Patent Advice Blog - Boswell IP Law

Patent Reform Law Signed Today

2011-09-16T11:53:56Z

The 2011 Leahy-Smith America Invents Act is scheduled to be signed into law today (9/16/2011) by President Obama. My initial take on it is that my large clients will find some things to like in the changes while my small to mid-size clients will find the changes largely tilt the odds against them. Overall I’m not a fan of the changes, and according to a recent survey by patent blog Patently-O, I am in good company. Here’s a rundown of some of the provisions of the new law that stand out to me.

First-to-file: For my smaller clients, switching to first-to-file will mean that more of them find themselves shut out of the system by their pre-filing activities. I recognize that there is an exception for your own activity, but it is not strong enough. Many startups do not learn about patent law or consult a patent attorney until well after they have already put up a website, presented at a conference, or engaged in business activities that could trigger the on-sale bar. My larger clients will more easily adapt and find it to be business as usual. They already have good filing practices in place and this may simply mean that we file earlier in the process (e.g., after the first developer spec is written rather than after the first prototype).

Patent Quality: For those that want to see higher quality patents, I hardly see how forcing inventors into a rush to the Patent Office rather than letting them perfect the invention before filing is going to lead to anything other than more hastily written patent specifications. There will be a need to file earlier and do more “guessing” about how the invention should work rather than waiting (as you can today) to complete all of your experimentation before filing.

Fee Diversion: Congress continues to raid the fees of the Patent Office. While the Patent Office could easily be a self-supporting agency getting better and better (particular with the great IT improvement plans Director Kappos had in mind that are now shelved due to budget cuts), instead it is becoming a cash cow for Congress to milk. Fees are going to go up 15%, and the Patent Office is going to keep less of them. The Patent Office has asked repeatedly to keep all of its fees, and in this law that is definitively denied.

Fast Track: A new accelerated examination program that allows inventors to pay $4,500 to get their patent to the front of the line may mean that startups wait longer than ever for a patent. Big companies have the resources to fill the fast queue, and others will be at the back of the line. While large companies have their patent and will be at the courthouse ready to sue with it, the startup and small inventor will not even have received any correspondence from the Patent Office yet. It’s hard to see how that will be good for small business.

Best Mode: The changes basically eliminate the “best mode” requirement. The bargain that a patent strikes is that you get a 20 year monopoly but in return you explain to the world exactly how your invention works so that after 20 years the public benefits by knowing how to use your invention for free. Best mode is the doctrine that basically said that if there are multiple ways to perform part of your invention, you cannot hide the one that works the best even though you disclose the others. You had to put on paper the best way you know how to implement the invention. Now inventors may be able to hide that best way, disclose inferior ways of implementing the invention, and the public loses. Consider it a way of keeping a trade secret even though you filed a patent. In the past you had to choose either a patent or trade secret.

Dis-joinder: On the litigation side, the changes bar those suing for infringement from naming multiple defendants in a single lawsuit when the only common ground is infringing the same patent. Patent cases start out with what is called a Markman hearing during which a judge determines how the words of a patent’s claims will be interpreted for the trial. In many cases, each side has a good idea whether it will win or not based on the outcome of this hearing. Thus, many cases settle after this stage before any factual arguments have been made about a particular defendant’s infringement. Given this, it seems inefficient to force separate lawsuits for each defendant. Again, small companies will be hurt the most. While patent trolls and big companies have ample resources to pursue 10 separate defendants in 10 separate cases, small companies may have to choose one golden target and try that case first. If they lose that one, they may not have the resources to pursue other defendants even if their cause is just.

Earmarks: The bill also contains some provisions that are questionable. For example, one large law firm missed a filing date and has been in a malpractice suit worth over $200M. They have reportedly engaged in a heavy lobbying campaign and the reform act changes the patent laws to “forgive” the error (click here for more details). A late attempt to add an amendment removing this provision by Sen. Jeff Sessions, R-Ala., failed.

During my time as a patent attorney, most changes to patent law have unfortunately made the complexity of filing and prosecuting patent applications go up. This in turn makes attorneys charge more and makes the Patent Office’s fees increase. So while Congress is likely patting itself on the back for these changes, I find little in the new law to get excited about.

