Patent Speak -- What Inventors Need to Know to Understand Patent Lawyers and Decode Patent Documents

Patent law has a steep learning curve.  For patent lawyers, this means reading a lot of federal court decisions and attending seminars.  For inventors, this learning curve can impede our ability to get patent protection.  By creating an inventor's glossary, we hope to make patents and interacting with patent lawyers a bit less complex to the average inventor.

Note that this is a glossary that will grow over time, so please forgive the initial shortness of the list.

101:  See Section 101.

102:  See Section 102.

103:  See Section 103.

112:  See Section 112.

AIA:  See America Invents Act.

Alice:  This term refers to Alice Corporation Pty. Ltd. v. CLS Bank International et al., a June 19, 2014 United States Supreme Court case.   It is impossible to accurately summarize what Alice says, because even top patent lawyers and Federal Circuit judges are still trying to figure it out.  The general understanding is that an abstract idea, without some non-incidental technological addition, is not patent-eligible under Section 101. The USPTO has issued guidelines on subject matter eligibility after Alice, as well as a list of examples drawn from post-Alice court decisions.

America Invents Act:  This 2011 statute, sometimes called the "AIA", made significant changes to U.S. patent law.  The AIA switched the United States from a "first to invent" system to a "first to file" system.  The AIA established a new "Inter partes review" procedure.  The AIA switched made changes to the administrative appeal process, including changing the name of the appeals board from the BPAI ("Board of Patent Appeals and Interferences") to the PTAB ("Patent Trial and Appeal Board").  The AIA created a "covered business method" review process for certain financial-related patents.

Best Mode:  The inventor is required to disclose what the inventors believes to be the best mode of practicing the invention.  The AIA eliminated the Best Mode requirement as a basis for invalidating an issued patent in later court proceedings or post-grant review proceedings.  The USPTO may reject a pending patent application for failure to identify the best mode.

Claims:  The claims are the section of the issued patent that define what the inventor's monopoly covers.  If Henry Ford had filed for a patent and described the entirety of a car, but the claims only described the suspension system, none of the other parts of the car would be patented.  It is common practice in complex inventions to seek protection for elements not covered by the granted claims by filing a continuation application.

Continuation:  Prior to issuance or abandonment, the inventor or assignee of the patent may file a continuation application.  The continuation application cannot introduce new matter (this may be done as a continuation in part), but may seek claims that cover parts of the invention not previously claimed.

FITF:  See First Inventor to File.

First Inventor to File:  This is a system whereby the patent for an invention is issued to the first inventor who gets an application on file with the relevant patent office.  This is the system in place throughout all or almost all patent offices in the world.  The United States changed over to this system from a first to invent system effective March 16, 2013 as part of the changes implemented in the AIA.

First to Invent:  This is the system that the United States followed until March 16, 2013, when the AIA first to invent provisions took effect.  Under this system, inventors typically kept invention notebooks or other documents to prove their invention date.  Subject to a lot of other limitations (such as not publishing the invention more than a year prior to the filing date), the first person to invent got the patent even if another inventor filed with the USPTO first.

MPEP:  This is the Manual of Patent Examining Procedure, the book of rules that patent examiners and patent lawyers use to determine, among other things, how to conduct themselves and how to go about getting a patent issued.

Myriad:  This refers to Assn. for Molecular Pathology v. Myriad Genetics, Inc., a 2012 United States Supreme Court case. The case held that a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated.  However, cDNA, which is not naturally occurring, is patent eligible.  Of interest, cDNA is the same as the naturally occurring DNA except that it omits portions within the DNA segment that do not code for proteins.  This case expanded on the "law of nature" exception to patentability.  The case invalidated patents related to the BRCA1 and BRCA2 genes, which are highly predictive of breast and ovarian cancer risk.

Non-Final Rejection:  This is a rejection of some of the patent claims in a pending application, but in such a case the applicant has a right to get a second office action (usually either an allowance or a final rejection) in response to the inventor's reply to the non-final rejection.

