1st edition Patent Savvy for Managers by Attorney Kirk Teska FIRST EDITION OCTOBER 2007 Editor RICHARD STIM Cover design SUSAN WIGHT Book design TERRI HEARSH Proofreading JOE SADUSKY Index BAYSIDE INDEXING SERVICE Printing DELTA PRINTING SOLUTIONS, INC. Teska, Kirk, 1962- Patent savvy for managers : spot & protect valuable innovations in your company / by Kirk Teska. 1st ed. p. cm. ISBN-13: 978-1-4133-0694-1 (pbk.) ISBN-10: 1-4133-0694-2 (pbk.) 1. Patent laws and legislation United States Popular works. 2. Patents United States Popular works. I. Title. KF3114.6.T47 2007 346.7304'86 dc22 2007013012 Copyright © 2007 by Nolo. ALL RIGHTS RESERVED. PRINTED IN THE U.S.A. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission of the publisher and the author. Reproduction prohibitions do not apply to the forms contained in this product when reproduced for personal use. For information on bulk purchases or corporate premium sales, please contact the Special Sales Department. For academic sales or textbook adoptions, ask for Academic Sales. Call 800-955-4775 or write to Nolo, 950 Parker Street, Berkeley, CA 94710. Dedication To Lora, my wife. Acknowledgments This work would not have been possible without the input of many people who have shaped the way I think, write, and talk about patents. Here, unfortunately I can acknowledge only a small subset of that group—those who directly provided input to my original manuscript and the many versions of this work between then and publication. First, my wife Lora, who many times reviewed, edited, and constructively criticized my original manuscript, my editor’s revisions thereto, and my revisions to his edits. Although Lora is a boring patent attorney like me, she gets the intersection of patents, technology, and business. Second, my editor, Rich Stim. Rich patiently educated me about the publishing process (I thought the editor just proofread the manuscript) and he alone transformed my manuscript into a tighter, more readable, and better organized commercial product. A fair amount of the resulting book is entirely Rich’s and/or originated from a previous book of his. Rich, at just the right times, provided both encouragement and criticism. My partner of 16 years, Joe Iandiorio, himself a prolific writer, was one of the key people who shaped the way I think, write, and talk about patents. At times, I would like to think I’ve surpassed him, but I know in my heart of hearts that’s impossible. Some of the key ideas in this book originated with Joe. Thanks too to my secretary of many years, Olga Kadish. I still initially write everything longhand. Olga deciphered my cryptic scribblings and worked on numerous edits to each chapter of this book. Like me, Olga spent the better part of the last two years on this book. Finally, thanks to everyone at Nolo. They alone saw the need for a book at the intersection of patents, technology, and business. Table of Contents Your Legal Companion 1 1 No Guarantees … and Other Patent Principles 5 Patent Principles 7 Patent Myths 10 Comparing Lifecycles: Patent and Product 11 A Word on Patent Management 16 2 Does Four Include ree? Case Studies You Can Understand 19 Gillette v. Schick: Does Four Include ree? 21 John Deere v. Toro: Control Means What? 31 Amazon.com v. Barnes & Noble: You Can’t Have It Both Ways 37 e Case of the Unintelligible Dog Chew Patent 43 3 Anything Under the Sun (Made by Man): What’s Patentable? 49 What’s Patentable? 50 Key Standards: New and Unobvious 52 Reinventing the Wheel: Improvements and New Uses 64 Should You Patent It? 67 4 e Claim Game: How to Read a Patent 83 Anatomy of a Patent 85 e Claim Game 105 What a Patent Doesn’t Tell You 125 5 What to Do When Your Candy Bar Melts: Capturing Patents 129 Patent Policies and Ownership 132 Trade Secret Considerations 136 Documentation 139 Patent Committees 148 6 e Long and Winding Road to “Patent Pending” 153 Playing the Claim Game: Part Two 155 To Search or Not to Search? 158 ings to Keep in Mind About Patent Searching 160 e Patentability Study 165 e Patent Application 167 e Provisional Patent Application 177 7 e Good Shepherd: Patent Prosecution and Management 181 Hurry Up and Wait 182 Dealing With Rejection 184 How Much Should You Say During Prosecution? 185 How Costs Mount Up During Prosecution 187 Post-Prosecution Activity 190 Management and Tracking 192 8 e Worldwide Patent Party 197 e One-Year Rule: How It Affects Foreign Patent Filing 198 How Do You File Outside the U.S.? 199 Where and When Should You File? 201 Foreign Patent Budgeting: e Robot 206 e Running Tab: What a Typical U.S. and Foreign Filing Might Cost 211 9 Live and Let Die: e Exhausting Effects of Patent Litigation 213 e Battle Over the BlackBerry 216 e Claim Game: Part ree 218 e BlackBerry: From Application to Trial 220 e BlackBerry: Judgment and Reexamination 222 Post-Trial: e Never-ending Story 223 What Did NTP Do Right? 230 What Did RIM Do Wrong? 