How to Choose a Patent Attorney

2011-02-19T00:50:38Z

New clients sometimes ask me how to choose a patent attorney. The field is specialized enough that from the outside all patent attorneys may look the same. Factors that may seem important to someone first approaching the field are often not the ones that turn out to be important later. The patent process is long, and your patent attorney is someone you will end up working with for several years or more. The following quotes are often heard from clients that come to me after having a bad experience with the wrong patent attorney:

“I didn’t even recognize the application from my attorney as my invention.”
“I feel like I spent all my money paying to train their new attorneys.”
“I was charged for every copy and phone call but still don’t understand the total cost.”
“It’s been 4 years and we haven’t gotten anywhere with the examiner.”

Following is some inside information about how the field works and how you can start out with the right patent attorney from the start to avoid the same pitfalls.

1. Technical Experience. One of the most overlooked factors is technical experience. The attorney obtained this experience before becoming a lawyer. All patent attorneys have to have engineering or other technical degrees to pass the patent bar, but not all have the same technical experience. You want an attorney to write your patents that has technical experience most closely matching your product. Some patent attorneys claim to handle any type of patent, but the best stick to their technical field. If you have a software invention, look for a computer or electrical engineer with experience writing software. If you have a mechanical invention, look for a mechanical engineer with experience building widgets. One question to ask is whether the attorney has a resume sufficient for you to hire them in an entry level or higher technical position in your company. If not, they probably shouldn’t be writing your patents.

2. Small vs. Big Firms. I am often asked whether there is any difference between large law firms and solo firms. The truth is often that there is very little difference. It is a bit like asking who has smarter engineers, a large company or a startup. There are smart engineers at both for different reasons, and there are just as many reasons why patent attorneys choose to work in different environments. At the end of the day, you are hiring a specific attorney that will write your patents. At a large law firm, it is more likely that an associate in training will write your patent with an experienced partner reviewing their work (many law firm partners only supervise work and no longer write patents). You often only meet the partner and may only see who worked on your patent on the bill. At a solo firm, the attorney you meet will also write your patent. Having done both, I would rather have the person with the most experience spend their time on my patent. To use a surgical analogy, it is better to have an experienced surgeon perform the whole surgery than to have a resident operate on you with a supervisor popping in for a few minutes at the end. Going back to technical experience above, make sure you know who is actually working on your patent and that person’s level of experience.

3. Cost. Although patent costs vary from firm to firm, one thing I would consistently suggest is to select an attorney that will give you an accurate picture of the costs upfront, and will commit to a cap on the total bill for filing your application. Hourly billing is particularly difficult for the client, because it gives the client very little upfront knowledge about how much a particular patent will cost, and unfortunately many clients often feel like the “clock is always running”. At large firms each attorney may have a different hourly rate and some will be faster than others, making it nearly impossible to know in advance how much anything will cost. I prefer flat fee billing because it gives you the clearest picture of the costs involved so you can plan effectively. Flat fee billing is a recent trend for law firms, and most old firms still use hourly billing. Also, watch out for extremely low fees. If you shop around you will find that most patent attorneys charge within a 10-20% range of each other, but some are 50% or more less than the going rate. Unlike most areas where a smart consumer looks for a low price, this is usually a warning sign in the patent field. Someone charging an unusually low fee may have had a hard time keeping clients in the past (due to poor work or missing deadlines), or may be very inexperienced.

4. Workload. High workload is often an indicator of good patent attorneys. This is a field where the supply of patent attorneys is lower than the demand for patent services, and the field has been growing steadily even throughout the recent recession. In fiscal year 2010, the Patent Office reports 509,367 U.S. patent applications were filed (a 4.7% increase over the prior year), with only 60,000 registered patent attorneys or agents (of which, approximately 1/3 are in-house at various companies and do not write patents and another 1/3 are retired or supervise the work of others). That means that even assuming an even distribution, the average attorney is drafting 25 patent applications a year, or one every other week. Because work will naturally find those who are good at performing it (and shy away from those who are not), a patent attorney without much work could be a warning sign of prior client dissatisfaction or other issues. Like any rule of thumb, there are exceptions: some attorneys may simply choose to work a low work schedule or may be returning to the field after some event.

