Patents and national security

Spike, logo of national security satellite NROL61

Filing a patent with national security implications? Check your filing receipt for a foreign filing authorization before filing outside the US.

After you file a US patent application, the USPTO will send you a filing receipt. On page two of this receipt, you will usually find the words: “If Required, Foreign Filing License Granted: [date]”.

What does this mean? Welcome to the interesting rules involving patents and national security.

Under the Invention Secrecy Act of 1951, the US government has the right to classify patent applications that, in the opinion of the USPTO, may pose a threat to the security of the US. In effect, the USPTO subjects every new patent application to at least a cursory security review. Think of it as a patent application TSA (airport style) inspection.

The vast majority of all applications will pass through the security review quickly, and those that pass will get the “Foreign Filing License Granted” clearance. But occasionally, something catches the interest of the national security review staff. For example, I can pretty much guarantee that a patent application for “Improved methods for detecting stealth aircraft” will get a very careful national security review!

What if you are planning to also file your invention outside the US? Doing a foreign patent filing without proper advance approval is much like trying to jump a TSA line. Folks get excited, and unfortunate things may happen. At a minimum, you could easily lose the US patent rights on your invention.

The amount of security review can vary depending upon world events. For example, after 9/11, it appears as if an unusually large amount of scrutiny took place. Scrutiny may also vary according to what areas of technology are considered sensitive at any given time.

So the take-home lesson, which is particularly relevant for US inventors of patent applications with potential dual-purpose civilian/military uses, is to look for that “Foreign Filing License Granted” small print before filing outside the US. Alternatively, if there has been a delay, file a PCT application through the USPTO, rather than filing directly outside the US.

Patent demand letters

Frustrated patent troll
Frustrated patent troll

Patent demand letters are stressful.  Before responding or ignoring, evaluate infringement, patent prosecution history, ownership, and litigation history.

Has your startup received a “demand” letter asserting that you are infringing on a patent?  Although real infringement of valid patents does occur, and some of these letters are legitimate, many demand letters are sent in less than 100% good faith. The sender may be betting that the startup will settle quickly to avoid litigation costs, regardless of the actual merits of the situation.

Don’t immediately contact the sender, and don’t ignore the letter either.  Instead, calm down and evaluate the facts, preferably with the help of a patent attorney.  Is there a plausible infringement problem or not?  How to tell the difference?  A few common methods are discussed below.

To start, get: 1) a copy of the issued patents discussed in the demand letter, 2) the USPTO prosecution history of these patents, and 3) information about the allegedly infringing product.  If the letter doesn’t provide actual issued patent numbers, or if the letter only cites patent application numbers, the probability that the letter is bogus becomes higher.

Look at the independent claims for each patent (claim 1 is not always the broadest claim), and see if your allegedly infringing product infringes the entire wording of any independent claim. If so, look at the relevant dependent claims for more detail. If the letter argues contributory infringement, combine your product with the other accused product for this analysis, and check if your marketing literature is promoting this combination.

The patent prosecution history for the patents in question, usually downloadable from the USPTO, can be very relevant. This history will often reference if the patent has been used in litigation before; if the patent has been reevaluated by either reexamination or the Patent Trial and Appeal Board (PTAB); and if the patent applicant had to make significant concessions during the patent prosecution history.

The patent’s USPTO assignment records can be used to better understand the relationship between the sender and the actual patent owner of record. This is often obfuscated. What is this relationship, and is the purported patent owner the real patent owner?

If there is a history of litigation, check it out. Patent litigation usually takes place in Federal Courts.  This is usually available through PACER (Public Access to Court Electronic Records) and a number of other sources. Has the patent owner been filing a lot of lawsuits and then settling before the court reaches a decision, or does the patent owner usually win?

There are many other issues that can be explored as well, but this type of information can help you and your attorney better evaluate what your next steps should be.

Rapid Litigation: Biotech patent win

Cleaning up a legal mess
Rapid Litigation v Cellzdirect: Federal Circuit cleaning up a patent mess

In Rapid Litigation v Cellzdirect, the Federal Circuit has further cleaned up the patent eligibility mess caused by SCOTUS’s Alice and Mayo decisions.

In 2012 and 2014, the Supreme Court (SCOTUS), which wanted to invalidate a few pesky financial and medical diagnostics patents, decided to use legal “nuclear weapons” rather than legal “fly swatters“.  The SCOTUS legal nuclear weapons were the now infamous two-step “abstract material” patent eligibility test.  Step 1 of this test is summarized below:

Step 1) Determine if the patent is directed to “abstract” subject material.  If not then congratulations, the patent passes this test and is patent eligible.  

