OUR PAL LLC

Optimum International Intellectual Property Strategy for

 Maximizing Protection and Minimizing Litigation Risks

In Non-Profit Academic High Tech Environment

S. Pal Asija CEO OUR PAL LLC

ABSTRACT:

This paper presents a comprehensive approach to creation, protection and cashing (exploiting) of all types of intellectual property.  It defines and delineates various aspects of intellectual property, the relationship between patents, trademarks, trade secrets and copyrights, ten requirements for patentability as well as non-requirements for patentability. It presents three strategies of international intellectual property protection including patents, trademarks, copyrights and trade secrets and their relationship to each other as applied to cutting edge technologies in Info-Tech, Bio-Tech, Nano-Tech and Energy-Tech.

The uniqueness in the academic environment originates not from IP Laws but primarily from non-profit nature of the university, its unique charter, its reputation, extant of endowments,  and that of its sponsors, R & D and licensing contract laws of the venue state, competing goals and objectives of the various communities the university operates in or interfaces with  including professors with ‘Publish or Perish’ pressures, role of post doc students, communities in which the university has influence and even international treaties. For this reason the legislature enacted lower fees schedule for universities. Licensing strategy is not easy in any environment even in the best of circumstances. It is less impacted by the non-profit nature of the university but more by the creativity such as barter and cross-licensing to obviate cash intensive transactions, which has greater resistance to change. Sometimes a good story in New York Times is revered and valued more than grant of letters PATENT.

 

The three strategies for international protection are designed for maximum a) Economy, b) Efficiency and c) Effectiveness, respectively notwithstanding it is not possible to achieve all three objectively concurrently.  The paper also discusses how to avoid the expensive risks of deep litigation pit by reliance on negotiations, mediation, arbitration and related alternative dispute prevention and resolution techniques.  The concomitant presentation is peppered with original continent, humor, proprietary audio-visual aids and audience participation techniques. An example is presentation of color and motion using ordinary overhead projector and B & W slides by using the creativity inherent in a prism for breaking white light into rainbow colors and motion derived from polarization. The cumulative effect of all these aides is more enlightening, entertaining memorable presentation in a shorter period than using conventional approaches.

 

INTRODUCTION: Intellectual property law is the contemporary name collectively for patents, trademarks, copyrights, unfair competition, trade secrets and related law. This white paper delineates major differences between patents, trademarks, trade secrets, copyrights and international patent strategies of economy, efficiency and effectiveness of which you can only achieve two at a time.

DEFINITION: The origin of the definition of the intellectual property can be traced back to the definition of the property itself. The common law divided property into two types. But a few decades ago the modern law added another type. So the Law now divides all property into three types.

A.    Real Property - Land and any structures fixed to it.

B.     Personal Property - Anything that you can touch, see and move. Regardless of whether it is manmade or God made (Existing in Nature). Examples include computer, dog, rose, automobile, etc., and at common law even women and children were considered personal property.

C.    Intellectual Property - Any intangible creation of the mind and brain that you cannot touch and see (except the medium on which it resides) but has value and can be perceived directly or vicariously through machines. Examples include art, ideas, inventions, innovations, thoughts, music, software, paintings and more.

STRATEGY:

                Ideas cannot be protected per se, but their expression and embodiments can be protected openly by copyrights & patents respectively by disclosure and teaching the best mode. President John F. Kennedy in a speech in 1961 said, I believe this nation should commit itself to landing and man on the moon and bringing him back safely to earth before this decade is out” Since it was merely an idea, end result, goal or objective it could not be patented but NASA by reducing the idea to embodiment(s) obtained several patents in the process. Alternatively various aspects of ideas may be protected by opposite secrecy based strategy through confidential agreements under contract law or through technical protection under tort law.

            The two sets (Patents and Copyrights on the one hand and contractual & technical protection on the other) are substantially mutually exclusive although some lawyers try to protect some aspect of the same intellectual property under the openness strategy and some other aspects under the secrecy strategy. In other words they help their clients have their cake and eat it too.

PATENT STRATEGY: since intellectual property protection schema and strategies affect litigation strategy, the best opportunity for complete, total, systematic and optimum litigation strategy commences with crafting and drafting the patent application or other intellectual property protection modality. Sound litigation strategy is rooted in sound understanding of the policies and principles behind the laws of protection.

