Future Trends

Future Trends

As a Patent Attorney, what I see for the near future.


Many of my friends are often surprised that I do not have a lot of the latest gadgets or get caught up in the latest fads. After all, as someone who makes a living from the latest technology, wouldn't I be a fan of it? But for the most part, I consider myself a techno-Luddite, adopting only those technologies which I really need and eschewing most of the trendy stuff.

Why is this? Well, the answer is simple. What may be the "latest and greatest" innovation to you was something I wrote a Patent Application on about ten years ago. The other day, someone was showing me the "latest feature" on their GPS system, which allowed them to monitor traffic conditions in real time and display them on a screen – coloring congested roads in red, mildly congested roads in yellow, and clear roads in green. He couldn't understand why I wasn't impressed with this bit of cutting edge technology, until I told him I wrote a Patent on it – back in 1992.

Oftentimes, the barriers to implementation of inventions reside less in the technological aspects, but in social aspects – either acceptance by the public, the need for a certain installed base of hardware, or due to laws or government regulations. Once a certain critical mass is achieved, change then occurs rapidly. The technology for real-time traffic monitoring existed back in 1992. However, it took an installed base of cheap $200 GPS systems, as well as the regulatory changes to gather and transmit such data, as well as the public's acceptance (and demand) for onboard GPS systems in order to make them readily available. All told, these "social" innovations took a decade or more. Innovating the tech part was easy, in retrospect.

The transition to CDs is another example which is easily understood by most people. In that instance, the regulatory hurdles were few. A consortium of companies banded together to develop a new standard (unlike the HD-DVD/BluRay fiasco) for digitally storing music and data on an optical disc. The hard part for that technology was getting an installed base of CD players into the marketplace. The early players costs hundreds of dollars (some over a thousand) and even well into the 1990's, CD players were not standard equipment on many cars (my 1997, 1999 and even 2002 BMWs have cassette decks in the dashboard standard, I kid you not!).

But, one day, you went to the record store, and suddenly, CDs were everywhere and there were no albums. Overnight, it seemed, the vinyl record was obsolete. Once a certain installed base of players existed, it made little or no sense to offer the latest recordings in three formats (Vinyl, Cassette tape, and CD) and the record companies dropped the old formats quickly. To be sure, there was a lot of grousing back then from folks who resisted the change and did not want to "upgrade" unwillingly to a new format. But since the technology was so superior to Vinyl in terms of sound quality and longevity, ease of use, and storage, it quickly took hold.

(To be sure, there are some "purists" who will argue that an analog vinyl recording, with pop and hiss and wow and flutter is better than the "digital sounding" CD recording. In any technology, however, there are always a few who will cling to the old ways, claiming they are best, regardless of the actual technical merits).

Today, we are poised for another series of "sea changes" in technology which will change the way we live and interact, and these changes will far more profound than the switch from analog to digital recording (although they are related). And as before, the technology for these changes has existed for years, even decades, but because of social and non-technical concerns (or because of cost reductions in technology) has only now become feasible. Many of these technical changes will solve some of the "problems" in our society.

And no, I am not talking about "Twitter" or the latest handheld gadget that is touted on the "tech" pages of CNN or some other website. Such things are merely the offshoots of the underlying technological changes occurring – the symptoms, not the causes. Focusing on social network sites and the latest iPod is examining the trees but missing the forest. The changes I am talking about are more far-reaching and may change our way of life dramatically.

While many are pessimistic about the future and blame technology for our problems, I believe that technology will also solve many of these problems. Frankly, at this point in our civilization, we have no choice. While it may be charming to think we can go back to a "sustainable" serf-like existence, it is not feasible for a planet populated with billions of people. But there are other answers that may produce real solutions.


1. The Death of Paper

With the introduction of the personal computer in the 1970's and the IBM-PC in the 1980's, a new era of computing was promised – one in which the flood of paperwork would be eliminated in favor of electronic data. Consider that before that time, most companies had small armies of accountants and clerks, armed with adding machines and ledgers, to keep track of data. The computer, it was promised, would eliminate that entire clerical class and all that paper, and produce neat and tidy electronic sums.

Word processing (a term yet to be invented) would also change. Instead of white-out and erasures, we could make changes to documents with a few keystrokes, or the click of something called a "mouse."

But a funny thing happened. Not only did paper consumption not decrease as predicted, it actually increased dramatically. Since we could produce multiple versions of a document on demand, we did. Before, when documents were typed, we were more careful in preparing them and accepted minor errors more readily. And since documents were expensive to prepare, we made them fairly short and simple. Once word processing came along, the two-page business letter supplanted the single-page business letter, often with the first page devoted mostly to elaborate letterhead and a salutation.

Environmentalists were alarmed. Consumption of paper products skyrocketed, and the resultant impact on the environment was predictable. What was good for Georgia Pacific was not necessarily good for America.

Even odder, after the introduction of the PC and the popularity of data networking, the amount of mailings increased. New "overnight" services such as FedEx proliferated (we have at least four now in competition, FedEx, UPS, USPS, and DHL).

But in the last year, something funny has happened. Nearly three decades after the introduction of the PC, the promise of a "paperless" office seems finally to be coming true. Granted, paper will never be entirely extinct, but consumption of paper products, at least in the traditional sense will decline dramatically in the next decade.

Why has this change occurred? The answer is multifold. The first reason is display technology. Inexpensive flat-panel displays have proliferated and gotten larger and larger. As a result, the idea of having a tiny display for your computer now seems antiquated. As I write this, I am using dual 24" flat panel displays, in portrait mode, which allows me to display entire pages of documents for viewing at a glance. While most visitors are amazed at the size of such displays, in future years, they will seem tiny and quaint.

The display factor, it turned out, was critical. Prior to the introduction of large flat panel displays, a user had to view the Internet or a document through the tiny peephole of a 15" CRT monitor. Imagine looking through the world through a cardboard paper towel roll tube (as a child often does, pretending it is a telescope) and you have an idea of how the Internet and how documents were viewed in the "bad old days" of only a year ago. To read even a single page of a document, one had to "scroll up" and "scroll down" constantly. To really look at or read a document, one had to print it out. Thus, printer technology exploded and paper consumption expanded rapidly.

I have two enormous photocopiers in my home offices, as well as laser printers. Every day, until about a year ago, I would go to my home office, crank up the printer and photocopier, and then go to work. All day long, the machines would crank out paper which I would then staple and punch, placing one copy in my file, sending one copy to the Patent Office (via Express Mail) and one copy to my client (via Priority Mail). Each day ended with a trip to the local Post Office before closing time.

My photocopier sits quiet and cold now. The Patent Office sends me documents by .pdf, which I in turn forward to my client and store on my hard drive. I rarely print anything out now, as I can display documents easily on my large flat panel displays. Like the introduction of the CD, it was a change that happened so quickly that I didn't even notice it until it happened. Suddenly, I was no longer buying paper and toner. (My fax machine went goodbye in a similar manner). I am using less electricity and paper as a result – and have less clutter, too. This change is a good thing for me, my clients, and the environment.

The second aspect of this sea change is social. Until a few years ago, the idea that an electronic document was "safe" was controversial. Many Lawyers and other professionals preferred to "FedEx" original documents rather than send them by e-mail. When closing on a home or other deal, for example, papers would be prepared at one office, and then "overnighted" or couriered (via bicycle courier, a quaint notion) to another office.

Part of the problem was technological. With so many different printers and formats for data, one could not insure that a document created in one word processing program would print properly in another or be formatted properly on a foreign printer. As de facto standards have evolved (e.g., Adobe .pdf), this has become less of a concern. Most business deals are routinely conducted by Internet now, and the idea of the "closing room" or the "closing table" seem almost antiquated. Print out the .pdfs, sign them and then scan them in and send back. Soon, digital signatures will replace even that (again, with the technology already largely in place, waiting for social adoption to take place).

And social adoption was probably the last hurdle (and remains) for paper. As with CDs, there are still folks who claim to prefer to have "something in their hand" to read, and such folks remain one of the few obstacles to electronic print. The e-paper revolution encompasses not only the business world, but the print media as well.

Again, the technology to distribute newspapers and books online has existed for decades. It was far easier to distribute text online than music or videos, and yet the latter two (which require much more bandwidth) are transitioning to electronic online formats faster than books, newspapers, and periodicals. Social adoption issues are causing the delays. Getting disparate publishers to agree on a standard format has been difficult.

Text publishers are concerned that their data will be pirated and refuse to allow access to online services such as Google and others. And yet, having the entire libraries of the world available online would clearly be a social good for all of mankind. Amazon has produced a primitive device called the Kindle, which succeeds the ill-fated Sony Reader. None has achieved widespread acceptance. Amazon, as a large content provider, seems poised to succeed where the Sony Reader has not.

Regardless, however, in order for the "e-book" or "e-paper" or "e-zine" to succeed, a standardization of formatting needs to occur, so that a user does not have to use different devices or formats to read different texts. Moreover, a better "reader" needs to be developed. Both the Sony Reader and Amazon Kindle have relatively tiny and hard to read screens. A larger format would lend itself to magazines and newspapers with graphic, as well as text content.

But these issues will be resolved, probably in the next decade, if not the next few years. Traditional magazine, newspaper, and book publishers have resisted technological innovation for fear it would diminish profits. An odd thing has occurred in the interim, however. Their business models have been shattered regardless of their resistance to technological innovation. Television and online "newspapers" (often merely extensions of television cable news channels) have supplanted the traditional daily paper. As a result, daily papers have died off in droves, as their business model of printing paper and distributing it on a mass scale has proven uneconomical in the new age.

Readership in general has declined, and no one in the publishing world seems to know what to do. Yet more and more people are spending time online reading and writing blogs, visiting websites, posting to discussion groups, and doing other things that fall under the umbrella of "reading." It is not that reading has died, but that people now read in a different way. It also means that publishing has changed as well. Just as a garage band can now upload their sings onto iTunes and forego the middleman record company, a publisher can "print" directly online, their thoughts and feelings. It took me mere minutes to "publish" this tract, for example. Of course, getting paid for it is another deal entirely.

