Monthly Archives: July 2010

Uncertainty in Patent Rights

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Here is a quote and lesson for patent seekers and others involved in patent law. Also, it contains one of the first references that I have found equating patent rights to property rights:

“It should also be borne in mind that no property is so uncertain as ‘patent rights’; no property more speculative in character or held by a more precarious tenure. An applicant who goes into the patent office with claims expanded to correspond with his unbounded faith in the invention, may emerge therefrom with a shriveled parchment which protects only that which any ingenious infringer can evade. Even this may be taken from him by the courts. Indeed, it is only after a patentee has passed successfully the ordeal of judicial interpretation that he can speak with any real certainty as to the scope and character of his invention. Especially is this true of patents on spring-tooth harrows.” E. Bement & Sons v. La Dow (C.C.) 66 Fed. 185 (Circuit Ct. N.Y. 1895)

Differences Between Patent Reexamination and Patent Reissue

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Reissue applications generally allow for correction of a larger scope of errors than patent reexamination, but reissue is only available to patentees (patents that have already issued). The process of reissue permits patentees to correct defects relating to subject matter eligibility, utility, written description, enablement, and clarity of the original claims. Reissue applications additionally allow for the broadening of claims, where the patentee believes that the patented claims are too narrow. Such a broadening reissue application must be filed within two years of the original patent grant. MPEP § 1412.03 allows a narrowing reissue to be filed any time before the expiration of the patent. Where reissue is proper, an additional benefit is that the patentee has the option, in the reissue proceedings, to seek paid extensions of time, requests for continued examination, and continuations, all of which are unavailable in reexamination. However, filing of a reissue application subjects all the claims in the original patent to examination. See MPEP § 1440. Reissue applications may be examined by the same examiner who issued the patent for which reissue is requested.

In contrast, in reexaminations, errors contained in the specification of a patent application may not be corrected. Patent reexamination is limited in scope to questions of validity that pertain to other patents or printed publications. Indeed, any change made that is outside the scope of such a validity issue would be deemed improper under 35 U.S.C. § 305. For this reason, during reexamination, 35 U.S.C. § 112 issues are only considered in claims which are amended or added by the reexamination, and not in the originally patented claims. Thus, a patentee should consider filing a reissue application where the issued patent contains an error with respect to either 35 U.S.C. §§ 112 or 35 U.S.C. §§ 101.  Further, broadened claims are never permitted in reexamination proceedings. Reexamination is limited to examination of those claims specifically requested for reexamination. See MPEP § 2243 (see also Sony v. Dudas). With regard to timing, a request for reexamination may be filed any time during the period of enforceability of the patent. Under 37 C.F.R. § 1.510(a), the period of enforceability is determined by adding 6 years to the date on which the patent expires. In patent reexamination, a special unit of the USPTO, the CRU performs the examination as required in MPEP § 2226, including review by three member examiner panels.

In some cases, the differences between reexamination and reissue may present a clear choice for the patentee. In other situations, the issues presented in an issued patent may be proper for both reissue and ex parte reexamination. Where this is the case, a patentee may wish to consider the option of merged proceedings, especially concurrent with a related litigation. In any event, it is best to consult with an experienced patent attorney in making the decision between a reissue and a reexamination so as to make the best decision given particular facts and circumstances surrounding the patent.

Requirements for Trademark Abandonment

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Abandonment

A trademark is considered abandoned if the trademark owner ceases use with an intent not to resume use. See 15 U.S.C. § 1127. A statutory presumption of abandonment arises when a trademark owner fails to make use of its mark for at least a three-year period. An assertion of abandonment can be used offensively, e.g., as a basis to seek cancellation of a registration, and also defensively to defend against a claim of likelihood of confusion.

To rebut the presumption of abandonment, a trademark owner must demonstrate “reasonable grounds for the suspension and plans to resume use in the reasonably foreseeable future when the conditions requiring suspension abate.” Silverman v. CBS, Inc., 870 F.2d 40, 47, 9 U.S.P.Q.2d 1778, 1773 (2nd Cir. 1989) (citations omitted). Therefore, to defend against an abandonment claim, a trademark owner must provide the reason for nonuse of the mark as well as sufficient evidence that the owner made continuous efforts to resume use of the mark.