PATENTS: Things (including machines, manufacturable articles, processes, composition of matter and improvements thereon) that you invent and buy because of what they “DO” for you are subject to patent protection. Designs patents for utilitarian expression for 14 years and utility patents for up to 20 years from filing date (effective June 8, 1995), if maintenance fees are timely paid. Utilitarian aspects of mathematical algorithms embedded in computer programs may be protected as patentable processes, if otherwise new, useful and non-obvious to one of average skill in the art when the invention was made.

            Contrary to common belief a patent is not an exclusive right to practice your invention but a right to exclude others from making, selling and using your invention in the countries in which you have a patent. Also in order to bring U S inventors at par with foreign applicants, the legislature also created a provisional application, which can extend the life of the patent to almost 21 years from the date of the provisional filing date provided a non-provisional application which often operates as a CIP is filed within a year.

            There are 10 requirements for a patent. 1. Statutory subject matter, 2. Invention not abandoned. 3. New, 4. Useful, 5. Non-obvious, 6. Teach the Best mode, 7. Accurate inventor-ship, 8. Constructive reduction to practice, 9. Duty of candor and 10. Diligence from conception to actual or constructive reduction to practice. 

            This list is important because not only it gives the requirements but also because anything that is not on the list is not a requirement for obtaining a patent, which is mostly territorial. Patents are earned by constructive reduction to practice and infringed by actual reduction to practice even if done independently.

 

INTERNATIONAL PATENT STRATEGY:  Basically there are 3 approaches. Unfortunately you can pursue only one strategy at a time and only one strategy makes sense in a particular set of circumstances.

A)     Maximum Economy – File single PCT (Patent Cooperation Treaty) application Only. Postpone costs to 30 months and national phase prosecution (and associated costs of translation etc.) by several years by paying maintenance fees in Japan, Germany, Canada

B)     Maximum Efficiency. File individual patent applications in selected countries directly without PCT.

C)     Maximum Effectiveness. File concurrently PCT & Regions & National applications.  You can get up to 3 bytes at each apple as you can designate the same countries 3 times as PCT, Region and National.  Prosecute favorable and discard less favorable actions.

 

PATENT SEARCHES: There are three types of patent searches the diligence and hence the cost for each is very different.  The most affordable is the prior art patentability and novelty search. The second “Infringement” search, the cost of which is at least one order of order of magnitude greater. Likewise the patent “Validity” searches are at least two orders of magnitude more costly.

            A) Prior art patentability and Novelty search which is generally done before finalizing the invention or the patent specification also know as constructive reduction to practice. All patents, publications and markets all over the world are searched for this purpose.  The fact that the patent is foreign or has expired is irrelevant to this search. This is the most affordable type of search. It has 3 purposes:

            (i) To make a GO NO-GO decision on filing a patent application
            (ii) To improve the invention by piggy backing on the ideas of other similar inventions
            (iii) To increase the chances of getting a PATENT and to reduce the patent prosecution costs by hitting the scope of the claims right on the head of the nail so to speak.
            Even a prior art patentability search should not be limited to U.S. Patent collection but should cover in theory all publications or public disclosure of all countries in all languages regardless of how old and even common law folklore knowledge handed down by word of mouth from centuries and millennia.

            B) Infringement   Searches, which are   generally   done   before commercialization or investment of huge sums of money in tooling and advertising etc. Only unexpired patents in the applicable venue are relevant to this search. Often it is necessary to draw claims chart of each patent found, which is very "Intellectual - Labor Intensive” task.

            One of the advantages of such a search to the client is that it obviates charges of intentional infringement and hence avoidance of treble damages.  This is true even if the inventor-entrepreneurs is strictly making, using and selling the invention strictly according to one's own PATENT. 

            The rationale behind this is that your patent may be an improvement over somebody else's unexpired patent. The good thing is that in order to practice your own patent you are liable only to the first patent owner but a third party must pay royalties to you and the first patent owner unless the third chooses not to incorporate your improvement. That is why the PATENT right is not an affirmative right to make, sell and use your invention but a negative right to exclude others from making selling and using your invention in the applicable venues.

