Robert Platt Bell Articles

NATIONAL PHASE FILING INFORMATION (Foreign Applicants Only)

2012-01-20T21:54:00.000-08:00

NATIONAL PHASE FILING INFORMATION (Foreign Applicants Only)

NOTE: We are not a foreign filing shop. There are law firms that specialize in filing large quantities for foreign cases for very low fees. Such firms have staffs of paralegals to handle large volumes of cases. We cannot compete on price with such firms. If, however, you need revision, amendment, or other substantive work performed, our services may be a good value for you. NOTE ALSO that we generally require a 100% advance from new clients. Please do not call two days before a bar date expecting us to pay filing fees with no advance, on short notice.

The following is a list of fees and charges for filing a National Phase Application in the United States claiming priority from a foreign-application under 35 USC 119, PCT Application under 35 USC 371 or continuation status of a PCT application under 35 USC 120. All PTO fees are listed for LARGE ENTITY. Halve the fees for a small entity (e.g., less than 500 employees). Note these quotes are estimates only. We do reserve the right to charge more for “rush” jobs.

We also strongly suggest you allow us to revise the application into U.S. Format, including the Specification, Claims, and Drawings. We can perform this service for a nominal fee. The savings in the multiple dependent claim fee ($290) as well as in reduced prosecution costs make this service a considerable bargain. We generally charge $500 to $1000 to revise an application to U.S. standards.

35 USC 119

Under the Paris Convention, you can file a U.S. Application claiming priority from a foreign-filed application (filed in a treaty country) within one year of the date of filing of that foreign application.

Patent Office Filing Fee (Large Entity) (1) (3), including Exam, Search, and Filing Fees: $1,250.00

Our Fee for Preparing and Filing Application: $1,000.00

Photocopying/postage/Faxing/FedEx (estimated) (4): $25.00

TOTAL (USD) $2,275.00

35 USC 120

A PCT Application is considered to be a U.S. Patent Application. Any time during the “pendency” of the PCT application (30 months from the priority date) you can file a regular U.S. Application in the United States claiming Continuation priority as if from another U.S. Patent Application. A Certified Copy of the original Priority Document is Required to file under 35 USC 120. This type of filing is cheaper, as the filing fee is less and the forms needed to file are not as extensive. Also, the filing fee need to be paid at the time of filing.

Patent Office Filing Fee (Large Entity) (1) (3): $1,250.00

Our Fee for Preparing and Filing Application: $1,000.00

Photocopying/postage/Faxing/FedEx (estimated) (4): $25.00

TOTAL (USD): $2,275.00

35 USC 371

A 371 or “National Phase” case is somewhat more expensive than a 35 USC 120 filing, as the filing fee is more, and the number and complexity of forms needed for PCT branch is greater . Certified copies of the priority document are not required. One advantage to 371 filing is that international standards for restriction requirements are applied to the application. Note that the filing fee varies depending on whether the US Patent Office was selected as the PCT search or examination authority. This example quote assumes the RO/US was not the ISA or IPEA.

Patent Office Filing Fee (Large Entity) (1) (3) (assumes US not ISA): $1,120.00

Our Fee for Preparing and Filing Application: $1,000.00

Photocopying/postage/Faxing/FedEx (estimated) (4): $ 25.00

TOTAL (USD): $2,145.00

NOTE: These are only basic price quotes. We can provide a more detailed price quote based on an actual application, which may be less than the amounts quoted above, particularly if it is well-prepared and translated.

Additional Services and Charges:

Preparing and filing Assignment Documents (if required): $175.00

Patent Office Assignment Recordation Fee: $40.00

Reporting of filing; or communications from Patent Office (2): NO CHARGE

Preparation and Filing of IDS: $175.00

Filing of any miscellaneous Paper with USPTO (if required): $175.00

NOTE 1: This price quote assumes the application is sent to us translated into English and in form for filing “as-is”. Additional charges would be incurred if the application is not in proper form for filing. Also, this price quote assumes we have a minimum of one month prior to the bar date to file. Additional fees are applicable for “rush” jobs.

NOTE 2: We do not charge for reporting of routine matters (filing of application; receipt of papers, and the like). Thus, the charges you see here are substantially all the fees you will pay for filing your national phase case with the USPTO. There are no hidden “reporting” charges.

NOTE 3: USPTO fees are raised or adjusted every October. This is not a guarantee of USPTO fees. See http://www.uspto.gov/about/offices/cfo/finance/fees.jsp for current fees. Note that additional claim fees and application size fees may also be due. This price quote page is not a guarantee of PTO fees.

NOTE 4: Photocopying/Postage/Faxing/FedEx are all invoiced at actual costs or at the following rates:

Photocopying: $0.25 per page

Domestic Fax: $0.50 per page

Overseas Fax: $1.00 per page

Postage/FedEx/Delivery invoiced at actual costs.

FORMAL DRAWINGS:

We use DEXTRASYS for our formal Drawings. Estimated cost is approximately $30 to $50 per sheet. Note that the USPTO may require formal drawings after filing due to new publication requirements. We strongly suggest filing formal drawings early as extensions of time for filing formal drawings are no longer permitted. “Rush” jobs will cost more, so it is better to file early.

NOTE: If your PCT drawings are formal, we may be able to download them from http://www.wipo.org/ and submit them as formal drawings.

PROSECUTION COSTS

We are happy to provide a written price quotation for preparing Amendments in response to Office Actions. Unlike some firms, we do not offer “lowball” prices to file applications and then make up the difference by padding our prosecution bills.

The following are our guidelines for Patent Prosecution expenses:

Review and file Amendment prepared by Applicant of foreign associate: $500.00

Preparation and Filing Amendment in Mechanical Case (estimate): $700.00 to $1250

Preparation and Filing Amendment in Electrical Case (estimate): $950.00 to $2250

Preparation and Filing Response to Notice to file Missing Parts: $175.00

Preparation and Filing of Election or Restriction response: $175.00

Paying Issue fee and submitting issue fee documents: $175.00

BILLING REQUIREMENTS

To keep our overhead low we will require a retainer to cover initial filing expenses and fees for all new clients. We cannot advance fees and services on behalf of clients without a billing history track record.

For clients with an established billing history, no advance on services may be required, however, we still require advances on fees, as we cannot afford to "float" these fees for clients while waiting to get paid.

We reserve the right to refuse service to any client who is not compatible with our practice.

(Updated January 21, 2012)

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New Payment Methods

2012-01-20T20:39:00.000-08:00

We now accept payment by Check, PayPal, or by most major credit cards, as well as wire transfer.

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Money in Advance

2011-12-17T10:09:00.000-08:00

Getting paid in advance these days is not only a good idea, it should be your default policy, particularly when it comes to USPTO or PCT fees you have to pay. Not getting paid is far worse than having no work at all!

2011 has not been a good year for many Patent Attorneys. I am getting calls from a lot of my old friends, grousing about the lack of work and when it does come, low prices. While filings are way up, the number of Patent Attorneys has also increased. And since Patents are viewed as being worth less (but not worthless, just yet) people are not willing to pay as much.

The land-office business of the 1980's and 1990's is gone. We are back to selling tract homes and collecting modest commissions.

In this environment, a practitioner has to shave expenses in order to make ends meet. Getting paid is one area where costs can get out of control.

Accepting payments by credit card, PayPal, or wire transfer are always a nuisance, as each transaction takes a percentage or flat fee for the transfer. For Credit Cards, not only do you have to pay monthly merchant fees (and now new quarterly fees) but also a percentage (2-5%) of each transaction.   PayPal can take as much as 5% as well. Wire transfers can cost up to $50 to send, at some banks, and many banks are charging fees to receive fees as well!

But the hassles of just getting money are trivial compared to not getting paid at all.   For some reason, historically, we Patent Attorneys have gotten used to being paid on 60, 90, or even 120 days. Every firm I have worked for has a huge outstanding Accounts Receivable (A/R) representing three to six months of billings. Especially when dealing with overseas companies and law firms, it seems we are expected to wait, wait, wait, to get paid.

And the irony is, often those same overseas entities demand instant payment from us, while sitting on our invoices for months. It is an odd situation.

But there are cases where this can cause real damage to your practice.   Advancing large fees, such as filing, maintenance, or PCT fees, on behalf of a client, can be problematic. If you pay the fee with a credit card, and have to wait months to get paid, the interest charges can cut into your bottom line. Even if you pay cash for these fees, you are losing the opportunity cost to use those funds.

And then, of course, there are clients who go bankrupt and do not pay at all. In the last two years, I have had two clients go "belly up" after I advanced thousands of dollars in PCT fees on their behalf.   Not getting paid for services is one thing (you are working for free). Not getting paid for fees is paying to work.

And once you agree to get paid "whenever" you are sort of on the hook. You have agreed to accept payment from the client at their whim, so you cannot let cases go abandoned for lack of payment without risking some malpractice exposure.

On the other hand, being stuck with $10,000 in unpaid PCT fees can be enough to bankrupt you. While this may represent only a small part of your overall billing, it may represent a big chunk of your personal disposable income for the year.

If you make, say $100,000 a year as a solo practitioner, your take-home income, after taxes may be less than half that. Subtract your mortgage, car payments, and whatever, and you are lucky to have ten grand left over at the end of the day. If you have to "eat" that much in unpaid fees, well, you'd better get used to eating a lot of Raman noodles!

For this reason, I have changed my billing practices this year. While I have always asked for at least a 50% advance on fees and services from new clients, effective 2012, I now ask for 100% of fees for any transaction, particularly maintenance fees (all fees, no services) or PCT cases - even from existing clients. There is no legitimate reason why a client cannot cut you a check, within 30 days, if they want to file a Patent overseas or pay a maintenance fee.

Of course, there are ways to use existing extension of time techniques to avoid paying fees until paid. If a client will not or cannot advance filing fees, I file without fees, when I can, and then inform the client, per our agreement that the case will go abandoned if they do not come up with the fees. I am not running a charity. And yes, if they can't advance fees at the time of filing, they have to pay the late fee and my fees for filing a Response to Missing Parts. Tough Love, baby!

Of course, in some instances, you may have to pay fees up front, as is the case with 371 national stage filings. And for this reason, I turn away these cases unless the client can come up with the dough in advance.   If you get an e-mail from an overseas firm wanting you to file a 371 case with a week's notice, with no advance, chances are, you will never get paid. It is a racket, and these overseas firms use small practitioners as a means of getting "free" filing services. And if you fall for this scheme, you have no one but yourself to blame when it all goes horribly wrong.

Some practitioners would argue, however, that getting paid "in due course" is part and parcel of the business. And perhaps this is true in litigation or other matters. But for Patent Prosecution, which is labor intensive, fee-intensive, and a very marginal, if not in fact a loss-leader business for many firms, not getting paid at all is just not an option.

It is tempting, if you want to "get business" to agree to such payment terms.    But bear in mind that if you do this, you really might "get the business" in the worst sort of way.

Many Attorneys worry about taking advances on fees, on the grounds that they have to set up escrow accounts and keep double-books. I actually did this, early in my career, thinking that fee advances were client money and I should keep them in escrow until the Patent was filed. I am not sure what the answer is on this, but I talked with the folks who run the IOLTA accounts section at the VA Bar and they told me my concerns were a little overblown.

While it is true that you should keep funds for "future legal fees" in a trust account, their take on this (or at least the person I spoke with) was not that these meant fees that were being paid in the same day or even week. I suppose the decision is up to you, but the real concern with trust accounts is where you are holding money that belongs to the client to which you have no claim, such as lawsuit judgment awards, real estate closing proceeds settlements, and the like.

I am not sure you are going to jail or are going to lose your law license because you deposit a check for a $580 filing fee to your general funds account and then pay that fee the next day - particularly in situations where you have already invoiced for that fee.

The abuses with trust accounts and the issues of "co-mingling of funds" usually involved tens of thousands of dollars of client money that you are holding for the client. An advance on legal fees might constitute this kind of money, where it is, say, a retainer paid on the premise that you might perform some work in the future. I am not sure it applies to work or fees already invoiced, for work that is already in progress. The client has no expectation of a refund at that point.

But if it worries you, set up a trust account, linked to your checking account, and then deposit the funds there and transfer them immediately to your working account. Either way, don't pay a fee without being paid first!

NOTE: With regard to overseas prosecution, I have found that the best way to avoid problems with getting paid (and then having to pay overseas associates) is to have the overseas associate invoice the client directly. That way, I am not "in the loop" and "playing the float" with tens of thousands of dollars in overseas legal fees.

What's Wrong With This Picture?

2011-10-22T06:21:00.000-07:00

Today in the e-mail, I get the following plea:

Hi Robert,
I am looking for a patent atty to represent me and file a timely response to a Final Office Action that is due by next Thursday -- the end of the six month statutory limit. My current patent atty is not willing to file a response unless my current invoices are all paid (in full) -- which, I am not able to do before this deadline.

The invention is directed toward a method of doing business.

Please advise if you would be able and willing to accept the representation, file a response, and what you will require to retain your services.

I almost thought this was a joke. What's wrong with this picture?

1. A non-paying client (I need more of those!)

2. Less than a week to respond (Yes, I should drop what I am doing for this!)

3. A Business Method Patent (good luck getting that allowed).

4. After-final status (not many options other than to file an RCE, or Appeal)

5. A Parachute Case (based on a Pro Se filed Provisional, no less).

6. A Speculative Patent, filed by someone not "making, using, or selling" the invention, who hopes to get broad claims allowed on an IDEA and then sell it.

Taken alone, any one of these indicia is a red flag - a good reason NOT to represent this person. Taken together, it is like a poster child for "when to say NO."

Yet, there are some attorneys out there who would jump on this bait, spend countless and fruitless hours working on the case - and worse yet, advance those hefty extension of time fees and RCE fees - and end up not getting paid, because the client is pissed he didn't get his broadest claims allowed - if any.

Obtaining a Patent is a gamble - you place a bet and see whether you can get broad coverage in view of the Prior Art. It is not a sure thing in any circumstance. And yet, there are some clients out there who seem to believe that they are entitled to whatever scope of protection they want - even if it is broad enough to read on the Prior Art.

And most clients fail to understand that there are issues other than legal ones, when filing at the Patent Office. One Examiner may allow your case on a first action, while another may reject everything. Just because "the other guy" got his Business Method case allowed doesn't mean that you can pull a rabbit out of the hat, too.

One problem with Pro Se filed cases is that since no one is there to advise the client at the time of filing as to the likelihood of Patentability, no one has the opportunity to talk him out of it. In probably 9 out of 10 cases, when people contact me about getting a Patent, I talk them out of it. This doesn't happen in the Pro Se cases.

And when an Attorney takes over a Pro Se filed case, there is little opportunity to say, "Gee, maybe you out to let this one go" - as the client has spent all this time and energy and "Why Not?" file a response to the multiple 102, 103, and 112 rejections. So you do the best you can to fix this train wreck and your reward is, well, you don't get paid.

Now granted, there are some Attorneys out there who say, "Well, too bad for him! Just quote him an obscene price! If he pays, great. Otherwise, screw him!"

The problem with this approach, besides being rather mean-spirited and mercantile, is that he just might say "Yes" - and since there is less than a week to respond, you know he will find every excuse to not pay you before a response is due. "The Check is in the Mail" is something I have heard far too often.

No. The best approach is to walk away.

A Maintenance Fee Trap!

2011-07-06T09:50:00.000-07:00

Patent Maintenance Fees are due at 3, 7, and 11 years from the date of issue. However, suppose a Patent has a terminal disclaimer filed in it? Be sure to check before paying that last, and most expensive fee!

I have a client who has five Patents prosecuted by another firm.   He transfers the files to me, and I docket the maintenance fees.

I later realize that there was a TERMINAL DISCLAIMER filed in two of the cases and as such, those cases expired in November of 2010. So the maintenance fee for 2013 is no longer due.

The danger in a situation like this is that I had docketed the maintenance fees based on the issue date - and did not check for terminal disclaimers.   If I had invoiced for (and paid) the unnecessary maintenance fee, the client could demand that money back, and as the third maintenance fee, it would be a stiff penalty to pay! As much as $4011 for large entity!

Fortunately, I dodged a bullet there, but it could be a trap for the unwary.   Be sure to check terminal disclaimers in a case before paying maintenance fees.

And of course, a Patent with a terminal disclaimer is only enforceable if both Patents are co-owned and in force.   Letting one expire for failure to pay maintenance fees, or selling one case - but not the other - could be problematic.

Patent Reform Act of 2011

2011-06-30T07:22:00.000-07:00

Note: I will leave it to the legal scholars to provide detailed analysis of the "Patent Reform" movement of the last two decades. Such scholarly articles, no doubt, will be peppered with impenetrable legal prose. However, you, the Patent Applicant, may have some questions about the new "Patent Reform" act of 2011 as well as the cumulative effects of prior Patent Reform efforts. The following article attempts to explain these issues in broad and general terms.

* * *

Will the Patent Reform Act of 2011 change the way we do business? Perhaps less than we think.

The Patent Reform Act of 2011 has been passed by both houses of Congress at the time of this writing, and is now in committee for reconciliation. The sticker at this point is in USPTO funding - one version allows the USPTO to keep its user fees (which in the past have been a profit center for the Government) and the other version requires the USPTO to beg for more money. The President has said he will sign the act, so it appears these provisions may come to pass. However, the impasse over the debt ceiling has stalled the bill, and it might not pass for some time - or may be derailed. Thus, I have not commented on this bill before.

What is Patent Reform? Why does our System Need Reforming?

When I was a Law Student, I paid my way through Law School writing Infringement and Validity Studies on Lemelson Patents. Many accuse Jerome "Jerry" Lemelson of Patent Abuse, and while it does not appear he has done anything illegal, he is sort of the poster-boy (or whipping -boy) for what are sometimes derisively termed "Patent Trolls".

In the old days, Patents extended 17 years from the date of issue - and since you could legally string Patent Applications together as Continuations, Continuations-In-Part, Divisionals, and the like, some of Lemelson's Patents issued in the 1980's and beyond with effective filing dates from the Eisenhower era. This meant that trying to invalidate such Patents with "Prior Art" was difficult.

And some folks would refer to these Patents as "submarine" Patents - surfacing after many years, with claims designed to torpedo a new technology. But again, this is some people's interpretation of events - one man's submarine Patent is another man's carefully drafted and valid Patent covering technologies that they invented.   It is a matter of perspective, not law.

And some folks argue that Lemelson (or his Attorney) went after people for infringement claims that were not very strong - or in fact, baseless. And by offering to settle for relatively small amounts of money, not many of these cases went to trial, and Lemelson made a lot of money as a result. And some folks think that was wrong.

For example, I worked on one case, involving six separate Patents. We studied these and came to the conclusion that four were either invalid or not infringed, one was likely invalid or not infringed, but that one was, well, sort of a toss-up. With a jury trial, it could go either way. The claims were broad and the disclosure (in my opinion) vague, and the products that were being accused of infringement were not even conceived of at the time of filing. We didn't think the case had merit, but on the other hand, you can't guarantee these sorts of things - such is the nature of the legal system.

But since, back then, claim interpretation was a very open-ended proposition (and often performed by technically unsophisticated juries) there was a real risk that a client could lose at trial. We charged the client $50,000 for this opinion, which was a lot of money back then. The opponent offered to settle for the equivalent of $100,000 a year. The client chose to settle.

Some folks argue that these cases amount to little more than shakedown attempts - Patent Blackmail - using the nuisance value of a lawsuit to extract or extort money from legitimate, non-infringing companies. However, as I noted before, Lemelson and others did not appear to be violating the law - they brought colorable claims of infringement based on what they felt were valid Patents.

What was annoying to some businesses was that these claims were not being raised against manufacturers, but often against users.   For example, I talked with one fellow who claimed to have invented a DTMF type telephone-tree, for automated telephone response systems. He hired a contingency fee litigation company to sue on his behalf. But rather than sue AT&T or some other telcom provider who makes and sells this type of telephone equipment, they went after Coca-Cola, and other large Corporations who actually use the equipment.

Again, nothing illegal here - use of an infringing product can be infringement. But the legal strategy is something that some folks found odious - namely that a company with no interest in the fight finds itself in the middle of an expensive legal battle. And such companies are more likely to settle for nominal sums than fight a major Patent battle. So from a Patent Owner perspective, it is more lucrative to go after the customers than to go after the manufacturer.

Of course, such a strategy doesn't work if you are a competitor of the manufacturer - those customers are potentially your customers, and you risk losing them forever if you sue them. But most so-called "Patent Trolls" were not manufacturers or sellers of products, but rather merely Patent holders, Attorneys, or companies formed whose only assets were Patents.

If you own only Patents, you have no risk of being counter-sued, so it does provide an advantage that corporations and manufacturers don't have.

Like I said, none of this was illegal and I am not accusing Lemelson or any others of doing anything illegal or immoral.   Moral judgements are your own call.

And whether this was a "major drag on industry" is also debatable.   According to some sources, Lemelson made maybe $450 million from his Patents (his is dead now, but the Patents live on, of course). This may seem like a lot of money, but it is a pretty small chunk of our overall economy - an infinitesimal one. And of course, Lemelson did spend decades prosecuting these Patents, often with no promise or hope of payoff.

But nevertheless, many people were up in arms about the rash of "Patent Trolls" out there. And since they were doing nothing illegal, they decided to change the laws. And they have.   And over the last two decades, our Patent system has changed, gradually. Some of these changes have been positive, some negative. I doubt they will put a coffin nail in the "Patent Troll" concept at all, however.   And in many respects, that make things harder for both solo inventors as well as large Corporate Clients.

What Changes Were Made Prior to the Reform Act of 2011?

Sine the mid-1990's a lot of changes to the Patent System have occurred. And these changes have taken a number of forms:

1. Changes in Patent Procedures at the USPTO - examination guidelines for Software and Internet-based Patents as well as Method-Of-Doing Business Patents have made obtaining these Patents more difficult. The procedures for applying obviousness-type rejections have changed as well, and such rejections are made more often. The overall allowance rate has dropped in recent years, as Examiners are emboldened to maintain rejections that in the past, would not have been made.