But the Internet seems to be adapting to ways of finding "content providers" and rewarding them for content. Some sites, for example, reward providers by paying them in reward points, good for free access to features on a site. Others provide points based on hits which actually can be used to pay cash to the content provider. Sites with no content, or garbage content (e.g., nothing but flame wars) tend to wither and die, so a site operator, if he wants to generate traffic for his advertisers, will find ways to attract and compensate content providers. Online publishing is in its infancy, and for the time being, most content providers are making nothing from their contributions. But all this will probably change over time.

So what does this mean for you? Well, for starters, in the long term, I would short sell stocks for paper companies and overnight delivery services. We are already hearing of pain at the Post Office and for FedEx, UPS, and DHL. I suspect that one or more of the commerical services will die off or merge with the others. These companies will have to reinvent themselves as parcel delivery services, not paper delivery services. As we shall see below, home delivery of goods will be a growth area in the coming decades, and the company that can deliver GOODS (not just packets of documents) will succeed in the marketplace.

Similarly, paper products companies will find the demand for photocopy paper dropping off dramatically. Those who do not adapt to the new technology will suffer, and there will be some shakeouts in this area as well. However, demand for corrugated containers and shipping products will increase or remain flat, as more and more consumers stay home and wait for the world to be shipped to them. There will still be a need for paper products in packaging, particularly now that Styrofoam and the like are no longer in favor. Paper can be easily recycled and paper packaging thus still has a fairly bright future.

This trend probably does not bode well for printer and photocopier makers, either. HP and others have done their best to make the printer market as toxic as possible to their customers. Many printer companies give away printers (at low prices) and then attempt to pick up the profits on the back end by selling proprietary cartridges. By making the cost per page for printing very high, the printer makers have signed their own death warrant. It is cheaper to display family photos on an electronic picture frame (made from a cheap flat panel display) than it is to print them out on a color printer. Expect to see some severe consolidation in the printer and photocopier market, as demand for these machines declines dramatically. The companies that survive will find ways to make new products, or to use their products in creative ways for other purposes.


2. The Death of the Car-Based Economy

This next major trend will take longer to implement, as it is so far entrenched into our society. Americans, like most humans, love their cars, even if they hate traffic, pollution, the lack of parking spaces, death due to accidents, and the high cost of personal auto transportation.

And no, I am not some public transportation nutjob who thinks that buses, trollies, or "personal transportation pods" are going to replace the automobile anytime soon. However, I do think as a long term trend that the number of miles driven annually will decrease dramatically (perhaps by half) over time.

Telecommuting is the answer to most of our auto woes. It will not eliminate the car entirely, but it will change the way we think about work and the work environment. For the last few decades, most office workers in the country have left their homes, bright and early, to drive an hour or more to an office. The office was equipped with a computer, a photocopier, a fax machine, and a phone. Most of these office workers had left a home with a computer, a fax machine, a photocopier, and a phone. The question that even a child would ask is, "why would you drive 20 miles one-way to access equipment already in your home?"

And increasingly, the answer is, "You wouldn't." In the Washington DC area, more and more companies and Federal Agencies are resorting to telecommuting, at least part-time, as a way of cutting costs. The Trademark Office has long allowed Examiners (Examining Attorneys) to work from home. The Patent Office followed suit a few years ago. Many other Federal Agencies and private organizations are following suit.

Granted, most are still requiring that employees come into the "office" once a week or more. And for some private organizations, telecommuting is limited to one or two days a week, on a voluntary basis. But consider this: imagine the effect on Washington traffic or air quality if 10% of the commuting traffic suddenly disappeared. How about 20%? Or maybe even 50%?

The savings to organizations are driving this engine. The Patent Office, after building an ambitious new campus, realized that it was still too small for their rapid growth plans. Building new office space was not feasible. Telecommuting provided a cheap solution.

Again, the technology existed for years. But the proliferation of cheap computers, high-speed internet access, and larger homes (with space for a home office) combined to make the concept practical.

The concept can be taken even further. If there is no need to drive to an office, then why live in a crowded and polluted and expensive city? As I type this, I look out from my home in Central New York, at a beautiful lake. Houses in this area are nearly half the cost of housing in Washington DC, and the "quality of life" is much better. Once freed from the idea of having to BE in a particular place, many workers can move to where housing is cheap and taxes are low. This, in turn, will provide employment opportunities in support and retail in those depressed areas.

Take this idea even further - why live in the US at all? Many retirees are finding that their Social Security dollars are more than welcome in friendly foreign countries, such as Panama. If you can work anywhere in the world, why not work in a country where $20,000 a year gets you a house with a maid, a gardener, a car and a chauffeur? Why do you think Hemmingway lived in Cuba as opposed to Key West? Telecommuting can allow workers to move offshore as well as out of the city.

Of course, such work can be "outsourced" to anywhere in the world. Outsourcing presently has a bad name in this country, as chauvinistic Americans, convinced that their birthright entitles them to a certain standard of living, decry the trend. However, many services can be performed by others overseas for a fraction of the cost in the US, with a HIGHER quality. I presently use a draftsman and searcher in India for my Patent drawings and searches. Not only are they cheaper, the quality and turnaround is better than with my local "American" sources, which produced indifferent work, often with great delays and at high costs (and acted as though doing work was a great favor to you).

And yes, even my own job could be (and probably will be) "outsourced" to some extent. I trained an Indian Attorney in my employ, who is also a Registered Patent Attorney. He returned to India and started his own firm there. He will be able to hire Indian Engineers to draft applications for far less than I can and will likely be very successful in the marketplace. Good for him! And I have been approached by Indian agencies who have offered to write applications and even responses to Office Actions, for a fee. While I have turned away such offers, it is likely that there are others who will not. If the result is a better quality product at a lower price, then the consumer will be the ultimate winner.

But I suspect that these trends will be slow enough that I can safely make it to retirement with something of a career intact. Moreover, since my personal overhead has been reduced by telecommuting, I can keep my fees reasonable enough to compete with such offshore competition. And this is where this "new economy" has already taken hold. Many Patent firms are laying off Attorneys or even folding due to the downturn. And the effect is not limited to Patent Attorneys, but encompasses other types of transactional Attorneys as well.

Companies still want their Patents, they just see no need to pay $30,000 to $40,000 to get them on file with a "downtown" law firm, with its high overhead costs. When the economy turns around, it is likely that this trend will not reverse itself. Once you've gotten used to the idea of paying less and using a telecommuting Attorney, it will be hard to go back to paying the high prices of the big firms for essentially the same (or worse) service.

My neighbors are still part of the old car-based economy. I watch them drive up and down our private road, sometimes two or three times a day. Both husband and wife commute 20 miles each way to work. Their children drive to school. Often, they all come home, in a parade spaced apart by mere minutes, only to leave again to go "shopping" or go to dinner. One wonders why they own a house at all, given that the only time they spend in it is sleeping.

Their experience is typical of most Americans, who spend 2-3 hours a day in their cars, and drive a staggering average of 15,000 miles a year. Most Americans have "bought into" the idea that driving is a major part of your life, and that making car payments is a perpetual task, and that buying a new car every 3 or 4 years is "normal." This "car economy" has been one primary engine for American manufacturing in the last decades and it is suddenly changing.

Yes, the "downturn" in the car business is due, in part, to the decline in the car economy. The world has long had an overproduction capacity of 30% or more in automobile manufacturing. Every emerging economy views a car plant as a ticket out of "third world" status. America is a land of 330 million people and 360 million cars. For every American, there is more than one car available (I have six). We are literally drowning in a sea of cars.

Telecommuting is changing all of that. As an "early adopter" I can tell you it is somewhat disturbing at first, to go from the "car economy" lifestyle to the "work at home" lifestyle. Just as I suddenly noticed that I was no longer using my photocopier one day, I noticed that my car usage dropped off the map one day. The idea of not leaving home for days at a time is alien to most people. Many folks would consider this a sign of some sort of "disorder." But traditionally, mankind tended to function in this manner. Most farmers live on and worked the land. Most trades people made their homes above their shops. The idea of "commuting" came into being only with the development of the train and trolley, accelerated with the introduction of the automobile, but may be slated for extinction soon.

It is liberating not to have to drive an hour to work each day, and this means I can spend less time devoted to work as well as further cut my overhead. Since I hardly drive anymore, my cars last forever (Most are over 10 years old and have 30,000 to 70,000 miles on them). I tend to plan trips more carefully now, rather than just "jump in the car" on impulse and drive somewhere. Not only do I have more time, I make more efficient use of my time. A car trip is now a major event, planned to achieve a certain set of goals. The idea of "running errands" or "going to the convenience store to grab something" become alien.

And since the Internet has almost everything you could want to buy, I find I am using retail stores less and less as a source of goods. I can price shop online and get the best deals – and have them delivered to my door in a matter of days. Since I don't leave home as often as I used to, this turns out to be more convenient than before. Moreover, I find I no longer am "shopping" – buying things on impulse rather than based on need.

To be sure, I am probably on the leading edge of this trend. But like the CD, I think it is a trend that will spread rapidly, with some problems in social adoption. The first problem is what I call the "Homer Simpson" syndrome. Most American workers are like Homer Simpson, and need to be hounded constantly to get any work out of them. In the Simpson's episode where Homer works from home, he resorts to doing as little work as possible, goofing off full time.

Working from home requires a staggering amount of self-discipline, and few workers today have that level of self-control. It is all too tempting to goof off (or write a blog) when one should be working. And for this reason, many companies will offer telecommuting only for their most disciplined employees.

And of course, telecommuting will not be possible, at least right away, for most jobs. But necessity and a creative mind can find telecommuting opportunities where they might not seem to exist. McDonald's, for example, found that hiring workers in high-cost Hawaii was difficult. Order takers for the drive through would take orders over a speaker phone and then enter the data into a computer. Someone at McDonald's figured out that there was no reason that such employees had to reside in Hawaii, and instead hired workers in Texas to "telecommute" to the drive-through window in Honolulu.

As computer displays become larger and the bugs are worked out of "virtual presence", many more jobs may go "online" or disappear altogether. Visiting a retail store may be obsolete within a decade or more, if you can go online and view a wall-screen display of goods (or in virtual 3-D).