SCOTUS refused to define “abstract material”. This allowed the USPTO and the lower courts to run amok and start randomly invalidating patents. This, in turn, started to damage US biotech and software startups, which need patents to get funding, as well as for protection from larger competitors.

The Federal Circuit, one step below SCOTUS, and charged with cleaning-up patent law, waited several years for SCOTUS to correct itself, to no avail.  However, their recent (mid-2016) series of patent eligibility decisions, first Enfish, then Bascom, now Rapid Litigation (Celsis) v Cellzdirect suggest that the Federal Circuit is now getting serious about damage control.

“Abstract” is just as undefined for biotech as it is for software, but for biotech, it seems have more of a “natural law-ish” flavor.  Arguably a technologically illiterate approach since everything involves natural laws, but alas SCOTUS has no STEM majors.

Fortunately, some Federal Circuit judges are STEM majors, and they have the power to do at least some damage control by providing official interpretations/clarifications of SCOTUS decisions. Here they clarified that in step 1, “directed to” is not the same thing as “involving”.

The patent in this case, 7,604,929, was about an improved method of freeze storing liver cells (cryopreservation of hepatocytes).  Before the patent, everyone in the field believed that freezing damages living cells, and that multiple freeze-thaw cycles should be avoided.  The inventors discovered that some hepatocytes were resistant to this problem, and used this discovery to invent an improved hepatocyte cryopreservation method.  This method first freeze-thawed the cells, then used a density gradient to select for the freezing resistant cells, and then refroze these resistant cells again, producing very freeze resistant hepatocytes.

An earlier court had ruled this patent invalid by arguing that discovering that some hepatocytes could survive multiple freeze-thaw cycles involved a “law of nature”. However, the Federal Circuit pointed out that “involved” isn’t enough grounds to invalidate a patent, because the ‘929 methods also claimed other steps, such as using density gradients.  So “directed to” is more than just “involves“.

This Federal Circuit decision makes it harder to invalidate biotech patents, at least in the most common cases where the claims also have other steps in addition to the “natural law” steps.  The fact that the ‘929 claims were relatively simple helps to further clarify the legal issues.

Bascom: another Alice software win

Bascom - fish delivering mail
Bascom – fish delivering mail

The Bascom court decision helps software patents by suggesting that step 2 of the Alice test should follow established obviousness rules.

US software patents got another win from the Federal Circuit Court this week.  This court, which has a Congressional mandate to clarify patent law, made an important clarification to the Alice (software patent killer) “abstract subject matter” test in the Bascom v AT&T case (Bascom).

As you may recall from our last “Enfish” episode, the Supreme Court (SCOTUS) “Alice” decision created a judge-ordered incoherent two-step test that any given patent must pass in order to be patent eligible under 35 USC 101 rules.  To simplify:

Step 1) Determine if the patent is directed to “abstract” subject material.  If not then congratulations, the patent passes this test.  

Step 2) But if the patent is found to be “abstract” in step 1, then determine if the patent contains “something extra” beyond just “abstract” subject material.  If there is nothing extra, then reject the patent as being “abstract”.   

The Federal Circuit is one step down from SCOTUS.  The Federal Circuit doesn’t have enough clout to overrule SCOTUS, but does have enough clout to overrule the USPTO and the lower courts.  More importantly, the Federal Circuit has both the clout and mandate to “clarify” SCOTUS decisions.

The USPTO and the lower courts were often ignoring Alice step 1 and just assuming that a patent had “abstract” subject matter. The previous Federal Circuit “Enfish” decision pointed out that this was improper.  By contrast, the newer Federal Circut “Bascom” case is now clarifying that another common practice, just asserting that the patent fails Alice step 2 because it lacks an undefined “something extra”, isn’t right either.

More specifically, in Bascom, the Federal Circuit pointed out that based on earlier SCOTUS decisions (e.g. Mayo v. Prometheus, which SCOTUS used for “Alice”), Alice step 2 tests if the claim is “well-understood, routine or conventional”.  According to the Federal Circuit’s interpretation, SCOTUS was probably thinking about something similar to an obviousness test.   The Federal Circuit also pointed out that there are well-established rules for establishing obviousness, which the USPTO and the lower courts were (also) ignoring.

Specifically, the Bascom case was an appeal of a lower court decision that had earlier found the Bascom patent claims to be “abstract” and therefore invalid.  The lower court’s arguments (in simplified form) were that the Bascom patent claim language words described conventional computer pieces, and therefore the Bascom claims failed Alice step 2 due to lack of “something more”.  