5. Prosecution Success. The process of getting a patent through the Patent Office is referred to as prosecution. One of the best ways to evaluate a patent attorney (and the most difficult bits of information to find) is the attorney’s success in getting patents through the Patent Office efficiently. Many clients that come to me after firing other firms have done so because the other firm has spent years in prosecution without making substantial progress. This can happen because the application was not written well in the first place or because the attorney is just ineffective at working with patent examiners. I have found that one of the most effective tools for working with the Patent Office is an examiner interview. The examiner handling the patent will often meet with your attorney if they simply request it, in a meeting called an interview. This is an incredible opportunity rarely used by many patent firms. Visiting the Patent Office and speaking in person with the examiner is often the most effective way to make progress in getting a patent. Everything in the patent record will later be used against you in litigation, so another advantage of interviews is that they are largely off the record and avoid hurting your patent during litigation.

6. Referrals. The way you find your patent attorney is often a good signal of how successful your experience with them will be. Unfortunately, many people do not know a patent attorney in advance of needing a patent. The Patent Office has only registered about 60,000 patent attorneys or agents in the U.S., so we make up less than 0.02% of the population. It is indeed a very specialized field. However, lawyers know lawyers and clients know the lawyers with which they have successfully worked. If you can get a recommendation for a patent attorney through another lawyer you trust (e.g., corporate attorneys often knows good patent attorneys) or from other businesses similar to your own, you are much more likely to start off with the right fit.

European Software Patent Update

2010-05-13T22:51:49Z

Two years ago a European judge devised a list of four questions related to software patentability in Europe. Under the European Patent Convention (EPC), a question can be referred to an Enlarged Board of Appeals when a judge perceives a conflict in previous cases that affects the current case. I have been following this closely since many of my clients seek patent protection in Europe and I wrote part of the response submitted as an amicus brief by the American Intellectual Property Law Association (AIPLA).

Yesterday, the Enlarged Board delivered their opinion, which you can find in full here: http://www.epo.org/topics/news/2010/20100512.html. The following is a summary of the four questions and the answers provided by the Enlarged Board (which I will refer to as the EB below). Basically it is a big letdown, as the EB squandered a big opportunity to provide some clarification and opted not to answer anything.

Q1. "Can a computer program only be excluded as a computer program as such if it is explicitly claimed as a computer program?"

Answer: There is no divergence in the case law, so the question is inadmissible. The EB rephrased the question as referring to whether software should be treated differently for determining patentability based on the form in which it is claimed. In U.S. practice, we often file claims for software related to methods (e.g., a set of steps), systems (e.g., a set of components that can perform various tasks), and computer-readable media (e.g., a disk or other storage containing software instructions). Each of these types of claims has different infringers. A method claim is often infringed by the user, since the user causes the steps to be performed. A system claim is infringed by the person that puts an infringing system together, which could be a software manufacturer (e.g., a competitor of the patent holder) or an IT staff member in an organization (who installs and assembles all of the pieces the make up the system). A computer-readable medium claim is infringed by a disk pressing company, someone who puts the software on a USB drive, and so forth. To a patent attorney these are each claims to very different things, and applications usually contain a mix of claim types for the same invention to cast a broad net to protect the invention.

The EB spends a lot of time considering whether they can even take the question. They can only get involved on a referral of questions of this type if there is a conflict of rulings that come from two separate lower courts. They distinguish between cases that come out differently because of "developments in the law" from those cases that come out differently because two lower courts disagree on the law. Here they find the conflict to be developments in the law, and thus claim there is no conflict and punt on the underlying question. As a result, the previous case law on the topic stands, which they describe as follows "a claim in the area of computer programs can avoid exclusion under Articles 52(2)(c) and (3) EPC merely by explicitly mentioning the use of a computer or a computer-readable storage medium. But no exposition of this position would be complete without the remark that it is also quite clear from the case law of the Boards of Appeal...that if a claim to program X falls under the exclusion of Articles 52(2) and (3) EPC, a claim which specifies no more than "Program X on a computer-readable storage medium," or "A method of operating a computer according to program X," will always still fail to be patentable for lack of an inventive step under Articles 52(1) and 56 EPC. Merely the EPC article applied is different."