Of course, naysayers will argue that such claims are overreaching – that humans have a need to interact in person. And to some extent, they are right. I am not saying that computers will replace human interaction, merely supplant it for many ordinary transactions. People will still want to "go out" and interact with others and attend live events, go to restaurants, and the like. But people will probably expect such live interactions to be of a higher quality before they decide to leave home.

The death of mediocre restaurant chains, such as Bennigan's is probably no anomaly. In the car economy, stopping by such a place "on the way home from work" for a light beer and stuffed potato skins might have seemed a viable proposition. The time taken up by commuting, after all, makes meal preparation at home more difficult. But when one is at home and not traveling to begin with, the impetus to get in the car to drink bad beer and eat bad food is, well, lacking. If I am to go out to a restaurant, it had better be a compelling experience.

The death of the car economy will mean shocks for several industries, starting with the car companies. Participants in the car economy need and require a constant stream of new cars, and the car economy feeds on this need. "For your next car," an automobile ad proclaims, as if buying a new car is akin to buying new underwear. As I noted before, I hardly drive my cars anymore, and as such, have no need to replace them, no matter how desperate the U.S. auto industry is.

I have older BMWs, which while antiquated, were cutting edge at the time of their manufacture. They have turned out to be good choices for long-term car ownership, as they do not get "boring" within a year or two (can one say that about a Chevy Lumina or Ford Taurus?) and much of the "cutting edge" technology from 1997 is now just being adopted by mainstream manufacturers.

I may replace some of my vehicles someday (and perhaps consolidate a few). But in order to do so, like the restaurant scenario, I would need a compelling reason to do so. Since I do not drive all over the place anymore, I no longer view my social status in terms of what kind of cars I drive (and since most of my cars are hardly driven, they look like new and tend to be mistaken for newer cars anyway). Trading in a good car for this year's indifferently made piece 'o crap is simply not an option. If I am to keep a car for a decade or more, it has to be the right choice.

Thus a car that is a gas hog is not an option, as it is likely that over the next 10 years, gas prices will climb. Similarly, quality is paramount, as I will likely own the car long after the warranty has expired. All of these criteria spell trouble for General Motors and other makers of largely disposable cars. Even BMW may have trouble, as it moves away from traditional values to embrace trendy styling and "product cycles."

Long term, while owning an automobile will still be necessary for most Americans, it is likely that most Americans will keep their cars longer and drive them less. As a result, the manufacture of automobiles en masse may no longer be the backbone of industrial production in the US, or even the world.


3. Effect on Society and Environment

These trends will have both positive and negative effects on society and the environment. Less commuting and driving will mean less road construction, less traffic congestion, less pollution, and fewer junked cars. The death of paper will mean less papers in landfills and less pollution and related effects from the production of paper.

For rural areas, this will mean property values will increase, as highly paid professionals increasingly move to lower cots rural areas. Granted, some folks may prefer to live in cities or areas where good schools are available. But unchained from the daily commute, many folks will pick areas that at first glance, may seem odd choices.

Higher land values may generate some resentment from "locals" in rural areas. However, this new class of telecommuters will end up adding more monies to local economies in the long run.

I touched on social networking sites earlier as a symptom of changes, not the actual change itself. These social networking sites are a basic stop-gap in the trend toward interactive Internet experiences. Sites such as "Second Life" became briefly popular as a trend among computer geeks a few years back (and again, I wrote Patents on the concept of "avatars" in interactive 3-D experiences a decade before that, so it was no big surprise to me).

The use of social networking sites is an interesting trend, and it does fit neatly into the telecommuting world of tomorrow. I can go on Facebook and see what my friends are doing, and exchange a word to two, just as I used to do in the Office. One can chat as long as they'd like, or just wave and say "Hi." To some extent, this is more efficient than the old Office environment, where some co-worker could plant himself in your office for hours and bitch about his ex-wife. With Facebook, you can ignore him and still be polite. And unlike your office friends, on Facebook you can at least choose who to interact with.

The decline in retail stores will continue. There was never enough business to justify as many Bed, Bath and Beyond AND Linen's 'N Things outlets as existed, and it is no surprise that one would fold eventually. The business model of "outgrow the competition" was a costly one, and for the victor, there may be no spoils. A recent trip to a "Bed Bath" store is illustrative. My partner, desiring a new mixer, visits the store hoping to buy one. However, the store, to cut costs, does not stock them in all colors. So the salesperson goes on the Internet, using a store terminal, to order it – having it shipped directly to our home. What exactly was the point of that? We could have ordered the same mixer online ourselves.

Since most good like that can be ordered online, more and more retail stores are resorting to pushing impulse purchase items. The center aisles of Bed, Bath, and Beyond are crammed full of impulse items, while the staples (Linens and Bath items) are tucked to the sides, and increasingly the variety limited. There is a greater markup in these impulse items, but to sell them requires that the purchaser enter the store and be inclined to squander money. In the new economy, both are hard to come by. I predict that at least half the Bed, Bath, and Beyond stores will close in the next five years, as retail sales at brick and mortar stores drops off.

The new jobs are more likely to be in the service sector – delivering installing, maintaining, and troubleshooting equipment, as people rely more and more on the Internet and their computers to access their work and life environments. The retail "McJob" – operating a cash register and being rude to customers – will largely be a thing of the past.

Time-shifting is another aspect of this new economy that will come as a pleasant surprise to many. As I write this, on a rainy, cold, and cloudy 4th of July weekend, many a vacationer is huddling in their cottages down by the lake, disappointed that their annual vacation has been effectively ruined. For most Americans, the "weekend" is the only time they have to relax, other than a week or two of vacation during the year, along with a few holidays (Memorial Day, 4thof July, Labor day, etc.).

As a result, when most people go on vacation, everybody else is going on vacation, too. Most folks thus live in a crowded world – commuting when everyone else is commuting, working when everyone else is working, eating when everyone else is eating, and vacationing when everyone else is vacationing. To most Americans, restaurants are always crowded, roads are always congested, and beaches are always full.

But if you time-shift, even by a day or two, you'll find most of America deserted. The resort on the 4th of July maybe slammed with people. But a few days later, it is bereft of visitors. When you work from home and telecommute, you can get work done when you want to, not when others are working. That great idea you have a 3AM can now be put on paper instead of being forgotten in the morning. And that day at the Office when it seems like nothing can get done can be better spend down at the beach or restoring an old car. And your favorite restaurant can be visited on Thursday night, when it is quiet and you can get a table, as opposed to the noise and crowds of a Saturday night.

Time-shifting means that the world will appear as a less crowded place to you. When I started working from home, I started time-shifting. When I drove, I avoided rush hour and when I went out, I avoided busy nights. As a result, even though I was living near a major city (Washington, DC) my life had more of the flavor of life in a small town. Traffic, for me was always light, and stores and restaurants were never crowded. The few times we would get caught up in traffic or crowds would come as something of a shock, as we would say to ourselves, "Did we really used to live like this?" and "Why do people chose to live like this?"

To be sure, these changes will not be a cure-all for our social and other problems. However, they will change the nature of some of these problems. Moreover, they may change the way most of us live – for the better. As I said, I am optimistic that the world can still be a better place to live. But it will require some vision and hard work to make it happen.

CONTINGENCY FEE PATENT PROSECUTION

CONTINGENCY FEE PATENT PROSECUTION

Why it is a bad idea

Why it doesn't work


Not a month goes by when I don't get an e-mail or phone call from an inventor who tells me he has the next "big thing" and if only had some money, he could get a Patent and be rich. Would I be interested in taking the case "on contingency" or for a percentage of the profits?

Unfortunately, I have to decline these requests, as contingency Patent Prosecution just doesn't work. The reasons why are varied and complex. The following is a summary of some of the reasons why it is a bad idea and why it won't work.


1. Most Inventions Fail

The sad fact of the matter is, perhaps 90 to 95% of all inventions never make any money for the inventor, and this number may be as high as 99%. Thus, the law of probability and simple mathematics dictates that if a practitioner takes on Patent cases for a contingency, chances are, he'll go broke. Even if one of those small minority of cases make money for the inventor, the Patent Attorney would have to take a huge percentage in order to compensate for all the other cases that went bust.

In litigation, the odds of success are much higher. A litigating Attorney can tell in advance the odds of a case winning – and each case has a nuisance value as well. So there is more like a 50/50 chance of a payout in a litigation matter. And, coincidentally, most litigation Attorneys demand 50% of the proceeds.

But for a Patent case, it is much harder to tell in advance if a Patent will be worth anything. Oftentimes the inventions that seem like "sure things" end up going bust, and the inventions that seem like "crazy ideas" take off. It is nearly impossible to gauge this in advance, unless the client has invented antigravity or something. And even then, getting a patent and making money from it are still difficult.

If you look at the track record of successful inventors, it is not a cheering prospect. Even some of the "great" successful inventors of the last century (Bell, Wrights, Edison) did not make a lot of money from their inventions - compared to the amounts made by investors. Most ended up living comfortable and moderately wealthy lives. Few, if any, became stinking rich. So there is little in the way of a "jackpot" to share with a contingency fee attorney.


2. Contingency Fee Cases Have Real Costs

Even if the Attorney is willing to take the case on contingency, there are real costs associated with Patent Prosecution. Patent fees are rising all the time, and it does not take much time before these fees run into the thousands of dollars. If the Attorney pays these fees, not only is he working for free, he is paying for the privilege of working.

In most jurisdictions, the Attorney cannot advance fees in litigation, as that is considered financing of litigation. It is less clear how this would work in a Patent Prosecution situation, but it may also be a violation of ethics rules as well.

Even if the inventor agrees to pay all the filing and Patent Office fees, there is still a real opportunity cost associated with taking a case on a contingency fee basis. A Patent Attorney has a finite amount of work output he can sell. If he takes a contingency fee case, he has to decline a cash-paying customer. So, until or when the contingency fee case pays out, he has decreased his income by the amount of the cash cases he is turning away.

While most people think Attorneys in general are all rich and make huge sums of money, it really isn't true. While lead partners in big law firms might make millions of dollars (doing some very, very bad things), the bulk of the lawyers out there merely make a good living, and many just scrape by.