In Bascom, the Federal Circuit Court, after “clarifying” Alice by pointing out that SCOTUS’s Alice step 2 resembled an obviousness test, then pointed out that the lower court had failed to follow established rules to determine obviousness (35 USC 103 rules).  These 35 USC 103 rules require that the combination of the pieces and the motive for combining the pieces also be considered.  Here conventional pieces, arranged in a non-conventional way, are often not obvious.

The Federal Circuit then looked at the Bascom claims, determined that they were not obvious, and (again somewhat simplifying) therefore had “something more” that satisfied step 2 of the Alice test.  They then overruled the lower court and found the Bascom patent to be “not abstract” and therefore valid under 35 USC 101.

If this holds up, the Bascom decision could almost bring some sanity to the Alice test.  Stay tuned…

International Trademarks: Madrid Protocol

Madrid Protocol countries
Madrid Protocol countries (US color or darker is “in”)

For US companies, the Madrid Protocol can be a low-cost and time efficient way of getting international trademark protection.

The internet makes it almost trivial to sell products and services internationally.  But how do you manage the IP for these products and services? The legal system has been lagging here. Although the 1970’s (pre-internet) PCT system simplifies the process of filing international patents, the underlying international patent system still remains cumbersome and expensive.  In the end, you still have to hire local law firms in each country and work with the local patent offices.

What is the situation in trademarks?  Almost reasonable!  This is because, in the early post-internet era, the international trademark system got a major upgrade, called the Madrid Protocol. So if you are a startup wanting to protect your trademark rights internationally, the Madrid Protocol is a reasonable and cost-effective way to do so.

The Madrid Protocol is a 1996-era refinement of an earlier 1891 Madrid trademark agreement.  The US and over 90 other countries (EU included) are presently members (see the darker countries on the world map), with Canada expected to join in the 2017 to 2018 timeframe.

The main advantage of the Madrid Protocol is that the applicant needs to only file once in the WIPO Madrid system in order to apply for trademark applications in a variety of different countries (such as the entire European Union at a single time).  The application fees, at least by patent standards, are reasonable (e.g. about $1600 to apply for full EU coverage).  This system minimizes the hassles and expense of hiring local law firms and dealing with local trademark offices in each country.

There are a few catches – the applicant must be associated with a Madrid subscribing country, so US based companies can do this; but Canadian companies — not quite yet.  You can’t start from scratch – rather you should have at least one national trademark application pending (and preferably issued), to form the basis of your Madrid application.  US applicants, for example, can use their pre-existing US trademark to file for Madrid coverage through the USPTO. The USPTO will check this Madrid application, and then forward it to the WIPO office in Geneva, Switzerland.

Some other cautions — in the event that your original national trademark application fails within the first five years after filing, your other Madrid filings will likely also fail. Additionally, the various local countries that you designate do have the right to refuse your trademark on an individual basis within the first 12-18 months after filing.

So additional research before filing is recommended.  At a minimum, check the Madrid ROMARIN database for conflicts. Check if your US trademarks might be “generic” or otherwise inappropriate in your Madrid target countries.  Madrid Protocol filings must be renewed every 10 years, so remember to put this on your long-term calendar as well.

Enfish for Alice: a software win

Einfish is good news for software patents
Enfish is good news for software patents

The recent Enfish court decision improves the outlook for US software patents.

Good news for software patents.  The negative impact of the 2014 SCOTUS (Supreme Court of the US) “Alice” decision (invalidating some business method and financial software patents) has been somewhat mitigated by the recent “Enfish” court decision.

What is “abstract?”  “You keep using that word, I do not think it means what you think it means.” Inigo Montoya, “The Princess Bride”.

In “Alice”, SCOTUS did not make business-method and financial software patents patent ineligible.  Instead, they determined that “abstract” subject matter is patent ineligible.  Unfortunately, SCOTUS refused to define the meaning of “abstract”, and then further confused things by using circular logic.  The present two-step, circular-logic, SCOTUS mandated test for patent eligibility is:

Step 1) Determine if the patent is directed to “abstract” subject material.  If not then congratulations, the patent passes this test.   

Step 2) But if the patent is found to be “abstract” in step 1, then determine if the patent contains “something extra” beyond just “abstract” subject material.  If there is nothing extra, then reject the patent as being “abstract”.    

No one knows what “abstract” means.  Unfortunately since late 2014, the USPTO has been generally assuming that patents for software running on standard computers must be abstract under step 1.  Many USPTO examiners (and judges) have been totally skipping step 1 of the two-step Alice test.  They just assume that a given software patent is abstract, and start their Alice test at step 2 “something more”.  This makes it much easier to reject the patent.