2. Changes in Patent Rules - A number of rule changes have been made that, collectively, make it a little harder to prosecute cases, and also have tried to speed up the process of Examination.   Some of these Rule changes can be a trap for the unwary. For example, extensions of time in submitting Reply Briefs (on Appeal) or Formal Drawings (after a notice of allowance) are no longer permitted. If you miss these deadlines, your case is abandoned. Moreover, new rules for the formatting of Amendments and Appeal Briefs have caused some difficulties for practitioners, if they fail to follow these rules to the letter. New Rules now limit the number of Continuations or Continuations-In-Part that an applicant can file. If you find yourself going around and around with the Examiner, you should stop and appeal, as you cannot file more than two Continuations now, without showing good cause for doing so.

3. Changes in Case Law (Court Decisions) - Several landmark cases have come down from the Federal Circuit and even the Supreme Court, altering the ways we interpret Patents as well as litigate them.

Patent Claims are no longer interpreted by a Jury, but rather by a Judge (Markman v. Westview Instruments, Inc.) This change takes a lot of uncertainty out of the process, as a Judge (arguably) may be less swayed by emotional arguments (the evil Corporation versus the poor solo inventor). Since Markman, a hearing may be held, before a judge, to decide the scope and meaning of the Patent Claims. Often, the outcome of such a hearing decides the case - if the claims are interpreted more narrowly, the Plaintiff may simply fold their case, as they have little chance of winning. If the claims are interpreted broadly, the Defendant may be more willing to settle.

Much ink has been spilled on the Teleflex and Bilski cases. While the former is supposed to revise the standards for obviousness, I personally do not see any difference in how art is applied at the Patent Office in the wake of this case. The application of Prior Art in a case is usually fact-based, and oftentimes the references do not teach what is alleged. Moreover, the claims usually can be amended to overcome a reference, without unduly limiting the scope. Rarely is the standard of obviousness - as a legal argument - made. And the "new" standard, such as it is, is just as nebulous as the old Graham v. John Deere standard.

Bilski may have made getting business method Patents more difficult, but it also provided a roadmap to amending around the rejections made by the Patent Office. So long as you can characterize your business method in terms of hardware or concrete steps, you might still be able to Patent it.

But each case steers the Patent Law in the same direction - toward more narrow interpretation and more difficult prosecution. Only the State Street Bank case, which opened the flood gates of the Business Method Patent, has expanded the scope of Patent Protection in recent years. And the door opened by State Street was slammed shut, to some extent, by Bilski.

4. Changes in the Law - (Congressional Action) - changes to the law (35 U.S.C.) have been enacted over the years to limit the terms of Patents and prevent cases from being strung together. In the mid-1990's we switched over to 20-year term, which counted Patent terms from the date of filing, not the date of issue. The idea behind this was to kill off these long application chains, where a case could have a filing date in the 1950's and issue in the next Century. There were some problems with this new Law, however:

A. Older cases were "Grandfathered" in, so ironically, some Lemelson cases are no doubt still pending in the system. While 20-year term may prevent new submarine Patents from being filed, it will not depth charge the old ones still lurking beneath the surface.

B. 20-year term can harm manufacturers and corporations as well, as it may take years for Patents to be Examined and issued, and moreover, technology may not come to full fruition until many years of development and marketing. With 20-year term, an applicant may find they have only five years of useful Patent Life.

C. Patent Term Extension attempts to correct some of the problems - but not all - by extending Patent terms by an amount equal to the "delays" caused by the Patent Office. However, this creates new levels of complexity in determining Patent terms, and could arguably create new grounds of malpractice.

D. Applicants have to choose between an early filing date (from an earlier-filed application) and a longer Patent term. If you have an improvement to your invention that has been out for a few years, you may be able to claim priority from an earlier-filed case - which makes your new Patent easier to get allowed as it anticipates more Prior Art. But the flip side is that the Patent term is shorter - leaving you less of an enforcement period to use.

As we shall see, the new Patent Reform Act of 2011 amplifies some of these issues, but perhaps not by much.

There have been other changes in the law as well, but none so directed at the "Submarine Patent" as the 20-year term.

So What is in this New Patent Act?

The law has yet to pass, at the time of this writing, although it appears to be on the way to the President's desk, and he appears ready to sign it into law. The new law has a number of provisions:

1. The First-to-File System

The major provision that will affect applicants is the switch to the first-to-file system. This may sound like a major change in the law, but it really will not affect the lives of most Inventors.   It is, however, another good reason why you should file as early as possible, instead of waiting around.

We will still have the "one year bar date" on the books, so you can file within one year of the date of first public use, sale, offer for sale, or publication. However, if an Interference is declared between two applications, the person with the earlier filing date will win. Interference practice, will, as a result, fade away.

This is not a significant change, in my opinion. Fewer than 1% of all Patent Applications end up in Interference, and of those, perhaps 90% end up being awarded to the person with the earlier filing date. Usually, the first to invent files first, as the process of developing an invention follows a certain pattern - and most inventors think about Patenting at about the same time in the process. So an obscure procedure is eliminated from the books - an obscure procedure that the first to file won most of the time, anyway.

But nevertheless, it illustrates why it is important to file as early as possible.

2. Expanded 3rd Party Participation

Before the passage of this act, a 3rd party could submit art to the USPTO for consideration in a Protest letter or the like.   But whether the information was acted upon, one would never know - and the applicant could argue against such art, and no one would be available to make counter-arguments. The new law expands 3rd party participation somewhat - but not by much, in my book.

In addition, a new, post-issuance procedure has been created, similar to Re-Examination, that allows a 3rd party to challenge the validity of a Patent within 9 months of the issue date. I am not sure why this process is any better than our existing 3rd Party Re-Examination procedures, other than it appears that you can request this as a right, not as a request.

Re-Examination is always problematic for a challenger - if you request a Re-Exam, and the Patent Office issues the Patent anyway, the Patent is now arguably stronger in Court, as it has been "twice examined" by the Office - an argument that tends to sway juries.

So, 3rd parties have a more powerful weapon here, but it can be used to shoot themselves in the foot, if they are not careful.

3. Provisions that favor Patent Holders

Not all the provisions in this bill are detrimental to Patent Holders. Part of the law alters the "false marking" Statute and dismisses a number of pending cases (opportunistically filed). Another part of the bill further streamlines the procedures for when an inventor refuses to sign an oath or declaration (the current procedures are not all that difficult, frankly, to comply with!). Yet another eliminates the "Best Mode" requirement as a means of invalidating a Patent.

So, while the law may make it harder to get a Patent, it does strengthen some enforcement and filing rights.

4. Litigation Damages

I have said all along that our Patent system problems are Litigation problems, not Prosecution problems. So long as litigation is expensive and damages are potentially enormous, every Patent out there has a nuisance suit value.

The new law limits damages by forcing the court to identify how they came up with their damage awards. No longer can Judges or Juries just pull numbers out of thin air - there has to be a calculation involved. Similarly, enhanced (treble) damages will require some showing of reckless disregard of infringement issues, not merely a knowledge that others' Patents exist.

5. Patent Office Finances

The USPTO has been a profit center for the U.S. Government, and traditionally, 1/3 of your filing fees have gone to pay for Big Bird on Sesame Street, or for the latest Government-funded art exhibit. Many inventors feel that this was an abuse of the system, as user fees should go to pay for the services that the user enjoys - not general governmental operations.

But in the past, the USPTO monies went into the general fund and then the USPTO had to beg to get its money back. Under the new law, these monies might be kept by the Patent Office, or may be earmarked for the office, which will have to "request" to get them back. This is the one sticking point that has held up the law at the present time, and what sort of compromise that is reached will be anyone's guess.

If the USPTO can keep its funds, it can hire more Examiners and speed up the process of Examination and provide better Examination as well.   If it cannot keep its funds, it will have a whole host of new procedures to implement and no money to do it with - arguably slowing down the process and creating more delay and waste.

* * *

Overall, the changes in this new law are not that dramatic. First-to-file may sound like a dramatic change, until you realize that a typical Patent Practitioner can spend an entire career without ever seeing an Interference Proceeding. The ramifications of First-to-Invent never made much of a dent in 99% of Patents issued, or I suspect, many litigated.

The 3rd Party re-exam provisions are merely extensions and variations of existing processes, not groundbreaking new ideas. And as for litigation damages and the like, these may make Patent cases less lucrative - or not. Some damages claims, such as "lost profits" do not seem to be barred by this new process, and those damages can easily exceed the profit margin of the accused infringer.

So are Patents Worth Less, or Worthless?

This is the question for many Applicants. I think, moving forward, the Patent Bonanza started by Polaroid v. Kodak is going to be attenuated somewhat.

Patents for breakthrough processes and important inventions will still continue to be worth a lot of money. However, filing Patents speculatively - on the premise that others may buy the Patent down the road - will likely be harder to do, and the resulting Patents may not be worth as much.

Note that filing speculative Patents has always been a difficult way to make money from an invention - and it is not a process I have ever promoted or suggested to clients - even though some clients of mine have made some money in this manner. Most do not.

Note that also, these provisions may raise the cost of obtaining a Patent, and combined with the previous efforts at "Reform" will make getting broad and ambiguous claims very difficult.

Will these new provisions in the law kill off the "Patent Trolls" and "Submarine Patents?" - hardly. Just as litigation reform efforts have been passed in many States, you still see the smiling faces of Personal Injury Attorneys on billboards all over the highways.

Simply stated, the high cost of litigation will continue to make the nuisance value of any issued Patent very high. As a result, anyone with an issued Patent can still "shake down" corporations for nominal settlement amounts, if they have an Attorney who knows how to play that game.

* * *

NOTE: I did not comment on another change to the Laws - the Publication of Pending Applications. This change was supposed to make the process more transparent by publishing pending Patent Applications so that the public could look at them and say "Hey, that's not Patentable!" and Protest if they so desired (see my article on Protest).

However, opponents of "Patent Reform" were successful in gutting the Publication program by making it an opt-out program. If you don't want your Patent Application published, you fill out a one-page form and not only is it not published, you save $300.

The only exception is if you decide to foreign file, and then you have to let it be published - or the application will be deemed "abandoned".

But of course, if you foreign file, it will be published in the foreign venue you file in - most foreign countries publish their applications.

So it really is a silly system - you can opt out of it, unless it will be published anyways overseas.

Due to the risk of abandonment I do not file applications with "non-publication requests" unless a client specifically requests such action and provides a sound reason for doing do.

INFORMATION DISCLOSURE STATEMENT AND THE DUTY OF DISCLOSURE

2011-05-29T08:30:00.001-07:00

INFORMATION DISCLOSURE STATEMENT AND THE DUTY OF DISCLOSURE

One aspect of U.S. Patent Practice that differs from other countries is the use of the Information Disclosure Statement (IDS) and the Duty of Disclosure. What do these terms means and what are your obligations as an applicant for a Patent?

1. Duty of Disclosure: As the name implies, as an applicant for a U.S. Patent, you are obligated to disclose all relevant references of which you are aware of at the time of filing, and throughout prosecution of the application.

This requirement is in stark contrast to overseas prosecution, where no such duty exists. This duty is tricky, and is often what opponents in litigation will seize upon to cloud the underlying issues of a Patent (validity, infringement). And the reasons for doing so are clear: If you can convince a Judge or Jury that your opponent failed to comply with the Duty of Disclosure, the entire patent can be invalidated.

The key words here, with regard to the Duty of Disclosure, are relevant and aware, and both are tricky. If you are not aware of a reference, you cannot cite it to the Patent Office, of course. And this means you are not obligated to go out and search for references. However, if you do, you should make a note of anything relevant that you find and cite it to the office.

What is relevant? Well, that is a tough question. As Engineers, we may make the technical call as to relevancy, which may be different than the legal standard. And an opponent will make the argument that references you failed to cite as "irrelevant" were in fact relevant, but that you intentionally hid them.

For this reason, I suggest that, when in doubt, cite a reference. And if you search for references, cite those that are relevant and discard the rest. What an opponent in litigation loves to find is a stack of Prior Art references in your files that were not cited to the Patent Office. You may argue they were irrelevant, but that is now a triable issue of fact, and they have a claim of "inequitable conduct" to raise against you.

Cite it or toss it. That is my advice. Keeping irrelevant references makes no sense to anyone.

2. What are Prior Art References? I have written on this before. Nearly anything can be a reference - a magazine article, a prior Patent, a published application, technical journal, a public demonstration, a competing product sold on the market, etc.

Since we submit documents to the Patent Office, it is hard to submit a competing product as a reference. So often we will cite a publication or patent that describes that product. Prior Art is not limited to competing Patents, however. We cite Patents often because they are convenient to search and cite, not because they are the only kinds of Prior Art.

3. Information Disclosure Statement: The IDS is a fairly simple document listing all the references cited. For non-US Patent references (publication or foreign Patent), we also need to submit a copy of the reference, in PDF format for online filing. For U.S. Patents and Published Applications, we need only cite the number and name of the reference.

In the old days, we would discuss each reference and its relevancy. This is no longer the case. However, if there is a reference you feel has some bearing on your invention, it is sometimes helpful to discuss it in the Background section of the application, to help the Examiner distinguish your invention from the Prior Art.

4. When to File the IDS: You can file the IDS with the application, or anytime during prosecution. However, it is best to file it before the first Office Action on the Merits (Examination) is issued. Unless you can certify that the references recently came to light either from a foreign case, or from your own discovery efforts, you will have to pay a $180 (at the time of this writing) fee to have the IDS considered and made of record.

So it pays to file the IDS early. Fortunately, with the backlog of cases at the USPTO, you have usually at least a year window to file the IDS before the Examiner will even look at the case.

5. Continuing Duty: The duty to cite relevant art is a continuing duty. So if you find a relevant reference later on, you should cite it. If you have a foreign case pending and the Examiner in that case finds a reference, it should be cited. Your Attorney cannot constantly remind you of these things, although he usually will cite the foreign case references (if he is in the loop in the prosecution of those cases). However, it is your duty to inform your Attorney if some relevant art is discovered later on.

Again, you are not under any obligation to go out and find art, so don't feel the need to start a search. Also, Prior Art has to be Prior. If someone comes up with a similar product after you filed you application, it may not be Prior Art, unless you have evidence to suggest that they invented it or published it before you did.

6. Presumption of Validity: While it has been weakened somewhat, there is a doctrine called the Presumption of Validity with regard to Prior Art. If the Examiner has reviewed a reference during prosecution and allowed your case in view of that reference, then it is presumed he felt your invention was patentably distinct from that reference. At trial, it is a lot harder to invalidate your Patent in view of that reference, unless an opponent can show the Examiner made a clear error.

So it pays to cite references. And one might argue that you should cite the kitchen sink, in terms of references. But such efforts are difficult and can backfire.

7. Jumbo IDS and Multiple Patent Applications: One problem with the IDS and the Duty of Disclosure occurs when you have multiple Patents for different inventions. A company like IBM, for example, has hundreds of thousands of Patents, created in different divisions all over the world by different inventors. It is not only possible, but inevitable that a reference cited in one case will be "relevant" to another - and yet not cited, even if the attorney was "aware" of it, due to the shear volume of cases handled for that client.

For example, suppose you write and prosecute 200 Patents for a client (which is not hard to do, I have done it myself). Do you cite every single reference from every other case in each application filed? If you did, the IDS would be enormous. And what happens if you cite a reference in one case, for one inventor, and fail to cite it in another case, with a different inventor in a different division, that might be considered "relevant"?

What happens is, most of the time, nothing. But if a case is litigated, then a smarmy litigating attorney (there are no other kind) will allege that you, as the Patent Attorney, with thousands of cases under his belt, and a docket of hundreds of cases for just one client, should have "known" that an obscure reference from a case in 1998 should have been cited in another case filed in 2007.

And a Jury, who thinks a Patent Attorney writes maybe one case a year (as opposed to one or more a week) might believe that sort of nonsense.

On the other hand, if you cite all the references ever cited in the same client's cases (which itself is hard to do, without missing a reference or two), you might be accused of "burying" a reference so that the Examiner misses it.

So, heads, you lose, tails they win. What can you do to protect yourself?

Well, all I can say is that you should use your best efforts to cite relevant art, which is about all any of us can do. It goes without saying that intentionally hiding a reference is a bad idea, and short-sighted as well. Intentionally failing to cite or otherwise obscure a reference will clearly invalidate your Patent.

But in situations where you have multiple Patents pending or issued, and a stack of 200, 300, or 500 Prior Art references, there is no easy way out - or at least no inexpensive way out.

* * *

If you are aware of, or become aware of, a relevant Prior Art reference, bring it to the attention of your Attorney for filing in an IDS, to comply with the Duty of Disclosure.

Evaluating an Invention

2011-01-08T15:52:00.000-08:00

One question I get a lot - and the one question I cannot answer effectively - is whether or not to get a Patent or pursue an invention.

I am not in the invention-evaluation business, and I would be skeptical of anyone who claims to be - most are fraudulent.

But there are some common-sense factors you should take into consideration before spending tens of thousands of dollars on Patenting, prototyping, and marketing an invention.

1. Market Size: A gadget that has a limited market, for example, only a few hundred or few thousand customers, might not be a good candidate for Patenting, unless the invention is a nuclear reactor or something and could generation huge royalties from each sale.

Many inventors lose sight of this simple fact - if there are not a lot of sales of the invention, it is hard to make money from the invention to pay back Patenting costs, as well as development costs. Your invention may indeed be an improvement over the "Prior Art" - but if the market is limited, then it will not make money for you.

So, for example, gadgets and devices for esoteric market segments might be hard to turn a buck on, as once you sell one to every possible customer, you're basically done.

I use the example of the Helmet Warmer invention that an enterprising young man came up with. It was a cabinet for warming football helmets so the elastic would not harden in cold weather. A great idea, but once you've sold one to every major league football team that plays in cold climates, and perhaps some college teams, your market dries up. Will the costs of designing and building the device be offset by profits from sales?

2. Lower Priced Alternatives: I was in the grocery store the other day, and saw a fancy potato peeler on sale for $9.95. It seemed very complex, but moreover it was pricey. The regular kind of Potato peeler that people have been using for decades costs a buck at the dollar store. Was there some compelling reason I should spend ten times that amount? Particularly since I don't peel a lot of potatoes!

And that is a second factor most inventors don't consider. Yes, your bracket, jig, fixture, tool, or other device may be the cat's ass and make a 20 minute job into a 15 minute one. It may be a labor-saver! But, if the alternative costs far, far less, it will be a hard sell to the average consumer.

An awful lot of inventions fall down on this simple point - they are improvements, yes, but expensive improvements that the market just doesn't want to pay for. The inventor has answered a question no one is asking.

3. Easy Design-Arounds: It is possible to get a Patent on nearly anything, if you claim it narrowly enough. But many products are very difficult to claim broadly at all. If you have an improved container, jig, fixture, or the like, where the point of novelty is in the field of use or application, it can be hard to get a useful Patent on it.

And even if you get a good Patent, if the device is pretty generic (a clamp, fixture, container, or the like) then it is likely that a competitor could "design around" your Patent claims, if the device became popular.

Then you are stuck in the situation where you can't stop the competitor from copying the device, because the Patent claims are too narrow - and broader claims are not available.

And even if your claims are narrow enough, do you have the money, time, and effort to sue him for damages - particularly if (as in #1 above) the Market Size is not very large?

This is a heartbreaking scenario I have seen play out more than once. An inventor has a good Patent, and the invention is a good idea. But someone decides to just copy it, and since the potential damages, even with treble damages applied, are less than a million dollars - so it isn't worthwhile suing to prevent infringement.

* * * *

If all of these concerns make it sound like I am not cheer-leading for people to file Patents, it is because I am. Some inventors are successful with their inventions, some with their Patents, some with both. But it requires a significant market share and royalty base to make an invention worthwhile developing and Patenting.

Think hard before you spend a lot of dough on marketing, selling, building, or Patenting your improved gadget. It could be a lot of money down the drain.

What is PRIOR ART?

2010-12-13T08:24:00.000-08:00

For non-practitioners, the terminology used by Patent Attorneys can seem arcane and obtuse. And one of most common of these terms is "Prior Art". What does the term mean? Where did it come from? And how does one determine what is "Prior Art"?

The source of the term is from the U.S. Constitution. "In order to promote Science and the Useful Arts..." Congress was authorized to set up a Patent and Copyright system. The term "Science" refers to Copyrights, not inventions (a source of confusion for many) while "Useful Arts" is what we would call technology, today.

The term "Prior Art" refers to any reference that teaches some aspect of an invention being examined (or litigated).   Once source of confusion is that in most cases, we cite other Patents as Prior Art and thus some inventors fall into the misconception that only other Patents are Prior Art. Worse yet, they may tend to believe that what we do when we apply Prior Art to a pending application is to pit one Patent against another, like battle-bots in an arena.

But anything can be considered Prior Art, provided it is Prior, as we shall discuss below. Historically, we have used Patents, as we have a large amount of them laying around, and since the Patent Office had them all on file, it was easy to search that database (and still is) than to look for esoteric technical journals or other types of references.

When we cite a Patent (or Published Application) we are citing it for what it teaches not what it claims. Thus a Patent or Published Application is merely cited as a publication of what is "known" to the public. Other documents or events could also be used, such as technical journals, instruction manuals, books, texts, public demonstrations, or prior sales of the invention. All are "Prior Art" if they have an effective date prior to your invention.

For example, in one litigated case, we found evidence that the inventor had attended a trade show more than one year prior to his filing date. We found a nice photo of him, standing at a trade booth with a customer, holding the invention in one hand, and shaking hands with his largest customer with the other. It was pretty compelling evidence that the invention had been "publicly demonstrated". Finding an invoice later proved he had actually sold the invention more than one year prior to his filing date.

So Prior Art is not limited to just Patents. Any publication, for example, can be cited as Prior Art.   I often use the example of the September, 1985 edition of the Slovenian Journal of Computer Science as a Prior Art reference. It was published only for three months in 1985, and is available only in an obscure library in Slovenia - and only 30 people have ever seen it or read it. But that is a "publication" and if an article in that Journal teaches your invention, well, tough luck.