The Patent Prosecution business has never been very lucrative. While litigating a Patent might generate hundreds of thousands of dollars in legal fees, the cost of preparing and filing a case might run only ten to twenty thousand dollars, on a good day. And prices in this business have been dropping, not rising, in recent years. For most Patent Prosecutors, there is little room on the docket for "free" Patent cases.


3. Ethics Rules & Conflict of Interest

While rules vary from jurisdiction to jurisdiction, in some instances, it is considered a breach of ethics for an Attorney to take a financial interest in a client's business. This creates a problem when an Attorney has agreed to take stock in exchange for legal work, or a percentage of the business or income from the Patent. For example, if I know a Patent is going to issue for a client, using this information to buy stock would be considered insider trading.

But these Rules are in place for other reasons as well. If an Attorney becomes an owner of the company or has an interest in the company, he now has a personal interest in the company separate from (and possibly adverse to) the inventor's. If a dispute arises on how the company should be run (e.g., a shareholder revolt) whose side is the Attorney on? His own, the inventors, the company's or the shareholders? There is a serious possibility of conflict of interest in such situations, and an Attorney has to tread carefully to avoid such difficulties.

Simply stated, if an Attorney takes on a contingency-fee case, he increases the risk of being sued for malpractice, and he increases his risk of an ethics complaint being filed against him. For most Attorneys, the slim possibility of a payout is not worth the risk.

Guaranteeing a legal result can also be grounds for an ethics complaint. If you are guaranteeing a Patent in exchange for a percentage of the client's business, are you not also guaranteeing a legal result?


4. Where Does It End?

Another problem that Attorneys don't think about, is where does the relationship end? Suppose your inventor comes to you with an invention that looks like a "sure fire" deal. You think, "Well, this seems like a good opportunity, and a good way to help the inventor make money from his invention."

So you file the case, and the Examiner rejects the claims – in view of some pretty good Prior Art you did not expect to find. What do you do now? Your client was expecting an enforceable Patent out of this deal, and for reasons not within your control, you can't get one. Are you still owed a percentage of his invention? After all, you DID do all that work, right?

Suppose the rejection isn't that good, but the Examiner refuses to allow the case. Do you have to Appeal? File a Request for Continued Examination? How far does your responsibility end in this case? Suppose you don’t think the case has any merit, but the inventor wants to push on and on? How do you end this relationship?

This may seem like an unlikely scenario, but it can happen. The Patent Office has been rather strict lately on 101 (Statutory Subject Matter) rejections. If your inventor has an Internet Method of Doing Business Patent Application, it will likely be rejected by the Examiner and even the Board of Appeals. What do you do then?

Another scenario is if, after filing the initial application, the inventor comes back to you with a second, related invention. Do you take on this case as part of the contingency fee arrangement? Arguably, it is in your best interests to do so, as the more Patents your inventor gets, the greater a chance you can license the technology. But suppose he brings you more and more inventions – some related, some not, some tangentially related. Who decides which cases get filed and which do not? It is a tricky situation, and a "simple" case can explode into a major headache in short order.


5. Suppose the Inventor Makes a Bad Business Decision?

As I have noted in other articles, I have seen inventors sabotage perfectly good licensing agreements and other business arrangements because they think the invention is worth millions of dollars, when in reality it may be worth thousands. The prospect of the inventor driving the whole she-bang off a cliff is not a remote possibility, but rather a likely one.

Suppose your inventor is offered a few million dollars for his invention, and he turns it down, saying that it is worth far more than that? This scenario plagued the Attorneys representing the inventor of the intermittent windshield wiper. He turned down cash offers, only to win far less in court. It is not an unlikely scenario – but rather a predictable outcome.

If the inventor turns down a reasonable offer, then what do you do? Oftentimes, those offers disappear after a while and there are no offers after that. The inventor making bad decisions puts you in the hot seat. As an investor in the project, you might pressure him to make a decision that results in a payout for you. Granted, it is probably in the inventor's best interest to take the deal, and even if you were not vested in the deal you'd advise him to do so. But if you advise him to take the deal, and he later on has regrets, he may argue that you unduly pressured him, etc. It's not worth it! This is the Conflict of Interest I referred to above. In addition, you are now giving him legal advice on business matters if you try to advise him in non-Patent issues. Does your malpractice insurance cover this scenario? Suppose you give him bad advice?

The answer is, you can't give any advice at all. If the inventor is the businessman, you have to limit your advice to Patent issues, lest you cross the line into Conflict of Interest or practicing outside your area of expertise. As a result, you might have to sit idly by and watch the inventor drive the whole enterprise off a cliff.

And guess what? Inventors are often the WORST businessmen in the world! They naturally think their inventions are the greatest thing since sliced bread, and want to charge huge prices for them, regardless of what market demand is. Moreover, they are not very likely to have any business or economics training whatsoever. In most cases where an inventor tries to run a business enterprise himself, it fails.


6. Suppose the Market Tanks?

This is an issue that is highly relevant today. During good times, taking a contingency fee case might seem like a good idea. People are buying and selling companies and Patents and inventions and everyone is making money at it. Why not you?

Then a few years later, the money dries up, and the boom times are over. Suddenly, no one is interested in buying startup companies or new inventions – they are more concerned with day-to-day survival. It happened in the mid 1990's with the "dot com" bust. One day, people with an idea and a website were becoming millionaires. The next day, they were on the unemployment line.

(And you know, more than one "dot com" company offered to pay me in stock. Sure, a lot of folks made money on those "dot com" stocks. But far more lost it all. I turned away such deals.)

The inventor's invention might not take off for reasons that are beyond your control and his control. What do you do then? You've spent an enormous amount of time and energy on a case, with little or no payout. You would have been better off taking cash cases for less.

In addition, the inventor may tend to view the disappointment with his invention as having nothing to do with the economy or the invention. People like to scapegoat, and chances are, the inventor will start looking at YOU as the source of difficulty. "If only we had broader patent protection" they will say, or "if only we had a better license agreement!" But the reality is, if an invention cannot succeed in the marketplace or the licensee goes bankrupt, you can't get money from a stone. These are real concerns today. Inventing is far from a sure-fire business in the best of times. In these times, even less so.


7. Suppose Somebody Decides to Infringe?

This is a tricky part as well. After your inventor has turned down a license agreement, the would-be licensee decides to just copy the invention and to heck with the inventor. If you do not get a Patent or your Patent is not strong, you are stuck.

But suppose you DO get a good Patent. What now? If you are not a litigating Attorney, you can't really help the inventor. He would have to hire a separate contingency fee Litigation Attorney to litigate the Patent. You would have to hope there are millions of dollars in royalties in the case, as by the time the Litigation Attorney takes his share, there might not be much left for you (and is your percentage of the top, or a percentage of what the inventor receives?).

Even if you can find this Litigation Attorney, and you have a strong case, and you get lots of damages, you can expect to wait years and years before you finally collect.

And the problem with this scenario is that the inventor will resist hiring a Litigation Attorney. Why bother, when he has you? So you will be pressured into writing "cease and desist" letters or doing other things outside your comfort level.


8. How Do You End the Relationship?

Again, this is tricky from an ethical standpoint, and you don't want a complaint filed against you. And you don't want to end up getting sued.

Suppose the cases are rejected – or some are allowed and some rejected, and the inventor's business has gone completely south. The inventions have not sold as expected, and even the ones that have sold have yet to turn a profit. The inventor has turned away lucrative business deals in favor of "going it alone" but now he has run out of money.

You've sent him bills for maintenance fees, issue fees, and other Patent Office fees, and he hasn't paid them. What do you do? Do you let the cases go abandoned, or advance him the fees?

In conventional representation, if a client doesn't pay your invoices, you Petition to Withdraw as Attorney of Record, simple as that. And if the client doesn’t pay, well, your Petition is granted, simple as that.

But what about a contingency fee case? The inventor cannot afford to get another Attorney, and the odds of him finding someone to take the case on contingency are slim. If you bail out on the project, you are leaving him high and dry. This might not be an ethical violation (after all, a paying customer is left in the same situation when he doesn't pay) but it may be a moral issue.

Granted, if the inventor has not paid you for the filing fees you invoiced, your Petition will be granted. You would, of course, have to surrender any interest you have in the Patents. So the entire project would be a horrendous write-off, to the tune of thousands of dollars in lost revenues and thousands more in cash expenses.


9. So, What Can You Do ?

The best thing to advise the inventor is to find investors for his invention to fund the Patent and also to fund prototyping, development and sales. He should get someone on board with business experience to run the enterprise and to market the invention. That someone is not you and not him.

If the inventor is paying cash money for Patent Prosecution, he will realize that each Patent has a cost/benefit analysis. Prolonged prosecution of cases where there is little likelihood of getting a useful Patent allowed make no sense, and he will see the light and pull the plug. If the prosecution is "free" he won't – he'll want to take each case to Appeal. Similarly, if the inventor is paying cash, the inventor will carefully pick and choose which cases to prosecute, rather than file on whatever whim catches his fancy.

Now, you might argue that it might be possible to draft an agreement with the inventor that would cover all these contingencies – and maybe such an agreement might be do-able. But I have only listed some areas I have thought of or experienced. There may be dozens more. How can you anticipate them all? The answer is, you simply can't.

The traditional techniques for billing clients for Patent Prosecution, and the traditional Attorney/Client relationship have evolved over decades, if not centuries of time. One reason such contingency-fee arrangements have been frowned upon for Patent Prosecution is that these arrangements have caused problems in the past. You are far better off following the "well-worn path" established by others than to attempt some new, untried arrangement, which could backfire on you in a big way.


* * *

ANTECEDENT BASIS in CLAIMS - What does it mean?

You may see a rejection of your claims under 35 USC §112, second paragraph, arguing that a term in your Patent claim "lacks antecedent basis".

What the heck does this mean?

To begin with, as touched upon in other articles here, claim language and the English language, while having some things in common, are really two different things. A Patent Claim is a legal definition of the metes and bounds of your invention. As such, it has little to do with narrative text.

I often compare claim language to a computer lanuage. You may look at a program in "C" language, FORTRAN or even BASIC and see words that look like English. But when you read it, it hardly makes sense, unless you are versed in that program language. As English prose, it makes no sense at all.