Novelty:  A patent is not available under Section 102 if "the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention", or described in another person's previously-filed patent application.  Note that novelty does not require that the invention be used for the same thing as the current inventor's proposed use.  For example, if an inventor develops an improved needle for closing surgical incisions, but unknown to the inventor, a sewing machine company across the country is selling an identical needle but for use in clothing, novelty bars a patent for the surgical use of that needle, even if it would not be obvious to one skilled in the art to use the sewing needle improvements in a surgical setting.

Obviousness:  Even if an invention is novel, it is not patentable under Section 103 if "the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains."  Under this section, it is common for patent examiners to combine numerous references to construct a case for obviousness.  If the inventor is able to overcome a Section 102 novelty rejection, the patent examiner will often fall back to a rejection based on Section 103 obviousness.

PAIR:  See Public PAIR and Private PAIR.

Private PAIR:  Private PAIR is a portal that patent lawyers and self-represented inventors can use to monitor the status of the U.S. patent applications associated with their account, whether or not the applications are published.

Public PAIR:  Public PAIR is a portal that members of the public can use to monitor the status of published U.S. patent applications.

RCE: See Request for Continued Examination.

Request for Continued Examination ("RCE"):  When a patent has received a final rejection, the applicant typically has at least three options:  (a) appeal; (b) abandon the application, potentially in conjunction with filing a continuation; or (c) file an RCE.  An RCE filing returns the application to "Ready for Examination" status.  If the inventor attempted to amend the claims after the final rejection and got an "advisory action" in response, the first office action on an RCE must be a non-final rejection.  Otherwise, the examiner may choose to make the initial office action in an RCE a final rejection.

Section 101:  This refers to section 101 of title 35 of the United States Code (35 U.S. Code § 101 - Inventions patentable).  Section 101 can be thought of as a gateway every invention must pass in order to be patentable.  While the text of the section is short and simple ("Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title."), numerous judicial decisions have created additional exceptions to patentability.  For example, after Alice, an invention that implements an abstract idea without substantially more is not patent eligible under Section 101.

Section 102:  This refers to section 102 of title 35 of the United States Code (35 U.S. Code § 102 - Conditions for patentability; novelty).  This section requires that an invention be novel in order to be patent-eligible.  See Novelty.

Section 103:  This refers to section 103 of title 35 of the United States Code (35 U.S. Code § 103 - Conditions for patentability; non-obvious subject matter).  This section requires that an invention not be obvious in order to be patent-eligible.  See Obviousness.

Section 112:  This refers to section 112 of title 35 of the United States Code (35 U.S. Code § 112 - Specification).  This section describes what must be present in a patent application.  The inventor must provide a written description enabling a person skilled in the art to make the invention (see Written Description) and must disclose the best mode for carrying out the invention (see Best Mode).

USPTO:  United States Patent and Trademark Office.

Written Description:  This is a requirement created by Section 112(a).  Under this requirement, the written description in the patent application (excluding the patent claims themselves) must describe the invention that the inventor seeks to protect in the patent claims.  Each element of the claims must find support in the written description.

Google v. Oracle - quick post

The Supreme Court today denied Google's request to review the lower court decision in Google, Inc. v. Oracle America, Inc. 14-410.

The case is a bit complicated, particularly for non-programmers, but it basically asked whether copyright law covers application programming interfaces, or "API"s.  The District Court originally found that an API could not be copyrighted.  The Federal Circuit disagreed on appeal, holding that "the declaring code and the structure, sequence, and organization of the API packages are entitled to copyright protection."

This is good news for Oracle (as they won) and for companies that develop software with APIs that they wish to limit access to.  This is bad news for the open source/free software movement.  It will also probably make standardization of APIs across similar software packages more difficult.

