Over the past year or so, discussions of the patenting system in publications read by the entertainment technology industry have fostered some misconceptions about what patents can and cannot do. Panic may have resulted from questions such as: (1) Should we file patent applications on our products or methods? (2) Are we vulnerable to attack by patent holders? (3) Should we be enforcing our patents? and (4) Are patents good or bad for the industry? Because awareness of patent issues generally arises in the wake of litigation, emotions, and fears can often ensue. A dispassionate consideration of the patenting system should help to put these questions in perspective.

What Is A Patent?

Patents are one form of protection for intellectual property that includes compositions of matter (e.g., products, such as chemicals), methods (e.g., how to produce a lighting effect), apparatus (e.g., lights, winches), and computer software. Patents come in two parts: (1) the specification, which describes what the invention is, and how to make and use it; and (2) the claims, which set the boundaries of what is protected. This distinction is important, as people have been known to panic over the misconception that the items described in the specification are “covered” by the patent. In reality, it is the claims that determine what subject matter is protected. Unless items are covered in the claims of the issued patent, those items are not protected by the patent. The invention is defined by the claims, while the specification is there to support and explain the claims. Parts of the specification not appearing as claimed elements cannot be enforced.

What Does A Patent Do Or Not Do?

Patents do not give patentees the right to practice the invention. Patents give the right to exclude others from making, using, offering for sale, selling, or importing the invention, as claimed.

What Is A Patentable Invention?

Claims are patentable if they delineate an invention that is novel, useful, and non-obvious based on the claim elements considered as a whole. To satisfy the novelty criterion, there must be no public disclosure, publication, presentation, use, sale, or offer to sell, by the inventor or others, of the invention as delineated in the elements of the claims. (There are some exceptions and grace periods, which are addressed briefly below). If there is even one novel element in a claim, it should satisfy the novelty requirement. For example:

Claim 1: An illumination assembly comprising:

(a) a source of light from outer space;

(b) a housing; and

(c) a reflector.

is novel if there is no “prior art” describing (a) a source of light from outer space, even if many lights in the prior art have (b) housings and (c) reflectors. (“Prior art” includes publications, patents, and so forth that precede an invention.) Such an illumination assembly should easily satisfy the utility criterion (in other words, the invention performs some credible function; i.e., it is useful).

The final hurdle to patentability — obviousness — is almost always raised by the US Patent Office (and by foreign patent offices, where this requirement is called “inventive step”). A rejection based on obviousness is usually the most difficult to overcome. For the patent office to reject a claim based on obviousness (or lack of inventive step), the patent office examiner must find in the prior art all the elements of the claimed invention and also must find the motivation or suggestion to combine all the elements into the invention as claimed and an expectation of success in its operation.

Occasionally — and incorrectly — patent examiners try to piece together the invention from the prior art guided not by motivation or suggestions in the art, but by “impermissible hindsight,” that is, based on the teachings of the patent application. In this example of a claim, the patent examiner would find housings, reflectors, and light from outer space in the art, but putting all three elements together would not be found. The examiner would argue that it was “obvious” to put all together. Arguments against this rejection would include that the examiner provides no evidence this combination of three elements was suggested or that inventors would be motivated by the art to make this combination or that some art expressed opinions that such combinations wouldn't work or that the operation of the light source from outer space in this context is “unexpected.”

Are Patents Granted On Inventions That Are Already Known?

There seems to be some concern in the industry that patent examiners are not aware of all the “prior art,” that is, disclosures that relate the elements of claims in a patent application being examined for patentability. Databases that patent examiners routinely search for prior art are indeed limited, including mostly patents and other publications. Therefore, for some technical areas, e.g., computer programs, these databases may not contain relevant prior art, and, in fact, may contain relatively little art generally.

Does this problem mean the patent system is flawed? No. A patentee who knows of relevant art and does not disclose it to the patent office for consideration risks having the patent declared invalid or unenforceable when challenged in litigation by alleged infringers. There are also provisions for third parties to disclose prior art to patent examiners. However, before complaining, “How could that get patented; it has been known for years and it's already out there?” the claims must be examined carefully. The patent office may have allowed limited claims to get around “what is already known, what is already out there.” Protection provided by the patent may be quite narrow in order to satisfy the patentability criteria or may include a novel element among known elements. Patents may be granted if the claims are so narrow that, indeed, they include limitations not in the art, but these patents may not be of much commercial use because it is easy to avoid infringement by omitting one element in a product or a step in a method or by “designing around” the claims. Avoidance of different patents on the same invention is achieved by a patent office procedure called “interference,” which is a form of litigation.

Is It Too Easy To Get Patents?

Despite comments in the industry, patents are difficult to obtain. There is no “rubber stamp” used in patent offices. Rather, it takes time and money to argue against patent examiners' rejections, especially to obtain broad, commercially useful claims. This does not mean that no patents are inappropriately granted, but if so, they can be attacked either in the patent office or in court. Also, applicants' money or enthusiasm may run out before allowance. There is also no guarantee that inventions that should be patented actually are.