And that example illustrates how doing a Prior Art Search can be so tricky. Inventors come to me wanting a "guarantee" that their invention is not known in the art. Oftentimes entrepreneurs want to assure investors that they are sure to get a Patent - and they want a guarantee from me that nothing, repeat nothing, out there will invalidate their Patent.

But I can't offer such guarantees. Even if every single obscure publication on the planet, since the dawn of recorded history, was available to search on-line, there is no way to reasonably say with any accuracy, that there is not some piece of Prior Art that may have been missed in a search. It is just is not physically possible.

The only time you know a search is exhaustive is if you find a reference that teaches all the features of the invention you are searching. Then you know you're done. But if you don't find anything, that is not an indicia of novelty. All you can do is search, and try to ameliorate risk, not avoid it entirely. And being an entrepreneur or inventor is all about risk-taking. I can't eliminate risk for you, only try to quantify it and take reasonable steps to avoid the more obvious pitfalls. But a Patent Attorney cannot guarantee a Patent will issue!

So, just about anything can qualify as "Prior Art" - even so-called "public knowledge" which can be hard to quantify. You might say, seeing an invention, "Well, everyone knows that!" and sometimes Examiners try that tactic in making a rejection, saying that such-and-such a feature is so well known, they are taking Official Notice of the feature as being well-known. If an Examiner makes such an argument, and you don't feel he is justified, you can ask that he cite a reference teaching the feature. The burden is on him to then find a reference showing the feature, or drop the rejection.

Lately, I've seen the Office trying to skirt this requirement by making obviousness-type rejections without using the term "Official Notice" but instead making one-reference obviousness-type rejections and then arguing the missing features are "well known". These are Official Notice rejections in reality, just not in form. And I've had Examiners argue that their making-up of missing features from whole cloth is not an Official Notice rejection at all! But usually, if you push the issue, they will back down. Most Examiners are not going to go to the Board of Appeals on a one-reference 103 rejection.

In order to be Prior Art, of course, the reference has to be Prior - whether it is a Patent, a publication, Public Use, Official Notice, on-sale, or whatever. And this is where it can get tricky.

In Europe and most of the rest of the world, there is an absolute novelty standard. Your effective date of your Patent Application is the filing date. And reference with a publication date prior to that is Prior Art to your Patent. This means that if you publicly demonstrate, publish, sell, or offer to sell your invention before filing for a Patent, your rights overseas may be diminished. It also means that determining whether a Patent, publication or other document is Prior Art to your application is a much easier task. If it is before your filing date, it is Prior.

Of course, this raises the first question - what is your filing date? Patents, both in the US and overseas, can be strung together in Priority Claims such that figuring out the effective filing date of a Patent can be tricky. For example, a US Patent may claim priority from an earlier filed application, which in turn may claim priority back from a Provisional Application. The effective filing date can be years in the past, which makes invalidating such a Patent all the more difficult, as many of your good references may not be "Prior" to that date.

In the old days, you could string Patents along like this for decades, and in some celebrated cases, people did. Some of Jerry Lemelson's Patents that issued in the 1990's (or indeed, even today) claim priority strings that go back to the 1950's. Many saw this as an abuse of the system, and since about 1995, most Patents issued have a term limited to 20 years from the earliest filing date in the chain. So claiming an earlier priority date may be useful, in terms of antedating Prior Art, but it also limits the term of your Patent by subtracting from that 20 years.

But in the US, we are also a first to invent country, not a first to file as in Europe and the rest of the world. As noted above, in Europe, your effective filing date is the absolute cutoff for determining what is "Prior". In the USA, it gets more complicated.

To begin with, we have a one year "grace period" for filing. Any Prior Art a reference that has an effective date of more than one year prior to your filing date absolutely qualifies as Prior Art.   Once something has been publicly disclosed for a year or more, it is public domain and if you haven't file a Patent Application by then, well too bad.

Believe it or not, I've seen Examiners, on occasion, cite references that had effective dates after our effective filing date! So be sure to check dates on references applied to a rejection before formulating a response. Rather than having to make a convoluted 103 argument, the entire tent may collapse when you point out that one of the references isn't "Prior" to your effective filing date.

In some instances, a reference can be considered Prior Art even if its effective publication date is within that one year period. These are 102(a) type rejections, for Patents which were filed before the one year period, but published afterwords. In some instances, you can "swear behind" such references by providing information showing that your inventor invented the invention before the reference in question. This is a tricky task and subject for a whole separate article. There are pitfalls to this technique, as you are putting on the record a definite invention date for others to see. If the other inventor can later "swear behind" your date, you may lose that Patent later on in litigation. In many cases, it is considered a better idea to distinguish over a reference rather than to rely on swearing behind a reference.

And the problem with such swearing behind, is that if the other fellow filed before you, chances are, he engaged in invention activities before you as well. But these scenarios illustrate why it is so important to file early, even if we are a first to invent country. You eliminate these messy problems and predate more "Art" by having an earlier filing date. The nature of the invention business is that people tend to come up with similar ideas at similar times, as technology improves, making new inventions possible. So getting that early filing date is very important to the process.

A final word on Prior Art: You are obligated to cite relevant Prior Art that you are aware of, to the Patent Office.   This is called the "duty of disclosure" and is unique to the US. This does not mean you have to go out searching for references, only that you can't hide things you are aware of. And hiding references from the Office is a really bad idea. If you cite a reference, there is a chance it may narrow the scope of your Patent or that some claims are rejected. But you still might get a Patent. But if you fail to cite the reference, and it comes out later in court, it can invalidate the whole Patent - even claims that are not anticipated by that reference.

What is a relevant reference? That is another tricky question. I tell inventors to use their judgment - any reference that is relevant to the claims should be cited.   One problem I see with inventors is that they go online, do searches, and print out reams and reams of Patent lists, most of which are not relevant. As you search, pick out the relevant Patents and print them out (or save them) and discard the rest. If you ever get into litigation and these endless printouts of hundreds of irrelevant Patents appear, it is fodder for an opponent to argue that you deceived the Patent Office.

And if you cite these hundreds of Patents, they will argue that you "buried" the relevant references in the pile! So you can't win either way. The best thing to do is to keep the relevant references and discard the rest.

There are other issues as well, but too much to go into for this article. For example, suppose your company has 50 Patents. Do all the references cited in each Patent need to be cross-cited in all the others? It is a tricky situation, and opportunistic litigators will try to find one reference you failed to cross-cite and then cry "foul!" to a Judge. It is not necessarily a winning argument, just another way of clouding the waters in litigation. You try to do your best to avoid these types of issues proactively, but all you can do is make best efforts.

When Someone Runs Down Your Patent...

2010-11-26T07:59:00.000-08:00

When someone trying to negotiate a license for your Patent says your Patent is no good, or not enforceable, it is a sign that they are scared. NEVER get drawn into a discussion as to the validity, scope, or enforceability of your Patent! Say NOTHING!

I get a phone call from a client several years back. Someone has contacted them regarding their Patent, and instead of talking to an Attorney about negotiating a license, they have decided to "save money" by going it alone. The person calling wants to take a license or buy the Patent, but they make disparaging remarks about the Patent and try to draw the inventor into protracted discussions about the scope and enforceability of the claims.

Foolishly, the inventor gets drawn into these discussions, not only in a series of phone calls (which turn out later to have been recorded by the opponent) but also in a series of e-mails and letters back and forth with the potential licensee.

By the time the inventor calls me to tell me about all of this, it is largely too late. They have basically pissed away the enforceability of their Patent by talking about it too much. If they had only contacted me at the beginning, I would have told them to shut up about it, and concentrate on the licensing terms.

When someone starts running down your Patent, while at the same time inquiring about a license, don't get drawn into the trap. Usually, if someone is running down your Patent, they are doing so for one of two reasons, either to get you to drop your price, or to get you to admit that the patent is limited in scope. Neither is a benefit to you.

The first is probably less evil - it is the same tactic many people use to talk you down on the price of a car. "Yea, its a nice car and all," they say, "But I don't like the color. Tell you what I'll do...." and they offer you $1000 less than asking price. Or they say that the car will never sell, so you might as well give it to them for a pittance.

And surprisingly, a lot of people fall for these type of tactics. As I noted in my companion Living Stingy blog, there was a used car dealer in Northern Virginia who used to call anyone selling their own car and scream into the phone, "What is Lowest Price! Lowest Price! You sell to me NOW!" which I guess is a tactic that works in India or Pakistan or wherever he was from - and worked often enough in the USA to make it lucrative. As I noted in that posting, a young airline stewardess was intimidated enough to sell a lovely Boston Green 1991 BMW E30 coupe for $1500 to this guy, after he convinced her it was a worthless car.

But talking you down on price is the lesser of the two evils here. The real danger in discussing the Patent is that you may make an admission that will come back to haunt you. As in the original example, the person harassing my client kept asking her what a certain limitation of claim 1 meant, and told her that it would be interpreted to have a limited meaning (when clearly it did not). He kept calling her and calling her, and then e-mailing (leaving a paper trail) and got her to say things on the record about what the claims meant and how broad the Patent was.

Ouch. By the time he was done with her, he had a paper trail a mile wide that would make enforcing her Patent in court a messy affair. You see, such documentation comes into evidence as an Admission by a Party Opponent. So you can bring that to court, and then say to a jury, "Look, even the inventor says this Patent is invalid!" And as Ricky Ricardo would say, you've got some 'splaining to do.

And after that, the trial is pretty much over. And in reality, there never would be a trial, as once these documents were discovered by the litigators, they would settle the case for nothing or drop it entirely.

Let me repeat this: There is NOTHING, repeat NOTHING to be gained by talking about what your Patents mean or how broad their scope is, whether they are enforceable, or whether someone infringes them.

If someone comes to you saying they are interested in your Patent, that is a powerful statement right there that your Patent is of concern to them, and they are worried. Don't screw it up by talking your Patent away. If pressed to comment on your Patent, say nothing, other than to refer to your Attorney. Or suggest they talk with their own Attorney for an interpretation of the claims.

But these types of tactics illustrate why it is a good idea to involve your Attorney in such negotiations. And why such negotiations should be kept simple - price and terms, basically. Getting drawn into ancillary discussions about the value of the Patent serve no use, whatsoever, and can never help you, only harm you.

Nails on a Chalkboard!

2010-08-26T05:48:00.000-07:00

The New Yorker ordinarily has interesting articles in long-format which are usually factually correct. However, lately, I have to question the accuracy of some of their information.

One problem with being an Attorney is that you are trained to speak precisely - and the imprecise language of ordinary folks tends to drive you nuts. Dangling modifiers, for example, annoy me. And as Patent Attorney, it is worse, as people tend to spout off all sorts of nonsense about Patents - and not even get the basic facts right.

And some certain phrases are like nails on a chalkboard to an IP Attorney. "I trademarked my invention," or "I copyrighted my company name," for example. They are as annoying as "I Xeroxed a document".

In a recent issue of the New Yorker, this boner jumped out at me:

"When he comes to Las Vegas himself, he is Farmer Lee, and wears a uniform he as trademarked with the U.S. Attorney General's office...." (August 16&23, 2010 issue, page 45, col. 1, lines 11-12, emphasis added)

Nice try, New Yorker. How about the Patent & Trademark Office? The "U.S. Attorney General's Office" does not grant Trademarks. Seems kind of simple. The USPTO even has the word "Trademark" in its name. How hard is that?

The rest of the article was pretty much bullshit as well. It was a 10-page fluff piece about some dude who buys gourmet food for Vegas restaurants. Unsubstantiated facts, rumors, and that sort of thing, plus a "Gee-Whiz, those people in Vegas sure do eats them fancy foods" kind of deal. It was an unabashed promotion of Las Vegas, frankly, and disappointing for the New Yorker. Perfect for People magazine, if you trimmed it down to a page or so.

A 30-second search of the USPTO database (even a newbie can use it!) reveals the following, when searching under "Farmer Lee":

Word Mark	FARMER LEE JONES
Goods and Services	(ABANDONED) IC 035. US 100 101 102. G & S: On-line ordering services featuring fresh vegetables, fruits, plants, herbs and edible flowers; Retail services by direct solicitation by sales agents in the field of fresh vegetables, fruits, plants, herbs and edible flowers; Retail stores featuring fresh vegetables, fruits, plants, herbs and edible flowers
Standard Characters Claimed
Mark Drawing Code	(4) STANDARD CHARACTER MARK
Serial Number	77034979
Filing Date	November 2, 2006
Current Filing Basis	1B
Original Filing Basis	1B
Published for Opposition	July 10, 2007
Owner	(APPLICANT) The Chef's Garden, Inc. CORPORATION OHIO 9009 Huron-Avery Road Huron OHIO 44839
Attorney of Record	Jeffrey C. Norris
Prior Registrations	2798381;3042576
Type of Mark	SERVICE MARK
Register	PRINCIPAL
Other Data	"The name(s), portrait(s), and/or signature(s) shown in the mark identifies Lee Jones , whose consent(s) to register is submitted."
Live/Dead Indicator	DEAD
Abandonment Date	April 3, 2008

From that dead mark, searching by owner name (Chef's Garden) we get a host of Marks:

Serial Number	Reg. Number	Word Mark	Check Status	Live/Dead
1	78565312		VEGGIE PICKS	TARR	DEAD
2	78906600	3522672	FARMER JONES	TARR	LIVE
3	78684288	3277095	ICE BEETS	TARR	LIVE
4	78684285	3277094	ICE CARROTS	TARR	LIVE
5	78534537	3050053	ICE VEGETABLES	TARR	LIVE
6	78504178	3040881	TASTY T'AISINS	TARR	LIVE
7	78906594		GOURMET FIELDS FOREVER	TARR	DEAD
8	78180429	2808602	SALAD SENSATION	TARR	LIVE
9	78130268	2763013	THE CULINARY VEGETABLE INSTITUTE	TARR	LIVE
10	78152226	2837309	VEGGIE U	TARR	LIVE
11	78129557	2740422	DEMITOPS	TARR	LIVE
12	78442331	3062313	THE CHEF'S GARDEN	TARR	LIVE
13	78369126	3074451	MAJENTA LACE	TARR	LIVE
14	78343041	2939890	ICE SPINACH	TARR	LIVE
15	78330939	3042576		TARR	LIVE
16	78299907	2878074	CARMELLINI	TARR	LIVE
17	78284416	2897301		TARR	LIVE
18	78302262		BEET BLUSH	TARR	DEAD
19	78283807		UMAMI	TARR	DEAD
20	77410136		FOSSIL FREE CUISINE	TARR	LIVE
21	77286151		BEET BLUSH	TARR	DEAD
22	77091353	3521312	AMUSE BOUCHE COLLECTION	TARR	LIVE
23	77091344	3521311	TRILOGY COLLECTION	TARR	LIVE
24	77091184		AGTOG	TARR	DEAD
25	77034979		FARMER LEE JONES	TARR	DEAD
26	77034961	3612872	EARTH TO TABLE	TARR	LIVE
27	76224467	2798381	FARMER JONES FARMS	TARR	LIVE
28	76215041	2665504	MICROGREENS	TARR	DEAD
29	76224587	2591150	GROWING VEGETABLES SLOWLY AND GENTLY, IN FULL ACCORD WITH NATURE	TARR	LIVE
30	76224585	2578065	THE CHEF AND FARMER CONCEPT	TARR	LIVE
31	76224464	2620342	THE CHEF'S KITCHEN GARDEN	TARR	LIVE
32	76215012	2591120	SALAD SENSATION	TARR	LIVE
33	76214862	2571195		TARR	LIVE
34	76224586		CULINARY VEGETABLE INSTITUTE	TA

Searching through this list (looking for IMAGE marks, which don't have a name in the mark column) finds this:

Goods and Services	IC 035. US 100 101 102. G & S: Retail store services, telephone order retail services, on-line retail store services, and retail services by direct solicitation by sales agents in the field of fresh vegetables, fruits, herbs and edible plants. FIRST USE: 20051107. FIRST USE IN COMMERCE: 20051107
Mark Drawing Code	(2) DESIGN ONLY
Design Search Code	02.01.18 - Farmers (men); Hobos (men); Men, farmers, hobos and other men wearing overalls; Overalls (men wearing) 02.01.31 - Men, stylized, including men depicted in caricature form 02.11.06 - Beards; Hair; Hair extensions; Human hair, locks of hair, wigs, beards, mustaches; Mustaches; Toupees; Wigs 09.03.02 - Coveralls; Exercise clothes, shorts; Gym shorts; Jeans; Knickers; Overalls; Overalls; Pants; Shorts; Slacks; Sweatpants; Trousers 09.03.15 - Bow ties; Neckties; Ties, neckties or bow ties 09.05.01 - Caps, including visors, military caps and baseball caps
Serial Number	78330939
Filing Date	November 20, 2003
Current Filing Basis	1A
Original Filing Basis	1B
Published for Opposition	October 26, 2004
Registration Number	3042576
Registration Date	January 10, 2006
Owner	(REGISTRANT) The Chef's Garden, Inc. CORPORATION OHIO 9009 Huron-Avery Road Huron OHIO 44839
Attorney of Record	Jeffrey C. Norris
Prior Registrations	2571195
Description of Mark	The mark consists of a picture of a farmer wearing overalls, a bow-tie, and a cap.
Type of Mark	SERVICE MARK
Register	PRINCIPAL
Other Data	The name(s), portrait(s), and/or signature(s) shown in the mark identifies Lee Jones , whose consent(s) to register is submitted.
Live/Dead Indicator	LIVE

So yes, he has a Trademark on his image, including the outfit (and his face). But no, the USAG does not issue Trademarks. (And no, the mark is not for the outfit per se, but for the image shown above).

Total Search Time: 1 minute.

Do I have to start reading the Atlantic Monthly now or something?

What makes the crime worse was that the New Yorker ran an article a few years back about how great their fact-checking department is. They detailed how every statement in an article is run down and checked and sources found - even innocuous statements that would seem to be self-evident. Of course, that article was about how the fact-checking department worked, "back in the day".

Perhaps in the interim, Conde Nasty has laid off all the fact-checkers to save money. To miss something as simple as which government agency issues Trademarks, well, that seems like a no-brainer.

Perhaps the New Yorker is going the way of Time Magazine?

Perhaps. It illustrates how much of our media and information these days is sloppy and poorly prepared. Television long ago ditched factual reporting in favor of celebrity news and talking heads. Allegations and "controversies" are now the order of the day. Factual analysis is too expensive and frankly, the ratings are too low.

So fluff pieces and showy articles that generate interest are promoted, as that is what sells. It is just sad that that sort of thing has trickled down to the New Yorker.

Why I Don't Guarantee Reminders of Maintenance Fees

2010-08-24T08:50:00.000-07:00

Managing maintenance fees can be a headache for the small practitioner.

Why I Don't Guarantee Reminders of Maintenance Fees -
and Why You Shouldn't Either!

At many of the large firms I worked for, we would docket and send reminders for Patent Maintenance fees. In a large firm, with an army of staff, this might be practical, but very, very expensive.

I just spent the better part of an hour or so, trying to track down a client to remind him of maintenance fees. Letters to his office come back "returned to sender" and e-mails to his last known address bounce back through the mailer-demon. I found some information for him online - he has apparently moved on to a new company. But the new company's website is pretty dead, with no active links when I click 'contact'. The phone number of his new company rings, but no one answers.

I finally located him on Linked-In, and sent him a message. Whether he gets it or not, I do not know. I suspect he doesn't want to pay these maintenance fees, as the last time I talked to him, years ago, he had lost interest in the invention and it was not being successfully marketed. But I figure it never hurts to check, right?

On my website and on the materials I sent to inventors, I make it clear that we do not docket for maintenance fees and that I do not agree to remind inventors of maintenance fees due. Some inventors find this a harsh policy. After all, how can they possibly remember the rule of 3, 7, and 11 years?

But as the previous example points out, docketing and reminding people of maintenance fees is an onerous chore and one that is not rewarding even if the client asks you to pay the fee on his behalf.

Maintenance fees are so easy to pay that you really can't charge much to do the chore. So even if you remind the client (and have their correct address, etc. up to 11 years after the Patent issues) you can't charge them much for the service.

And in many instances, the client will say "Thanks for the reminder, I'll go online and pay this myself!" So you've done all the jumping through hoops with no reward.

And of course, in about half of all cases, many clients will simply say "let it lapse" and you also don't get paid.

And in an increasing number of cases, you can't find the inventor or company or their successors, after years of no contact. And as a result, even if you want to remind them, you can't.

And that begs the question, if you agree to remind a client of maintenance fees due, what is the level of due diligence you need to use to remind the client? Is one reminder enough, or do you need to nag them on a weekly basis until they pay up or explicitly say "don't pay the fee"?

How much effort do you need to go to in order to track them down to remind them, if they have disappeared from view? An online search? Letter to the last known address? Hire a detective? What?

Whatever you think the standard is, rest assured there will be someone out there who will say, "Well if you had just Googled me, you could have found me," or, "I was expecting four more reminders before I had to pay! Why did you let my Patent lapse?"

It is a lose-lose situation for the Attorney as a result. Thus, I do not agree to send ANY reminders to clients, and if I do so, it is only as a courtesy. The liability of agreeing to track clients over a 13 year period and then send them timely reminders (of an unknown quantity) is not worth the few hundred dollars (tops) that you can reasonably charge for paying a maintenance fee.

So if you have a Patent and have maintenance fees due, docket them yourself on your own calendar, using the rule of 3, 7, and 11. Understanding Maintenance Fees is not hard.

And you can pay them yourself online.

But don't expect a reminder from me!

I do NOT guarantee to send reminders for maintenance fees!

Law School for Idiots

2010-08-13T15:10:00.000-07:00

Note: This is cross-posted from my Living Stingy blog...

Law School may seem intimidating at first, but this is only because of the scare stories. What could be easier than a school where all your grades are based on the final exams?

Any idiot can go to law school, and as I like to say, I'm living proof of that. I just finished reading Scott Turow's "1L" which is an account of his harrowing experiences in his first year at Harvard. As he learned in the book, part of the problem of being a law student is not that the work is hard, but rather in learning that it is easier than it appears.