What is “something more?”  It is also undefined, but financial and business software generally seems to be lacking.  We could substitute “evil spirits” for “abstract”, and “charisma” for “something more”.  We could almost as validly say that lately, many USPTO examiners and judges have been rejecting most business and financial method patents because 1) assumption of evil spirits and 2) a further lack of charisma.  It is easier to understand if you don’t expect logic.

In 1982, Congress established the Federal Circuit Court to bring more logic and consistency to patent law.  In the recent (May 12, 2016) “Enfish v Microsoft” (Enfish) decision, the Federal Circuit has finally started to do its job.  The Enfish court has ruled that examiners and judges can’t just arbitrarily skip step 1 of the two-step Alice test.  Specifically, the Enfish court ruled that it is improper to assume that software running on standard computers is “step 1” abstract.

The Enfish court pointed out that in Alice, SCOTUS didn’t rule that software is automatically abstract.  Further in Alice, SCOTUS also warned against running amok since every patent is somewhat abstract.  So don’t make software automatically fail the two-step Alice test at step 1.  The Federal Circuit further determined that software running on standard computers that improves an existing technology (such as a database) is not abstract at step 1.

This is another important point:  “abstract” is an undefined legal term, and you and I lack the authority to officially define it.  But the Federal Circuit does have the legal authority to define “abstract”.  The USPTO and other judges have to follow this updated definition.  So Enfish is good news for US software patent law.

Patent restrictions and elections

Why is my examiner holding a chainsaw?

USPTO examiners can require patent restrictions.  These narrow the scope of your originally submitted patent claims.  Choose carefully here.

A while back, you filed a patent application.  Now you have received a phone call or letter from your examiner.  You are informed that there are “Election/Restrictions” and that you must choose between various patent claims on various “Species group” lists.  What is this?

Your initial USPTO patent filing fee buys your patent application about 25 to 30 hours of total examination time.  This is not a lot of time, and frequently examiners think that an application will take longer than this. When this happens, the examiner can reduce his workload by asserting that your application contains “multiple inventions”.  Each of these “multiple inventions” is called a “species”.  These “species” are pieces or fragments of your original claim set.  Examiners divide your claim set among these species, and then send you a notice asking you to “elect” a “species” and claims for examination.  The claims that you don’t elect are called “withdrawn”.

Be careful here.  Examiners have orders to initially reject most patent applications.  The examiner is chopping your invention into smaller pieces to make it quicker and easier to reject. This chopping is uneven. Some pieces may be commercially useful, others not.  Some pieces may be easy to reject, others hard. Sometimes there are only a few pieces, but other times the examiner may split your invention into 15 or even 50+ pieces!

USPTO rules allow restrictions and elections to be done either orally or in writing.  Sometimes your examiner may call you on the phone, explain the restriction and election options, and ask what you want.  A bad decision can be costly, and these oral elections are often legally binding.  I recommend not deciding on the spot.  To be sure you understand all the details and have time to think, request the restriction in writing.

There are restriction rules.  The species need to be distinct, and the restriction should not destroy the invention.  If your examiner has violated these rules, you can and should argue back (this is called a “traverse”) in writing.  Unfortunately, you still have to choose, no matter how unreasonable your examiner’s scheme may look.

Even if your examiner rejects your arguments, there will be other chances.  Later in the examination process, after your elected claims are found to be allowable, you can request “rejoinder” and try to get more claims examined.  You can also have the unelected claims examined later (for extra filing fees) as one or more divisional applications.

USPTO office actions

USPTO office actions
USPTO office actions

USPTO office actions are used to reject most patent applications by using “done before”, “obvious”, “vague”, or “not patent eligible” type arguments.

Although we all hope that a patent application will sail through the USPTO patent examination process and be allowed “as is”, this usually doesn’t occur.  As a practical matter, examiners work on a quota system. The net effect of this quota or “count” system is that the average successful patent is usually rejected several times before it is allowed.

Typically an examiner will first read the patent claims, and search for various citations (often earlier filed patent applications) that match certain claim key-words.  The examiner will then write a 20-40+ page “office action” document that rejects your various claims for various reasons, and send it to the correspondence contact of record.  The examiner expects you to respond within three months by submitting a written “office action response” that rebuts these various rejections.

The most “popular” USPTO rejections are:

Done before – 35 USC 102: The examiner thinks he has found another single citation that teaches everything in your particular claim. However absent actual copying, no two patents are usually totally alike. This type of rejection can often be rebutted by explaining where the citation is different, or amending the claims to add additional detail that differs from the citation.