            It should also be noted that papers and patents do not infringe only products infringe. The term infringement should also not be confused with Interference in the United States Patent office which is litigation procedure in the patent office to determine first true sole inventor based on first to conceive and reduce to actual or constructive reduction to practice with due "Diligence" which very subjective and fact dependent. This interference proceeding is unique to USA and does not apply to other countries, as USA is now the only country, which is based on first to invent concept rather than first to file.  The cost of such a search is generally a many tens of thousands of dollars but is only small percentage of marketing and manufacturing costs, especially when the PATENT right includes right for INJUNCTION which makes most of patentee's investment worthless because all hardware becomes scrap metal and all marketing and advertising expense instead of becoming "goodwill" turns into "bad will."

            C) Patent Validity searches which are typically performed or commissioned immediately before initiating a law suit, or after one is served with a law suit for patent infringement. This search is akin to finding the proverbial needle in the haystack. Its cost is often many hundreds of thousand of dollars but a very small price and according to some even a “BARGAIN" compared to what's at stake. Often times it involves translation of apparently close foreign documents and patents into English for the first time.

 

TRADE SECRETS:  Trade secrets are earned by secrecy and contract and infringed by theft or breach of contract. Trade secret laws vary from state to state. Trade secrets need not be absolute secrets.  Trade secrets are enforceable only against the signatory parties. Trade secrets may be strengthened by technical protection, which is created by technology and infringed by theft or tort.

 

TECHNICAL PROTECTION: Technical protection is created and earned by technology and infringed by theft under tort law theories. Examples of technical protection include, electronic or software locks, encryption, passwords, obfuscation and many more are being invented almost daily.

 

TRADEMARKS: Trademarks are for short slogans, expressions, phrases, names, images and devices to identify source and are virtually perpetual if used and renewed (every ten years) properly. Federal Trademark Applications can now be filed under “Intent to Use” statute in addition to the old Interstate Commerce Use for 12 months statute. Service marks are merely a subset of trademarks. Corporate names and logos may also be registered as trademarks.

            Generic words cannot be registered for their dictionary meaning but may be registered for unrelated products for example Apple may not registered as trademark for apples but may be registered for computers. Marks that do not qualify for registration in the principal register may qualify for registration in the supplemental register. Trademarks rights are earned by use but there are good and valuable reasons for registration. The word “trademark” is a noun and should not be used as verb as for example it is wrong to say, “I trademarked my logo”.

            A trademark should be used as an adjective. Trademark rights are earned by use and infringed by counterfeiting or otherwise causing the likelihood of confusion with respect to source. In addition to the Federal Trademark registration, states maintain their own trademark registers as well as corporate name registers. Therefore a search clearing a mark should include federal, state trademark registers, state corporate name registers, common law publications, computer databases and Internet domain names as well foreign regional and national trademark registers.  However a federal trademark owner can easily bump an authorized prior even bona-fide domain name user. 

 

COPYRIGHTS: Like patents and trademarks, copyrights are part of the intellectual property as contrasted form real and personal property, but unlike patents and trademarks which are under the executive branch of the Government Copyrights are under the legislative (Library of Congress) branch of the Government.  Unlike patent law independent creation is a complete defense to copyright infringement. Non-utilitarian expression of arts, writings, music, paintings and things such as figurines that you buy not for what they “DO” but how they “affect you or make you feel” are subject to copyright protection. Utilitarian exception does not apply to writings. Source code of computer programs is regarded as writings. U S is now part of the Berne convention. Copyrights are earned by creation and fixation into tangible medium but copyright notice (The word Copyright, Name of the author and year of Creation) and registration are recommended for other good and valuable reasons.  The grant is from the people to the author. The new copyright act of 1978 drastically revised the old copyright act of 1909.  In 1989 USA joined the Berne convention in addition to the UCC – Universal Copyright Convention, administered by UNESCO (United Nations Educational Scientific Cultural Organization).          The new law all but eliminated the common law copyright vested in States. Now the copyright is earned automatically upon creation and fixation. The maximum term was extended from 56 (28+28) year to the (Life of Author + 70 years) or for works made for hire by employees and contractors 95 years from publication or 120 years from creation whichever is shorter.

Copyright notice and registration though not mandatory are highly recommended for a variety of reasons.  The copyright notice consists of “© Name of the Author Four digit Year of Creation”.   In case of sound recordings © is replaced by P in a circle (P). Both notices can be combined on an audio cassette such as © (P) Pal Asija 2009. For optimum protection in African countries it is also recommended that the phrase "All Rights Reserved" be added.