Getting in to law school is no big deal. Get a good grade on the LSAT. To do this, you have to be somewhat smart and good at those SAT-type tests. But also you have to invest the money in taking the LSAT review course. The course will train you in the questions you will expect to see, and it will easily boost your LSAT score by several percentile points. I ended up in the 99th percentile after taking the course. Not bad.

Train yourself to take the test, and you will do well on the test. This is a theme you will see throughout law school and on the Bar exam. Try to train yourself on the law in general, and you will do much more poorly on the test - even if you end up learning "more" in the latter method.

Having some decent grades will help you get into law school as well. Now if you are one of those overachievers who wants to work for a big New York law firm, well, you need great grades from a name school and a good LSAT score to get into the "name" law schools like Harvard or Yale. But for the rest of us schumcks who will end up practicing law at a more parochial level, that really isn't necessary - nor is all the stress of law school.

Once you are in law school, relax. Very few people flunk out of law school. Most people who leave do so for other reasons - they find they don't like the law, for example. But failing? Hard to do.

Here's the dirty little secret of law school - one that I didn't "get" until my second year: All of your grades are based (in most cases) on your score on the final exam. And in most cases, what is taught on the final exam has little bearing on the coursework over the semester.

I wasted a lot of time trying to participate in class and being "prepared" for class, when what I should have been was prepared for the Exam. The oddball cases discussed by the Professors ended up confusing me and I didn't learn the basics of the law until it was too late.

So as a "1L" you can stress out about briefing cases or being "prepared for class" to be called on to "brief the case", but it really means nothing at all, other than maybe an academic interest in the law.

By your second year, you will find that many students are skipping more than half their classes. Some of my friends attended not a single class in some courses, and still ended up getting an "A" because they aced the Exam, which was a near-copy of the previous years' exam. I tried to "learn" by attending classes and reading the material, and nearly did the impossible - I nearly flunked out of law school.

Once I started training myself to take the exams, my grades improved remarkably. I am a slow learner, sometimes, but I finally figured it out by the last year of school (which is four years for us night students).

Approaching Law School as an Engineering grad, I assume naively that the classwork was related to the coursework on the test. In Engineering school, I could show up, pay attention, take notes, ask questions, and get an "A" on the Exam. Law School was a completely different ballgame, and I doggedly (and stupidly) tried to apply my previous skill set to Law School, blithely ignoring my neighbor's different approaches. I felt that somehow I was learning "more about the law" by doing it my way. But passing the test was the main idea - the main idea I missed, initially.

The grade for each course is based on the one and only Exam, and the Exam is based on two things: Black letter law and issue spotting. The exams are basically essays and some ask you to spot major issues (the important ones) which is really not hard to do. Don't get caught up in the tricks they use to distract you - getting you to go off on a tangent on some minor issue that won't carry the day. Spot the main, important issues, and you are assured a good grade.

Such exams are easy to grade for the professors. You spot five of the six main issues, you get an "A". You go off on what seems like an interesting tangent, but fail to discuss most of the main issues, you get a "D". It is that simple - the simple, direct answers take the day. Bullshitting about tangential nonsense might make you think you look smart, but it misses the main idea.

Similarly, the essays are based on the "Black Letter Law" which is the well-worn path the law usually takes - not some obscure case which is presented in class only to confuse you and to make you wonder if the law makes any sense at all. Professors like to teach you about esoteric oddball cases in order to illustrate basic questions in the law or to get you to think about the boundaries of that well-worn path.

Many first-year students, myself included, fail to grasp this simple concept and end up confused - wondering why one piece of case law says the opposite of another, based on nearly the same facts and circumstances. Scott Turow, in his book, recalls his struggles with this same problem - that he failed to grasp that what his professors were trying to do is ask questions with no clear answers, and then get you to think and argue about the law. The professors are not providing answers, but trying to get you to think - like lawyers - by asking questions.

But generally, these sorts of things are not on the Exam. The Exam, which is the whole deal (and graded anonymously) deals with your basic understanding of the law, and generally doesn't address esoteric questions.

And many professors re-use the same (or similar) questions from year to year on the exams, or rotate them from time to time. Law school libraries generally have copies of old exams for you to look at, so you can train yourself to take the exam by taking old Exams.

My grades improved remarkably when I realized this simple trick. Train myself to take the exam first, then think about the esoteric aspects of the law second. I would sit in a room and take an old exam, typing up the answers, in the time allotted for the "real" exam, as an exercise. In some instances, I would use the actual exam room, so that by the day of the Exam, I had been through the experience several times and was not all freaked out by it. By then, the Exam room was my comfortable lounge, and taking the Exam was something I had done several times already. I was relaxed, to say the least.

Typing answers is also a good idea, if you are a good typist. A typed exam is easier to read and one professor confessed that he automatically graded such exams higher than poorly scrawled answers in "blue books". Usually the typing room was less crowded, too, so you can have a little more peace and less stress than the large auditoriums where the main part of the class is taking the test.

Again, if you want to be a legal superstar, you'll want to get on Law Review and have stellar grades. For me, as a night student, this was not even an option. I just wanted to get the degree that I needed to keep the job that I already had (writing Patents). Passing the courses - and the bar exam - with the minimal amount of fuss was important. Becoming a great legal scholar in Constitutional Law, well, that wasn't as important.

And speaking of the Bar Exam, it is just a test, just like the LSAT or the law school exams. No need to freak out about it And guess what? They test you on issue spotting and black letter law, just like in law school. Really smart people screw up the bar exam because they are really smart people - too smart. They read a simple question with a couple of "ringer" distracting facts in it, and assume the question is a "trick" and that the main issue deals with the distracting facts. But what the examiners are really looking for is you to barf up the basic idea, to show you understand the basics of the law. You miss the basics, and all the esoteric tangential issues are of no use. And it is a pass/fail test.

Again, the bar review courses (I used BAR/BRI) are essential. Many of the legal concepts I learned in law school did not coalesce until I took the bar review course, which reduced an entire semester (or year) of coursework into a few days of outlines. Suddenly, it all made sense.

Many of the questions on the actual Bar Exam were verbatim from the review course. Some always are. The multi-state portion repeats a lot of questions (and some are basically unanswerable). You can drill yourself on multi-state questions (available in electronic form) to the point where you can pass the Exam just because you've memorized all the "correct" answers after a while.

When I took the State Bar Exam, I was very sick and running a fever due to an ear infection. I was in very bad shape, ready to pass out. As a result, I wrote short, simple, direct answers to the exam questions, covering the main ideas.

I passed.

Friends of mine, all panicky and nervous, were sure that there was a "trick" to each question, and that by addressing some tangential issue in a long-winded essay, they had mastered the bar exam.

Some of them failed.

I am not trying to trivialize the study of law, of course. One of the major hurdles one faces as a "1L" and as Mr. Turow discusses, is learning to think like a lawyer and learning the unusual lingo of the law. First year law classes and the Socratic method do help you learn to "think on your feet". There is value in the classwork, at least initially.

And as Mr. Turow discusses in his book, many of the "case books" published by the professors often abstract the cases to the point where you can barely make sense of them. In fact, no one could make sense of them.

So in that regard, such "cheater" materials like nutshells, outlines, and other study aids are important in cutting to the chase when studying law school materials. Hiding the main idea is very common in law school, and there is no sense in going on a treasure hunt, when someone can just hand you a map.

When a professor leaves out basic information from a case in the case book, it really is just making simple ideas seem harder than they need to be. Why they do this is a mystery to some - perhaps because they want to make law school seem harder than it is - and keep people out of the guild as a result.

There are, of course, some courses where the grade is not based on the exam - moot court competitions, courses with research papers due, etc. Such courses tend to teach you more about what you will actually be doing as a lawyer, and as a result, you may be better off putting more effort into your moot court brief than into attending every class for a course where the grade is based on the final.

Perhaps that sounds crass, but this is the way the law schools have structured the game - so in a way, it really is their fault. As Mr. Turow noted in his book, by the second semester, many of his classmates - as many as 1/3, were skipping classes regularly to concentrate on more important things, such as research projects or moot court briefs. And this was at Harvard, supposedly the greatest law school in the nation.

One wonders why they would structure a legal education in such a manner that encourages students to take shortcuts or skip classes. But perhaps that is another part of the education itself - learning to spot what is important and necessary and most useful, and also identifying what is less important and less necessary. In medicine they call this triage, separating the dead and dying from the merely wounded, and concentrating efforts where they are most useful and will produce results.

Most lawyers only have limited resources to bear on a given legal problem (limited by their client's ability to pay) and thus have to adjust their efforts to where they would do the most good. The most bang-for-the-buck.

Law students have to do the same thing. And perhaps that is one of the more important lessons in law school. You learn to separate the wheat from the chaff - what is important from what is window dressing. You learn to think analytically instead of emotionally. And that last item is why some people drop out. They don't want to learn to be analytical, on the grounds it is dehumanizing.

Like I said, it took me nearly four years to figure all this out. By the time I sat for the Bar Exam, I realized that I had wasted much of my law school education trying to do things "right" when I could have learned more and gotten better grades by applying the principles of triage to my work. It was a hard and expensive lesson to learn.

And here you are, getting it for free. Enjoy.

The Death of Free-Form Pleading

2010-06-14T05:33:00.000-07:00

There is an episode of the Simpsons, which projects the world 20 years in the future. Marge is watching television and an X-rated video is playing. She remarks, "The Fox Network turned into a hard core porn channel so gradually, we hardly noticed until it was too late!"

Similarly, the practice of free-form pleading is dying or dead at the Patent Office, and no one seems to have noticed the trend - until it was too late.

When I started out as a newly minted junior Examiner back in 1987, there were very few forms or other standardized documents that were used by applicants for filing with the Patent Office. Examiners had a few carbon-copy forms and of course, the infamous "form paragraphs" to be used, but on the client side of things, the formatting, other than a few general guidelines, was pretty lax.

Back then, a pro se applicant could file a Patent Application by writing a letter, "Dear Patent Office, how are you? I have an invention..." and get a Filing Date and Serial Number, and the whole mess would be jammed in a file wrapper and Examined. Yes, there were guidelines as to headings and formatting of an application. But those were guidelines in the MPEP, not really the Rules or Law. So long as you had a Specification and at least one claim (and maybe a Drawing), you had a Patent Application.

And, oddly enough, today our Eurocrat friends at the EPO pretty much still work this way. I have a Swedish Attorney who basically writes personal letters to the EPO in response to Office Actions, and even a large German firm I have used, sends hand-marked-up copies of documents in response to actions. How odd that the Europeans are now more lax that the USA in terms of form and formatting - after all, they invented bureaucracy!

Changes started cropping up at the USPTO when the switch to publication and on-line filing occurred. Insertion of paragraph numbers ([0001], [0002], [0003], etc.) was a first formatting change that should have been seen as a shot across the bow. For the first time in decades, we were being asked to change how we filed our cases. Sure, many applicants had formatting preferences - using line numbers, for example. But such elements were not required, only preferred. Suddenly there was a new requirement, one that was not easy to comply with (if you go over 100 paragraphs in WORD, your formatted paragraph numbers take on a fifth digit).

Up until that time, every Attorney and firm had their own set of "forms", usually in WordPerfect (for DOS, remember that?) or later on, in MS-WORD. These were not official forms, but merely documents that had evolved over time, and most Attorneys shamelessly swiped forms and formats from one another. Many of these "informal" forms, I am told, were developed by U.S. Navy Patent Attorneys, and filtered out from there. But that could be folklore.

With the advent of electronic filing, we saw a switch to Adobe PDF for forms. Since PDF was the standard format for submitting electronic documents to the USPTO, it seemed cumbersome to create documents in WORD and then convert them to PDF. Such conversions often produce artifacts in the documents and, of course, cannot take advantage of interactive PDF features.

The Application Data Cover sheet was introduced, first as a user-generated form, and then finally as an Official USPTO form. Prior to that time, some applicant's had created their own "application data sheets" informally, to list inventor names, addresses, title, docket number, and assignee name, as well as contact information. Such data sheets were useful, as an application filed without Declaration or Assignment may have been missing some of this data.

The forms section of the USPTO website has expanded considerably. At first, there was a total disconnect between the forms offered on the website and the form categories listed on the electronic filing site. But lately, the two are starting to dovetail better and better. The modern EFT forms actually allow the USPTO to harvest data directly from an application and thus improve efficiency of the organization and help reduce errors.

But with each new and improved form, little by little, free-form pleading has died a tiny little death. The .pdf forms are, in most cases easier to use, to some extent. I am not sure why the USPTO resists creating a combined Declaration and Power of Attorney form (these have to be filed separately) and the IDS form can be a PITA if you have more than six references to submit.

And of course, forms can be very bureaucratic and poorly formatted. Historically, most USPTO forms have suffered from two problems. First, the form creator tries to create a form that covers every possible circumstance known under the sun. So a general-purpose form that 99% of the time is used for one purpose, lists 100 different alternatives, most of which are rarely, if ever, used. This tends to create large and unwieldy forms that tend to evenly emphasize all possible outcomes, whereas 99% of the filers are following one, well-worn path. A better solution, I think, is to create a simplified form for the 99% of cases and make a special form (or allow free-form pleading) for the oddball cases. The new RCE form is an example of such a simplifed, 99%-of-the-time kind of form. It takes only seconds to complete and file. Well done!

The other problems with USPTO forms (and many of these are being corrected, even as we speak) was a wild inconsistency in formatting (oddly enough). The header for one form had seven fields to complete (Inventor, Title, Docket Number, Filing Date, Examiner, Art Unit, Serial Number) while another has only five. Thus, you can't "cut and paste" the data from one form to another, and also the "auto-complete" feature in Adobe is inconsistent.

With each new generation of Forms, many of these problems are being eliminated. One-size-fits-all forms seem to be going away, and standardized headers seem to be the norm now. And the new interactive forms include helpful pop-ups to illustrate correct formatting for dates and other information. It has been a slow, painful, evolutionary process, but each iteration is an improvement.

Several years back, the Appeals process started getting trickier in this department as well. The Board of Appeals started requiring different headings and standardized headings and sections. The instructions for this new format were, at best, vague, and many a practitioner received a "Notice of Non-Compliant Brief" as a result. In addition, new tables of authorities and references were required. The process was continually tweaked and tampered with until, last year, an entirely new Appeal Brief format was instituted, more in line with legal briefs filed in Court. You may have a compelling argument, but if you don't have a table of contents, it won't get heard.

What is disturbing about the Board of Appeals formatting procedures, is that while they are spelled out in the Rules, no sample form or format is provided by the Office to aid practitioners. So you have to read the rules, try to prepare a document as best you can, to meet the requirements, and then wait for the "Notice of Non-Compliant Appeal Brief" correcting your errors. And recently, there is talk of limiting the number of times an applicant can submit a Non-Compliant Appeal Brief, or limiting the time period for response. It starts to take on an Alice in Wonderland type of aspect. Or perhaps more like Rumplestiltskin. You have to keep guessing at what they want, in the formatting department, and hope you guess right.

And it is not clear to me how this formatting helps the Board of Appeals make better decisions. Let's face it, 99% of all Appeals involve one thing - Obviousness rejections. If you really wanted to make the Appeals process simpler and better, you could reduce an appeal brief to a claim chart. Or perhaps just a listing of the references and the claims. Because that's really the meat of the matter, when you get down to it.

But perhaps the Board of Appeals, like the rest of us, really can't put their finger on what constitutes "obviousness". But that is the subject for another blog entry. I have always said a "strong obviousness rejection" is an oxymoron. Frankly, anything beyond 102 anticipation, really doesn't exist, except in hindsight. But I digress...

On the Examining side, I am seeing more attention being paid to form and format over substance. Examiners, at least in some Groups, seem more concerned about details in drawings and reference numerals in the Specification than they are about the claim language or a detailed search of the Prior Art. This can be a boon for some applicants, as if the application is formatted properly it sails through, without, it seems a serious contemplation of the claims. In other cases, however, a meritorious Patent is consistently denied, not because of lack of novelty or an obviousness issue, but because trivial objections to the Specification.

Now granted, any practitioner should properly prepare their Specification, and I have always harped that if you are going to claim something, you'd better show it. And if you show it, it had better have a reference numeral, and if it has a reference numeral, it had better be mentioned in the Spec. And if it is in the Spec, it should be in the drawings and have a reference numeral as well!

And in the past, this procedure was not always followed. I recall reviewing a Lemelson case for a client, and looking at drawings with un-labeled boxes, connections that went off the page, and other informalities. Such vagueness and informality in a Patent Application should not have been permitted. There are reasons for formatting and form requirements, of course.

But it seems that perhaps maybe today we have swung too far in the other direction. Applications are being examined with an eye toward bureaucratic procedures and less with regard to merits of the case. This is disturbing, as in any bureaucratic organization, a worker can deny nearly anything on bureaucratic grounds, and create never-ending hoops for the client to jump through, all of which can be characterized as "legitimate" objections or rejections.

Take, for example, the brouhaha over 112, sixth paragraph rejections. For some reason, after decades of practice, and a law that explicitly states that "means plus function" language is permitted, it is decided that "means plus function" should no longer be allowed. At first I was mystified by this, as almost all "structural" claim language is in the form of "means plus function" even if the word "means" is not used. But I stopped fighting these rejections/objections when I realized that the only thing the Examiner wanted was to eliminate the "for" in the claims. So instead of saying "A transistor for amplifying..." we say "A transistor amplifying...".

And, we are told, this makes for a better and more definite claim. Well, OK, if you say so. But I get the sneaking suspicion that we are just arranging the deck chairs on the Titanic. It looks pretty and all, but have we really done anything here of significance? Have the claims been further limited or reduced in scope? Have the wild excesses of 112, sixth paragraph (what were those again?) been reined in?

Or take our "business method" claims conundrum. For a while there, Examiners, after attending a training session, were spitting out business method and software rejections, taken word-for-word from the PowerPoint presentations at the training meeting. Six months later, of course, these "new procedures" are largely dropped. And, as with the 112, sixth paragraph nonsense, it turns out that overcoming these rejections is more of a matter of claim formatting than responding to any real, substantive rejection.

You can make the argument that business method claims are a bad thing. Go ahead. But if you really want to reject these types of claims and make it stick, a simple 102 rejection really is the nail in the coffin, not some esoteric new and untried argument. The people who argue, in a panic, that business method patents will be the death of industry needn't worry - because Prior Art techniques are never Patentable, business method or not!

And the problem with all of these types of approaches to Examination is that instead of producing more consistent Examination standards, they tend to produce more wildly inconsistent standards of Examination. When Examiners spend more time focusing on what amount to procedural issues and formatting issues, they may spend less on the merits of the case - specifically, are these claims allowable over the Prior Art?

The hardest part of Patent Examination is searching - finding art. The second hardest part is applying art to the claims in a 102 rejection, and in particular, in a 103 rejection. And it seems to me that rather than spending more resources doing these "hard" things, the USPTO seems to be trying to find easier ways out - procedural issues to raise, formatting issues to raise, and new types of rejections to raise. So rather than chuck out a case by finding good art and applying it to the claims, we raise a 101 rejection instead. You can argue all day long about what constitutes patentable subject matter under 101, but a good 102 reference pretty much settles the matter.

(Can't find a 102 reference? Well, maybe - just maybe - the applicant may have invented something. It seems like a weird concept, but it does happen.)

Because when it is all said and done, the claim's the thing. And one constant criticism of the USPTO has been that some cases are being allowed with overly broad claims. While in many cases, this criticism is unwarranted (many making the argument have private, anti-Patent agendas), there have been notable instances where cases allowed with vague or unduly broad claims have cost innocent defendants millions to litigate or license. Yes, Patent Abuse does happen - in Courts of Law, not at the Patent Office, however.

Nitpicking the Title of the invention really doesn't address this broader and more important issue. And denying applications to meritorious applicants - people with real businesses and real products, who have invested hundreds of thousands of dollars in research and development - does little to deter the "Patent Trolls" out there. It only damages legitimate industry.

And hand in hand with this increased reliance on forms and formatting is another disturbing trend. It seems the USPTO is more inclined, these days, to reject a case on procedural grounds, rather than address the merits of an issue. In other words, if the Examiner or the Board can find a way to not consider an issue on the merits, they will.

In part, this seems to reflect a general trend in jurisprudence. A Death Row appeal in Virginia is denied on the grounds it was filed one day late. You know, that sort of thing. Why bother with the merits of the case, when it can be disposed of procedurally? It's a convenience thing. We all have other stuff to do, you know. While you hope the guy is actually guilty (DNA testing seems to confirm this), it seems to send the wrong sort of message. It says that merits don't matter - only procedures do. And a society more concerned with rules and forms that with people and issues is a society that is doomed from the outset.

The IRS used to try this approach, and failed. Taxpayers were outraged that minor errors in filings could result in staggering fines that could bankrupt them - while the wealthy could hire lawyers to comply with all the procedures and forms, and end up paying no taxes whatsoever. The merits of the case should carry more weight than procedures and forms. And to some extent, our new, improved "friendly" IRS seems to be taking this to heart. Perhaps, the USPTO could follow suit.

With the advent of electronic filing, perhaps it was inevitable that standardization of Patent forms and procedures would become stricter. And to some extent, this standardization will bring about improvements to the process and can make it easier for the applicant and the Patent Office. If official forms are easy to use and standardized, they make the process smoother and more certain. After all, no one can argue that an Oath or Declaration is "defective" if it is the standard Government form, correct?

But at the same time, we are losing something important here, and not merely a sense of nostalgia for a time when Patent Applications were hammered out on IBM Selectrics. We are losing the sense that it is the content of the application, not its formatting, that is important. If we lose focus on that, not only will these new forms and format requirements not improve the system, they will, in fact, make it worse.

FWIW.

Foreign Clients, Problem Clients

2010-06-06T14:45:00.000-07:00

Foreign Clients pose special problems for the practitioner, both in legal terms of representation, and also in practical practice management terms.

As I noted in my "Problem Clients" posting, you can always spot a problem client, as they usually want a discount on the on the work done, and they want it done yesterday. And they nitpick at the work, looking for imagined flaws in order to demand additional discounts. Nowhere is this more true that with foreign clients. Sad to say, the foreign client is often the problem client.