After the Alice Corp. v. CLS Bank decision in 2014, the limits for software patentability are, put bluntly, very unclear.  Worse, the direction that the Court will take in future cases is even less clear.  Had the Supreme Court granted Google's request and gone on to hold that copyright law does not cover APIs, and if the Supreme Court continued the nearly annual tradition of limiting the types of things that are patent eligible, it is possible that APIs would have been ineligible for any kind of IP protection.

There is a broader lesson here:  Many types of innovation are eligible for more than one kind of legal protection.  For example, the Google v. Oracle suit originally involved both copyrights and patents.  Had Oracle relied only on patents, they would have lost.  The lesson for innovators seeking to protect their innovations against infringement is that they should rely on as many different kinds of IP protection as are available.  After Google v. Oracle, the patent/copyright combination seems a wise path for software.

Help, Yelp! What to do if you are being defamed online

It is a common problem businesses face:  You are going about your day, providing great customer service, when you notice a bad review pops up on Yelp (or Google+, or Amazon, or any of the infinite places people post things online).

 -- (Note that I am discussing general rules, and this article is not to be construed as legal advice; for that, you need to retain a lawyer) --

For reasons I will explain below (and to avoid having to pay lawyers), often the best thing is to try to get the person who posted the review to change or remove it, or to convince the web site to voluntarily remove the post.  If you can't convince either one, then you will want to look at your legal options.

What if what they are saying is true?

When somebody posts a bad review or something else critical of you, your first hurdle is the First Amendment.  Defamation law (slander for spoken words, libel for written words) can be complex, but there is at least one hard and fast rule in the United States:  Truth is an absolute defense.  No matter how embarrassing you may find a review saying that there was a roach in the sandwich you served a customer, if there was in fact a roach, you have no case.  There are some narrow exceptions, so if you have questions, and particularly if you have some agreement with the other party that limits what they can say (such as a non-disparagement clause or a non-disclosure clause), you should definitely see a lawyer.  

The rules relating to defamation do vary in other countries, so it may be possible to sue over truthful statements in those courts.  However, note that there is a U.S. law, the SPEECH Act, that prohibits enforcing foreign defamation judgments in the U.S. unless the foreign courts provided the same free speech protections as a U.S. court would have provided.  So while there is a route to sue over damaging but truthful speech, it is a very narrow, expensive, and likely fruitless route (definitely financially fruitless if the person doing the defamation lives, with all of their assets, in the United States).

What if they are lying?

In California, libel and slander require a false, defamatory publication that is unprivileged and has a natural tendency to injure or that causes special damage.  There are some complexities, but if the posting seems likely to meet those requirements, it is a good idea to retain a lawyer and learn your options.  

There are two problems that permeate a lot of online defamation issues.  First, a lot of online defamation is done anonymously, so it is not easy to track down who posted it.  A lot of internet service providers keep access logs, and a lawyer can file suit against a "John Doe" and subpoena those records -- but in this case, delay is not your friend.  Access logs can get very big, and it is a common practice for service providers to delete those logs after they reach a certain age.

The second problem is less specific to online posting, but does seem to occur more often in that context:  Even if you find out who posted it and you are able to get a court judgment against them, you may not be able to collect.  In addition to local defendants who just do not have the assets to pay a judgment, online defamation often involves international disputes.  For example, if a person in Turkey posts a defamatory statement about your eBay business online, you may be able to get a huge judgment against them, but good luck collecting.

A good lawyer can help you figure out if it makes financial sense to pursue claims.  A tech-savvy lawyer can help you identify the party who posted the defamatory review and do an asset search on that party.  Based on those results, your lawyer can help you decide whether it makes sense to pay the fees involved in suing the posting party.

Why don't I just sue Yelp (or another service provider)?  A Tale of Two Defamers:

In 1996, Congress passed the Communications Decency Act.  While portions of that act were held unconstitutional, section 230 survived.  Section 230(c)(1) provides as follows:  "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider."  Because of the Supremacy Clause to the Constitution, Section 230 preempts state laws, including those on defamation.  While there have been numerous Section 230 cases, many lawyers still seem to be unaware of the broad immunity this federal law provides.  For both plaintiffs and defendants, ignoring Section 230 is a terrible mistake.

