By David Hricik

Proud to announce that the 3rd edition of Patent Ethics: Prosecution that I co-authored with Mercedes Meyer is now available here!  This edition adds a massive amount of new material to deal with the new PTO ethics rules and the fast-moving, roller coaster world of ethical issues in patent practice!

From the description:

Patent Ethics: Prosecution (2015 Edition), by David Hricik and Mercedes Meyer, is an essential guide to the ethical issues arising in the course of the patent prosecution process. By providing relevant rules and case law, it allows practitioners to identify ethical problems before they arise and to address them most effectively when they do. Patent Ethics: Prosecution is one of two volumes on patent ethics — the second focuses on litigation — and is the first of its kind to combine the United State Patent and Trademark Office (PTO) rules with commentary by the authors, which distills the authors’ own experience and expertise in patent prosecution into effective practice strategies.

The 2015 Edition is particularly relevant considering the significant ramifications with the United States Patent & Trademark Office (USPTO) repealing its existing rules, the USPTO Code of Professional Responsibility, and replacing them with the new USPTO Rules of Professional Conduct. Furthermore, the 2015 Edition also comprehensively discusses ethical issues of major concern for patent law practitioners such as:
•   The increase in malpractice claims based upon patent prosecution as well as recent significant verdicts of $30 million and $70 million.

•   The USPTO’s Office of Enrollment and Discipline’s vigorous enforcement efforts, continued persistence in asserting a broad view of its jurisdiction, and resulting increase in the volume of case law and other authorities.

•   The troublesome issue of best mode and the America Invents Act.

•   The various ethical issues surrounding patent agents.

The 2015 Edition features new analysis of current client conflicts in patent practice, including when prosecution and opinion work become “adverse” to a client, the conflicts of interest created by the AIA’s approach to the best mode, and duty of candor post-Therasense. It also includes an updated PTO Code completely annotated with OED decisions on each provision.

Makes a perfect Christmas present, too!  Buy one for every lawyer in your firm!  Heck, buy two so they have one at home!

Cross-Border Inventors

The number of inventors per patent has been steadily increasing over the past forty years. Patents issued during the past six months, have an average of 2.7 inventors per patent. In all, 68% of these patents list multiple inventors with 13% listing five or more inventors. Prior to 1990, most patents listed only one inventor.

I wanted to look at cross-border or transnational inventing. To do that, I pulled-up all patents that listed inventors from two or more separate nations. For this, I used the inventor's country of residence that is typically supplied when a patent application is filed. Patents with a US inventor (US patents) had an 8% rate of including a cross-border inventor. For US patents, Germany was the most likely country of residence for collaborators. Of the top-10 patenting countries, Japan had the lowest rate of cross-border inventorship at 3% while 48% of Swiss patents listed a non-Swiss inventor. The table below provides more comparative values.

Inventor Country 

Percent that Included Cross-Border Inventor 

Most Likely Country of Co-Inventor 



















Great Britain
























[Updated] Assignees with the most cross-border patents include IBM, Microsoft, Hong Fu Jin Precision Industry (Shenzhen), Intel, Cisco, GE, Schlumberger, Nokia, HP, ExxonMobile, Novartis, and Infineon. Several readers e-mailed and correctly noted that continental European cross-border co-inventorship should be expected because many Europeans cross a border for their jobs. Apparently, Novartis' main building is in Basel Switzerland, but is so close to the border that one Novartis parking lot is actually in France. University of California has a large number of US-China co-invented patents that likely arise from Chinese graduate students seeking their PhD in the US.

Note on the data: The table above includes a classification for "inventor country." The "inventor countries" of a patent include all countries that are designated as the country of residence for at least one of the inventors. Thus, a single patent may be classified as both a US patent and a German patent if there were inventors from each nation. The inventors submit their country of residence as part of the patent application process. The country of residence may be different from the nationality or correspondence address.

Note on spelling: I injured my shoulder this past week and will now be typing with one hand for a while.


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.

Inventorship: Conception does not Require Scientific Certainty; Rather, “Proof that the Invention Works to a Scientific Certainty is Reduction to Practice”

University of Pittsburgh v. Marc Hendrick (Fed. Cir. 2009) 08-1468.pdf

The patent at issue (6,777,231) relates to a method of creating stem cells from liposuction residue. In an inventorship dispute amongst former Pitt scientists, the district court held that the Hendrick was not a co-inventor. On appeal, the Federal Circuit affirmed – based primarily on the corroborating evidence found in one of the listed inventor’s laboratory notebook.

Inventorship is a question of law, although a challenge to inventorship must be proven with clear and convincing evidence. In a joint invention situation, “each inventor must contribute to the joint arrival at a definite and permanent idea of the invention as it will be used in practice.” However, there is no requirement that the inventors actually work together; that all asserted claims be jointly invented; or that all inventors realize that they invented something.

In this case, the timeline is important: The two listed inventors had written evidence (in lab notebooks and elsewhere) from before Hendrick arrived on campus that they believed their liposuction derived stem sells could transdifferentiate into various types of cells such as bone, cartilage, nerves, and muscles. At that time, however, they were not “scientifically certain” that nerve cells had been created. And, almost certainly, the two did not have enough evidence to patent their specific claim to adipose-derived stem cells that can differentiate into nerve cells. Hendrick and his REBAR team of researchers then came along and confirmed that the “highly speculative” suggestions of the original listed inventors was indeed correct.

On appeal, the Federal Circuit held that despite the lack of scientific certainty, the invention had been conceived before Hendrick joined the team.