Traditionally, many Washington DC area firms acted as foreign patent filing sweatshops, filing Japanese, European, or Korean cases, in bulk, for reduced fees. Usually, these firms were captive to one major client. And that major client cranked down on the firms bills in the same way overseas manufacturers clamp down on their Keiretsu suppliers.

If you are offered a deal by a foreign company or law firm to take on such work, consider it carefully, as it can be a life-long trap. They will pay you six months or longer after you invoice them, meaning that you will accumulate, over time, $500,000 to $1M in unpaid billables as a perpetual "loan" from you to them. If the relationship is ever severed, they will not pay off this outstanding balance, leaving you in a lurch with a six- or seven-figure loss to write off.

If you are offered a job at such a law firm, consider it carefully. You will not likely see any interesting work, such as original patent drafting. Most of the work you'll see is amending cases to place them in condition for allowance. In some instances, this can be challenging, puzzle-like work. But it does not give one the full spectrum of Patent Drafting experience.

Moreover, such firms are not fertile grounds to developing your own client base. If they hire you, they expect you to work on cases for whatever Asian conglomerate they are beholden to. So like the firm itself, you will be a captive supplier of services.

Now, of course, if you hang out your shingle long enough, you will receive an e-mail, fax, or other inquiry from an overseas firm, asking you to prosecute a case for them. In many cases, these entreaties are obvious traps. They petition you mere weeks or days before the filing deadline, and want the work done quickly, at a low price, with no retainer provided in advance. If you bite on this hook, don't be surprised if, after you file the case, your Power of Attorney is revoked and you are never paid at all. That was the gag all along - get the case on file for free. They will move on to some other sucker to take over prosecution once an Office Action is received.

When representing foreign clients, often you are representing them through overseas counsel. This can get tricky, as you are, in effect, playing "telephone operator", relaying your messages to the ultimate client (who you may never meet or communicate directly with) through a foreign language. Things get lost in the translation, and often the overseas Attorney or firm modifies your messages to suit their own needs.

For example, if the original disclosure is lacking or deficient in any way, or the original claims badly drafted, and the overseas Attorney refuses to authorize you to fix these problems prior to filing, well they will not communicate any later problems to the ultimate client in a manner that makes them look bad. In fact, their omissions may be characterized as your failures.

The USPTO ethics rules have special provisions for dealing with situations when you are representing a foreign entity through an overseas Attorney. Invention Brokers have invoked these rules as evidence that their technique of managing communications between Attorney and client is legitimate. While the analogy is not apt, the situations can be someone analogous, in that the Invention Broker, like some overseas Attorneys, will twist your message to suit their own ends.

Language is another barrier that is hard to breach. It is not that the overseas client does not speak English, but just that oftentimes their understanding of English is not as good as they think it is. For some reason, most U.S. Attorneys would never profess to be fluent in German, Japanese, French, or other languages, unless they truly were. But Europeans and Asians all believe themselves to be experts in the English language, when in fact their skills are on a par with my Spanish (I can order a beer and ask directions to the bathroom, and that's about it).

And ironically, these are the first clients to insist on speaking to you in English, on the phone, badly, at all hours of the morning. You would think they would prefer the contemplative approach of reading e-mails at their leisure, to understand the nuances of translation. But no, they call. And like bad American tourists, they feel that if they TALK LOUDER, somehow their mangled English is more understandable.

As I noted in the beginning of this note, one indicia of the problem client is the insistence on discounts for the work performed. Overseas clients seem to think that working for them is some sort of privilege. When you quote very reasonable prices for work (and U.S. Attorneys work very cheaply compared to their foreign counterparts) they balk and demand discounts.

But ask the same overseas Attorney how much it will cost to file in the EPO and zoot alors! it is nearly twice what you quoted your client to write and prosecute the case in the first place. Why this discrpency in pricing exists is unknown. And it does not seem to be affected by exchange rates. European and Japanese Attorneys charge nearly twice what we charge in the USA, for weaker coverage in smaller markets, and for less work (they don't have to write the case). For this reason alone, I often counsel my clients to forget about foreign filing, unless they have a trunk full of money they don't want.

Reciprocation is one issue that crops up when dealing with foreign clients. Many foreign firms expect reciprocation in work exchanged, and in fact prefer such exchanges, as it eliminates the need for wiring money back and forth. In overseas practice in many countries, explicit written quid pro quo reciprocity agreements are made. However, in the USA, such agreements are violations of the bar rules. Agreeing to reciprocity encourages an Attorney to recommend overseas filing.

If you don't have a lot of US work to send overseas, however, you may find that the overseas Attorney is not really interested in sending you a lot of work. In a way, given all that I have outlined above, this is a real blessing.

Filing overseas can be a nightmare for a small practice. With the high prices and exchange rates, your client will pay a lot for foreign filing. And since you are paid on 60-90 days, by the time you pay the overseas Attorney, the exchange rates may have changed. Add in the fact that many banks charge $25 to $50 to wire money, and if you are not careful, you could end up working for free. You can hedge your bets by using an exchange rate plus a predetermined percentage. But it quickly becomes an accounting nightmare.

If you are not careful, therefor, you can lose money in overseas transactional work. For example, many municipalities, such as the City of Alexandria, charge a 4.5% gross receipts tax on money received. Suppose you have to pay a $5000 overseas bill and charge $300 for reporting the matter. The client pays you $5300. You wire $5000 to the overseas Attorney. You pay the bank a $50 wire transfer fee. The City wants 4.5% of the total amount, or 238.50. Between the time you invoiced the client and the time you wire the foreign Attorney, the exchange rates change unfavorably by 2% or $100. With all of that, you have lost $88.50 in real cash, all for the privilege of representing your client.

So, in order to break even in these deals, you have to bill for everything - taxes, wire fees, and even adjusting for exchange rates. And since all of that takes time, you'd better bill for your time as well. If you are not careful, foreign filing can be a loss leader in no time.

One way to streamline the process for the small practitioner is to have the overseas Attorney invoice the client directly. If the client is a fairly large company with an accounting department, it is far less work for them to wire money on a regular basis. Thus, you don't end up being the middleman for the transfer of huge sums of money overseas. If your business is in a jurisdiction with a gross receipts tax, it helps you avoid that nightmare as well.

Ordinarily, I hate to bill for merely forwarding a letter to a client. It seems almost criminal to bill an hour of time to photocopy a letter and put a stamp on it (or in this day and age, forward an e-mail). But as I illustrated above, you have to put your time in, or you will end up losing money on these headache deals.

Speaking of e-mail, you'd think overseas clients would be up on this. Other than India, I find that many are still clinging to DHL courier, Fax machines, and even the Royal Mail. Some will send me an e-mail with a communication, but then mail the invoice weeks later. I have trained most to send communications by e-mail. But for some reason, they remain firmly rooted in the past, and do not embrace electronic communications. One German Attorney still files by paper, adding hand-written notes and comments to amendments.

So why do people do this work? Well, for starters, you can make money at it, if you can run an efficient practice. You have to hire people cheaply, work them like dogs, and watch the overhead like a hawk. You end up running a business more than a law practice, and you'll need a volume of work and a number of underlings beneath you to make it all work. Once you set up this filing machine, you'd better watch it like a hawk. And you'd better hope the client doesn't decide to change firms or gets bought out by another company. Because then your deck of cards will fall down all around you.

For this reason, many "sweatshop" firms try very hard to morph into mainstream firms - acquiring expertise in litigation, or trying to acquire domestic clients. Once you realize you are a million bucks in the hole to the Koreans, Germans, or Japanese, you'll find you don't sleep very well at night (but your Associates sleep like babies). Having a more diversified practice becomes a priority.

Diversity in your practice is important. It is hard, as most of us end up being one-client practices at one time or another. For most practitioners, 50% or more of their billings are from one major client. However, which client this is can morph over time. If you are a "captive" firm, such morphing is harder to do.

I have tried to limit the number of overseas clients in my practice. For the most part, they seem to be the most troublesome in terms of payment and complaining about costs. Many times, they will hand you a poorly drafted overseas case (where standards are often laxer for disclosures) that has been machine translated. They send 2nd generation faxed drawings that are blurred and unreadable and sure to trigger an objection. And they want it all filed today, for a pittance, without any preliminary amendment or correction to the Specification and in particular, the claims. And in many cases, often the client ends up disappearing and not paying. And they never, ever, want to pay a retainer or an advance on fees.

So for the small practitioner, I would not recommend that you seek out such work. Some of such work might come to you, and under the right circumstances, it may be a nice adjunct to your main client base. But after reflection after 20-some odd years of practice, I realize that in most instances, the foreign work was the least enjoyable and the most hassle all the way around.

Let the sweatshops take that work. They deserve it.

FWIW.

Letting the Client Drive the Bus - Off a Cliff!

2010-03-24T15:39:00.000-07:00

If you let the client drive the bus, they might drive it off a cliff, taking you along.

One problem that crops up in Patent Prosecution is dealing with an unreasonable client who wants to control prosecution, but at the same time, blame the Attorney when it goes horribly wrong.

Where I see this happening the most is with regard to Claims. Many clients are not aware that Claims are the heart and soul of a Patent, and that the only way to get a Patent allowed is to write Claims that, while broad enough to protect the invention, are narrow enough not to impinge on the Prior Art.

Many clients are under the mistaken impression that arguments are what gets Claims allowed. Many novice Attorneys fall for this as well. But it is the Claims, not the arguments, that carry the day.

Many Examiners don't even read applicant arguments, but rather go straight to the amended Claims and read those. If you don't amend your Claims, or amend them sufficiently to overcome the art, chances are, you aren't getting a Patent.

I went through this process with more than one client. We discuss the rejection and the client gets agitated because the references cited do not "read on" the invention. I try to point out to clients that it is the Claims that are rejected, not the invention, but often that falls on deaf ears.

Many clients (and pro se applicants) get so incensed that they want to argue with the Examiner, stating why their invention is different than the Prior Art, but not that the Claims are different.

But the problem doesn't stop there. When I try to amend the Claims to overcome the rejection, the client balks. They want broad Claims, period, and any amendment to try to get around the art of record is nixed. "If we amend the Claim, then someone could design-around my Patent!" they say.

Well, that might be true - the guy with the PRIOR ART Patent is entitled to practice his own invention, and we can't Claim what he has already Patented. He can "design around" your Claims merely by practicing his Prior Art invention. You can't claim the Prior Art, period.

But some clients will argue, again and again that a three-line Claim is sufficiently narrow to distinguish over the Prior Art, and that the arguments accompanying the amendment will carry the day. It is a strategy that rarely works.

And of course, the Examiner is never persuaded to allow such overly-broad Claims, no matter how good the accompanying arguments are. Because Examiners do not allow arguments, they allow Claims.

So, you end up with a FINAL rejection and a pissed-off client. "If only your arguments were better!" they cry, "Then the Examiner would have seen reason and allowed the case!"

But again, it is likely the Examiner never even read the arguments, or if they did, they just skimmed them. Because it is the CLAIMS that are of major importance, and the best arguments in the world are meaningless if the Claims still are not distinguishable over the Prior Art of record.

So you have to be assertive with such clients and not let them drive the bus. Because chances are, if you let him drive, he'll drive the bus right off a cliff, and then blame you for the wreck.

Perhaps some of the blame for this type of client attitude has to do with Television. On the TeeVee, Attorneys win cases by making really good arguments, which in turn reduce the Judge and Jury to tears and result in their client being acquitted. In reality, this happens in very, very few cases. Evidence drives most cases, and if your client is caught with a smoking gun, in front of 20 witnesses, on videotape, and confesses to the crime, well, all the flowery arguments in the world are not going to get him acquitted. The best you can hope for is to keep him off death row.

So maybe that is one reason clients have unreasonable expectations about their cases. The Examiner cites good Prior Art, and the best you can hope to do is keep your client's Patent off death row. But the client wants to go for full acquittal. It's risky, and if it backfires, you can be in a lot of trouble. Sometimes it is better to cop a plea.

Another reason I think clients have these unrealistic expectations is that they perceive "everyone else" to be getting unduly broad claims. After all, they read that somewhere on the Internet, so it must of course be true. The number of websites, blogsites, and discussion groups where self-appointed Patent experts hold court is beyond count. Most of these "experts" are not even Engineers, much less Patent Attorneys. Yet they will read the Abstract of a pending Application and declare it an example of an "unduly broad Patent".

Many people decry the issuance of unduly broad Patents, and it does happen occasionally, but not as often as you'd think - or as often as the self-anointed prognosticators say it does. The person reading those types of sites tends to believe that it is possible to get such a Patent allowed, and moreover, that they are entitled to such an overly broad Patent, because "everyone else is doing it". And of course, everyone else isn't. And such unduly broad claims, even if allowed, might actually jeopardize the validity of the Patent.

As I have noted before, the best Patents are not necessarily the ones with claims like Rorschach ink-blot tests - where you can read whatever you see into the claims. Overly broad claims are more easy to invalidate in court. The best Patents are the ones where there is some trick or technique which at first may appear to be somewhat narrow in scope (and thus harder to invalidate on Prior Art grounds) but ends up being essential to the economic implementation of the underlying product. Such Patents can be gold mines, as they are hard to design around and hard to invalidate. But in order to get one, you have to have a good invention. Facts trump arguments, every time.

So how do you deal with a client with unrealistic expectations about claim scope, who wants to run the show and push you to argue for unduly broad claims? Sometimes, all you can do is walk away from such clients. And by the way, irreconcilable differences such as these are likely grounds for withdrawal from a case. See 37 CFR 10.40(c)(i) and 37 CFR 10.40(c)(iv). If the client insists on presenting claims that are not Patentable, arguably this is a claim not warranted under the law, or such disagreements comprise "other conduct [that] renders it unreasonably difficult for the practitioner to carry out the employment effectively."

But you don't usually have to resort to such extremes to withdraw as Attorney of Record, as these sort of clients also are the ones that rarely pay or refuse to pay. Part of their game is "I get a Patent or I don't pay", which is, of course, not what you signed up for. They want to write the claims, make the arguments, and when it doesn't work out, they will refuse to pay for your services - even for Patent fees.

I have been fortunate in that this situation has not happened to me very often. However, in some arts, it seems that recently, the allowance rate has dropped dramatically. Method of doing business Patents and even software-related Patents are getting more scrutiny, and with more onerous Appeals processes, Examiners are getting bolder about asserting weak 103 rejections. Getting cases allowed is harder these days, and if the client is not willing to compromise on claim scope, getting a case allowed can be nearly impossible.

Don't get me wrong, client participation is a good thing, and it results in a better Patent product. Having a client that gets involved in the process, reads all the materials, and asks important questions is useful and makes the work enjoyable. It is only when the client takes it a step too far, and starts second-guessing your strategies that things can go horribly bad. If the client has no faith in your abilities, it is time for the client to find new counsel - for both your sakes.

There are multiple approaches to dealing with such clients. One approach is to write the Claims you believe are allowable as one Claim set, while submitting a second group of Claims along the lines the client wants to present. The problem with this approach is that you are conceding control right off the bat, and the unduly broad client Claims are not likely to be allowed. And, as often happens, an Examiner may, upon seeing the unduly broad Claim, reject everything. (Note also, that under the Rules, you are not supposed to be submitting unduly broad Claims in the first place, although this is something of a gray area, as Claim interpretation, as we know, is never black and white).

A better approach is to be proactive and explain to the client why their proposed Claim won't fly. And explain to them also the economic consequences of trying to get such Claims allowed. Once they add up the cost of filing Requests for Reconsideration and Amendment after Amendment, to no end, they may come to their senses and realize that compromise is more effective.

But if that doesn't work, consider suggesting to the client that they find new counsel. Because when they drive the bus off a cliff, you don't want to be aboard!

How to Spot an Invention Promotion or Sales Scam

2009-12-15T07:15:00.000-08:00

Not a day goes by, it seems, that I don't get an e-mail or phone call from an inventor asking if a particular invention promotion or sales company is fraudulent.

It is hard to answer specifically about a specific company for several reasons:

1. Companies change names on a regular basis to avoid bad reputations, so "Inventomatic Partners, Inc." might morph into "Gee-Whiz Inventco LLC" within a month or so.

2. The larger and more successful companies (in terms of making money for themselves, not you) tend to sue anyone who says anything negative about their company. So offering opinions about any particular company is just not worthwhile.

3. The nature and extent of the schemes they use vary and change over time. As authorities crack down on one type of activity, they morph their scheme to something which, while not against the law, is certainly not a good bargain.

4. Often what they are doing is merely overcharging for inferior services - which is not against the law in this country. If it were, GM would be bankrupt. OK, that is a bad example. But selling an inferior product or service for too-high a price is not illegal.

For that last reason, please note that when I say something is a "scam" or a "con", I mean that it is not necessarily illegal, but merely a bad bargain.

How can you protect yourself from invention scams? Well, using common sense is the first step. Don't let your enthusiasm for your invention blind you to obvious schemes. If it sounds too good to be true, it probably is.

How do you spot a come-on invention company? Well, first, understand how such schemes have worked in the past - often in many different arenas - and how they work today. It is an old con and used for many years in many different venues.

Invention Promotion and Invention Sales companies (and they are different, I'll explain later) have relied on the same model used to get people to part with their money over time - they promise to sell something you have, for what seems like a relatively small fee. You are eager to sell it, so you are blinded to the money aspect of the transaction. They make verbal promises and are very enthusiastic about your item. It all sounds too good to be true - and often is.

A Short History of Sales Scams:

Preying upon other people's dreams and hopes and wishes seems somewhat morally repugnant - and it is. But they do it - and they get filthy rich. And in most cases, it is not illegal.

For example, Grandma writes a biography of her life on the farm in Indiana. While it is a nice book, not many folks even in her home town want to read it. She isn't about to become the next Pulitzer Prize-winning author.

She sees an ad in a magazine from an impressive-sounding company that says that publishers are eager to find new authors! She sends them a letter with a Self-Addressed, Stamped Envelope asking for more information. A slick brochure (or letter on impressive letterhead) comes in the mail, and they offer to consider her manuscript, for a nominal fee of $100 (a lot of money in 1950).

She sends it in with her hard-earned savings and a week later they call her (or write) and say what a great book it is, and how it will make her rich, as readers across the nation will want to buy her biography of life in a small town. They can get a publisher for her - they know someone perfect for this material - if she will sign the enclosed contract and send in $500.

Well, you know the rest. She sends in the $500 and nothing happens. Well, they might send letters to publishing companies, just to make it appear legit. But the publishing companies know the score with these con-men and toss their letters in the trash. The publishing companies have their own editors, readers, and scouts, and they don't need, want, or use information from the outside.

Months or a year later, the company sends a letter to Grandma saying "Gee, we're sorry, but we could not get interest in your book (and thanks for the money, by the way)." Too late, Grandma realizes she has been had, a foolish old lady who has squandered away some of her savings to pursue a vanity project. She knows that if she mentions this to anyone in her small town, people will ridicule her and make comments behind her back. Her children will think she is becoming senile and perhaps put her in the home. No, it is better to bury her shame, and put "Life in Small Town Indiana" up in the attic or donate the manuscript to the local library.

The shame factor works to the advantage of these types of cons. There are basically two ways (well three, actually) to silence the victims of your cons. The first is to make the "Mark" believe that they are the ones doing the scamming (or doing something illegal). The Nigerian scammers use this one - getting their Marks to believe they are illegally laundering millions of dollars. Who would go to the Police after that? "Gee, Mr. Policeman, I was going to get in the money laundering business but got conned instead!"

The second, used by the invention promoters, is shame. Many inventors become euphoric about their inventions early on, and have an almost religious-like fervor about them. It is not hard to stoke these fires early on with encouraging advice. Later on, after years have passed and the invention has not succeeded, they may feel let down. And if they have handed over tens of thousands (or mere thousands) of dollars to an invention promoter, they feel too ashamed to admit it to others. The few people who do complain should be commended for their courage. But in reality, they are often mocked for their perceived stupidity.

The third way, of course is intimidation. Some invention promoters have made examples of people who post complaints on the Patent Office website or complain to the BBB or post anything online. They file frivolous and time-consuming lawsuits in an effort to silence the people raising the alarm. The effect is to scare people into silence - not only the people involved, but others as well.

As I noted earlier, there are two related scams with regard to Patents and intellectual property. The first is the SALES SCAM, which is a time-honored scam like the one outlined above, where the con artist offers to sell your intellectual property for an up-front fee. The second is more involved and includes Invention Promotion, Evaluation, and Patenting Services. The two are related, but I will address them separately.

SALES SCAMS: These generally ask you for money up front to sell an item. These cams have been around for a long time, and have morphed into new scams as of late. These are not the "big" rip-offs like the invention promoters, which I will discuss separately. They usually ask for less than $1000 and offer to sell something of yours. Here are some I am aware of:

1. The Book Publishing Scam: Outlined in the example above. We'll find a publisher for your book for a nominal fee. Send them money and nothing happens.

2. The Poetry Scam: Similar, but they tell Grandma her poem about kittens and flowers is so great it will be published in their national poetry book - if she agrees to buy 10 copies for herself and her friends for $50 a copy.

3. Time-Share Resale Scam: They ask for $500 to advertise your time-share or to find a buyer for it. They put an ad in a publication which may or may not get wide distribution. No one buys (Time-Shares are a ripoff to begin with) but they will keep the $500, thanks.

4. The Great Wall of Sound: See the movie by the same name. "Record Promoters" go from town to town, promising starry-eyed musicians a chance at the big time - if they pony up a few grand for "recording expenses". They take the money and then leave town.

5. License your Patent: You get a Patent, and your name and address are published in the electronic records of the USPTO. You start getting form letters from companies saying that for a few hundred dollars, they can sell or license your Patent. You send them money, they prepare and mail a brochure (or send you the brochures for you to mail yourself). Nothing comes of it, but they keep the money. You could create an mail your own brochure for far less.