The copyright is not a single right but a bundle of rights including reproduction, distribution, display, preparation of derivative works and public performance etc. This bundle varies from country to country.  That is why there is no such thing as an international copyright. Other countries have a different mix of the bundle of rights.

Most countries according to the international or bilateral treaties grant most favored nation´ status to foreign authors that is they treat foreign authors and copyright holders at least as well as their own nationals. 

A copyright merely protects the expression and not the idea expressed.  It is sometimes known as the Idea-Expression Dichotomy. It is akin to the Idea-Embodiment-Expression trichotomy of the patent law.  Thus no copyright or any other legal method extends to protection of ideas per se. Utilitarian expression e.g. appearance, shape, color combination and design of utilitarian 3D (three dimensional) objects is protected by Design patents.

Any non-utilitarian expression is copyrightable subject matter except short phrases and very simple forms with a few lines and no writing or design on them.  However this utilitarian bar does not apply to writings and therefore computer programs (at least the source code) are copyrightable subject matter. The utilitarian defense (for example use of figurine as hammer) is however not available to an infringer.  Short phrases, names devices and even slogan are subject to protection under state and federal trademark laws if used as source indicators.

A modicum of 'de Minimus' originality is also required.  Original in this context means, "owes its origin to” the author. According to the U S Supreme Court Feist (Feist Publications Inc v/s Rural Telephone Services Co Inc 499 U.S. 340)  1991 decision this originality is satisfied in the layout of the yellow pages of the phone book but not the white pages.  Thus USA does not recognize "Sweat of Brow" doctrine advocated by creators of databases.  Many foreign countries however do. They also have moral rights for authors which empower them to stop others form modifying their work at least for "WORSE" which is very subjective and solely at the discretion of the author.

Copyrights are earned by creation and infringed by copying. Hence unlike patent infringement. Some fringe organizations such as the LPF (League for Programming Freedom) openly advocate elimination of copyrights for computer programs. They believe in copy right and left to suit their pocketbooks, not that they are too happy about software patents either. Do not confuse the copyright registration number with the Library of Congress Catalog Card number and ISSN – International Standard Serial Numbering system, all three controlled by the copyright office with the private ISBN –International Standard Book Numbering System administered by R.R. Bowker c/o Martindale-Hubbell in New Jersey.

 

THE INTERNET FACTOR: The Internet has introduced another dimension of complexity to an already confusing and complex and often conflicting international intellectual property laws.  There are basically two models of information on the Internet. First is the advertising model, where the website owners and creators hope that you would not only visit their site but tell others about it, copy it and distribute it freely to the maximum extent, but unfortunately no body copies.  The second is the proprietary model where infringes very skillfully copy the ideas without copying the protect-able expression.  Fortunately for you, the register of copyrights lets you determine publication status of your website for deposit purposes and if you file on-line the filing fee is discounted.

Copyright infringement issues can be quite complex especially when compiling from various sources on the Internet. Copyright law on the Internet is still developing. One can easily cross the "Fair Use" limits without realizing it.

A License is often affordably and easily available through the authors. A blanket license is also available for use of multiple sources through organized agencies such as BMI (Broadcast Music Inc), ASCAP (American Society of Composers and Performer) University Licensing and the like.  In some cases there is even provision for compulsory licensing through copyright office royalty tribunal for cable and other copyrights in the public interest policy. 

 Intellectual property laws are constantly being revised and court decisions affect their interpretation. U S Congress enacted the DMCA – Digital Millennium Copyright Act to ameliorate the theft of copyright material on the Internet. According to another modification, the copyright laws not only protect the blue prints of architects but also the building or house itself. In other words constructing a house identical to somebody else's design or blueprints thereof constitutes infringement of copyright even though strictly speaking you never made a copy of the blue prints on a copying machine.

Strategies for protection and litigation go hand in hand and are interdependent. Billions of dollars are lost annually to piracy, software crimes and related theft of related intellectual property in USA and internationally for lack of coherent strategy to prevent such crimes and infringements.  The following litigation tips are designed for the novice as well as experienced litigators such that infringers have to think twice before trampling on rights of intellectual property creators and owners, who give more to the society than they take back.

            Choice of venue has important strategic and tactical pros and cons. International Trade Commission if available to the plaintiff is very expedient (more so than rocket docket of Virginia) such that often defendant’s case is prejudiced and even dismissed before counsel can be retained.