The inventive step needs to include more as described by one case they considered, "In the view of the Board, a computer program claimed by itself is not excluded from patentability if the program, when running on a computer or loaded into a computer, brings about, or is capable of bringing about, a technical effect which goes beyond the 'normal' physical interactions between the program (software) and the computer (hardware) on which it is run.’Running on a computer' means that the system comprising the computer program plus the computer carries out a method (or process) which may be of the kind according to claim 1. 'Loaded into a computer' means that the computer programmed in this way is capable of or adapted to carrying out a method which may be of the kind according to claim 1 and thus constitutes a system (or device or apparatus) which may be of the kind according to claim 14."

Q2. "(a) Can a claim in the area of computer programs avoid exclusion under Art. 52(2)(c) and (3) merely by explicitly mentioning the use of a computer or a computer-readable storage medium? (b) If Question 2(a) is answered in the negative, is a further technical effect necessary to avoid exclusion, said effect going beyond those effects inherent in the use of a computer or data storage medium to respectively execute or store a computer program?"

Answer: There is no divergence in the case law, so the question is inadmissible. The EB finds that the existing case law correctly distinguishes a computer program's instructions from the method the program performs. They point out that there is a difference between what something is versus what it is called, even though both use the same words. Here's a funny example: "Tigers eat meat. Meat is a word. Therefore tigers eat words." The problem with this statement is that "meat" is being used as what something is in the first instance and what something is called in the second instance. They apply this to computers as follows: "In the present case there is a logical distinction between a method carried out by a computer and the sequential list of instructions which specify that method."

Q3. "(a) Must a claimed feature cause a technical effect on a physical entity in the real world in order to contribute to the technical character of the claim? (b) If Question 3(a) is answered in the positive, is it sufficient that the physical entity be an unspecified computer? (c) If Question 3(a) is answered in the negative, can features contribute to the technical character of the claim if the only effects to which they contribute are independent of any particular hardware that may be used?"

Answer: There is no divergence in the case law, so the question is inadmissible. A technical effect is required, and previous cases do not care whether the "technical effects were on a physical entity in the real world" or not.

Q4. "(a) Does the activity of programming a computer necessarily involve technical considerations? (b) If Question 4(a) is answered in the positive, do all features resulting from programming thus contribute to the technical character of a claim? (c) If Question 4(a) is answered in the negative, can features resulting from programming contribute to the technical character of a claim only when they contribute to a further technical effect when the program is executed?"

Answer: There is no divergence in the case law, so the question is inadmissible. The EB summarizes the prior case law as follows: "all computer programs have technical effects, since for example when different programs are executed they cause different electrical currents to circulate in the computer they run on. However such technical effects are not sufficient to confer 'technical character' on the programs; they must cause further technical effects."

What I Learned About Billable Hours From a Taxi Ride

2009-04-23T09:59:26Z

My wife and I attended a Mariners game tonight (Seattle's local baseball team) and ended up taking a cab home. On the way back, it occurred to me how great of a metaphor a cab is for exactly what I dislike about legal services that are billed by the hour.

When you get in a cab the meter starts and you usually pay by the mile. When you are in a city that you are not familiar with, it is often the case that the route on which you are driven is not necessarily the shortest route. Even when it is the shortest route, you often do not have enough familiarity with the area to verify that. Whether the driver takes advantage of it or not, there is a financial incentive to drive you farther than you need to go and cost you more time and money. All I could do was watch and be amazed at how fast that electronic meter racked up the dollars.

That's a lot like modern legal service that charges by the billable hour. Most clients are seeing an attorney because they are not familiar enough with the work that needs to be done to do it without the attorney. The attorney has the upper hand on information, and the client must often trust the attorney to take the client down the shortest, most cost-effective path. While we must hope that all attorneys have the highest ethical standards and put the client's interests before their own, why create an incentive in the first place that misaligns the attorney's interests and the client's interests?

The solution is simple, flat fees. Boswell IP has charged flat fees since day one. If you work with us, you will get a fixed quote at our first meeting that will tell you exactly how much you pay for the work. Imagine how the cab driver's incentives would change if he knew he was getting a flat $20 fee to drive you from the airport to your hotel. He would take the quickest route, because he would want to get the $20 and get back to the airport to pick up more passengers. The same is true of flat fees. Rather than an incentive to waste time and increase cost, the attorney has an incentive to get the work done and the client knows exactly how much he/she will pay.