[Hendrick’s] is premised upon a misapprehension of what it means to “know” the limitations of the claims.

Knowledge in the context of a possessed, isolated biological construct does not mean proof to a scientific certainty that the construct is exactly what a scientist believes it is. Conception requires a definite and permanent idea of the operative invention, and “necessarily turns on the inventor’s ability to describe his invention.” Proof that the invention works to a scientific certainty is reduction to practice. Therefore, because the district court found evidence that Katz and Llull had formed a definite and permanent idea of the cells’ inventive qualities, and had in fact observed them, it is immaterial that their knowledge was not scientifically certain and that the REBAR researchers helped them gain such scientific certainty.

Here, the lab notebooks were important to to show that the listed inventors had “sufficiently described to those skilled in the art how to isolate the cells from adipose-tissue … [and] thus they had disclosed a ‘completed thought expressed in such clear terms as to enable those skilled in the art to make the invention.'” Citing Coleman.


Bits and Bytes No. 94


  • I used a software algorithm to count the number of inventors in each utility patent application published June 2007- February 2009. The histogram below shows the result. The median application has two inventors. One German application lists 100 inventors (I’ll post the patent number when I get back to my office).

Revisiting Upcoming Conferences

  • Northwestern Law School’s Journal of Technology and Intellectual Property (NJTIP) is putting on a great event in Chicago on March 6, 2009 (Friday).
  • Howard University’s Institute of Intellectual Property and Social Justice IP Symposium – March 5-6. Day two will focus in patent issues and will include a year in review by Irving Kayton, a discussion of design patent issues by Jon Wood (Bridgestone); and panels that include Chief Judge Michel and Judge Linn as speakers.
  • Federal Circuit Year in Review (St. Louis) – March 13 – I’ll be presenting this one hour session sponsored by the Bar Assn. of Metropolitan St. Louis.
  • The IP Law SummitMarch 17-19 – hosted by the marcus evans company will be a nice event in Ponte Vedra, Florida. I will be speaking there along with Marc Began (Novo), Manny Schecter (IBM), Bruce Schelkoph (Cummins), Scott Kief (Wash U), Bruce Pokras (Pfizer), Colin Raufer (Boeing), Mony Ghose (BD), Ken Collier (Medtronic), Scott Reid (Lenovo), Chris Turoski (Cargill), Hope Mehlman (Regions Financial), Tom Boshinski (Mead), Wendall Guffy (Nestle), Tim Wilson (SAS), Robert Renke (Flashpoint), John Parrish (Sanofi), Mike Jaro (Medtornic), and Phyllis Turner-Brim (Intermec).
  • The Federal Circuit Symposium March 18. Sponsored by the FCBA and GWU Law School. Speakers include Chief Judge Michel, and Judges Friedman, Newman, and Rader; Senator Specter (invited); a heavy Supreme Court perspective with the five former solicitors general; academics speaking include John Duffy, Arti Rai, John Golden, and Rochelle Dreyfuss may largely focus on the role of the Federal Circuit.
  • Fordham IP Conference (NYC) – April 15-16. This conference has strong cross-Atlantic ties and will include judges and scholars from both continents.
  • IAM’s IP Business Congress in Chicago – June 21-23 – As the name suggest, this annual event focuses on how IP can be used in business. Sessions include “brand IP, strategic IP and business alignment, and IP value creation, as well as a range of breakouts examining legal, financial, strategic and business-related topics.”

Ninth Circuit Applies Federal Circuit Law in Interpreting Contract to Assign Patent Rights

Los Angeles Biomedical Research Institute v. White (9th Cir. 2008)

The Federal Circuit has repeatedly held that contracts to assign patent rights should be interpreted under state law. In a recent opinion, the Ninth Circuit came to the opposite conclusion — holding that “patent law terms” in an employment contract should be interpreted according to to patent law principles.

Dr. White’s Patent & Copyright Agreement with LA Biomed read as follows:

I understand and agree that every possibly patentable device, process, or product hereinafter referred to as “invention”, which I conceive and/or reduce to practice while employed by the Institute, or during the course of my utilization of any Institute research facilities, shall be examined by the Institute to determine rights and equities therein in accordance with the Institute’s Patent and Copyright Policy.

It appeared that the jury interpreted the contractual term “conceive” as a solo activity, while patent law allows for joint conception. The appeal focused on whether the jury should have been informed of law of inventorship and conception as it relates to patent law.

On appeal, the 9th Circuit first agreed that California law requires agreements regarding patent rights be interpreted according to standard contract law and are not generally bound by the limits of patent law. In this case, however, the appellate panel found that the patent laws should be applied in this case when interpreting the contract language. This case may well be unique because the contract specifically noted that patent law principles “shall be taken into consideration.”

Consequently, the court held that the jury should have been properly informed of the law of conception — especially as it relates to joint inventorship.  “[W]e conclude that it was clear error for the district court … exclude the co-inventorship language.”


  • Read the decision [LINK].
  • Comment by Professor Mark Patterson: “The L.A. Biomed. case seems to me uncontroversial as a matter of contract law.  I would view it as saying that trade usage regarding patent law terms should be used to interpret contracts, just as trade usage is typically used in contract law.  And then the Federal Circuit’s decisions will be evidence of — indeed, an authoritative source of what is or will become — trade usage.  So I would say that the court is not so much applying Federal Circuit law directly as using it as evidence of trade usage.  I don’t anything in the opinion is inconsistent with that.”