Trademark Board Proceeding

A recent proceeding before the Trademark Board reiterated the requirements for trademark abandonment. In the particular case, both Mattel and and Crash Dummy Movie (CDM) agreed that a likelihood of confusion existed between CDM’s mark and the CRASH DUMMIES marks. Mattel, Inc. v. Crash Dummy Movie, LLC, Opposition No. 91159002 (T.T.A.B. Nov. 25, 2008) [not precedential]. Thus, the primary issue before the Trademark Board was abandonment of Mattel’s marks. Mattel purchased the CRASH DUMMIES marks from Tyco in 1997, and these marks were properly assigned to Mattel during that transaction, along with nearly 300 other marks that Tyco owned at that time. Mattel completely acquired Tyco a few months thereafter. Subsequently, Mattel was unable to make use of Mattel’s marks until December 2003, equaling an eight-year period of non-use. Accordingly, the Trademark Board found a prima facie case of abandonment, and noted that the burden of proof regarding the issue of abandonment shifted to Mattel.

The lesson is that a prima facie case of abandonment can be rebutted by (1) evidence of use, or (2) an explanation of nonuse and evidence of efforts to resume use of a mark. See On-Line Careline, Inc. v. Am. Online, Inc., 229 F.3d 1080, 1087 (Fed. Cir. 2000). Trademark owners should take care to use each of their marks or be prepared to lose some rights to use unused marks.

Aligning Intangible Business Assets with Business Objectives

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I am often asked, “How can my company best align its intellectual property (IP) portfolio with our business objectives?” The answer is pretty simple.

Tarek N. Fahmi, a partner in the Silicon Valley (California) law firm of Sonnenschein, Nath & Rosenthal, has stated that IP can be aligned with business objectives by performing a good IP audit and integrating the audit with a sound understanding of a business plan.

Increasingly, today’s corporate leaders need to understand how their companies’ IP assets relate to their business operations and financial performance. An IP audit is a mechanism that can be used in gathering information for such analysis. Together with an understanding of the company’s business plan, the audit can help to ensure that the company’s IP portfolio and strategy are kept in alignment with its business objectives.

Basically, a company’s business plan will identify certain objectives and strategies for meeting those objectives. The objectives are selected through an analysis of the company’s strengths, weaknesses, opportunities, and threats (a SWOT analysis). Strategies for meeting the objectives may involve the sale of certain products or services, partnering with others to gain access to products or markets, and, often in the case of privately-held companies, raising capital.

Among objectives to be considered in the business plan are those pertaining to the company’s IP assets. The company should want to ensure that its products or services are covered by patents. Patents should cover not only the current generation products, but also the next generation ones. This can prevent competitors from leap-frogging over the company’s current commercial offerings. Competitive technologies may also provide opportunities for patents. By establishing barriers to design-arounds or other solutions, companies can help ensure themselves a position in the marketplace for years to come.

A company’s willingness to enforce its rights also can play a key role in its IP strategy. Often, the question of whether or not a company is willing to sue infringers depends on the perceived importance of the market into which the infringing products are being introduced. For example, companies may be more willing to defend their IP rights in the United States (where a large consumer base exits) rather than in other jurisdictions (where smaller or negligible numbers of potential customers exist). Accordingly, companies may decide to seek patent protection in only those jurisdictions where the company reasonably expects to enforce its rights with respect to the subject inventions and forgo such protection in other countries.

As a company continues to develop its strategic plans, IP components of that plan should continually be reevaluated to ensure that IP protection aligns with stated business objectives. For example, if new objectives for new markets will be pursued, the IP plan should be updated to reflect the need to seek protection for inventions, brand names and other assets in those markets. Likewise, if older objectives are to be abandoned in favor of new ones, companies should consider pruning older IP assets to make way for new ones.

Components of an IP Strategic Plan. An IP plan should address portfolio development (i.e., the acquisition of IP assets by internal development or other means) and monetization or other exploitation of that portfolio.