6. Car/RV/Boat sales: NEW for 2009! This is an extension of this scam in time for the recession. Sales of used cars and particularly Boats and RVs have tanked in the last year. You put an ad on Craigslist or in Autotrader or Boattrader and you get an illegal robo-call from a company offering, for $500, to market your "vehicle". They claim that not only will they sell your vehicle, but get over book value for it - and line up financing for the buyer. Again, the marketing services are limited, the cost far over-valued, and no results come of it.

So you can see, these sales scams are not limited to Patents, but can be applied in any situation where someone has something they want to sell, but don't have the connections or means by which to sell it. Patent licensing is just one example of this trend.

Con-men? Fraudsters? Criminals? Not really. Just people selling services that I think are overpriced. In America, that is not illegal or even considered immoral. If it sounds too good to be true, it probably is, I'm afraid.

And overpricing things is not illegal. I use a virtual fax service, Maxemail, that costs me $16 a year. A competing service, eFax, charged nearly that much a month. Is eFax a scam? No, just wildly overpriced, in my opinion - by a factor of 13! They advertise more heavily and thus gain customers. Other services, that are harder to find, offer the same service for less money. You just have to know where to look - you have to educate yourself and not click on the first advertisement you see on Google.

How do these guys do it? I think perhaps that they may have started out as legitimate schemes, but then didn't work out. They realized, like the characters in Mel Brooks' The Producers, that there was more money to be made in failure than in success. Even though they rarely, if ever, successfully marketed an invention, sold a time-share, a car, a book, or whatever, they end up raking in money. In fact, a successful invention would be difficult for them, as they would not know how to go about the messy business of licensing or producing the product.

It is the same old, same old. They ask for money up front, promising to sell your invention/time-share/condo/book/poem whatever, and then promise to use "best efforts" to do so. Under the law, "best efforts" means nothing. Getting out of bed in the morning could be considered "best efforts". It is not an enforceable contract, in a practical sense - unless they use no efforts whatsoever.

In most cases, companies like this take a copy of the Patent and mass-mail it to a mailing list of companies and then say "Gee, no interest, sorry. But we'll keep the money." In some cases, they will call back near the end of the contract term and say "Gee, no interest yet, but we have some nibbles. Want to extend the contract for another 6 months/year/whatever?" and then they take a second bite at the apple. These types of companies prey upon inventors, who want to see their inventions succeed.

Few are legitimate. The only legitimate ones do not ask for money up front, but rather want only a percentage of royalties. And you are not likely to find them from a mass-mailing sent to you using data harvested from the USPTO website. You will not likely find them calling a 1-800 number from an ad in the newspaper or on TV.

Invention sales companies, like the other sales companies listed above, usually ask for only a few hundred dollars, so they are not hurting people in a big way. But they do rake in the dough, over time. The big money is in what some call Invention Promotion Companies. They differ from Invention Sales Companies as follows.

Invention Promotion Companies: Invention promotion companies are slightly different from the Patent sale or licensing companies. The Patent sale companies merely offer to prepare a brochure and mail it out - nothing illegal about that, they just charge a hefty fee to do it. Invention Promotion Companies tend to take the whole concept a step further - and charge a lot more money to do it. In this regard, they have run afoul of the law on occasion.

These companies offer to do invention evaluations and then offer to obtain Patents for their "clients". The evaluations are boilerplate (often from a form letter) that always conclude that the invention will be wildly successful. The Patent obtained is usually a worthless Design Patent or a narrow "Picture Claim" Utility Patent.

Unlike the licensing and sale companies, they ask for thousands (not hundreds) of dollars - often $5000, $10,00, $20,000 or more. By venturing into the legal field, they gave the authorities at the Patent Office and other agencies a foothold for prosecution.

But even then, prosecution of these companies has not been very successful. For every one company shut down, others pop up. For every Attorney suspended, another takes his place. They change their strategies and tactics to suit the attacks they are under. Like the Invention Sales people, much of what they do is not necessarily illegal - just wildly overpriced.

For example, one company I ran into offered invention evaluation services. For thousands of dollars, they offered various packages of invention evaluation, including determining your U.S. Census Bureau industry designation. Why this information is useful (to anyone outside the Census bureau) is beyond me. And you can find it free, online, on the Census bureau website.

A company licensing your Patent doesn't care what your Census Bureau industry designation is - and the information is hardly useful to you either. But for $1500, they'll tell you what you can find on a governmental website in 20 minutes.

The bottom line, is they charge a lot of money for services they pay little for, and pocket the difference. They rely on your lack of knowledge about Patenting and Licensing to take advantage of you.

How Can I Spot A Scam?

Well, the best way is to use your own Judgment. Anyone who asks you for money up front in a way you can't recover should be scrutinized. It is nearly impossible to recover, as a practical matter, using legal means (courts, lawsuits) amounts less than $50,000, particularly for an out-of-State entity. Thus, when you send money to someone for services, you had better have some way of getting it back if they don't perform. Once you send the money and they don't perform to your satisfaction, it may cost more to file suit than the amount of damages - and because of the nature of "best efforts" contracts, you likely won't win.

Here are some typical warning signs of an operation that is an overpriced scam:

1. The name "invent" or "invention" is in their company name: This is not determinative, of course, but most of these companies have catchy names with invention or innovation in them - or innovation or some variation.

2. They ask for lots of money up front: Here's the big deal. The really egregious companies charge thousands of dollars for "invention evaluation" services and also promise to obtain Patents and "market the invention to industry". The typical take is $10,000 to $20,0000 and they usually obtain worthless Design Patents or picture-claim Utility Patents.

3. Their prices are amazingly flexible: Can't afford $20,000? Suddenly a package is available at $10,000 - or $5000 or even $3000.

4. They can call you, you can't call them: They call you, usually in the evening. but it is hard if not impossible to call them back and reach anyone other than an answering machine or service. Where do you think this relationship is going down the road when you need to contact them?

5. They send unsolicited letters or make unsolicited phone calls, send SPAM e-mail, robo-calls, or other questionable, if not illegal forms of communication: In the case of the latter, do you expect the relationship to go uphill? Spam and junk mail are annoying. Letters faked up to look like official government documents are deceptive. Just say "no" to ANYONE who tries to start a business relationship through trickery.

6. They promise things on the phone verbally that are not written down in the contract: You should always read any contract you are asked to sign. If someone makes a verbal promise, ask where it is in the contract. If it ain't there, it ain't there, period. You have no one but yourself to blame for broken verbal promises.

7. The contract promises to use "best efforts" to promote the invention: As noted above, such clauses are not really enforceable unless they use no efforts whatsoever. Under the law, "best efforts" means nothing. Getting out of bed in the morning could be considered "best efforts". It is not an enforceable contract, in a practical sense - unless they use no efforts whatsoever.

8. They have a very slick-looking website that is actually very short on real content (lots of impressive sounding but vaguely worded paragraphs, slick graphics, etc.): Anyone can put together a website and throw in some fancy graphics. The key is to look for real content, not just generic boilerplate. Evasive language is a real tip-off. They tout success stories, but you try to find out more about them, but get no real hard data. If you can't distinguish between fact and fluff (many cannot!) you will get taken in a lot in life.

9. They advertise heavily on radio, TV and other media: Just because something is advertised on television does not mean that the network has investigated and vetted it. Don't fall into the trap of "it was advertised on TV, so it must be legit!" Many prestigious magazines and newspapers take ads from questionable sources. Have you seen the ads in the back of the Smithsonian for "collectibles"? It really is shameful. But it is your own fault if you can't figure out the "The Official Gov't Mint, Inc." is not part of the real U.S. Government or Mint.

10. They offer a money-back guarantee: This sounds like a good deal, but in reality it is just a way of trying to get you to part with your money. Such guarantees are nearly impossible to enforce. They risk nothing by offering it, so don't fall for it. To collect on such a guarantee, you'd have to sue them. A lawyer would charge you at least several thousand dollars just to file suit. Chances are they would just fold their tent and reincorporate elsewhere. Since it is a best efforts contract, your suit would likely fail anyway. Money back guarantees mean nothing at all.

There are other ways of investigating Invention Promotion or Sales companies. Ron Riley has a "watch list" of invention promoters, but I am not aware of what criterion he uses to put companies on this list. Some companies that I think should be on the list are not. Perhaps some on the list shouldn't be. I cannot endorse it one way or another. But it is a good research tool to get you to ask questions.

Magazines like Inventor's Digest generally (in the past) accepted ads only from "legitimate" invention marketers and Patent Agents and Attorneys. But since it is very hard to determine what constitutes "legitimate", an ad in that magazine (or any magazine, for that matter) is no guarantee of anything. The magazine recently changed owners.

Organizations like the United Inventors Association also provide endorsements for companies. But a company that provides Invention Selling services (but is never successful at it) could be endorsed by such organizations. A 0% success rate is nothing to write home about. For that reason, I am not sure it is possible for an inventor group to "police" such companies or certify them. I am no longer a member of UIA.

The Better Business Bureau, as I have noted in the past, is worse than worthless. While a laudable idea, it is funded by businesses themselves. If a company has a "no complaint" record, it is given a clean bill of health. This could mean that the company has reincorporated over and over again (and thus has no track record). It also could mean that that they have intimidated or forced people into settling complaints. It also could mean they are a good company. You really can't tell from their ratings. Also, some fraudulent companies will tout their record with the BBB, knowing it is horrible - and also knowing you'll never bother to check!

The Patent Office maintains a complaint site for people to post complaints about invention brokers. Again, many have been harassed for posting to the site. And the presence (or absence) of a complaint is not necessarily determinative. Note that many of the larger companies SUE people who speak out about invention promotion, so many folks do not complain or withdraw their complaints. Many more are cowed into silence.

But your best defense is your own skepticism. Ask pointed questions, and if you don't get straight answers, ask yourself - why?

For example, the Inventors Protection Act requires invention promoters to state their success rates. Most have success rates under 1% and cannot readily point to any specific success story. The fact that an invention was developed, marketed and sold is not a "secret", so don't believe it when they say they cannot tell you do to "confidentiality" concerns.

The invention SALES places claim not to be bound by the Inventors Protection Act, as they do not evaluate inventions. But again, you'd think they'd want to tout their success rate like all get-out, wouldn't you? After all, that is the best advertising there is, right? Yet strangely, many have no success stories at all on their website.

(And, just in case you are asking, I do have some success stories on my website. I cannot take credit for them, though. I just wrote the Patents and in some instances helped negotiate licenses. Patents I have written have been licensed, sold, or litigated by Corporations and Private Individuals for millions of dollars. Success or failure of an invention depends on the merits of the invention, however, and one reason my success rate is higher than 1% is that I try to turn away dreamers and people with unrealistic expectations).

Hey, but wait, Patent Attorneys ask for money "up front" (as retainers). Are they con-jobs as well?

Well, some Patent Attorneys have been known to go rogue and try to con people out of money. However, since a Patent Attorney is licensed both by the State and the United States Patent Office, they risk losing their livelihood if they "rip off" a customer.

Most Patent Attorneys do not ask for ALL the money up front, but merely a retainer. So you are not likely to be out as much. Legal debts are the hardest to collect, so if you run up a bill with a lawyer, they may have a hard time collecting from you.

You can also shop around and compare prices for attorneys - and you can change attorneys as well. You have a lot more flexibility and control over the process.

It costs little or nothing to file a complaint against an Attorney, either with the State or with the USPTO. But it can cost the Attorney a lot of time and money to answer such a complaint. You have a powerful weapon at your disposal, if you feel you have been wronged.

Invention companies do not have this weakness. Even if sued, they can simply declare bankruptcy and reopen under a new name in a new town. They have little in the way of attachable assets and have little to risk from the legal system.

A legitimate Patent Attorney will only promise to write and prosecute a Patent for you. He will not guarantee to get one for you as many invention brokers have done in the past (guaranteeing a legal result is a breach of State ethics rules). A good Patent Attorney should discourage you from even trying, frankly - or at least honestly assess you of the long odds. Invention Broker companies rarely do this and in fact play cheerleader for your invention, rather than provide a brutally honest evaluation, which a Patent Attorney (a legitimate one) should do.

Why Do People Become Invention Promoters?

The simple answer is MONEY and tons of it. You might not think it is that lucrative a deal, but you can make tens of millions of dollars at this.

For example, one company, when raided by the FBI, had over 3,000 worthless Design Patents pending at the time of the raid. They charged an average of $10,000 for their "services" which comprised a superficial search, a Design (not utility) Patent, and the bogus "marketing" - all of which cost them less than $1000 per client.

So $10,000 and 3,000 clients = 30 MILLION dollars. Not a bad haul. Think about it - they are charging the equivalent of the price of a new car, without actually doing anything other than generating a small amount of paperwork and making a few phone calls.

The Patent Sales people charge only $1000 per client. For 3,000 clients, this might amount to 3 million dollars. Still not a bad haul. Over 50 years, you could make a good living at it.

Why Haven't YOU Become an Invention Promoter?

I would have made a lot more money if I went over to "the dark side". In fact, I had more than one opportunity to do so. One firm I was with took on a secret representation of an invention promoter when they got into legal trouble. I served my notice then and started my own practice.

It is not hard to start an invention broker or sales scam. You hire a clerk and secretary to produce the "personalized" letters and do the advertising brochures. It becomes a machine that just cranks out money. Your only real expense is advertising.

It is a lucrative business. So why not do it? Well for me, there were numerous reasons, including this pesky morals thing. I like to sleep at night. Also, many of these shady characters end up in legal trouble (and many fight it and win). Some older players are, at this point, largely immune. Newcomers to the business end up getting hassled by the law - which in effect protects the older players in the business - ironic, isn't it?

It is interesting to see how many of the people in the invention broker or sales businesses seem to crave acceptance or recognition as legitimate businessmen. On one website, one touts his civic accomplishments. It is interesting to say the least. Perhaps the people at the Country Club still snub them? I think so.

People who have a desperate need to be successful - at all costs - often have troubled backgrounds. I have worked for such men, and they tend to follow a pattern - impoverished childhoods, being snubbed by society due to racism or other prejudice. Perhaps abuse at the hands of their parents. Becoming wildly successful and wealthy is a way, perhaps, of putting that all behind them and getting revenge. Perhaps. But what I've seen is that they are rarely, if every, happy once they get all that stuff. They sit alone in their mansions, their families shattered, their children not talking to them (or refusing to move out of the basement).

I've never been "jealous" of the rich, perhaps because I grew up in places with lots of wealthy people (Greenwich, Connecticut, Lake Forest, Illinois, Cazenovia, New York) and they all seemed to me to be very miserable people. Money does not equate to happiness, particularly when it is achieved at any cost. Now granted, the opposite is not true - poverty does not make one happy either.

Human beings are programmed (literally, our brains are little more than trained Neural Networks) to enjoy working. There is nothing more satisfying that working at a task which is difficult enough to be considered work, but not so hard to be unsolvable. You approach a task, find the problem, figure out a solution, and create something new. Whether it is repairing a car or figuring out a way around a 103 rejection, the reaction in the brain is the same. Your brain rewards itself when you work and do well. It punishes you (through depression) if you are just laying about.

Lottery winners are rarely happy. Laying around and doing nothing of value is fine for short periods of time (or as a reward for hard work), but over a lifetime, it could be damaging. The Invention Brokers of the world (and other con-men) might like to show off their acquired wealth and try to convince you they are successful and happy. but it is in the end, a hollow existence, and they know it.

And they may try to tell you otherwise, but don't believe it for a second.

So How Do I Spot an Invention Promoter? How Do I Protect Myself?

To some extent, you can't do either. Let's face it, if you are the kind of person who is inclined to get corralled into these types of cons, you are not going to listen to anything I've said here or be dissuaded from going with an invention broker.

I once had a potential client call me and ask about XYZINVENT company. I spent 20-30 minutes with them on the phone and discussed the invention with him, the pros and cons of Patenting, and the nature of invention brokers. While on the phone, I found a reference that was "spot on" to his invention and e-mailed it to him, free of charge.

P.T. Barnum was right, the Marks don't value something unless they pay for it.

He called me back the next week and said that XYZINVENT company told him his invention was great - and that he would get a Patent and make millions. He chided me for being "unduly pessimistic". He read me the riot act! I again explained to him how invention promotion companies worked and told him to be careful sending anyone that kind of money up front. He ignored my advice.

Two years later, he called me and said that XYZINVENT company had "ripped him off" and WHY DIDN'T I WARN HIM ABOUT THEM???

At that point, I stopped feeling "sorry" for people caught up in invention promotion schemes. You can't help them. In fact, trying to "help" people is something fraught with peril. It never pays to be altruistic, and in fact, there is something somewhat evil about altruism in general.

People should look after their own interests, period. Yes, if you see someone driving their car off a cliff, you should shout "hey, look out for the cliff!". But if in response, they give you the finger, well, nothing to do but watch them crash and burn. Bring marshmallows.

We all have to look out for our own interests, I'm afraid. You can try to warn people about scams and schemes but the fact is, there will always be someone falling for them and there is not a lot you can do to stop them.

Use your common sense,and Good Luck!

Post Script: I recently came across this link, which discusses how our friends, the Nigerians, are getting in on the act - posing as Japanese Patent investors who will buy your Patent for millions of dollars, provided you hand them over a $15,000 "processing fee". Do people really fall for this sort of thing? Apparently they do. A real licensing agreement is rarely paid in cash, rarely paid up front, and never asks YOU for money first.

Paying Maintenance Fees

2009-10-07T06:44:00.000-07:00

Maintenance fees for U.S. Utility Patents are due at 3, 7 and 11 years from the date of issue. You have a six month window to pay the fee after those anniversary dates. After that, you have another six months to pay the fee, albeit with a late fee surcharge. See my article "Understanding Maintenance Fees" for more details.

Note: If you have failed to pay your maintenance fee by the end of the second six month window, the Patent will be deemed expired. It is possible to reinstate a Patent, in some situations, however you should consult a Patent Attorney for details.

Note also that there are a lot of fraudulent companies out there that may send you notices about maintenance fees. These companies may have names that sound like official organizations or arms of the U.S. Government. The USPTO generally does NOT send maintenance fee reminders and does NOT solicit money for maintenance fees.

You can pay the fees online yourself, without the need for an Attorney. The purpose of this article is to illustrate how to do so, in a step-by-step fashion. If you are NOT computer literate or comfortable using the Internet, I do not suggest you attempt this. If you have any questions, consult a Patent Attorney for more advice. If you do not complete this process properly, your maintenance fee may not be paid and your Patent will expire. You should check after paying the fee to insure that the system shows it as being paid. You should also print out and keep a copy of the maintenance fee STATEMENT as set forth below. The author assumes no responsibility for those who fail to pay their maintenance fees properly.

In the following examples, I will use data from my Beerbrella Patent. Obviously, you will need to insert your own Patent Data where I have illustrated mine. If you can't figure that out, please proceed no further.

To get started, you will need the following items:

1. Your Patent Number: This is the seven digit number of your Patent as issued. For Beerbrella, the Patent Number is 6,637,447.

2. Your Application Number: This is an eight-digit number, usually in the format of of a two-digit "series" number and then a six digit serial number. For Beerbrella, this number is 09/981,966. The Patent Office has played games with this number, calling it the "Application Control Number" but in the past, we referred to it as the Serial Number. Note also that on older Patents, the Series Number is not printed.

In order to find the series code that is based upon the application filing date, use the following table:

Application Filing Date
From	To	Series Code
01/01/93	12/31/97	08
01/01/98	12/03/01	09
12/04/01	12/1/04	10
12/2/04	Present	11

3. A Valid Credit Card: You will need a credit card with an available balance sufficient to pay the fees due. What are the fees? They increase exponentially for each successive payment. They are also adjusted every year, so I cannot print out an accurate list here.

The current (as of 10/09) USPTO FEE SHEET can be found at:

http://www.uspto.gov/web/offices/ac/qs/ope/fee2009january01_2009may01.htm

Or you can log into www.uspto.gov, click on "site index" and then look under "Fees, USPTO"

Please note that all of these links are effective as of the date of this writing. The USPTO website changes from time to time (a new Beta version is presently in testing, I hate it). I cannot be responsible for dead links or changes to locations of pages.

You should make sure you pay the proper maintenance fee at the proper entity status (Small or Large Entity). Failure to do so could invalidate your Patent during litigation. Consult an Attorney if you are not sure if you are small or large entity.

Whether you are a small or large entity is not a bright line test. If you are a solo inventor who has never licensed or assigned his Patent, then yes, chances are, you are a small entity. However, if you have licensed your Patent to a larger company, or if your company does not qualify as a "small business" under the Small Business Administration standards, then you may be a large entity. Again, if you do not understand whether you are a small or large entity, consult a Patent Attorney for more information.

Once you have your Patent Number, Serial Number, and a Credit Card, you are ready to begin.

To start, access the USPTO Electronic Business center. You can access this from the www.uspto.gov website by clicking on the"eBusiness" link at the top tool bar. Again, the site may change over time, so this information is only accurate as of the date of this article (10/09).

The direct link, as of this date, is:

http://www.uspto.gov/ebc/indexebc.html

From that page, you can access the "Revenue and Account Managing" link, or go directly to:

https://ramps.uspto.gov/eram/

From that page, click on "Pay or Look Up Patent Maintenance Fees" or go directly to:

https://ramps.uspto.gov/eram/patentMaintFees.do

Again, you can probably go directly to this last link, I provide the intermediary links and page descriptions in case the USPTO changes its site in the future.

Once on the USPTO Maintenance Fee page, you should see a screen similar to the following:

-----------------------------------------------------------------------------------
Patent Maintenance Fees

Please enter both a patent number and its corresponding application number to do the following:

Click on ‘Retrieve Fees to Pay’ to pay a maintenance fee.
Click on 'Get Bibliographic Data' to obtain patent bibliographic data.
Click on ‘View Payment Windows’ to determine when maintenance fees are due.
Select the applicable year (4, 8 or 12) from the drop-down list box next to ‘Payment Window’ and click 'View Statement' to print a statement showing receipt of a maintenance fee payment.