The moral of the story is, don't trust your legal work to an attorney that charges like a cab driver.

Patents Often Lead to Rejection

2009-04-04T00:16:51Z

Patently-O has some great analysis of the initial rejection rates of patent applications that ultimately issued as a patent (click for link). This is great analysis and puts some real data behind what most of us have experienced in the field many times over. No matter how great an application is, it is very likely going to be initially rejected.

For the Patent Office's technology centers that correspond to many of the fields that I work in (e.g., 3620 - E-Commerce, 2160 - GUI and Database, 2150 - Networks) the rejection rates are greater than 80%. Note that these numbers are for patent applications that ultimately issued as patents, meaning that these numbers do not include those applications that were abandoned at some point in the process.

For patent filers, this highlights three key points. First, your application needs to be well written by an attorney that is an expert in your field. There are numerous things that a competent patent attorney knows to include in the application to provide support for multiple directions that the application may take in the Patent Office. The application should support not only the key concepts of the invention, but other subtle nuances that may take center stage as potential narrowing amendments based on prior art raised by the examiner.

Second, you should expect that no matter how well your application is written, it is very likely going to be initially rejected. Though I mention this to every new client in our first conversation, it always hits like a ton of bricks when they receive that first rejection from the Patent Office. In most cases an initial rejection is not the end of the line and the application will mature into a patent with a proper response to the examiner's concerns and some patience.

Third, after filing you should work with an attorney that is experienced at working with the Patent Office and plan for the cost of this stage of your application. The application process is not done when the application is filed, rather it is just getting started. Efforts after the application is filed are typically equal in scope and cost to the filing of the application. A skilled patent attorney knows how to work with the patent examiner to get to the root of the examiner's rejections and to get the application in condition for allowance as quickly and cost-effectivevly as possible. Unfortunately I have seen too many firms use this as an opportunity to run up costs by providing incomplete responses to Office Action after Office Action, further delaying the application's issuance. I have found that a proactive approach up front works well, and I often fly to the Patent Office (the U.S. only has one in Alexandria, Virginia) to meet with the examiner in person as early as possible for each application.

Despite the high rejection rates, with the right approach an initial rejection can be a sign of progress rather than the end of the line for your patent application.

Layoffs Leading to Increased Innovation

2009-03-30T07:16:29Z

John Cook of TechFlash asked the question over the weekend, "could laid off Microsoft workers spark a new innovation wave?". I can confirm that exactly that is happening.

As many who are close to me know, I try to balance my patent work 50% among established corporations and 50% among startups. While I am seeing established corporations cut budgets and pull back 10-20% on patent work in the current economy, I am also seeing a flood of growth in the number of laid off workers starting new ventures and seeking patent protection. Whether from Microsoft or other local companies, many who have for years been seduced by a steady corporate paycheck are finding that the current crisis is providing an opportunity to pursue a long-held dream of starting a technology company.

Not every new venture will succeed, but this period will undoubtedly lead to some very interesting and useful innovation that will spur the next wave of economic growth. Now if we can just get the government to stay out of businesses enough to let them succeed (but that's deserving of its own post).

Washington's Own Gary Locke to Select Next Patent Director

2009-03-21T17:18:27Z

The Senate Committee on Commerce, Science, and Transportation has approved the nomination of Gary Locke as Secretary of Commerce in the Obama Administration. Locke now goes to the full Senate for confirmation. Among other duties of the Secretary of Commerce is selecting the leadership of the U.S. Patent and Trademark Office.

Many are hoping for a return to the tradition of the leader of the Patent Office being a former patent attorney, and that the next leader will work to streamline the current 2+ year process involved with getting a patent.

Gary Locke was Washington's governor from 1997-2005, and is currently a partner at the Seatle office of Davis Wright Tremaine LLP. He holds a Bachelor of Arts degree from Yale (1972) and a law degree from Boston University (1975). Locke was the first Chinese-American governor in U.S. history; during his time as governor he led eight trade missions to China and opened a Washington state trade office in Guangzhou. It will be interesting to see if he works to improve U.S.-China relations on patent policy.

Patent Office Largely Wins on Continuation Rules

2009-03-21T01:03:44Z

The two-year old appeal of the United States Patent and Trademark Office's (USPTO) new rules regarding continuation applications, requests for continued examination (RCEs), and applications with a high number of claims (greater than 5 independent, 25 total claims) has finally been decided today.

