Five Things about Patenting

I frequently come across corporate counsel with questions about intellectual property. They are the legal "jack of all trades," but often aren't regularly enough exposed to patent law to be able to effectively spot issues when they occur. In this brief article, I provide five things corporate counsel need to know about patents. Not really intended to be a thorough discussion, this article is more focused on a number of bulleted, generally independent points for consideration.

WHAT IS PATENTABLE?

The answer may surprise you. Generally, anything that is both novel and nonobvious is patentable. To be "novel," an invention must be new and unique, essentially meaning that no one before has done the exact same thing the exact same way. A more difficult hurdle can be "nonobviousness," a subjective determination by a patent examiner that an invention is nothing more than an obvious modification of items already known to a person of ordinary skill in the art. Essentially, even if an invention is new and unique, if an ordinary person would have found the invention obvious, then no patent will be granted. Thus, if your company is doing something that your competitors are not and it is considered to be valuable to the business, you should inquire as to whether or not the idea, concept, device or method is patentable and whether patent protection is worth the investment for that item or project.

WHO CAN BE AN INVENTOR?

For corporate counsel, this can be an important issue. The "inventorship" of a patent is determined by what is claimed in the claims. If people do not make a patentable contribution to an invention described in a claim, they cannot be listed as an inventor. It is not uncommon for corporate patents to have multiple inventors, but where someone -- for instance, the company CEO or a supervisor -- is listed as an inventor "just to get their name on the patent," serious questions about the validity of the patent can arise in that improper inventorship is a ground for invalidating a patent. Thus, keep an eye on who is being listed as co-inventors on your company's patents and candidly discuss the issue with your patent counsel should you suspect inventorship needs to be more thoroughly confirmed.

WHO OWNS THE PATENT?

Inventors own the patents unless they have a duty to assign or have assigned. While a duty to assign can come from an employment relationship, it is always best to settle the matter through having appropriate patent/copyright assignment language within employee contracts, signed "employee manuals," and separate assignment documents. Having a signed assignment or agreement to assign can save your corporation a great deal of grief down the road. You should also remember that independent contractors do not have such a duty to assign, although one can often be implied. Every independent contractor needs to sign an assignment or agreement to assign before working on the project.

WHAT CAN WE FIND OUT ABOUT OUR COMPETITORS' PATENTS AND PATENT APPLICATIONS?

Quite a bit. Most of your competitors' patent applications will be laid open on the U.S. Patent and Trademark Office's Web site for public inspection eighteen months after they are filed. Knowing what your competitors are inventing can be quite useful (so long as you don't infringe any patent they subsequently receive) and also gives you an opportunity to object (submit to the Patent Office copies of patents and non-patent prior art which may be useful in ensuring that the Patent Office only gives your competitor a patent if a patent is deserved). However, remember that pre-infringement knowledge of a competitor's patent in a patent infringement case can make the case "exceptional" and open the door to treble damages.

WHAT IS THE IMPACT OF MY COMPANY'S EXPANSION ON OUR PATENT PORTFOLIO? The biggest potential impact could be loss of patent rights through mistakenly paying improper fee amounts. A number of years ago, Congress provided independent inventors and small businesses with a break, allowing them to essentially pay half price fees with the Patent Office. This is typically referred to as "small entity" status. Small entity status is defined in 37 CFR §1.27 using the definitions of 37 CFR §1.9. Essentially, a company is a small entity if it (including parent and related companies) has less than 500 employees. Having a duty to assign to or a license with a large entity (more than 500 employees) can strip a company's "small entity status." Thus, don't presume that your patent counsel knows the number of current employees you have or with whom you have licensed the patent. Failure to pay the correct fees can be considered inequitable conduct and could result in patent invalidity.