231 Common Lessons for All Litigation 231 What to Expect in Patent Litigation 232 10 Caveat Emptor: Buying and Licensing Patents 235 Determining Patent Value 237 Do You Really Need the Patent? 239 Assignment or License? 244 Licensing a Patent 247 Buying a Patent 256 G Patent Glossary 259 I Index 271 Your Legal Companion P atents are boring. I can understand how you might think that. The first patent law course I took in law school was the most boring course I had … and I was studying to be a patent attorney. Adding to that misconception is the fact that many patent attorneys are also boring. We’re hybrids, part attorney, part engineer, and we usually get little respect from either camp (and often pick up the worst traits of both). Perhaps you’ve sat slack-jawed in a meeting with a patent attorney. Then you know what I’m talking about. But the truth is that patents are not boring at all. Actually, they’re fascinating. Patents are at the intersection of two topics the general public finds interesting: the law and technology. My wife and I are patent attorneys, and we find patents exciting. So do many professionals in medicine, science, investments, research, production, sales and marketing, design, testing, fabrication, business, engineering, and manufacturing. Just about everyone in the business world shares the excitement of patents—once they understand patents and how they can both benefit and adversely affect a company. It would be a rare case if anyone who’s spent considerable time in a business had not yet come across a patent issue. These issues reach into even the most mundane and low-tech businesses. For example, I was at a court hearing some time ago involving a patent dispute over a plastic holder that comes with a floral bouquet sold by a florist. Unfortunately, you can’t make informed business decisions about patents unless you can understand the language. It’s what I call an “information asymmetry” that exists between patent attorneys and people in the business world, and it’s the biggest problem in dealing with patents. How can you learn the strange nomenclature—for example, terms such as “provisional patent application,” “means plus function,” and “file wrapper”? For most businesses, being patent literate is not a luxury, it’s a necessity. Patents are everywhere, and business owners and managers ignore patents at their peril. If you are charged with a patent violation, you can be sure the people on the other side of the fence will be patent literate. The fact is that anybody can understand patents. Over the last 15 years, I’ve educated scientists, engineers, business managers, corporate attorneys, venture capitalists, and others about the business realities of patents. And that’s one of the reasons I wrote this book—I had trouble finding a cogent quick-read reference exploring patents and the patent system that would suit businesspeople, engineers, and project managers—the very audience who needs to understand patents the most. My goal in writing this book is to help businesspeople—whether engineers, managers, scientists, or CEOs—spot patentable innovations, protect them through the patent review process, and preserve them through tracking and vigilance. Although I explain how the law works, this is not a legal tome, nor is it intended as a do-it-yourself kit for independent inventors. Here are some things I’m not trying to do here: I’m not trying to make you a patent expert or a patent professional; I’m not trying to show you how to prepare, file, or prosecute a patent application; and I’m not trying to show you how to draft and review a patent license, patent assignment, or other legal documents. I advise that most of this legal heavy-lifting be done by a patent attorney, a patent agent, or your company’s general counsel. With that mind, this book will: •explainpatentprinciples,reviewpatentlifecycles,andexpose patent myths •providenumerous(easytounderstand)casestudies •describewhat’spatentable •showyouhowtoreadapatent •explainproceduresforcapturingpatentableideas •walkyouthroughthestepsfrompatentreviewtolingapatent application •helpyouanalyzewhetherforeignpatentprotectionisworththe expense 2 | PATENT SAVVY FOR MANAGERS •reviewthebasicsofpatentlitigationandanalyzeapatent lawsuit •explaintheprinciplesofbuying,selling,andlicensingpatents •showyoumethodstomanageandtrackpatents. If I provide you with a basic understanding of patents, how to manage the associated risks associated with patents, and how to contain patent costs, then I will have succeeded. You will be patent savvy. Great! Let’s embark on a short patent course that hopefully will make your job easier, your employer more secure, and your business more prosperous. l YOUR LEGAL COMPANION | 3 No Guarantees … and Other Patent Principles CHAPTER 1 Patent Principles 7 Patent Myths 10 Comparing Lifecycles: Patent and Product 11 A Word on Patent Management 16 [...]