Patent Number (exclude special characters; e.g. commas):
Application Number (must be 8 numeric digits - see NOTE below):




for Payment Window:

--------------------------------------------------------------------------------

Enter your Patent Number and Application Number (Serial Number) where indicated, leaving out any commas or slashes. Note that if you enter either number wrong, the system will kick back an error message. By requiring both the Serial Number AND the Patent Number, the system makes it nearly impossible to pay the fees for the wrong Patent.

There are FOUR LINKS you can click on at this point. The VIEW PAYMENT WINDOWS link will display when your patent maintenance fees are due. It is a good idea to click on this link and then print out the windows for future reference. If you use a calendar program or the like, enter the dates in that to remind you in the future.

The page display may look something like this:

Maintenance Fees Window Dates	10/07/2009 10:50 AM EDT
Patent Number: 7012552	Application Number: 09982948

	4th Year	8th Year	12th Year
Open Date	03/16/2009	03/14/2013	03/14/2017
Surcharge Date	09/15/2009	09/17/2013	09/15/2017
Close Date	03/15/2010	03/14/2014	03/14/2018

Again, this is sample data for someone else's Patent. Sadly, I have to keep reiterating that, as in this day and age, some idiot will enter that person's Patent data and then wonder why their maintenance fee wasn't paid. We live in a country where you can get sued for serving hot coffee. No wonder few want to give out real advice or instructions such as these.

Going back to the main page, click on "RETRIEVE FEES TO PAY" link. You may see a display such as the following, again, this is data for someone else's Patent:

Patent Maintenance Fees		10/07/2009 10:52 AM EDT
Patent Number:	7012552	Application Number:	09982948
Issue Date:	03/14/2006	Filing Date:	10/22/2001
Window Opens:	03/14/2013	Surcharge Date:	09/17/2013
Window Closes:	03/14/2014	Payment Year:
Entity Status:	LARGE

Customer Number:	000000
Street Address:	MARSH, FISCHMANN & BREYFOGLE LLP
City:	Denver
State:	CO
Zip Code:	80237
Phone Number:	(303) 770-0051
Currently there are no fees due.

If any fees ARE due, you will see a link to PAY FEES NOW. Follow that link to pay your maintenance fee.

Be sure to check the box for MAINTENANCE FEE STATEMENT so that the system will generate the STATEMENT for you. If you forget to do this, you can go back later on and access the statement from the links above.

Click on PAY BY CREDIT CARD and enter your data where indicated. If you are comfortable paying bills online by credit card, this should be no problem.

I hope to update this article at a later date with actual maintenance fee payment data showing a fee being paid. As this is a simple procedure, many clients choose to do this online themselves and avoid my fees. Others engage an annuity company such as Computer Patents Annuities (CPA) to docket and pay the maintenance fees.

Note that I do not guarantee to remind clients of maintenance fees when they are due. I send a notice with each Patent to clients and the Patents themselves have the maintenance fee obligations spelled out on the inside cover. Some folks ask why I do not remind clients of maintenance fees. The answer is simple: It is an 11-plus year obligation, and over that time period, clients move, change address and can be hard to find. Oftentimes, when I remind a client of a maintenance fee, they say "thank you" and pay the fee themselves.

If I assume responsibility for docketing these fees and fail to remind a client, I could get sued. But if the client does not pay me for assuming this responsibility, there is no corresponding benefit to assuming the risk. Assuming an open-ended risk for no money makes no sense. If you want reminders, contract with Computer Patent Annuities and they will, for a fee, remind you of payment due dates and make payments on your behalf.

Or look at it another way - when you bought your house, did you expect your Real Estate Attorney to send you yearly reminders to pay your property taxes so you would not lose the house? Of course not.

See my article on maintenance fees for more information on docketing the due dates.

Outsourcing in IP work - changing the game?

2009-09-13T04:43:00.000-07:00

I received an e-mail from a reader. I was surprised that people actually read my blog. After all, it isn't chock full of case cites or the type of thing you see in Law Review or some IP magazine. Just my musings on Patent Law and the Practice.

But his question was very relevant and related to my previous tirade about the end of the Patent business as we know it. How does IP outsourcing affect the Patent Business?

Good Question.

First of all, let me state that I am not against outsourcing of work, if it means that you can get better quality work at lower prices. Competition is a good thing, and the consumer (the Patent Applicant) wins, usually.

There are a number of levels of IP outsourcing going on at the present time. Everything from ancillary services to Patent Prosecution are being handled overseas, mostly in India, which has a large number of quality Engineers with little work to do. Litigation has yet to move offshore, but I would not be surprised if that happens as well, at least with regard to support services.

I presently use an Indian firm (Dextrasys) for Patent Searching and for Patent Drawings. Why? well they provide me with quality services at low prices in an area of my practice where my margins are slim. And they turn around work in a matter of days, sometimes hours, which makes my job a lot easier.

I have remarked on the nature of the search business in the past. In the old days, back when there was the Public Search Room, you'd find a good searcher, just starting out, and he'd do a great job at reasonable prices and turnaround the job in a day or two. So you started sending him more work and as word got around, other attorneys would send him work. Pretty soon, he'd be overwhelmed, and he'd subcontract out work to other, lesser searchers in the search room.

You'd hand him a $500 "full day" search, and he'd hand it to a friend for $250. That friend in turn would hand it over to some lower order searcher for $100, and so on, until it ended up being handed off to a homeless lady for $5 and a half-eaten hot dog. At times, I felt like Diogenes, looking for the last honest searcher.

And rates would go up, too. I remember one searcher raising his rates to $750 and then $1000, on the basis that his work was superior to others. Now bear in mind that this was over a decade ago - nearly two decades. Today, such prices seem almost dreamlike.

Of course, the Public Search Room is history now. But Americans, being the way they are, do not make the best searchers. Or assemblers of cars. Or workers, period. We all have, it seems, something better to do with our time. Like citizens of old Rome, we view leisure and a high standard of living as a birthright, even as the barbarians are at the gate.

I would contact my searcher and he would quote me $500 to do a search, and tell me he'd have results in 4-6 weeks. At the time, I thought this was the nature of the game. And the resultant search report was little more than a list of references. I had to download each reference, review it, and then prepare my own search report, which often took an hour or more. Searches became a "loss leader" for me, as oftentimes, I could not pass on all this expense to the client. Raising search prices for clients resulted in less searches being done. Most clients don't want to spend $1000 or $2000 on a search.

I was contacted by an Indian firm who asked me for search work. At first I was skeptical, as like many of you, I had spent far too much time on hold with call centers in India (you know, just once, I would love it if the person on the other end of the phone would tell me what his real name was, and how the weather was in Bangalore. But I guess that will never happen). But on the other hand, if you are a Patent Attorney, you know that a large number of Engineers here in America are from India, and they are very well educated and talented people. But even then, I resisted.

The clincher was when the Indian firm offered to do a first search for free, to see if I liked the quality of their work. I had a client who had ordered a search, and I had sent it to my U.S. Searcher, who did a fairly superficial job, sent me one of his incomprehensible search reports, and charged me a ton of money. My client was unhappy and wanted a more thorough search done, as many aspects of the invention were not searched. My U.S. Searcher was all too happy to expand on the scope of the search - for more money.

This seemed like a good opportunity to perform an experiment. I took up my Indian searcher on his offer and also had my U.S. Searcher perform the "expanded" search. The Indian searcher has results in about 2-3 days. I had to wait 2-3 weeks for the U.S. Searcher to get his work done. At this point, the U.S. Searcher has cost me over $1000 in fees as well.

The Indian search report found very relevant Prior Art that my U.S. searcher missed. The Indian search report was formatted so that I did not have to hold the Patents in one hand while reading the report in the other - excerpts and drawings from the relevant Patents were displayed in the body of the report. Not only that, but the report was formatted in a manner that I could send it to my client with only a cover letter analyzing the most relevant Patents. It save me a lot of time. The standard fee for such a search? $300.

Better results, better product, better pricing, faster turnaround. It was no contest, the Indians had the Americans beat. And I didn't have to worry about finding my searcher at the beginning of Fishing or Hunting season, or whatever excuse Americans always seem to have for not working.

Suddenly, searches were no longer a loss-leader, but a small profit center. Not only that, more clients were comfortable ordering them, as they cost only $500, instead of $1000, including my fees. Yea, yea, yea, I could pay more and "Buy American" - but all that would do is slowly bankrupt me and provide more expensive and shoddier service to my clients.

After using the Indian search firm for a few months, I had some Patent drawings I needed revised in a hurry. My U.S. Draftsman was falling into the same trap as my searcher. High costs, slow turnaround, and sloppy work. Not only that, but he charged for every revision to the drawings, even ones that were caused by his errors.

And even then, the U.S. Draftsmen were bitching that they were not making enough money. I had one draftsman quit the business entirely, complaining that the fees he was charging to do drawings were "not worth it" to him, as he could make more money doing web design and forensic animations.

Back in the day, when people were filing like mad and we were all making money, it was no big deal to tack on a few hundred dollars for draftsman's fees. But since the fees in the Patent Business have been stagnant for a decade or more, every dollar tacked on in ancillary services was a dollar that had to be cut out of the billing side.

Once again, the Indians cleaned our clock. The drawings were revised in a day or two and the charge was so small, that it was ridiculous. So, very quickly, I decided to outsource my drafting services overseas as well.

And after a year or so, it has worked out pretty well. I have better turnaround, lower costs, and higher quality. Only a fool would continue to use higher-cost services with slower turnaround and lower quality.

Now I know that there are going to be some searchers and draftspeople out there who will say "Well, for real quality, you can't beat American labor!" and I have heard this from some folks firsthand. But, like the folks who will sit there and argue with a straight face that a Chevy Impala is a better car than a Toyota Camry, they are full of horse hockey.

The secondary argument that such folks raise is, "Well, how would you like it if YOUR JOB was outsourced?"

And the answer is, "It probably will be, at least to some extent" and I know this because I've trained my replacement.

Early on in my practice, I made the mistake of hiring Associates. Not that they were bad Associates, but that having employees is about the worst way to go about making money there is. I made less money with three Associates working for me than I did working solo - and I worked harder than ever. In order to really make big bucks in this business, you have to have a high volume of work and an army of Associates, and be willing to exploit, harass, encourage, lead on, monitor, and ride herd on them, 24 hours a day. As most firms are discovering, hiring a young Associate into a firm is a "loss leader" not a profit center.

One of my associates was a very talented Indian Engineer and Patent Attorney. After a few years of working in the States, he went back to India and opened his own shop. Now HE is poised to make some money. He can hire very talented young Indian Engineers, who have a cost of living of next to nothing, and they will work hard cranking out work. Even at today's reduced rates, he can prosecute cases and still make a hefty profit.

And since many "high tech" firms these days are populated by folks from all around the world, there is less of a cultural barrier to using an Indian firm. In fact, having an "ethnic" background is now an advantage in this business, as more and more of the innovators are now offshore or from overseas.

So yes, offshore firms could take a larger and larger share of business from domestic Patent Attorneys. It hasn't happened yet, but it is a likely trend.

I have been approached by some Indian firms that have offered to ghostwrite cases and even prepare responses to Amendments for me. I have not investigated such arrangements, although I suspect others have. The situation is this, you send them a disclosure to write, and they write the application. You review and revise it, and then file it. Once an Office Action is received, you send it to them to write a response, and then you revise it and file it.

I am not sure such arrangements would work as well as simpler tasks such as searching and drawing preparation. Both searching and drawings are stand-alone tasks, that can be handed off and encapsulated. If you provide the searcher with a complete and concise description of the invention, he can search it. If you provide a draftsman with some informal drawings, he can prepare formals.

But Patent drafting is something that is a little more esoteric. You have to have a feel for the technology, and not only know how to write the case based on what is in the disclosure, but what isn't. You need to be able to project applications for the invention into other areas of art, and also be able to see how the invention can be rearranged into other configurations. Otherwise, a literal writing of the disclosure will result in a very narrow Patent.

For example, in one of the first cases I wrote relating to satellite television, the inventor disclosed that the decoding process took place first in the decoder and then in a removable module. When I wrote the case, I reversed the process, and the inventor pointed out that I had it backwards. I asked the inventor, "Well, couldn't it work both ways?" and he replied that it could, that the order was unimportant and that the overall inventive concept was the same.

So, we decided to write the application both ways. Guess which way our client's competitor ended up infringing? I learned early on that filing an application just on the literal disclosure was next to useless - you need to explore all the combinations and permutations of an invention, or you leave the "other guy" an easy design-around. Not only that, but with the Doctrine of Equivalents and "Means Plus Function" claims taking a beating, it pays to disclose such variations in the Specification.

But that is merely one problem with overseas Patent preparation. Data used for preparing an application may comprise a telephone interview, in-person interview, e-mail exchanges, or the like. Such data is hard to transfer to an overseas associate, where the language barrier may be an impediment (the call center effect, again).

For example, I used to work at a firm where my boss would fly to meet the client and then tape an interview with the inventor about the invention. He'd return with some sketches and the tapes and ask me to prepare the application. It was a maddening process, as he would ask the inventor all sorts of irrelevant questions and never admit (because of pride) when he didn't understand some basic concept of the invention. Oftentimes, asking the "stupid question" ends up being the key to understanding the overall invention.

Now imagine trying to do a "brain transplant" like that to someone in India. If you are sending them audio or video interviews, will they understand American accents and slang? I am not sure. Will they explore all the different aspects of the invention and try to project a few of their own? Most Indian firms I have dealt with are fairly literal and do not provide this creative edge.

But, I am a realist, and in many instances, I think Indian Patent Prosecution may work for some clients. I think the best chance of success is with Indian firms who have in-house U.S. Registered Patent Attorneys on staff. Heck, I could probably move to India, live like a God on $5000 a year, and have 20 people working for me. We live in a global economy - why not?

So yes, off-shore outsourcing will affect this business in the coming years, and in combination with the dramatic increase in the number of Registered Patent Attorneys and the decline or flattening of filings, will serve to further depress prices.

As an aside, I think the Indian outsourcing thing will work well for certain areas of practice. Simple mechanical inventions, solo inventors, and the like may be good candidates for outsourcing. Then again, there is always the specter of the Invention Broker as well. They pay very little for Patent services and such brokers may find outsourcing attractive.

As a second aside, I think some searchers and draftsmen in the United States are already outsourcing their work overseas, marking it up, and selling it as "made in the USA". As a long-term business model, I am not sure this will work, as eventually clients will go directly to the source.

So how does this answer the ultimate question that my reader submitted? For a person starting out in the Patent Business, what are the alternatives? What should you do?

As I have stated all along, in any business, you need to enjoy the work, or you will never be happy. If you were attracted to the Patent Business because you thought you'd make a pile of money, then find something else to do. There is no pile of money anymore, (and largely, there never was) and even if you find it, you'll never be happy. Seriously.

Every Patent Attorney I have ever met who has made "the big money" in Patents was a miserable excuse for a human being - and miserable as well. Mini-Mansions and Trophy Wives may seem like living the high life to folks on the outside, but as you get older, you realize that there is more to life than having a plastic mansion in an old cornfield and an attractive wife who resorts to greater and greater lengths to modify herself, paranoid that you will eventually dump her for some other young secretary. And what's the point of having a family if your kids hate you and you never see them? Money is a false God, and it takes most folks a lifetime to learn that.

If you want to make a "killing" in some business, good luck to you. I doubt you'll ever be happy. If you want to write Patents, there will always be jobs out there, but they won't pay a lot.

For a young person starting out, the question is, where to start? I started at the Patent Office, but I understand they have a hiring freeze in place (again). I think also that the Patent Office is less kindly to the idea of folks going to work there and then leaving after a few years for the private sector. And with the job market the way it is, they have a much better field to select from. A law degree may be a negative in applying for a job there, as they will view that as an indication you will leave later on.

If you come there with a law degree and already having worked at a firm, it will be rough for you. Some Examiners are intimidated by the law degree thing (let's face it, most Americans are) and may give you a hard time. In addition, working in a government bureaucracy takes a certain amount of patience and tolerance. If you have a boss or co-worker who doesn't like you, well, it can make life difficult.

I enjoyed working there until my boss got promoted and a temporary boss was installed. The temporary boss was a nice guy, but he wasn't cut out to be a boss. He never was comfortable relying on the work of others, and as a result, would never sign off on anything. Overnight, I went from 110% production and having received commendations for excellent work, to 80% production and working hours of free overtime trying to satisfy the needs of this temporary boss, who of course, was never happy. I saw the writing on the wall and left. Others will ride the bus off the cliff until they are fired for low production. And that's the way it works at the Patent Office. It can be a great job, or a nightmare, depending on who your SPE is.

Landing a job as an Associate in prosecution is tough. As I noted from my experience, it is very difficult to make money by hiring Associates to prosecute Patents. There is no money in it to begin with. And unfortunately, many young Associates think, "Hey, I got my law degree, where's my six figure salary, two-hour lunch and BMW?" Many law school graduates think that law school was "the hard part" and now it is just coasting for 5 years until they get the corner office and Partnership.

I've had people approach me about doing work virtually or online or whatever. The bottom line is, I don't have enough work to "farm out" and even if I did, it would be a loss-leader to me. I would spend hours reviewing and revising such work (it is, after all, my signature on the bottom line) and in the meantime, the "virtual Associate" would be expecting that big paycheck for his work. I'd be better off sending the work to India, where at least it would be cheap.

I have also been asked by some folks starting out whether they should start their own practice. My advice there is that you'd need at least four years of prosecution experience before even attempting this, and even then, you should have a good starter client. There is a LOT to the paperwork end of this business that most Associates don't learn at a firm.

I had one young Associate tell me, "Well, they do that all online now, right?"

Well, true, "They" do. And if you want to have your own practice, that "They" is YOU. If you don't have a clue how to file an application online with the USPTO and have safeguards in place not to mess it up, then you will make a lot of expensive mistakes trying to start out on your own.

So, hanging out your own shingle is not something that should be entered into lightly.

The only solution, as I see it, is if wages drop to the point where it is attractive for firms to hire people. But wages have been somewhat stagnant as of late, so I am not sure how far they can drop. It chagrins me to learn that the guidance counselor and the librarian at my local high school make $80,000 a year (albeit with seniority) and that an elementary school teacher in Brooklyn can make six figures (so much for the myth of the "underpaid teacher," at least in pro-union New York State).

The other solution is to wait out the market until it thins out more. Once the word spreads that there is no longer easy money in Patents, the number of folks entering the business will dwindle and demand will increase. But either way, the future of the Patent Business does not look as rosy as it did in the past.

Don't get me wrong. People will still file for Patents. People will still get Patents. Patents will still be litigated. But the idea that filings will continue to skyrocket and salaries climb and climb are something from the last Century, not this one.

In a way, the Patent Business reflects the overall legal climate. More and more young people have been going to law school every year and the number of graduates and practicing lawyers has increased dramatically. It was only a matter of time before supply caught up with demand. In non-Patent legal fields salaries have been depressed for some time now. At your next CLE law conference, ask the fellow next to you, who handles divorce cases or DUIs or whatever, how business is - and check out what kind of car he drives. Not many people are getting rich as lawyers anymore.

As high-paying manufacturing jobs have evaporated, more and more people are looking to education and the professions as a ticket to wealth, only to find that at best, it is a ticket to an upper-middle class lifestyle, if that.

I wish I had some better advice to give. For me personally, these trends cause me to consider my own future actions and lifestyle choices. I saw my Father lose his job at age 55, never to work again. As I approach that age myself, I think more and more that perhaps I should scale back my lifestyle such that I can be prepared to retire or work part time.

You could, I suppose, move to India..... Why not? That's where the jobs are.

Seriously. That could be the smart thing to do, if you are young Attorney starting out, and don't mind relocating overseas.

FWIW.

The End of the Patent Business as We Know It?

2009-09-11T10:06:00.000-07:00

I received a disturbing phone call from a young man seeking employment in the Patent business. He had been laid off from a Patent firm and was struggling to find a job. Even the Patent Office is not hiring these days, it seems.

I asked around and the same thing is happening all over the country. Patent law firms are laying off Associates and paralegals for lack of work. Issue fees are going unpaid, as companies go bankrupt or reorganize their priorities.

It is too early to say, but I suspect that filings are down somewhat, or at least the rate of increase has declined. Is this the end of the Patent Business as we know it?

Many many years ago, the Patent Business was not like it is (or was) today. Patents were difficult, if not impossible to enforce, and most companies freely cross-licensed their portfolios or settled for nominal sums out of court.

When I was a kid in Rochester, New York, my Father was a young Vice President at ITEK. The joke around Rochester at the time was that ITEK stood for "I Took Eastman Kodak" as many of the young Engineers there were former Kodak Engineers, and ITEK was accused of borrowing some ideas from Kodak at the time.

A good friend of my Father was Frank Robbins, who was the in-house counsel at ITEK at the time, as I recall. I once told my Father that I had come up with a great idea and wanted to Patent it. My Dad said, at the time, "Don't bother, Patents aren't worth anything, as you can't enforce them, and nobody pays much for them." I remember him saying this, even though I was just a kid at the time.

At the time (1968) this was probably sound advice. Fast-forward 20 years and I am having lunch with Frank Robbins at the Lawyer's Club in downtown Washington DC. Frank had his own law firm then. "This is a helluva racket, Bobby," he said, "you oughta get in on it. Go to work for the Patent Office and call me in a couple of years. You'll have all the job offers you want!"

I took his advice and prospered. But what happened in the interim that took Patents from a "don't bother" category to a "must have" one? The answer can be found in two words: Federal Circuit. That, or Polaroid v. Kodak.

The Federal Circuit was founded around 1981 as the first subject-matter appeals court (Court of Appeals for the Federal Circuit). It was a bipartisan effort and the theory was that certain cases dealing with Federal Law should be heard by a Federal Appeals Court, not one of the regional Appeals Courts.

So the Court of Appeals for the Federal Circuit (sometimes called the CAFC) was born. The subject matter jurisdiction included Admiralty law, Federal Employment Law, and Patent, Trademark and Copyright Law. While one of the first Chiefs of that Bench, Judge Markey, was often fond of saying "The Federal Circuit is not just a Patent Court!" we Patent Attorneys knew better.

