Considering the Markman Hearing.

Establishing the meaning of a patent term is challenging, especially in patent litigation, because terms used in computer science are inherently ambiguous.  Before a jury may determine damages for patent infringement, the judge must determine the scope of the patent claims.  Although the inventor may define terms to describe his invention, he must do so with reasonable clarity, deliberateness, and precision.  The meanings of any terms used in a patent come from three sources:  1) the patent itself, usually the specification; 2) the file wrapper; and 3) the ordinary meaning of the terms.  And in order to be able to demonstrate what a term does not mean, you should see whether the inventor disclaimed any definition during the patent prosecution.

Responding to a Cease and Desist Letter of Allegation of Patent Infringement.

Once you receive a letter alleging patent infringement, you need to respond carefully because with actual  notice of another’s patent you now have affirmative duty to exercise due care to determine whether or not the patent is infringed.  Take note of any offer to license and any deadline.  If the deadline is short, then send a response and inform the patent owner that you are investigating the matter.

To evaluate the patent, you need a copy of the patent and its file history, as well as the prior art cited by the patent examiner.

While federal case law does not require an opinion, obtaining one is a good idea because of the complexities involved in constructing the scope of patent claims.

Obtaining a legal opinion will enable you to assert a good-faith belief that the patent was invalid or not infringed.

Once you have reviewed the patent opinion, respond to the cease-and-desist letter or license offer on or prior to your stated response date. Your response should account for:

(1) whether your company deliberately copied the technology described in the patent claims;

(2) the results of your investigation and whether you, in good-faith, believe that the patent is invalid or that you do not infringe it; and

(3) any remedial action company taken.

Companies often have patent attorneys from a separate law firm who do not conduct patent litigation for the company render opinions, because using in-house or retained counsel for an opinion may waive attorney-client privilege.

 

Patents May Be Intangible Property Under Publication 535.

The tax treatment of patents arise when buying or selling a business with patent assets, or licensing patents because certain assets are intangible and must be amortized:

Section 197 Intangibles Defined: The following assets are section 197 intangibles and must be amortized over 180 months:

1. Goodwill;
2. Going concern value;
3. Workforce in place;
4. Business books and records, operating systems, or any other information base, including lists or other information concerning current or prospective customers;
5. A patent, copyright, formula, process, design, pattern, know-how, format, or similar item;
6. A customer-based intangible;
7. A supplier-based intangible;
8. Any item similar to items (3) through (7);
9. A license, permit, or other right granted by a governmental unit or agency (including issuances and renewals);
10. A covenant not to compete entered into in connection with the acquisition of an interest in a trade or business;
11. Any franchise, trademark, or trade name; and
12. A contract for the use of, or a term interest in, any item in this list.

How to respond to a cease and desist letter alleging patent infringement.

Cease and desist letters regarding patent infringement can come from patent trolls or your competitors.

If you receive one, you should first look to see if it identifies specific patent.  If so, then you need to look at the claims of the patent and compare them to the infringing conduct alleged in the cease and desist letter if any.

If what you do is covered by the claims in the patents held by the letter sender, then you must do something to avoid further infringement.

You may be tempted to ignore these letters and hope that the patent holder will simply go away, but the patent persuaded to drop the matter if it has gone to the trouble of looking you up.

If the cease and desist letter is threatening and you want to sue to determine your rights, you could file a complaint for declaratory relief in Federal Court.  One advantage of doing so is that you can secure the advantage of a local venue for further litigqation.

 

Patent Law Reform Has Arrived

Patent Law reform legislation, known as the “America Invents Act”, has passed both the Senate and House of Representatives (in the Senate by a vote of 95-5 on March 8, 2011 and in the House of Representatives by a vote of 304 – 117 on June 23, 2011).  Since the two bills as passed appear to be very similar, reconciliation of their texts is expected.   President Obama has indicated that he will sign the legislation.

Advantages and Disadvantages of Filing a Provisional Patent Application.

In the United States, provisional patent applications can provide an additional year of patent protection, for a total of 21 years from the initial filing date, although little or no actual protection is available until the patent issues.  With such an extension, a provisional application provides parity with foreign applicants who, pursuant to the Paris Convention, may file for a U.S. patent within 12 months of filing in a foreign patent office.

The advantages include the preservation of a priority date immediately after an invention is conceived and constructive reduction to practice of the invention.  Filing a provisional patent application allows the inventor to use the phrase “patent pending”.

As an informal application, a provisional patent application does not require all the formal elements of a utility patent application.  Provisional applications need not have any formal claims, but must have a full written description of the invention covers.  Provisional patent applications are not substantively examined by an examiner.  Nor does the USPTO conduct a prior art search.

 

What is the Danger of Initiating Patent License Negotiations?

Some people would rather go to litigation than negotiate a license.  You need a careful study of the patent.  A claim chart may not be enough since the patent may be too good to be true.

First, go to the back and review the claims.  Generally, the patent attorney cannot rely upon the client representations of infringement.  The attorney is subject to Rule 11 and must make an independent investigation.  One way to do this is to buy the potentially infringing product.

Expert testimony is required which may be provided by the client-inventor.

Patents are presumed to be valid, but the trend to try to show obviousness.  Usually it is advisable to consult an independent attorney to deal with the obviousness issue.  Many of today’s patents may not pass the KSR vs. Teleflex standard.

Proper preparation includes:

1. Perform a claim chart.

2. Look at File Wrapper to check for fraud.

3. Check for obviousness.

4. Chain of ownership.

5. Inform client that patent asset is put at risk in litigation.

Threatening litigation or offering to sell a license may provoke a declaratory relief action by the potential infringer in their home court.  Even a gentle letter can trigger a counter-suit for declaratory relief for non-infringement and invalidity.

 

 

Invention Must Be Non-Obvious.

Intention Must Be Useful In Order to Be Patentable.

Patents Only Cover What is Covered in the Claims.

Drafting claims is demanding and complex work:

The specification and claims of a patent, particularly if the invention be at all complicated, constitute one of the most difficult legal instruments to draw with accuracy; and, in view of the fact that valuable inventions are often placed in the hands of inexperienced persons to prepare such specifications and claims, it is no matter of surprise that the latter frequently fail to describe with requisite certainty the exact invention of the patentee, and err either in claiming that which the patentee had not in fact invented, or in omitting some element which was a valuable or essential part of his actual invention.

Toplift v. Toplift , 145 U.S. 156, 171, 12 S. Ct. 825, 831 (1892).

The demands of effective patent prosecution are even more rigorous today.