And, just as trying to read a computer program as a novel makes no sense, trying to read a Patent Claim as though it were a short story is bound to cause difficulty and confusion. For this reason, you should take the arguments of these "armchair analysts" with a grain of salt, when they try to alarm you about some Patent claim being overbroad.

But getting back to antecdent basis - what does the term mean?

Well, to use the computer program analogy again, it basically means that you have failed to defined a term in your claim previously.

Consider the following example of a simple computer program in BASIC:

10 INPUT X
20 INPUT Y
30 LET Z=X+Y
40 PRINT Z
50 END

Such a program would ask for input of two variables (X and Y), add them together, and print the sum. Big deal, right? Well suppose you re-wrote the program as follows?

10 INPUT Y
20 LET Z=X+Y
30 PRINT Z
40 END

If you "ran" this program, one of two things would happen. On some computers, if X had been previously defined (and stored in memory) the program would run and deliver a sum based on that historically stored value. But for most computers, you would get the following message:

UNDEFINED VARIABLE IN LINE 20

The reason is simple. You start talking about variable X in line 20 like it was your old friend, when in fact, you never mentioned it before. It is an undefined variable. Before you start doing math with Mr. X, you have to introduce him to your computer, so he knows who he is.

Simlarly, before you start introducing new terms in your claims, you have to introduce them to the Examiner.

Putting this back in a Patent context, consider the following simple claim which mirrors our computer program above:

1. An apparatus comprising:
a first input for receiving a first data value;
an adder for adding the first and second data values; and
an output for displaying the sum of the first and second data values.

Now, if you are a Patent Attorney, please set aside your howls of protest over software patent claims and §112, sixth paragraph objections. This is a learning example only.

Here, there are a number of potential §112, second paragraph antecdent basis problems.

To begin with, astute readers will note that my second data value has not been defined. Thus, my later recitation of "the first and second data values" has no antecedent basis, as I have not previously introduced the term. A better attempt would be:

1. An apparatus comprising:
a first input for receiving a first data value;
a second input for receiving a second data value;
an adder for adding the first and second data values; and
an output for displaying the sum of the first and second data values.

This is better, but still has some problems. To begin with, whenever you use the word "the" or "said" in front of a term, it has to have been previously recited in exactly those same words. Some examiners are more lax in enforcing this than others. But it never hurts to be specific.

Here, we talk about "the first and second data values" when in fact no such term has been previously defined. A better approach would be:

1. An apparatus comprising:
a first input for receiving a first data value;
a second input for receiving a second data value;
an adder for adding the first data value and the second data value; and
an output for displaying the sum of the first and second data values.

Now we have an exact 1-to-1 match in our terminilogy and there is no ambiguity as to whether "the first and second data values" is the same as the "first data value" and "the second data value" or some other thing.

But note in the last line, we talk about "the sum of the the first and second data values". This fails on the same grounds as before ("the first and second data values" having no antecedent basis) and also because "the sum" has no antecedent basis. Correcting this yields:

1. An apparatus comprising:
a first input for receiving a first data value;
a second input for receiving a second data value;
an adder for adding the first data value and the second data value to produce a sum of the first data value and second data value; and
an output for displaying the sum of the first data value and the second data value.

This language is awkward, but claim language often is. Here we have defined the two data values, the sum of the data values. It is now clear how the thing works. Note that you could use "said" in place of "the" and it makes no difference, other than to sound more legalese.

Note that shortcuts are not permitted. You cannot call something "a first input" and later on refer to it as "the input". Similarly, the "first data value" cannot later be "the value", "the first value" or "the data value". It always has to go by its full name, "the first data value".

Note also that punctuation is important. Consider the last line:

an output for displaying the sum of the first data value and the second data value.

Suppose we re-wrote this as:

an output for displaying the sum of the first data value, and the second data value.

The meaning is entirely different, as it implies displaying two values, not the sum of two values. Perhaps a less wordy and clearer version of the claim could be written as:

1. An apparatus comprising:
a first input for receiving a first data value;
a second input for receiving a second data value;
an adder for adding the first data value to the second data value to produce a sum; and
an output for displaying the sum.

This arguably is neater, as we define "the sum" as being the first data value and the second data value added together. Now we have a short and neat term ("the sum") defined.

As an aside, some Examiners may object to such a claim as lacking coupling between the elements. You can tie the elements of the claim together better this way:

1. An apparatus comprising:
a first input for receiving a first data value;
a second input for receiving a second data value;
an adder, coupled to the first input and the second input, for adding the first data value and the second data value to produce a sum of the first data value and second data value; and
an output, coupled to the adder, for displaying the sum of the first data value and the second data value.

Note that the location and use of commas here is very critical.

The examples here use the now-derided "means plus function" claim language which is explicitly authorized under 35 USC §112, sixth paragraph, but now the subject of some controversy with regard to software claims. Claiming structure without defining function is a tricky thing and beyond the scope of this article.

* * * *

Antecedent basis is not difficult to figure out. Just remember, if you use the word "said" (or "the") before a phrase in a claim, then you had better have "said" the exact same phrase earlier on in the claim.

ASSIGNMENT of Patents

ASSIGNMENT of Patents - Should I Assign my Patent?

One of the first questions your Attorney will ask you when you file a Patent Application is whether or not you want to Assign your Patent Application and if so, to what entity. What is a Patent Assignment? How is it created? How do you File it? When do I file it? Do I need to file one? Am I required to file one? The present article attempts to answer all of these questions.

What is a Patent Assignment?

An Assignment, in legal terms is the name for the transfer of ownership of some defined piece of existing property. Any type of property or interest can be assigned (and often is), so the term is not unique to the Patent business. In Patent Law, this can be Intellectual Property - a pending Patent Application or issued Patent, for example.

When you Assign your Patent rights, the ownership of the pending application or Patent is transferred from you (the assignor) to the new owner (the assignee). If you have any trouble remembering which term is which, remember this simple jingle a law professor told me many years ago: "Assignee, that's not me!". Usually as the inventor, you are the assignor of Patent rights.

Note that under the law, it is generally impossible to Assign a future interest. Thus, for example, you cannot sign an Assignment document assigning "all your future lottery winnings" as this is not an actual property right - it is something that does not exist yet.

Thus, in the Patent Law arena, we cannot assign "all my future inventions" in an assignment document. For this reason, employers use an employment agreement which is a contract obligating you to assign the inventions developed during the course of your employment. If you get into a dispute with your employer and refuse to assign your invention to them, they do not "own" the invention by virtue of the employment agreement, however they have a contract cause of action against you and can go to court to have you assign the Patent to them under the contract.

So an employment agreement is a contract to assign, but an assignment is the actual transfer of ownership interest.

Note that an Assignment is not a license agreement either. A license agreement licenses a licensee ("that's not me", again) from the licensor (you) to use the Patent, either on an exclusive or non-exclusive basis, usually with a stated royalty payment involved. In a license agreement, ownership of the Patent remains with the licensor, while the licensee merely has a right to make, use, or sell the invention.

Whether an agreement is a license or an assignment is sometimes difficult to tell. Even though an agreement says "license" or "assignment" on it, such titles are not necessarily determinative. If the agreement gives over all rights to the licensee for a fixed fee, then it may be construed as an assignment. Similarly, if an Assignment has royalty payments, a termination or breach clause, and a reversion back to the patentee, then it may be viewed as a license, even if it is titled "assignment".


How is it created?

The Assignment document is generally created by your attorney and there are a number of forms out there used by different attorneys. The USPTO does not provide assignment forms (the USPTO had sample forms at one time, but these were deleted as of 2005, as the Patent Office is not in the business of giving legal advice).

The Assignment generally lists the name of the application (or patent) and identifies it by serial number, filing date, and other indicia, and also lists the names of the assignor(s) and assignee(s) and usually has something called a "granting clause".

There is a space for your signature and date. The document may be notarized, although notarization is not required for an Assignment to be effective.


How do you File it?

We record Assignments with the USPTO's office of Finance, online, using the http://www.uspto.gov/ website. As a .pdf copy is uploaded to the USPTO, no physical copy is required for recordation. The original copy should be kept by the new Patent owner with their valuable papers to prove ownership of the application or patent later on. There is a $40 recordation fee per assignment.

Recordation puts the world on notice that the assignee is the new owner of the Patent. State law varies as to whether assignments are valid based on "first to sign" or "first to record". However, it is a good idea to record assignments to perfect your interest in the application or patent.

Once filed, the ownership record is available online for anyone to see. Note that the assignment information published on the face of a patent is for informational purposes only and does not accurately reflect the actual ownership of the patent. The assignment information on the face of the patent is taken from the issue fee transmittal form, and is not legally binding. It may be left blank, or be incorrect. If the attorney writes down "Mickey Mouse" on the issue fee form, Mickey Mouse will appear in the "assignee" field on the face of the Patent. It means nothing, however, in legal terms. So never use the assignee data on the face of the patent as a source of hard data.


When do I file the Assigment?

As noted above, you cannot assign a future interest. So the Assignment cannot be filed until at least a Patent Application (even a provisional) has been filed. Before then, there is nothing really to assign.

An Assignment can be filed at any time, however, once the application is on file and after it issues as a Patent. And a case can be assigned and re-assigned to different entities over and over again.

So there is no specific deadline to file the assignment. However, in most cases where there are multiple inventors, it is a good idea to file sooner, rather than later. Once an inventor leaves the company, it is much harder to get those signatures!


Do I need to file one?

That depends. As I set forth in my article "Who Owns Your Invention?" there is the two-inventor paradox. If two or more inventors are listed on a Patent, they each own all of the patent in the entirety. This means each can license separately and even grant "exclusive" licenses to others (exclusivity here meaning in the grantor, not grantee).

Also, inventors sometimes have a falling out over time, so it makes sense for one entity to own the Patent - preferably the entity that is paying all the bills. So two or more inventors can assign their rights to a partnership, a company, a subchapter-S corporation, an LLC, or single individual or a group of individuals - or any valid legal entity (or government).

Typically, a group of inventors may form a start-up company (subchapter-S) and assign the rights to the company. The inventors may then own stock in the company which in turn owns the Patent. This way, if there is a dispute later on between inventors, one cannot leave and take his patent rights with him.