Perhaps there is some great piece of case law coming out of the CAFC dealing with Admiralty law or Federal Employment claims. I don't know. I've never heard of it. But in the Patent field, the CAFC changed the rules of the game overnight, and the case that shocked the world was Polaroid v. Kodak.

You may not recall Polaroid instant cameras, as they are now pretty much extinct, the coffin nails being pounded in by the digital camera. But at one time, they were fairly popular, and every grocery store had a display of cameras and film by the checkout register. Polaroid enjoyed a monopoly for ages until in the mid 1970's, Kodak decided that they should get in the game. Kodak counsel objected that Polaroid's Patents might be infringed, but in one famous memo, a Kodak executive famously scrawled across the legal memo, "Screw the Patents" - or words to that effect. Kodak, operating in the legal environment of the era, made what seemed like a sound business decision.

But the legal climate changed with the creation of the CAFC. Polaroid sued, and won, with the Federal Circuit upholding damages on appeal. Not only did Kodak have to pay Polaroid a record-breaking damages award (nearly one billion dollars), they were forced to withdraw their camera from the market, leaving hundreds of thousands of consumers with worthless cameras and no film for them.

Overnight, it seemed, Patents were valuable. And during the 1980's the number of Patents litigated soared. Companies scrambled to find Patent Attorneys and file Patents of their own. It was, as Mr. Robbins said, "a helluva racket".

I became a registered Patent Agent (later Attorney) around 1990, with my registration number of 34,546. That means that since the Patent Office started registering Agents, only 34, 546 people had been registered. At that time, the "old timers" in the business had numbers in the 20,000 range. The "old fossils" maybe in the mid-teens. So at that time, there were about maybe 20,000 registered Patent Attorneys practicing, and of that maybe 3/4 actively prosecuting Patents.

My young friend who called me the other day has a registration number over 61,000, which sort of made me feel like an "old timer". I suspect that most mature Patent Attorneys have registration numbers in the high 20,000 range to mid 30,000 range. The "old fossils" out there maybe in the high teens (rare) to low 20's. So the law of supply and demand in the Patent Business has caught up with us. There are probably 30,000 or more Registered Patent Attorneys out there, an increase of nearly 50% since I started in this business.

Not surprisingly, the cost of obtaining a Patent has remained relatively flat in the last 20 years. While some firms have tried to adventurously charge $30,000 or more just to file a Patent Application, most have trended downward in the last two decades, with the cost of filing a Patent dropping below $10,000, in many cases to $5,000 or less. These prices would probably be even lower if not for the fact that the number of filings has increased dramatically at the same time as the number of Attorneys practicing increased.

A friend of mine who is a partner at a large firm tells me the same story. Prosecution is highly unprofitable for large firms these days, and many are getting out of it, even firing clients in the process. Large companies with "must have" IP may be willing to pay their large firm prices, but smaller companies that are trying to get a "me too" portfolio on a budget simply are not profitable. And large companies that try to dictate pricing are simply a non-starter.

Solo practitioners like myself are getting work, albeit at reduced prices that reflect low overhead. The idea that you can make a lot of money in prosecution is a myth. While you can earn nearly every dollar you bill, the amount of billables is shrinking daily.

My young friend looking for a job is in a pickle. He needs a few years experience at a firm to really learn the business, but the large firms aren't hiring anyone, and the smaller firms want someone they can put to work right away, making money for them - someone who won't leave after a few years for greener pastures.

Compounding this problem are the changes to the Patent Laws, Rules, Case Law, and Procedures that are making it harder to get Patent Protection and even harder to enforce it. Now granted, when I started out in this business, there was a lot of abuses in the system, where folks with vague patents and clever lawyers could basically blackmail small and even large companies for a shake-down fee.

Many of the "reforms" implemented in the interceding 20 years were touted as stopping these "submarine patent" people. But they also had the effect of making it harder for legitimate folks to get and enforce their Patents.

The Doctrine of Equivalents has taken an beating at the Federal Circuit - to the point where it largely doesn't exist. Claims are now interpreted at a Markman Hearing without a Jury present, so a solo judge can effectively narrow the scope of a case before it begins - to the point where the Patent is unenforceable.

Mean-plus-function language, which Congress specifically provided for under 35 USC 112, sixth paragraph, is now being rejected under 35 USC 112, and what little slips by the Patent Office is narrowly construed by the courts as limited only to what is specifically disclosed in the Specification.

For a brief period, it appeared that the Federal Circuit was starting the party all over again, with its decision in State Street Bank, creating, in effect, an entirely new area of patentability - the business method. But since then, the Federal Circuit has reined in the monster it created, and now the Supreme Court in the Bilsky case appears poised to drive a stake through its heart. It was a nice ride while it lasted.

Business Method Patents filed during the heyday are now just starting to be examined - under a new set of rules than they were filed under. Attorneys have to shift gears to try to re-state claims in different terms - and hope the Specification supports them. In many cases, there is no way out, and the Patent will not likely be granted. And in many cases, the point is moot. Like the aftermath of the "dot com" era, the phone numbers for the clients in these matters are in many cases disconnected, and e-mails to the inventors bounce back with "domain not found".

We are heading, I am afraid, back to the pre-Federal Circuit era, where Patents were difficult to enforce with any breadth or scope. As Patents become harder to obtain and harder to enforce, their perceived value will drop. And as the perceived value of obtaining a Patent drops, the incentive to obtain one will wane as well. The demand for Patents - and Patent Attorneys - will dwindle.

Is this a good thing or bad thing? Perhaps in some respects, an era of normalcy and calm is needed in this field, if we are to progress in a digital age. Many industries are "stuck" at this moment in time, not because of technological limitations, but because of legal ones.

Distributing newspapers, magazines, music, video, and other media is clearly poised to change dramatically in the coming decade. Paper and physical CD's or other media are rapidly becoming obsolete. But the main hurdle to a fully digital era is not the hardware or even the software, but figuring out a means of licensing such media in a manner that is profitable and fair and also acceptable to consumers.

And it also remains a problem to figure out such a system in a manner that all consumers in the marketplace can participate on equal footing. While the CD and DVD were rapidly developed through a consortium of players all agreeing in advance on how to share the licensing of technology, the High definition DVD fell prey to the "greed factor" and two competing formats came out. The least likely format won (at least in my mind) and we finally have a single format (the oddly named and spelled Blu-Ray).

But to the victors go.... no spoils? Demand for Blu-Ray discs and players is not as strong as initially expected. People are not going to go out and buy their libraries of DVDs all over again in a new format. They've had enough of these format wars and format changes. They are, simply stated, format fatigued. And many more are "platform agnostics" - not caring whose technology they are using, provided it is cheap and it works.

And even if Blu-Ray becomes popular, its victory will be short-lived. You can already download movies on your computer as it is. Granted, it is primitive and the definition is not all that great. But it is only a matter of time before higher bandwidth connections allow people true "movies on demand" in high definition mode on their home HD-TV, without the need to buy any player or spend $20 on a Blu-Ray disc.

It is possible that a relaxation of Patent Laws may allow all of these things to happen - without some one party throwing a wrench in the works by claiming they "invented" it. But that remains to be seen.

One problem with the current trend, is that it will be harder for the start-up companies and designers and idea men to protect their ideas and thus get capital to build new technologies. Venture Capitalists are still out there and still looking for the "next big thing". But if the "next big thing" is not Patentable, one of two things could happen. First, the Venture Capitalists might just decide to take someone's idea without compensating them for it. That would be bad. Second, they might decide to forget funding a new project or product entirely. That would be worse.

If there is no exclusivity for an idea - even for a brief moment - then there is little incentive to invest millions in developing and marketing an invention - not if your competitor can "piggyback" off your idea and come to market second and cheaper (the second player in any market usually ends up the victor, historically, unless the first player has some unique and protectable technology).

Would Apple be making any money if the iPhone and iPod could be cheaply cloned and sold? Of course not. Competitors do sell knock-offs of both products, but they are "me too" products that cannot interface with the proprietary Apple software, and thus have limited market shares.

It is a double-edged sword. We would all benefit from open architecture and open formats for technology. But such formats would likely not be developed if you removed the profit motive from development.

On the whole, I'd say that we are swinging the pendulum too far in the anti-Patent direction. The short term results will likely be a downturn in the Patent business and a downturn in litigation. For some corporations, this may be welcome relief. But in the long-term, it may help further our transition from International Superpower into a third world country. As our technology becomes unprotectable, there will be little incentive to invest in new technology. Manufacturing will continue to move offshore, where the cost of labor will be the dominate factor, not the technological content. We will start to look abroad for technical innovations and solutions, and end up being a passive consumer of technology, not a creator of it.

I see a bleak future for the United States if this trend continues. As we become more concerned with tending to the needs of the poorest sectors of our economy, our tax base will continue to increase dramatically (as it has here in Central New York). Increased taxes and competition based on labor cost only will force more and more companies into bankruptcy or to move overseas. As domestic employment decreases (and more and more people retire) the working portion of the economy will continue to shrink. Like General Motors or Chrysler, each worker will have to support not only themselves, but two non-working retirees or laid-off workers as well.

And since innovation is not rewarded, there is little incentive to study Engineering or other Sciences. The majority of graduates from U.S. Engineering schools are mostly from overseas - they have come here to learn our technology and then take it back to their home countries. The centers for innovation are moving away from places like Silicon Valley and transitioning to India and China. As we graduate fewer and fewer Engineers, there will be less and less innovation as well.

Perhaps this is a bit alarmist, but I don't think it is. After World War II, manufacturing drove our economic engine. But manufacturing in a high cost of living country cannot be sustainable - if the competition is merely based on labor rates. Technology drove our economic engine for the last three decades. Innovation and new products created new jobs and entire industries which never existed mere years earlier.

We kill Patents, we kill Innovation, it is just that simple. Take away the incentives to innovate and no one will do it. In fact, those who innovate will be punished in the market for wasting resources on innovation rather than mere production cost-cutting and copying.

We kill Patents, we kill Innovation. We kill Innovation, we kill ourselves.

It was a nice ride, while it lasted.

POSTSCRIPT: Patent Application Data

I found this link:

www.uspto.gov/go/taf/us_stat.htm

Which includes filign statistics since 1963. As you can see, the Patent business was pretty static from about 1963 (85,000 applications filed, 45,000 issued) through 1983 (103,000 applications filed, 56,000 issued). Between those two decades, growth in Patent filings was nearly flat, which is interesting considering the population growth and growth of technology between 1963 and 1983.

Between 1983 and today, filings have jumped to about 456,000, more than quadruple the amount in 1983. The issue rate increased accordingly, tracking the '63-83 data (about 50% issued) until recent years. The issue rate peaked in 2006 at 173,000 Patents and dropped to 157,000 Patents since then.

Note that in the old days, a File Wrapper Continuation was counted as a "new" application. I am not sure whether this chart takes that into account. If not, then the numbers are even higher in relation to the older numbers, which would count FWCs and other Contiunations. This change in policy explains why we went through a "series"(09/, 10/, 11/) of Application Numbers every 3-4 years through the 1990s, but have been in the 12/ series of applications since 2004 (nearly 6 years).

What is interesting is that for the last three years, filings have flatted and settled at the 450,000 mark. It will be interesting to see the 2009 numbers and whether they show a decrease (my guess is YES).

What is also interesting to me is that the year I started in this business, 1987, the filing boom had hardly started. The real growth in filings didn't occur until well into the 1990's. And yet the 1980's were viewed as a boom period for this business.

Even at "only" 450,000 filings per year, there should be growth in this business, if the number of Attorneys and Agents has only increased by 50% as posited in my thesis. For some reason, though, fees have remained flat. Perhaps we Attorneys are cutting our throats by keeping fees down.

Low Patent fees result in more filings as well. So if the Patent Office wants to decrease filings of "frivolous" applications, increased Attorneys fees work in their favor. I think one reason why the Appeals format was so dramatically changed was to increase the cost of filing an Appeal for an applicant.

It is an interesting situation.

New SCAM letter from APTR CD-CTI Ltd.

2009-08-28T13:20:00.000-07:00

In recent weeks, I have been getting about a dozen scam letters from Hong Kong from a company that calls itself the "American Patent & Trademark Register" or APTR and also bills itself as CD-CTI limited.

The letter looks very official, with all the data for your Patent on it, as well as mysterious looking codes and bar codes. The letter is is made to look like an invoice for "USD 2.489,46" which should tell you something right there (in the US, this would be printed as $2,489.46).

The letter states, in fine print, that for this fee, the APTR agrees to publish your Patent on a CD-ROM. Where this CD-ROM is or who it is distributed to or why is not made clear.

The letter also states that it is NOT an invoice and that they are NOT connected with the USPTO - but in a font much smaller than the remainder of the letter.

If you send money to this organization, it is lost for good, as they are in Hong Kong, and there is no way to get your money back. They are addressing these letters to address of record of published applications. For Pro Se applicants, this letter would be addressed to the applicant. For those using a lawyer, the letter would go to your attorney.

While it seems like an obvious and stupid scam (and it is), many pro se applicant's, not being familiar with the process, might think this is an invoice from the Patent Office for their Patent.

And once they send the money off, it is gone for good.

They are blanketing the US with these letters. If the response rate is even one in a thousand, they stand to make money at this.

If you ever get a letter from an official-sounding agency asking for money, be wary. The USPTO has only one name and address - United States Patent & Trademark Office in Alexandria, Virgina. Other names, such as "Official Maintenance Fee Payment Agency" are bogus. Do NOT send money to such organizations!

Contact your attorney or the USPTO before sending off any money to any organization with regard to your Patent. Once you send off this money, there is nothing anyone can do to get it back for you.

The Litigation Conundrum

2009-07-24T08:46:00.000-07:00

While many decry the abuses in the litigation system as "proof" that the Patent system needs an "overhaul" or should be tossed out entirely, there is another problem at the other end of the spectrum as well.

In particular, there are inventors and small businessmen out there who have developed inventions - real inventions, not submarine Patents - who want to enforce their Patent rights, and find it difficult, if not impossible to do so.

While a "Patent Troll" can extract a few hundred thousand or even millions by suing a large company with a nuisance suit, it seems that many small companies and solo inventors cannot get even one dime for their valid U.S. Patents - for real inventions - that are infringed upon, and in some instances, even clearly stolen from them.

As I noted in another article, this is a Litigation problem, not a Patent problem.

Perhaps the analogy to Personal Injury cases I have made in the past is appropriate. A scamming plaintiff with a "setup" slip-and-fall injury case against a large company has a better chance of success than a real Plaintiff with serious injuries who has a case with messy facts. The "setup" cases are easier to litigate, as the plaintiff knows in advance how to create a fake injury scenario that is credible with the courts - and also how to target the right defendants (deep pockets with lots of insurance). But a person who is really injured in a car accident? Well, it was a dark and stormy night, as they say, and the skid marks were inconclusive and maybe the Defendant doesn't have a lot of readily attachable assets or insurance.

Like I said, it is the litigation system that needs fixing, not the Patent system. Often those least entitled to damages end up winning big, while those who have been truly wronged walk away with nothing.

For a solo inventor or small company, there are not a lot of choices when it comes to litigation. There are large firms, which are expensive. There are smaller firms, which are cheaper, but still cost money, and do not have the cache of the big firm. There are contingency fee firms, which will want a lion's share of the damages - and expect to see a lot of damages. And then there are the various Patent companies, sometimes derisively referred to as "Patent Trolls."

Litigation is an interesting conundrum. Hiring a large, downtown law firm can cost as much as $100,000 a month in litigation expenses, or at least it did back in 1992 when I worked for a large downtown firm. So there had better be millions in damages on the other side of the case if you want to proceed with it. Plus, you have to have enough money to fund the litigation for at least a year (e.g., a million bucks). If you run out of money halfway through the process, well, you're sunk. There are a number of large firms, such as Blakely Sokoloff in silicon valley. See: http://www.bstz.com/

Smaller firms might be more cost-effective, but they do not have the cache of the larger firm. Litigation is very psychological, and sometimes you can force settlement of a case if a competitor is cowed by the large law firm name. I had one client settle a case with his former business partner, merely by hiring the biggest, meanest law firm in his State. The former partner got a letter from that firm and quickly folded his tent - realizing he could not afford to go up against them. Like poker, a lot of litigation can involve bluffing.

But a smaller firm can cost a lot less to hire, and as a result, you can afford the litigation expenses. A friend of mine, David Voorhees, works for a small litigation shop in Alexandria, Virgina. He and his partner know their way around the courthouse, even if they are not a large shop. I am not sure if you can get jurisdiction there, although if infringement activities take place nationwide, it may be possible. The "Rocket Docket" in Alexandria can decide patent cases in as little as 18 months (as opposed to years and years elsewhere) and it is a popular venue. See: http://www.mbv-ip.com/attorney_bios.php

Then again, there are also contingency fee firms that handle such cases for a percentage of the damages. Most want to see at least a million bucks in potential damages, as well as an easily identifiable plaintiff, preferably with readily attachable assets. An offshore producer is probably not a good target for them. But a large US company might be. One of the most famous of these is Niro, Scavone, in Chicago. I have dealt with them in the past with the Internet Couponing case, and they are a formidable opponent. See: http://www.niroscavone.com/

There are other contingency fee companies out there, such as General Patent Corporation and the IP contingency consortium. These are a different animal, and are often accused of "Patent Trolling". I interviewed GPC for one client, and the references they offered were interesting. One fellow had an invention for a telephone voicemail type invention. The defendant was Coca-Cola. Rather than go after the maker of the product, they want after the end customer and extracted what some might say are nuisance settlement amounts. For an individual inventor, this may be an option, but for a small company interested in going after competitors, maybe not the correct solution.

The key question you need to answer before you start on any cause of action is to determine what your GOALS are with the Patent. There are several different strategies you can take:

1. Defensive - use your Patents to defend against infringement suits from competitors. A large company comes after you and says you are infringing their Patent, and you can counter-sue them with yours - and hopefully settle.

2. Offensive - use your Patents offensively to obtain royalties, damages, and monies from others. The only downside to this (other than the costs noted above) is that if you are in the business as well, expect the people you sue to do #1 above - that is to say, counter-sue you with their Patents. Make sure your opponent doesn't have something in their portfolio to hit you back with. You take a shot at someone, expect them to shoot back.

3. Exclude Others from the Marketplace - In theory, you can use a Patent to obtain a monopoly on your invention. That's what the law says. In theory. In reality, it is very hard to "exclude others from making, using, or selling" the invention. The Windshield Wiper case is a good example (this is out as a movie with Greg Kinnear, called "Flash of Genius", by the way). He tried to "exclude others" from making intermittent windshield wipers, turning down enormous sums of money, only to win smaller settlements later on in court. His dream of being the windshield wiper king never materialized.

4. As an Asset - If you ever decide to sell your company or go public or apply for a loan, a Patent or Patent portfolio can be useful as an asset. I have had several clients go this route - selling out to larger companies that were interested in the business, but also the Patent Portfolio and the potential for litigation damages. Larger corporations have the deep pockets to fund litigation (and opponents know this, making the threat of a lawsuit more credible).

Before contemplating litigation, I would suggest sitting down and figuring out what your ultimate goals are and then interviewing a number of firms. They may charge you a rather astounding amount of money just for a few hours of their time, but it may be worth it.

As with the question of "Should I Get a Patent?" (see my earlier article) you need to do a cost/benefit analysis as a businessman before proceeding. While the promise of millions in damages may sound inviting, if it costs you a million dollars in legal fees, and the outcome is uncertain, or the legal fees sink your company, perhaps it is not such a swell idea.

As in most legal endeavors, the real winners are usually the lawyers.

Early in my career, I was invoved in a multi-million dollar lawsuit between two major electronics firms. While both appeared to be "deep pockets" with lots of money to spend, the legal fees were topping a million dollars a year for each side. As the corporate counsel noted, this amounted to nearly 5% of their annual profits. "If we could increase our profits by even one percentage point, do you know what that would do to our stock price?"

After several years of a lawsuit and countersuit, the CEOs of each company did the unthinkable - they got together over a game of golf, and with no lawyers present, settled the case over the weekend. Both realized that the lawsuit game was getting them nowhere. They were not able to exclude the other from the marketplace, and the potential damages were little compared to the legal fees involved. Polaroid v Kodak type cases are a rarity, not the norm.

You can see why I concentrate on the Prosecution side of things. Litigation requires a critical mass of manpower and money to be successful. As a prosecuting attorney, I merely create causes of action for others.

NOTE: I have listed a number of law firms and Patent Companies that handle Patent litigation (or at least did at one time). I am not endorsing any of these entities, but merely using them as examples of the genre. However, I have no negative information on any of the cited entites, either. Which type is best for you is a fact-specific situation, too. There are many more out there, and you should search in your area, interview several, and consider the costs and benefits before proceeding.

In a perfect world, everyone would quickly realize who is entitled to royalties for a particular invention, and they would pay out in an efficient and cost-effective manner. And those who do not have a real cause of action would receive nothing. That is, if we lived in a perfect world.

Unfortunately, we live in a world that is far from perfect, and our system sometimes seems to work in a manner opposite to the way it was intended. However, in many cases, the proper people end up being rewarded for their efforts. It can and does happen on occasion!

Future Trends

2009-07-04T08:29:00.000-07:00

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

2009-04-13T07:14:00.000-07:00

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 anti-gravity 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 start-up 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.

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ANTECEDENT BASIS in CLAIMS - What does it mean?

2009-04-10T09:03:00.001-07:00

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 language. 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 over-broad.

But getting back to antecedent 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.

Similarly, 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 antecedent 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 terminology 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 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

2009-03-27T15:17:00.000-07:00

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.

2009-03-25T07:24:00.000-07:00

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

2009-03-25T06:55:00.001-07:00

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?

2009-02-19T07:16:00.000-08:00

§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.

UPDATE: Since I have written this article, it appears that the number of these rejections is tapering off. Moreover, many Examiners are placated if you remove the "for" in a means-plus-function claim.

So if you recited "an amplifier for receiving an input signal and amplifying...", removing the word "for" seems to satisfy some Examiners that it is no longer a "means plus function" recitation.

Go Figure. (01/28/2010)

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?