Obvious – 35 USC 103:  The examiner (sometimes impermissibly guided by your disclosure) is attempting to reject your claim by combining features from multiple citations. The examiner may often create a Frankenstein concept that may or may not be plausible. Fortunately, there are examination rules here. Often this type of rejection can be rebutted by any of 1) showing that the examiner is misquoting the citations, 2) amending your claims, 3) showing which “103” examination rules were broken.

Vague – 35 USC 112:  This “vagueness” or “indefinite” type rejection is used for different things. Sometimes it is harmless and easily corrected, such as when the claim’s grammar is off. Sometimes it is deadly, such as when your underlying patent application doesn’t teach how your invention works in adequate detail.  This is more likely to happen if the original application lacks specific examples.  Although this can often be rebutted or fixed by changing the claims, sometimes the only way to attempt to fix this is to file a “continuation in part” application that adds the missing detail.

Not eligible – 35 USC 101:  In the old days (i.e. before 2015), this was a rarely used rejection because the 35 USC 101 law was written to be very expansive. However, recent court decisions have made this area quite a swamp, and this is still being sorted out. In the meantime, realize that business methods and financial methods have a higher than average rejection risk.

Trade Secrets

secrets
“Sshh” by Deborah Azzopradi

Consider trade secrets, especially when your commercially important secrets are unsuitable for patent or copyright protection.

Consider the formula for Coca-Cola and its “natural flavorings”, which dates back over 100 years.  Even if the formula could have been patented (unlikely), the patent would be long expired.  The formula might not be even eligible for copyright since it is a list.  In any event, a copyright by now would be both expired and useless since a copyright is only for the printed words.  However as a closely guarded trade secret, the formula remains valuable (the trademark, of course, is almost priceless).

In addition to recipes, trade secrets can include production methods, marketing methods, computer software, and the like. Pretty much any information that gives a business competitive advantage, and is not generally known, is a potential trade secret.

Trade secret protection is very narrow – unless you can prove to a court that you carefully guarded the secret, and someone with access to the secret then misappropriated the secret, you are out of luck. If someone figures out the secret by other means (e.g. reverse engineering), there is no protection, even for Coca-Cola.

However if you can convince the court that trade secret theft occurred, you can request injunctions (e.g. block disclosure), damages (your economic harm caused by the theft), and possibly even seizure of materials and/or attorney fees.

Until recently, trade secrets were only handled at the state level.  However in May 2016, the federal Defend Trade Secrets Act of 2016 (DTSA) was signed into law.  Trade secret theft can now be handled in either state or federal court. Trade secret theft can now be charged under both civil and even criminal law.

So if you are doing a startup, think about which of your non-commonly known information gives you a competitive edge. Where appropriate, apply for patents and trademarks, and register copyrights to prove copyright ownership.  For the rest, although some disclosure may be required for marketing and fund-raising, try to limit this disclosure, and take positive steps (e.g. restriction of access, nondisclosure agreements) to preserve not-generally-known information that is competitively important.

Design patents

For stronger design patents – less detail can give you broader coverage, so consider turning some solid lines into dotted lines.

design patent
Design patents can be like the disappearing Cheshire Cat

On the surface, design patents – a patent that covers the ornamental appearance of an article of manufacture, seem simple. File multiple drawings showing your design from multiple angles – often all six sides of an imaginary cube, as well as in perspective. If (under a famous court case called the Egyptian Goddess test), an ordinary observer (familiar with the prior art designs of similar products) will confuse someone else’s product with the patented design, then there is infringement.

This raises interesting questions of pattern recognition. The problem is often explained by analogy to the Cheshire Cat from Alice in Wonderland.  How much of the cat do you need to see in order to identify it as a Cheshire Cat?

In a design patent, the parts that are required are shown in solid lines, and the optional parts are shown in dotted lines.  As more and more solid lines are turned into dotted lines, the design becomes more general, but of course at some point, the design then becomes too general to be unique or even recognizable.

When broad coverage of a design is desired, consider filing multiple versions (or alternatively continuations) of a design patent.  Narrower but safer versions can have more solid lines; in riskier but broader versions, replace the less essential solid lines with dotted lines.  Perhaps a subset or outline of your product is distinct enough to warrant design patent protection?  If you think that your design may have multiple distinct sections, consider putting in dotted lines to show these sections in the initial filing, since the USPTO won’t let you do it later.

Compared to utility patents, design patents are relatively inexpensive to file, and relatively easy to get.  However again, the design patent is only for the artistic and non-functional aspects of the design. Design patents now have a 15 year lifetime, and no maintenance fees are required.

A few more tips — design patent examiners have a well-developed ability to detect inconsistencies between drawings and/or ambiguity in drawings.  Problems can often be avoided by first making good quality 3D CAD files, and then making these 3D CAD files available to the patent attorney.