Generally, developing an IP portfolio is a long-term proposition. Given current processing times at patent offices throughout the world, companies should be looking out at least three to four years in their patent planning. Simply filing patent applications for existing technologies is not enough. To create a portfolio that will truly provide value for the company by erecting effective competitive barriers requires placing those barriers at chokepoints in market and technology trends. A company that takes the time to plan for these trends and to file its patent applications accordingly will be in a position to later enter the relevant markets in a much stronger position than its competitors.

Competitive Assessments. One way to glean the developing market and technology trends is to invest in a competitive assessment. This form of intelligence can reveal competitors’ patents that might present an obstacle to a company’s business objectives. Early identification of such obstacles can provide a company with sufficient opportunity to design around problem patents or seek partnering opportunities to gain access to needed intangible business assets. A competitive assessment can also reveal strategic holes or weaknesses in competitors’ patent portfolios, weaknesses that the company can exploit by filing patent applications of its own. Importantly, any competitive assessment should include an analysis of the company’s own IP portfolio so as to identify weaknesses that need to be addressed.

Patenting Strategy. In addition to filing patents based on competitive assessment, companies should adhere to a well-defined patenting strategy and avoid the tendency to patent everything that results from its research and development activities. Here, reference to the business plan is essential. That plan will help define the company’s core business and the technology important to fulfilling that business. The bulk of resources devoted to IP portfolio development should be devoted to protecting that technology. While some funds may be spent with respect to patents for non-core technology, for example to develop licensing opportunities for the company, the focus on core technology should not be lost.

Enforcement. As the company’s IP portfolio begins to develop, the company should look to extract value from it. Enforcing the newly acquired IP rights is one means by which this can be accomplished. Here, enforcement is not necessarily synonymous with litigation. Instead, strategic partnerships through sharing of IP assets is a common means for companies to derive value from their respective IP portfolios. So too is the sale of IP assets directed to non-core technology.

Identify Prior Art. A less traditional, but not to be overlooked, means of deriving value from one’s IP portfolio is to search through that portfolio for prior art that might be useful against competitors’ patents. This includes not just the company’s own patents, but any prior art cited during the prosecution of those patents. References culled from the file wrappers of the company’s own patents can sometimes be used to provoke reexaminations or other attacks on competitors’ patents. By narrowing or even invalidating such patents, a company can indirectly strengthen its own patents and thereby enhance the overall value of its own portfolio.

Continuations. A less aggressive, and more traditional, approach to enhancing the value of one’s patent portfolio is to maintain a liberal continuation practice. Filing of multiple continuations or divisional applications can help companies shape their portfolio as a market matures or develops. Such a practice can often help convince investors to commit funds in favor of one company over another. It should be noted that recent USPTO proposals to change the rules regarding the filing of continuations may severely limit the availability of these vehicles for value enhancement of patent portfolios.

Integration. A key to successfully integrating any IP plan with a company’s business plans is education. Engineers, sales and marketing professionals and company executives must all be indoctrinated with the idea that the company’s business objectives can only be achieved if the elements of the IP strategic plan are adhered to. This requires regular and continuous communication with and among the people responsible for creating and managing the company’s IP assets as well as executives focused on executing the business plan. Integration cannot be achieved with a single “IP Asset Day” or one-time meeting to discuss a plan as if it were a static idea. The IP plan will be an ever-evolving idea, just as the company’s business plans will change over time. It is important that these changes be communicated among the people within the company responsible for ensuring its success.

Incentives. A company should also provide incentives for ensuring integration of an IP plan. Many companies provide monetary or other awards to inventors when patent applications are submitted or when patents are issued. Similar incentives could be provided to others tasked with competitive analysis or other forms of IP portfolio development. Incentives encourage employees to remain with the company. Employees are often one of the most under appreciated intangible assets of a business.

Metrics. Metrics should be established to allow manager to determine whether IP objectives are being met. In the absence of a dedicated licensing program it can be difficult to directly tie any increased sales or profits to the company’s IP portfolio. However, metrics such as the number of patent applications filed per quarter or number of patents issued can be used.

By doing these seemingly simple things, corporations can establish a successful program to protect and monetize their intangible business assets and align their IP portfolio with their business objectives.