... innovations • All things patent are costly Through this book, I have included a running total for your patent costs from the time an innovation is identified, through the patent review and the filing of a patent, then through patent prosecution and foreign filing and 10 | Patent Savvy for Managers post-issuance activities As you can imagine, acquiring a U.S patent is expensive (foreign patents are even more... book, Patent Office examiners considered patent applications for a system for estimating the cost of fishing gear, a method for managing property cleaning services, and a system for prepurchasing air flight miles So, let’s start our journey by exploring some patent principles and myths Patent Principles Here are ten patent principles that I’ll explore in this book: • Patents offer no guarantees Patents,... its patent status Keep in mind that you cannot stop infringers of your patent until after the patent issues Product release also starts the clock running regarding what can be patented • Sales and Marketing In the case of patented products, this period usually begins in the period following patent filing (or 16 | Patent Savvy for Managers in some cases, after issuance) and continues until the patent. .. a patent will cost • The marketing department has no business in the management of patents • A patent application need be understood only by those skilled in the art Chapter 1 | No Guarantees | 11 • Patents are primarily for revolutionary ideas • Your patent will sail through the Patent Office • Having a patent will stop poachers • The company with the most patents wins • If you can’t get a patent, ... • You have to wait until you get the patent before you can sell a product • A patent is good for forever • Most infringers will stop copying when notified by an attorney • You can extend the term of a patent • You can file provisional patent applications in foreign countries • A provisional patent application allows you to stop a competitor from making the product • Patents are boring Hopefully, I’ll... Whether to Seek a Patent Patent Application Drafting Patent Application Filing 2008 Patent Prosecution 2009 Patent Issuance 2010 2011 2012 Sales and Marketing of Product 2013 Note: There is no fixed system for comparing product and patent development Sometimes, some steps in the patent lifecycle— invention capture, the decision to seek a patent, drafting, and filing—occur days before product release... general rule, patent filing should occur prior to manufacture and sale Payment of Maintenance Fee 2014 2015 2016 2017 Payment of Maintenance Fee Comparison of Product and Patent Development 14 | Patent Savvy for Managers managers will review the application prior to filing to ensure a patent with a planned and definite purpose is being pursued • Patent Application Filing Once it’s drafted, the patent application... at the Patent Office, kicking off the patent pending” period • Patent Prosecution This is the process by which your patent attorney shepherds the application through the Patent Office, overcoming or resolving any examiner objections If necessary, your company may be involved in resolving objections from the patent examiner • Patent Issuance Victory The Patent Office has granted your patent • Patent. .. worldwide patent • There is a patent application form you can fill out • Patents can be reliably searched on the Internet • You can still get a patent so long as a prior patent doesn’t disclose your idea in the patent claims • You can’t patent software, financial tools, or business methods • A competitor cannot copy your product because you have patents pending • The most important thing is to file the patent. .. render the Gillette patent unenforceable • Had the Patent Office known the details regarding Gillette’s own prior Sensor razor, the Patent Office would never have issued Gillette’s patent for the Mach3 In other words, Gillette’s patent was invalid • Gillette’s patent clearly pertained only to razors with three blades, and therefore the Quattro four-bladed razor did not violate the Gillette patent In other . come rolling in if only they had a patent. Patent- savvy people, though, know a patent is just a document. Innovative products and 8 | PATENT SAVVY FOR MANAGERS services make you money. If. •providenumerous(easytounderstand)casestudies •describewhat’spatentable •showyouhowtoreada patent •explainprocedures for capturingpatentableideas •walkyouthroughthestepsfrom patent reviewtolinga patent application •helpyouanalyzewhetherforeign patent protectionisworththe expense 2 | PATENT SAVVY FOR MANAGERS •reviewthebasicsof patent litigationandanalyzea patent lawsuit •explaintheprinciplesofbuying,selling,andlicensingpatents •showyoumethodstomanageandtrackpatents. If. SAVVY FOR MANAGERS •Patentsareprimarily for revolutionaryideas. •Your patent willsailthroughthe Patent Ofce. •Havinga patent willstoppoachers. •Thecompanywiththemostpatentswins. •Ifyoucan’tgeta patent, youcanalwaysusetradesecret(or copyright