Even if you are a solo inventor, sometimes you want to Assign your rights to your own company for financial reasons. If you are running a start-up company, and want to obtain venture capital financing, the money people usually want to see the applications and patents assigned to the company, or have their own lien on the appplications and patents - or both.


Am I required to file one?

If you are an employee of a company, and you have signed an employment agreement, you may be contractually obligated to assign your rights to the company.

Sometimes, former employees refuse to do this, on the premise that somehow their lack of signature will prevent the company from getting a Patent. The inventor may also refuse to sign the Declaration documents as well (see my article "inventor refuses to sign") From the Patent prosecution standpoint, this is not true at all. All the company need do is file a simple petition and they can proceed without your signature. From the Assignment standpoint, the company can take you to court and force you to assign your rights (specific performance) to the company.

So yes, there are situations where you may be required to Assign your patent rights.

Again, as noted above, there may be situations where venture capitalists, banks, or other money providers may require you to assign your rights to your own company, or may record a lien interest or security interest on your Patents.


Are there any Downsides to Filing an Assignment?

One downside to assigning your application or patent to another entity is that you may no longer own the invention. This may seem like an obvious statement in most cases, but consider the following scenario:

Joe starts a company to develop his invention (he is a solo inventor). He incorporates InventCo as a subchapter-S Corporation. He as three patents pending and assigns them to InventCo.

InventCo builds prototypes and starts selling the product. However, due to unforeseen circumstances, the company hits a snag, and starts losing money. Debtors clamor to be paid, and eventually, Joe has to lay everyone off and declare bankruptcy.

Since the Patents are now property of Inventco, they are sold off an the bankruptcy sale during bankruptcy proceedings (Note also that Bankruptcy Judges can reformulate license agreements on almost any terms as well, so licensing is not a safe harbor either). Joe's #1 competitor buys the patent rights at the bankruptcy sale, and not only is Joe broke, he can't even make, use, or sell his own invention without permission from his former foes.

This bankruptcy scenario seemed somewhat far-fetched even a few years ago. Today, however, it is becoming quite commonplace.

Arguably, if Joe did not Assign his Patent rights to InventCo, he would still own the Patents, and thus could start a new company and still make his inventions.

This latter scenario would be nice, if you can pull it off. In reality, as noted above, the financial people will demand that Joe assign his rights to Inventco, or at the very least, will record a lien or security interest on the Patents. Money people know all too well that the value in a business often is not in the desks, office supplies, leases, and machinery, but in the ideas and technology underlying the company.

Also, even if there were no such requirements by the banks, in most businesses, there are business partners or fellow shareholders who will insist on your assigning Patent rights to the company, in case you decide to split and leave them hanging.

So keeping the Patents as personal property is a neat concept in theory, but often not practical in application.

* * * * *

Whether or not your should assign your Patent rights is a fact-specific question that depends on your actual circumstances. The above information is provided for education purposes and is not legal advice on whether or not you should or should not assign your rights. However, the information provided above should give you a good idea of the data your Attorney will need to help you decide which course of action is best for you.

Don't Xerox® my Band-Aid®! - How Trademarks can Become Generic.

Don't Xerox® my Band-Aid®! - How Trademarks can Become Generic

As an Intellectual Property Attorney, it is always galling to hear how people mix up Patents, Copyrights, and Trademarks. It is understandable that the average man-on-the-street doesn't understand this somewhat esoteric area of law, but when you read articles in the newspaper (which are supposed to be fact-checked) or hear terms inaccurately bandied about on the television, it makes one cringe.

For example, a newscaster may refer to an inventor as having "copyrighted his ideas" which of course, is a ludicrous proposition, as copyright law does not protect an invention - it only covers the expresssion of an idea, not the idea itself. Copyrights are used to protect books, artwork, music, poems, recorded performances, and the like - not inventions!

Similarly, it is galling to hear a reporter say that an author has "trademarked his book" when what she clearly meant to say was "copyrighted".

But another nails-on-the-chalkboard scenario for IP Attorneys is when people use trademarks as verbs. To some extent, this is falling from fashion, as using someone's trademark to describe something seems almost quaint today. Back in the day, for example, one might describe a photo buff as "Kodakking" when he took a picture. Today, such a term would seem odd or even incomprehensible.

But folks (particularly older folks) commonly use the term Xerox® as a verb, as in "I'll make a Xerox for you" or "Let me Xerox that". In a similar manner, people use the term Band-Aid® as a verb or common noun, as in "the economic stimulus package is little more than a Band-Aid for the economy".

Both terms, as well as Kleenex® and a host of others, are in fact registered Trademarks. Using them to describe generic products, or using them as verbs, is arguably improper, although not, of course illegal, for the average citizen. However for businesses, particularly competing businesses, using these trademarks as "generic" words can cause some problems.

Of course, the companies themselves are often to blame for the "genericizing" of their marks. As I noted, back in the day, it was common to use trademarks to describe things. You Simonized your car, and made a Photostat copy of a document. These terms seemed modern and new, and more sophisticated than mere waxing or copying. Many companies encouraged the use of their names as substitutes for the generic English equivalent. Hey, it's free advertising, right?

The problem is, once a term is deemed "generic" it no longer can serve as a Trademark. Kleenex and Band-Aid have both run into this problem in the past. That's why today, when you hear or see an ad for these products, the phrase "Band-Aid BRAND Adhesive Bandages" or "Kleenex BRAND Facial Tissues" is used. Both companies are taking steps to insure that you realize that their brand names are . . . brand names. By emphasizing the word BRAND and then adding the "generic" product name afterwords, they are making it clear that their name is a trademark for the generic product, not a generic product name itself.

Xeroxing does not seem to be headed for generic status just yet. To some extent, this is largely because the Xerox brand no longer dominates the photocopier business. Most people today, particularly younger people, use the term "photocopy". Whenever I hear someone say "I'll Xerox this" I can usually bet they are over 60 years old.

If a trademark ends up in the common lexicon as a generic name for a product, it may lose its trademark status. A trademark may not be registered if it is considered the generic name for a product. And similarly, a registered trademark may be cancelled if its name passes from product name to catch-all name for the product in question. Wikipedia has a list of Trademarks declared Generic which also lists some trademarks that are at-risk of becoming generic. (The list is sort of euro-centric, as the term 'wite-out' is notably missing, as is "Xerox").

Companies today are more cognizant of the risks of a Trademark becoming generic, and as noted above, are careful not to use the term generically in their own advertising. However, many newer companies are not paying attention to the possible pitfalls of generic use of marks. The term "Google" for example, is fast becoming a generic name for searching on the Internet. "Google me" people say, or "I Googled it". Perhaps Google® should refer to its online products as "Google® BRAND Internet Searching Services."

Just a suggestion.

PICTURE CLAIM - The Latest Invention Broker Scam

The following is an article that I posted on the net in 1996. Apparently Brown & Michaels, PC thought it was good enough to put on their website. Oddly enough, I ended up testifying against one of their clients as an Expert Witness. No hard feelings, guys!

The "Picture Claim" - A new Invention Broker Scam

Brown and Michaels thanks Robert Platt Bell, Esq., for permission to use this excellent review of the techniques of Invention Marketing Companies. It was originally posted to the "alt.inventors" USENET newsgroup in 1996.

I've had calls from a couple of inventors on yet another Invention Broker company. It seems that these guys never quit - just like the Energizer Bunny! The business is so lucrative, that new ones are springing up all the time. The competition has forced prices down somewhat. Now instead of being ripped-off for $50,000, you just get ripped off for $6,000 to $10,000.
In the past, Invention brokers have tried a number of patent-related schemes:

1. The "patent papers": Invention Broker promises to get "patent documents" on file at the PTO. Unfortunately, the "patent documents" are a Disclosure Document - a $10 service the PTO has to date-stamp your document as proof of conception date.
There are no patent rights for such a document, but the Invention Brokers lead you to believe that you do have patent rights. After they have mass-mailed your slickly drafted invention promotion to a list of Fortune 500 companies, they tell you no one was interested, but thanks, we'll keep the $20,000.
Surprise! Since a year has passed, your idea is now public domain.

2. The Design Patent Scam: Every search report (boilerplate) ends with the phrase "We believe that your invention is eligible for Design Patent Protection." The inventor is not told what a Design Patent is, or how it differs from a Utility Patent.
A Design Patent covers only the ornamental outward appearance of an object, and thus is worthless to protect a mechanism, electrical circuit, or chemical composition. Some Brokers use this technique with a "Patent or your money back" claim, as Design Patents are almost always issued (low standard of novelty, aided by embellishment of the design by the draftsman).
Again, the mass-mailing is unsuccessful, and after a year, your invention is in the public domain. Take your money, void your rights, crush your dreams!
Nice folks.

3. The new scam is the "picture claim". It works like this: A Utility Patent is filed, but with a few very, very long claims. The claims include very specific and silly limitations which have nothing to do with the overall concept of the invention. In one case I reviewed, the attorney argues the point of novelty was the carrying handle for the device (a simple bicycle grip) and ignored the functional aspects of the invention.
Such "picture claims" are readily granted by the Examiners, as they are so narrow in scope as to be distinguishable over all prior art. You get your patent, all right, but it is pretty worthless!
Again, your invention materials are mass-mailed, and your $10,000 is gone (prices are at least going down).
At least you have two years from the date of issue to file a broadening re-issue application if you'd like (of course at your additional expense!) presuming the attorney did an even half-way decent job of disclosing your invention.


HOW CAN YOU PROTECT YOURSELF?

1. Do not use an invention broker at all. Period. Even the legitimate ones are of little help. Promoting your invention is hard work which you must do. You can't simply 'hand it off' to someone else and expect results. If you must use an Invention Broker, visit the Inventors Awareness Group or Inventors' Digest websites. Join! Subscribe! These two organizations can steer you clear of the rip-off artists!

2. Run, do not walk, away from anyone who wants large amounts of money up front. Once you have paid, it is next to impossible to get your money back. It would cost at least $20,000 to sue them, and even if you won, you'd have to collect. Guess what? These guys don't keep a lot of money lying around.