Section 230 was intended to promote the growth of the internet and internet companies.  Without it, for example, Facebook would have to police every one of the billions of posts users have made.  The result of Section 230 is that republication of the very same defamatory statement is actionable in one context, but not actionable in another.  Consider, for example, the following review:

John Doe:  "I recently visited Jim's House of Pancakes, Waffles and Bananas.  I couldn't believe it when Jim himself walked out to serve my food.  He has syphilis, and had his hands all over my food!  Then, when I bit into my pancake, I chipped my tooth on a rock.  Then, when I paid with a credit card, he fraudulently charged my card an extra $100.  Avoid this store!"

Assuming that Jim is healthy and didn't manhandle the food, no rock was ever in the pancake, and there was no credit card fraud, this meets the definition of slander just about everywhere.  Indeed, the statement itself is slander per se, and under any circumstance the person who posted the review can be sued.  But what if that person cannot be found, is overseas and beyond the reach of United States courts, or has no money to pay a judgment?  The obvious answer would seem to be to go after the publisher of the review -- but for that, the critical question is where the review was published.

Imagine that John Doe submitted the review to a printed-on-paper newspaper and to Yelp, and the review was published in both places.  Section 230 does not apply to the newspaper, and under the right circumstances, the newspaper can be held liable for the falsehoods in John Doe's review.  

Yelp, however, as an "interactive computer service", enjoys the protection of Section 230.  Applying the language of that statute is pretty easy:  "No provider or user of an interactive computer service [i.e. Yelp, which provides an interactive computer service] shall be treated as the publisher [even though it published the statement just like a newspaper did, it cannot be legally treated as the publisher] or speaker of any information [i.e. the information in the review] provided by another information content provider [in this case, John Doe would be the information content provider]."

So there it is.  The same review published by different information providers, even reaching the same audience, yields vastly different results.

Note that Section 230 is not a blank check for information providers.  If they created the review themselves, for example, they have no immunity.  Federal criminal law is not preempted, copyright law is exempt (although the DMCA does provide an exemption if they quality), and there are other exceptions.  So service providers still have to worry about certain aspects of what their customers post, but truth is generally not one of those aspects.  That said, Section 230 is a United States law, and does not apply in other nations, so service providers still need to be aware of the extraterritorial risks of not retracting false reviews.

So what do I do?  Those reviews are really hurting my business.

In probably the worst legal marketing strategy ever, my standard approach is to talk potential clients through how to approach service providers and get them to voluntarily remove false reviews.  Just like people would not go to a lawyer or doctor who has been repeatedly sued for malpractice, consumers will stop relying on sites that are filled with fake and false reviews or information.  So in most cases, the service provider's interests are the same as the victim's:  Keeping false information off of their site improves both the provider's business and the victim's business.  In a case where the client has a good shot at resolving the matter without incurring legal fees and without prejudicing their position, a good lawyer will provide the client with that information.

There are some sites that refuse to take down any bad information, even if they know it is false.  If the victim has no luck convincing the provider to take down bad information, or is dealing with a provider that has a policy against taking down any information, true or false, there are strategies that can be employed.  But at that point, it becomes difficult to make progress without a tech-savvy lawyer.  For example, because the person who posted the information is not immunized by Section 230, it is possible to sue the posting party as an anonymous defendant and then use a subpoena to get logs and other user information from the service provider that can be used to identify the posting party.  Once we have the actual identity of the posting party, it is possible to sue them and get them to take the review down themselves.

Even in cases where the posting party cannot be identified by name or is identified but lives in another country, there are strategies that can be employed to attempt to get the review taken down.  Section 230 is broad, but with a good lawyer all hope is not (always) lost -- although the options and strategies depend strongly on the facts of the individual case.