Patent offices routinely split claims from the same application into several potential patents (restrictions). Applicants wishing to pursue the various sets of claims must pay for each filing and examination separately. This cost can be prohibitive depending on the number of claim groups but is why patents will be separately granted for, e.g. materials and methods from the same invention.

What Protection Is Available From A Patent?

Patents are not automatically enforceable. Action must be brought by patentees against alleged infringers. Before taking action as a patent holder, an opinion should be obtained on the validity of the patent, because alleged infringers are certain to raise invalidity as a defense. Claim elements should be checked against the product, method, or apparatus suspected of infringing to be sure it has all the elements (literal infringement) or equivalent elements (equivalency is a complex issue, beyond the scope of this article) as in the patent claims. Conversely, accused infringers should check the validity of the patent being raised against their product, method, or apparatus and obtain an opinion as to whether the product, method, or apparatus infringe — ideally before going to market. If there is a risk that a product does infringe, one good business decision would be to design around the invention claimed in the patent, so that it no longer infringes.

There are several options for a patentee confronted with an allegedly infringing product, method, or apparatus. The choice is a business decision based on cost of the various options, relative financial standing of the patentee (or exclusive licensee who also has standing to bring a lawsuit) compared to the alleged infringer, and whether it is more beneficial to get the product off the market or obtain royalty income from a license to the infringer.

Factors to consider about these enforcement options include: (1) A “cease and desist” letter, perhaps offering a license, which may scare off the alleged infringer. However, instead of capitulating, the infringer's response may be to take the matter into his/her hands by filing a Declaratory Judgment action seeking to have the patent declared invalid in court. (2) If the infringer does not capitulate or take a license, a next step is likely litigation, which is expensive, takes time — including employee time — and for which the outcome is not totally predictable. Successful litigation for the patentee may result in a temporary or permanent injunction against the infringer, thereby getting the competing product off the market and/or may result in awarding damages to the patentee. Calculations should be made before filing a lawsuit to determine whether the cost of litigation is balanced by anticipated damage awards.

Does The Patent System Work For All?

There is some truth in the statement that the patent system “works only for those with money for lawyers.” The US Patent Office has provisions for filing a patent application without use of a lawyer or patent agent, but this is not recommended due to the many pitfalls in obtaining a patent, particularly a patent that provides meaningful protection.

Does this mean individual inventors or small businesses should not seek patent protection? No, assuming they have determined the patents will have value to them. There are a number of options to minimize costs. The individual inventor or small business can shop around — there is competent legal counsel at a variety of rates. Also, costs can be reduced by the inventors writing technical parts of the applications under the direction of an attorney or patent agent, rather than leaving most of the drafting to the attorney or patent agent who generally bills by the hour. Some attorneys may accept payment in the form of equity. Another strategy is to license the invention to a bigger player who will take care of patent costs. This last option is especially attractive for costly activities such as enforcement of the patent and/or for filing applications outside the US.

Is It Worth Filing Outside The Us?

If filing outside the US is a business goal, costs will be a factor, especially in countries where translations are required. Because most foreign countries have an “absolute novelty bar,” foreign filings should be explored before any public disclosure of the invention. For some countries, applications must be filed in the country before any disclosure. For countries that are members of the Paris Convention or Patent Cooperation Treaty (which includes the US and almost all countries generally of interest), there is a one-year grace period to file a PCT application to preserve rights in member countries, or go directly into member countries, if there is a filing in a member country before public disclosure. If an application is only to be filed in the US, there is a one-year grace period after disclosure to file the application, but that will be too late for the other countries. Although patents can be obtained outside the US, problems arise in enforcement.Before deciding on countries in which to seek patents, the latest status of enforcement should be checked and business contacts within the country should be established.

Are Patents Good Or Bad For The Industry?

The founding fathers who initiated the patent system believed benefits of patents were to reward inventors and stimulate invention. The goal was to discourage trade secrets as a means of protection. Disclosing intellectual property to the public was to encourage further invention, using patent disclosures as a building block for further innovations. And indeed, improvements are patentable over existing patents. In such cases, there is incentive to cross-license because, for instance, where the basic patent with claim elements A, B, and C is infringed by the improved product, and the improvement (d) is covered by a patent having claim elements A, B, C, and D, the owner of the basic patent might want the improvement (d). Cross-licensing allows both patent owners to make, use, sell, or import the improved product.

Investors usually require patents, and stockholders are not happy to see research and development dollars benefiting competitors with impunity. The US patent system provides protection to inventors for a limited time in their inventions. Meanwhile, competitors are free to design around the invention protected by a patent and “build a better moustrap” of their own. This energy should benefit an industry. Patents can be used offensively or defensively.

However, all parties — patent owners and competitors — need to have a basic understanding of the rules and the objectives of the patent system to navigate their businesses in a competitive environment. When faced with a decision whether or not to patent, whether to make use of or sell a product, method, or apparatus, how to enforce a patent, or how to respond to a patentee's threat, consider the points discussed herein and consult legal counsel.

Alice O. Martin, PhD. is a partner, and John P. Wappel is an associate in the law firm of Barnes & Thornburg LLP, based in Chicago.