3. Avoid any brokerage who tries to control your communications with your attorney. This is illegal and unethical in most states. You should have the right to choose your own attorney and be in direct contact with that attorney.

4. READ THE MATERIALS THEY PROVIDE YOU CAREFULLY! Is a lot of it boilerplate? (in other words, could the same language be used for another client?). A search report recently I reviewed for a client stated:

"The (reference name) reference discloses an apparatus which may be similar to your invention. This reference is relevant to the extent that it discloses some features which appear similar to your (invention name). However, we feel that there are some features of your invention which are distinguishable over the (reference name) reference."

The search report does not go on to state what these distinguishing features are! That is NOT a search report. That is B.S.! The search report should set forth which features they think are distinguishable, and discuss the reference in at least some specific detail. Note that you should get complete copies of all references as well.

WHAT CAN YOU DO TO STOP INVENTION BROKERS?

1. Join Inventors Awareness Group and/or subscribe to Inventors' Digest. These two organizations deserve the support of Inventors and Patent professionals, and can provide you with useful information!

2. SPREAD THE WORD. Ignorance is the best ally of the Invention Broker. Invention Broker scams take a big dive every time "60 Minutes" or "20/20" does an expose on TV. That's why some invention brokers try to sue the networks! If you have a friend who is thinking of calling a 1-800 Invention Broker, tell him to be careful!

3. WRITE A LETTER TO THE EDITOR. Magazines such as Popular Mechanics, Popular Science, USA Today, and others, routinely carry advertisements from various Inventor Brokers. Most magazines do not "check out" their advertisers to see whether they are legitimate or not. Write a note to the editor of your favorite periodical and ask them if this is how they value their subscribers.

Invention Brokers can't survive without advertising! I know of at least one instance where this technique has been successful. Mainstream publications give the aura of legitimacy to fraudulent Invention Brokers, and thus, if this avenue is cut off, it will be much harder for them to succeed in their scams. Some have so much money now they advertise on TV and Radio!

4. DON'T BE ASHAMED. If you have been ripped off by an Invention Broker, speak up! Call the FTC! Call your Attorney General! File a complaint! No, you won't get your money back, but you might help someone else avoid the trap you fell into. The good news is that the FTC is taking an active role in busting fraudulent Invention Brokers - nailing one right here in Virginia recently. In addition, legislation is pending to grant the PTO broader powers to investigate and prosecute scam artists. There is hope!

© 1996 Robert Platt Bell

§112, Sixth Paragraph Rejections - Who is John Love?

§112, Sixth Paragraph Rejections - Who is John Love?

In Ayn Rand's famous (if not sophomoric) novel Atlas Shrugged, the character John Galt is invoked by name throughout the first half of the novel. Who is John Galt? the characters ask - who is this mysterious person pulling the levers of power behind the scenes?

With regard to rejections under 35 USC §112, sixth paragraph, a similar question arises: Who is John Love? John Love is the Deputy Commissioner for Patent Examination Policy, and author of the September 2, 2008 memorandum on §112, sixth paragraph rejections. Like the mysterious John Galt, Mr. John Love has an extraordinary amount of power that is neither checked by election, Rulemaking, or Lawmaking, or even case law. The guidelines for examination issued by the Office of Patent Examination Policy have the effect of law, in terms of affecting the Patent Prosecution process. But unlike the law, there is little or no way to challenge these guidelines, unless you have very deep pockets and a lot of time on your hands.

What do you mean §112, sixth paragraph rejection? You can't reject claims under a section of the Law that permits means plus function claims, can you?

Well, you are right in that part. 35 USC §112, sixth paragraph, reads, in its entirety:

"An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof."

This section of 35 USC §112 clearly allows an applicant to use "means plus function" language in a claim. So you are right, you cannot reject a claim under 35 USC §112, sixth paragraph. To get around this limitation, the Patent Office characterizes these rejections as 35 USC §112, second paragraph rejections, in view of 35 USC §112, sixth paragraph. Confusing? well, read on, it gets worse.

What is disturbing is that the law is very clear on its face - and Congress' intent is clear - that "means plus function" claims are to be permitted, if not encouraged. However, the effect of the USPTO's guidelines is to discourage means-plus-function claiming, based on a very thin reed of case law. The Patent Office has, in effect, thumbed its nose at Congress' intent.

When did they propose a Rule Change to allow a rejection based on 112, sixth paragraph?

Well, the truth is, they didn't. Unfortunately, this seems to be the norm at the Patent Office these days. If you don't like the Laws and don't like the Rules, create your own by establishing "examination guidelines" or by editing the MPEP. The Office has used this rubric to establish new guidelines for 35 USC §101 that are not supported by the Law, the Rules, or the case law. In a similar manner, 35 USC §112, sixth paragraph is now being interpreted in a manner inconsistent with the Law, the Rules, and the case law.

The MPEP at least has the humility to acknowledge that its interpretation of §112 sixth paragraph has been woven entirely of whole cloth. MPEP §2181 is the relevant portions dealing with §112, sixth paragraph, and the MPEP admits:

"These guidelines are based on the Office's current understanding of the law and are believed to be fully consistent with binding precedent of the Supreme Court, the Federal Circuit and the Federal Circuit's predecessor courts. These guidelines do not constitute substantive rulemaking and hence do not have the force and effect of law."

Translation: "We just made up a bunch of stuff. How do you like it?"

Well, surely there must be some relevant case law, right?

Right. And wrong. What started this mess was In Re Donaldson, 16 F.3d at 1189, 29 USPQ2d 1845 (Fed. Cir, 1994). In Donaldson, the Federal Circuit decided that a "means-or-step-plus-function" limitation should be interpreted in a manner different than patent examining practice had previously dictated. The Donaldson decision affects only the manner in which the scope of a "means or step plus function" limitation in accordance with 35 USC, §112,, sixth paragraph, is interpreted during examination. The Federal Circuit never said "reject claims in view of this case" - only to examine them from a Prior Art perspective in view of this case.

In Donaldson, the Federal Circuit stated:

"Per our holding, the "broadest reasonable interpretation" that an examiner may give means-plus-function language is that statutorily mandated in paragraph six. Accordingly, the PTO may not disregard the structure disclosed in the specification corresponding to such language when rendering a patentability determination."

Patentability, in this instance, means a Prior Art rejection, not a rejection based on §112, sixth paragraph.

Whoa, how do you reject a claim based on case law that instructs the Patent Office on how to interpret claims?

Good Question. In a way, this situation closely parallels the 35 USC §101 rejections after State Street Bank. In that case, the Federal Circuit upheld the right of Patentee to obtain a Patent on subject matter related to a method of doing business. The Patent Office took this decision and stood it on its head, issuing a new set of vague "guidelines" effectively negating the Court's decision by raising a number of procedural rejections limiting the obtainability of Business Method and Software Patents.

The same is true here. Instead of taking the Federal Circuit's opinion at face value (that means-plus-function claims are allowable, but limited in interpretation during examination to the scope shown in the Specification), the Office has created vague new "guidelines" which argue that means plus function language is essentially not permissible, unless the Specification very narrowly defines the means plus function.

One valid critique of the Donaldson case is that if taken at face value, it would be possible for two Patents to issue with the exactly same worded claims - but each having different fields of use described in their Specifications. Perhaps this is true, but then again, interpretation of the claims would have to be similarly limited in litigation as well. But as we shall see, that is, perhaps, where this entire train is going - getting applicant to create file wrapper estoppel to limit the scope of the claims later on.

Since 35 USC §112, sixth paragraph does not have a rejection provision (how can you reject a claim based on a positive assertion?) the rejection is bootstrapped into a 35 USC §112, second paragraph rejection by making the argument that the claims are indefinite, as the means plus function are not properly disclosed in the specification.

Wait a minute. Wouldn't that be a §112, first paragraph rejection?

Well, you and I think alike. If the specification is so wholly indefinite that one of ordinary skill in the art cannot make or use the invention, without undue experimentation, then it should properly be rejected under 35 USC §112, first paragraph.

However, these §112, sixth paragraph rejections (let's call them what they are, not what the Patent Office wants to call them) rarely are coupled with a §112, first paragraph rejection. Why is this?

Well, the guidelines set forth in MPEP §2181and the John Love memo create what is arguably a new standard for 112, first paragraph. And surprise, surprise, this new standard has to do with - computer software. From the infamous Memo, page 3:

"For a computer-implemented means-plus-function claim limitation that invokes 35 U.S.C. §112, sixth paragraph, the corresponding structure is required to be more than simply a general purpose computer or microprocessor. The corresponding structure for a computer-implemented function must include the algorithm as well as the general purpose computer or microprocessor. The written description of the specification must at least disclose the algorithm that transforms the general purpose microprocessor to a special purpose computer programmed to perform the disclosed algorithm that performs the claimed function."

"Applicant may express the algorithm in any understandable terms including as a mathematical formula, in prose, in a flow chart, or in any other manner that provides sufficient structure"

The guidelines suggest that support for a computer-based claim must show an algorithm to a higher standard, even if "one for ordinary skill in the art is capable of writing the software to convert the general purpose computer to a special purpose computer to perform the claimed function." In other words, even if the Specification passes muster under 35 USC §112, first paragraph, some additional (and vaguely defined) higher standard is required under 35 USC §112, sixth paragraph.

Creating this additional standard of disclosure for 35 USC §112 6th paragraph, and even then, special to one area of art, is creating new law from whole cloth. There is nothing in the existing Rules, Law, or case law, that dictates that computer-related inventions are subject to a higher standard of disclosure than any other area of art. By writing one memo, however, the USPTO can, in effect, create new law.

So this only applies to computer-related inventions, correct?

Yes. And now we see where the Patent Office is coming from. The USPTO has had a long history of antagonism to computer-related Patents. When I was an Examiner back in 1987, the computer group was notorious for its resistance to issuing software related Patents. The rubric used back then was the "algorithm" rejection.

Under 35 USC §101, it was argued that mental processes were not Patentable. An algorithm was a mental process. Putting an algorithm on a computer was merely a mental process in a computer and therefore was not Patentable. The source for all this great legal thought? More supra-legal "examination guidelines" based on misinterpretations of hoary old case law. In other words, "we made it up!"