Many patent attorneys have argued that the rules went beyond simple procedural instructions and into substantive lawmaking by dictating what could and could not be patented. The rules consist of three major areas. The first area regards the availability of continuations (Rule 78). Rule 78 prevents the filing of more than two continuations or continuations-in-part against a parent application without the filing of a petition to show why the substance of the continuation could not have been covered in the prior application.

The second area regards the availability of RCEs in an application. Typically, a patent application receives a first non-final Office action then a second final Office action. To keep the application alive and provide further argument to a final Office action, an applicant has to file an RCE. This two-Office-action-followed-by-RCE cycle can repeat several times before the USPTO either 1) is convinced by the attorney's arguments and allows the application, or 2) the applicant abandons the application (there is also the additional option of an appeal to the Board of Patent Appeals and Interferences (BPAI)). Rule 114 allows an applicant only one RCE without a similar petition to that described above for continuations.

The third area regards applications with high numbers of claims. Rules 75 and 265 require applicants that exceed a 25 claims to file an Examination Support Document (ESD) and conduct his/her own search of the prior art. Essentially, the applicant takes part of the burden off the USPTO examiner by searching and making arguments relative to each reference found as to why the application is patentable in light of the reference. This has been criticized as taking away the essential function of the examiner in examining applications as well as forcing the applicant to go on record with arguments that could later be damaging to the application.

The Federal Circuit Court of Appeals in its decision today made several holdings. First, the Court confirmed that the USPTO has no substantive rulemaking authority, but rather can only make procedural rules. Second, the Court finds the rules in this case to be procedural. Third, the Court finds that, "Rule 78 is invalid because it attempts to add an additional requirement — that the application not contain amendments, arguments, or evidence that could have been submitted earlier — that is foreclosed by the statute."

So what will really happen if these rules now go into effect? My opinion is that like so many recent decisions that fail to consider the additional burdens on inventors, the cost of getting a patent will just increase. To comply with Rules 75 and 265, most attorneys will urge their clients not to exceed 25 claims, and when they do exceed 25 claims will have to charge an additional premium for the additional searching and analysis involved (probably on the order of $5,000 to $10,000, potentially doubling the cost of filing the application). This only puts patents further out of the reach of small inventors, some of this country's main innovators. The costs related to applications will also go up because of Rule 114 for two reasons. First, patent attorneys will be reluctant to leave out any argument during prosecution of an application for fear that he/she will run into the limit against RCEs and will not be able to show that the argument could not have been raised earlier. Thus, Office action responses will become longer, cost will go up, and the USPTO will face even more paper to consider. Second, malpractice claims against attorneys will increase for failure to make arguments early enough, causing insurance premiums to go up (a cost that is ultimately paid by the attorney's clients through higher fees).

What is clear is that the USPTO's purpose behind these rules of reducing the current backlog almost certainly will not occur, since these rules primarily increase the burden on the Office to consume all of the new paper. The Obama Administration has yet to name a new USPTO Director, but we can only hope that new leadership will be able to find some more constructive suggestions for keeping our patent system strong and clearing the backlog.

The full opinion can be found here: CAFC Patent Rules Decision.

Companies Founded in Downturns More Likely to Succeed

2009-02-11T10:02:41Z

Did you know that founding a company in a recessionary period puts you in good company? Genentech, Microsoft, Southwest Airlines, and Genzyme were all founded in downturns and many well-known names were founded during the Great Depression, including Morgan Stanley, Allstate, Krispy Kreme, and Knoll. The following study from the Kauffman Foundation is interesting and includes some preliminary analysis on starting a company in a downturn: Kauffman Research Paper.

In a related study the Kauffman Foundation named Washington one of the top five states for innovation. Hitting closer to my own field, they found that Washington holds the second most patents per capita (up from a rank of 10 in 2002) only behind Idaho (where Micron and other top filers are located). You can read the full report here (p.47 has patent info): Kauffman Study.

History of Video Game Patents

2008-12-30T12:26:28Z

There was a great post yesterday with a gallery of patent images from video game patents all the way back to the 60's. Here's the article: Technologizer Slide Show.