Equally important to strategy is the need for maintaining proper perspective, balance and moderation and ever willing to cut losses if it appears to be a case of throwing good money after bad.

 

PROSECUTION & LITIGATION TIPS: This is just a short list of tips and recommendations. In practice there are many other recommendations, which are unique to your circumstances. Do not be quick to sue. ADR (Alternative Dispute Resolution) such as mediation, arbitration etc work. For a foreseeable future the USPTO will continue to give 35USC101 rejections to any inventions they perceive as perpetual motion machine. Energy inventions from cold fusion or zero point energy are likely candidates. Normally you only need to provide a prima facie case that invention works and it’s the responsibility of the examiner to cite which law of nature or science or mathematics does your invention violate. If the examiner cannot do this then he or she should allow the patent but following the tactic of “CYA” (Cover Your Anterior) and protecting the boss from embarrassment by providing the plausible deniability the examiner has the power to require a working model which is normally not done and can be a problem. Alternatively the examiner also has the power to give “Final Rejection” 

1.      Carefully select and vigorously pursue a patent strategy that matches your circumstances, resources and objectives.

2.       Pursue tactics that optimize your chances of getting an enforceable patent and at the same time reduce risks of litigation. For example a good prior art patentability and novelty search is indispensable and include your intellectual property attorney on your leadership team.

3.      Ensure exact match between aspect protected and aspect infringed by the defendant before filing the federal complaint, otherwise you are better off with some kind of WIN-WIN licensing strategy through mediation and arbitration and thereby avoiding the deep litigation pit altogether. 

4.      Get a counsel’s opinion of infringement and serve notice of infringement on the defendant to qualify for triple damages.

5.      Discuss with the patent practitioner or other intellectual property transactional attorney the strategy for which the patent application was crafted and drafted. The application may include things to impress, entertain and educate the jury about the technology.

6.      Review the prosecution history thoroughly for strengths and weaknesses again with the help of the patent practitioner. Ensure that the patent is valid, enforceable and infringed. Your client looses just the same regardless of whether the patent is held invalid, unenforceable or not infringed.

7.      Discuss the affect of FESTO (Festo Corp v/s SKKK 535 U.S. 722; 2002) to determine to what degree if any the infringement by doctrine of equivalence is still available. This can be readily determined by ascertaining whether or not each claim was narrowed through amendments in the file wrapper.

8.      Conduct a thorough search over and above the prior art patentability and novelty search that was conducted by the patent practitioner at the time of filing. The search should focus on patent validity.

9.      Do a claims chart/diagram element by element to analyze thoroughly the infringement match.

10.  Settle on a single interpretation of the claims under Markman (Markman v/s Westview Instruments Inc 517 U.S. 370 hearing for trifurcated trial for the determination of patent validity, infringement/liability and damages.

11.  Develop strategy for controlling the timing of the Markman hearing for the interpretation of the claims by the judge.

12.  Practice mock jury trial and focus group if the case involves novel issues.

13.  Consult econometrics experts for calculation of damages before filing complaint so your client doesn’t feel you left money on the table if jury comes back with a verdict greater than the amount you asked for in the complaint. Do not confuse IP evaluation with litigation valuation.

14.  More you are prepared for litigation better are your chances of settlement, negotiations and WIN-WIN outcomes.

 

CONCLUSION & PROGNOSIS

            Legislature as well as the United States Supreme Court will continue to fine tune intellectual property laws. To increase the perceived value of patents the “High Court” curtailed the scope of “Doctrine of Equivalents” tightened the definition of “Obviousness” and standard for obtaining injunction to be at par with obtaining injunctions for cases in other laws which are continuously being revised and harmonized with laws of other nations.

The United States Patent Office allowance rate has gone down from 70% to 40%, while the pendency of application has increased from less than two years to over 3 years, all the while the fees have gone up.

            All this of course guarantees bright future for lawyers but on the downside it becomes harder for pro se applicants to prevail. That is why the cynical critics like Greg Ahronian who operates an Internet Patent News Service (PatNews@NS1.Patenting-Art.com) love clichés like, “No man’s life, liberty or property is safe while the congress is in session” Some other cynics see these changes as “Lawyers’ Full Employment Act”. It is hard to determine whether lawyers are complaining or bragging. At any rate intellectual property will continue to play vital role in the strategy of many corporations, especially those who see patents still the rosy road to real riches.