At the time, "Computer Science" was not considered a "science" at all - by the USPTO and many Universities as well. The USPTO did not recognize a Computer Science degree as sufficent technical background to be an Examiner or to become a registered Agent or Attorney. To some extent, this is because of the times. Historically, in the mainframe era, it was hardware innovation that drove the computer business. Software was little more than adding and subtracting numbers for payroll, keeping inventory, or other plebian tasks that programmers were hired to write code for on a case-by-case basis. Of course, with the advent of the PC era and the Internet, the hardware, while still important, has been eclipsed by innovations in software - innovations that go far beyond the punchcard programs of the 1970's.

While the rest of the world advanced into the software era, the USPTO stayed in the past, for the large part, stubbornly refusing to consider sofware or even many computer-related inventions as "Patentable Subject Matter" under 35 USC §101.

The net result of this reluctance to issue software Patents was that the Patents issued eventually t0 those who had the wherewithal to fight the Patent Office. So many small companies were forced to fold, while the this ad-hoc system, designed (by a few Examiners) to "help" the budding software industry, ended up hurting it.

And this anti-software Patent policy lead to the eventual transfer of the Group Director and decisions such as State Street Bank. However, it seems that the anti-software Patent bias still exists at the USPTO.

The irony here, of course, is that while in the past, the presence of an "algorithm" in a Patent was a recipe for a sure-fire §101 rejection, if you fail to state an "algorithm" now, you will receive a §112, sixth paragraph rejection.

But if you state that you have an "algorithm" in your Patent, you can be sure to get a 35 USC §101 rejection (again, based on "guidelines" not law). Catch-22!

But I've heard that Software Patents have caused a lot of harm in the industry, right?

We've all heard a lot about this on various websites and blogsites. People post messages claiming that Bill Gates has Patented the 0's and 1's of binary code. Or that such-and-such a Patent is "overly broad" and should not have been issued.

However, most of these armchair analysis of Patents are performed by non-professionals, who often are reading the Abstract or Specification and sounding the alarm based on some Prior Art disclosed in the Background. And rarely are these decried Patents the subject of litigation - just alarm.

As we know, it is the claims that are enforceable, and interpreting claims requires that we read the Specification to interpret the claims and also review the file wrapper history. And as Donaldson set forth, the means plus function claims are not as broad as they were once thought to be - and arguably can only be interpreted to read on what is disclosed.

In the history of software Patenting, it has been the large corporations that have paid the price for patent infringement. Small companies and start-ups, often with little more than an idea and a Patent, have ended up receiving the benefit of the system. Microsoft had to buy out Stakker in order to obtain their drive compression software. Without their Patents, Stakker would have been helpless. See my article "Who's Afraid of Software Patents?"

Yet the myth persists on the Internet that Software Patenting is benefiting the corporations at the expense of the solo programmer. Time and time again, we are told that small programmers will be sued for infringement (a ludicrous proposition, financially) if they inadvertently tread on one of the 'big boys' Patents. Yet the record does not reflect such a thing happening - in fact, just the opposite. Yet many small programmers, ignorant of the facts, jump on this bandwagon.

So, where's the fire? Yes, there are some cases in which contingency-fee attorneys will file frivolous lawsuits against companies alleging Patent Infringement. These types of cases are usually characterized by the Patent being interpreted to read on something it does not appear to read on at first. Moreover, the person being sued is usually a "deep pocket" who is an incidental user of the product, not the manufacturer of it. And most importantly, most of these "submarine" or "Patent Troll" cases rarely involve computer software.

As I noted in my article "A Litigation Problem, not a Patent Problem" the reason for these abuses rest in our litigation system, which creates a huge cost associated with an Patent Infringement case. A Plaintiff can sue someone fairly inexpensively, and force the opponent to squander millions in legal fees. Thus, each Patent case has a nuisance value, and the "drive by" litigant can scoop up a number of small settlements, which cumulatively add up to a princely sum.

And again, there's the irony of this whole charade. The drive-by litigants are not going to be deterred by some new "guidelines". They will simply file a dozen or more Patent Applications and hope that one or more is allowed. Or they will use existing Patents, or Patents not related to computer software. It really doesn't matter to them at all. All they need is a Patent and a Lawyer, and they can file suit. These restrictive guidelines do little to deter "Patent Abuse" that is so decried online.

However, to the small software company, startup, or individual programmer, such guidelines can be fatal. By forcing extended prosecution, the cost of obtaining a Patent can balloon into the tens of thousands of dollars. Add to this the restrictive new Appeals process, and the cost balloons ever further. Any inventor wanting to challenge this interpretation of the law under 35 USC 112, sixth paragraph had better have hundreds of thousands of dollars - or more, as it would appear that such a case will have to be heard by the Federal Circuit, before the Patent Office backs down.

But then again, since the Patent Office merely twisted State Street Bank and Donaldson to its own ends, it does not appear that even a decision by the Federal Circuit - or even the Supreme Court, would be binding.

In this era of extraordinary renditions and signing statements, such behavior by a Federal Agency is, I guess, to be expected.

So how DO I overcome a §112, sixth paragraph, rejection?

Good Question. And since Mr. Love's memo was only dated last September, Office Actions issuing under these new guidelines are only starting to issue now. To some extent, this comes down to a "your guess is as good as mine" scenario.

I have seen a couple of §112, sixth paragraph rejections in the past, usually based on the MPEP §2181 section (pre-guidelines rejections). In those cases, usually pointing to the portions of the Specification that recite or disclose the claimed elements appears to satisfy the Examiner, who is raising the rejection more pro forma than anything else.

In a way, this is similar to most §101 rejections, which are raised and then fold like a cheap tent in response to any serious argument. Perhaps the Office realizes that such rejections would not be sustained on Appeal or in Court, and thus backs down to any serious challenge. And perhaps these types of rejections are used simply to create file wrapper estoppel (which is useful) and to discourage amateur filers - and issuance of embarrassing Patents, such as the Method of Swinging on a Swing case.

Of course, if the Examiner is serious about maintaining the case, there is little you can do, other than to Appeal.

In one case on my desk, the claim rejected under 35 USC §112, sixth paragraph is nearly word-for-word taken from the description in the Summary of the Invention and from the Figures. The words "means plus" do not appear in the claims, however, that of course is not dispositive of a means-plus-function claim.

So what does the rejection boil down to? Whether the "algorithm" is adequately disclosed. The Examiner has not raised a §112, first paragraph rejection, so apparently the invention is disclosed in such a manner as one of ordinary skill in the art can make or use the invention. However, §112, sixth paragraph appears to be requiring some higher standard of disclosure - some standard which is not clearly defined, and thus not possible to determine or meet.

Why not just avoid "means plus function" language?

This is, of course, a good suggestion, but one that fails on a number of grounds. Eliminating the words "means for" or "step for" from the claim may not be sufficient to take it out of the realm of means-plus-function.

Any claim that recites an element with an associated function is arguably a functionally described claim. OK, no big deal, just remove the functionality, right?

Well, there's the rub. Once you remove the functionality, the claim is not Patentable under 35 USC §102 or §103 - as the mere recitation of components is probably anticipated by the Prior Art.

Thus, for example, suppose you want to claim a TiVo-like device. It receives television signals over a network (which these days are likely to be digital MPEG signals) and stores them on a hard drive. The user can then later search the hard drive for programs and play them back on his television. Let's assume this is a new invention. How do we claim it?

If we remove all functionality from a claim to this invention, we end up with:

1. A system comprising:
a network;
a processor coupled to the network;
a hard drive coupled to the processor;
a display, coupled to the processor; and
an interface, coupled to the processor.

Such a claim "reads on" Colecovision, circa 1985. And yet, this invention (which is what it is) is entitled to Patent protection. So we need to beef up the claim to make it distiguishable from a mid-80's hobby computer. But how? We can't really add more hardware without being unduly narrow.

By adding functional language, however, you can distinguish the claim from the Prior Art:

1. A system comprising:
a network transmitting television programming data;
a processor coupled to the network, for receiving the television programming data and processing the television programming data to output television signals;
a hard drive coupled to the processor, for storing the television programming data in response to commads from the processor;
a display, coupled to the processor, for receiving the television signals and displaying television programming; and
an interface, coupled to the processor, for receiving input signals from a user and transmitting the input signals to the processor to control the processor to selectively playback stored television programming from the hard drive on the display .

Obviously, this is just an example claim that requires some polish to complete (hey, I ain't getting paid here!). But it illustrates how the functionality of the elements distinguishes them from the Prior Art.

Given that nearly all inventions are a combination of known elements in the art - or indeed a known combination applied in a different manner, it is nearly impossible, particularly in the electrical arts, to avoid functional language.

And most inventions, yes inventions, today are based in software. From your cell phone to OnStar, to satellite television, to electronic voting, most of these inventions can be described in a few block diagrams including a processor, memory, output display, and input device. It is the method of how these things interact that makes them distinguishable from the Prior Art.

So why not just write a method claim?

Good Point. If claim fees permit, it is worthwhile to write both method and apparatus claims. Apparatus claims have been traditionally favored from a royalty standpoint. To avoid contributory infringement or inducement to infringe arguments, it has long been standing practice to favor apparatus claims.

Adding method claims is a good idea as well, but this often forces a spurious Restriction Requirement, (see again, my Article: The Game has Changed) which again increases costs.

And of course, as is in the case on my desk at the moment, a 101 rejection will likely be made on your method claims, as a bookend to the §112, sixth paragraph rejection on your apparatus claims.

So what the heck do I do?

Well, if you're like me, you look forward to retirement. The best approach, as I can fathom, is to show where each element in the claim is located in the Specification and Drawings as well as argue that the Algorithm (if applicable) is adequately disclosed. Trying to rephrase the claims in a format other than means-plus function (eliminate "for" from the phrase, or use other language) is also helpful.

If the past is any guideline, these §112, sixth paragraph rejections usually go away quickly, like most §101 rejections, if you are willing to re-draft your claims to be more specific.

But for the most part, I think all we can do is stay tuned and see how this plays out, particularly with a new administration.

And who is John Galt?