The bottom line is that if you talk with a lawyer about online defamation and they aren't immediately familiar with Section 230, you probably want to reconsider your choice of lawyer.

Patent royalties cannot last beyond the expiration of the patent: SCOTUS

The Supreme Court decided Kimble v. Marvel Entertainment, LLC today.  The holding is simple:  The Court refused to change a rule they announced in the 1964 Brulotte case, holding that a patent holder cannot charge royalties for the use of his invention after its patent term has expired.

The patent at issue, 5,072,856, covers a toy that allows users to pretend to be "Spiderman" by enabling them to shoot pressurized foam string that looks like a web.  The inventor filed for a patent on May 25, 1990 and the patent issued 19 months later, on December 17, 1991.

In a sadly common sequence of events, the inventor met with the president of Marvel to try to sell or license his patent.  Marvel declined to buy or license the patent, but did start marketing their own toy -- the suspiciously similar "Web Blaster" that lets users shoot foam webs.  This eventually led to the inventor suing Marvel for patent infringement in 1997.

That litigation was settled by Marvel's purchase of the patent for around half a million dollars (presumably to cover past infringement) and a 3% royalty on Marvel's future sales of the Web Blaster.  There was no sunset date on the royalty stream.  The lower courts followed the 1964 rule and held that royalties expired when the patent expired.  The Supreme Court took the case to decide whether Brulotte should be overturned.

The Supreme Court today declined to overturn Brulotte.  The Court recognized that the rule might interfere with things that both the infringer and the patentee desire, like spreading payments out over time or allocating the risks and rewards associated with commercializing inventions.  However, the Court held, "parties can often find ways around Brulotte, enabling them to achieve the same ends."

This is where it gets interesting:  The Court provides an array of workarounds for inventors and licensees to avoid the very result that it imposed on Kimble in today's case:
 - The parties can "defer payments for pre-expiration use of a patent into the post-expiration period";
 - The parties can enter into a "licensing agreement [that] covers either multiple patents or additional non-patent rights.  Under Brulotte", the Court held, "royalties may run until the latest-running patent covered in the parties' agreement expires."
 - The parties may contract for "post-expiration royalties ... so long as tied to a non-patent right -- even when closely related to a patent....  That means, for example, that a license involving both a patent and a trade secret can set a 5% royalty during the patent period (as compensation for the two combined) and a 4% royalty afterward (as payment for the trade secret alone)." (Note that it is tough to reconcile patent law's command that the inventor teach the public how to make the invention with the idea that the inventor has withheld a related trade secret that could be licensed).
 - The Court also suggests that parties enter into business arrangements other than royalties, such as joint ventures, as a way of giving the inventor an interest that lasts beyond the patent expiration.

The Court then quotes a SpiderMan comic book (seriously, they do) as part of their justification for not overturning Brulotte:  The power to overturn established precedent should be used sparingly, because, as the comic book says, "In this world, with great power there must also come -- great responsibility".

Implicit in today's case is the risk that if a patent gets invalidated, the Courts will hold that the royalty stream must cease.  That is, patents can expire on their own (which is the case the Court was looking at) or they can be declared invalid before the expiration date.  With regard to the latter, much has changed since Brulotte was decided 50 years ago:

- The internet and search engines have made finding prior art to invalidate a patent far easier.  No longer must one hire a team of experts to comb through dusty library shelves.  Google is even developing a tool that they hope will find invalidating prior art automatically.
- The America Invents Act has unleashed powerful new method to invalidate patents via an administrative tribunal, tribunals which have been so aggressive in invalidating patents that the former Chief Judge of the Federal Circuit Court of Appeals has called patent "death squads".
- Patents that impact financial services are subject to a special second review as a "covered business method" under the America Invents Act.
- Infringers have become far more aggressive in using ex-parte reviews and inter-party reviews to attack patent validity.
- The numerous recent Supreme Court cases changing the standards for what is patentable has caused infringers to question -- and challenge -- the validity of many patents that they would simply have licensed a decade ago.
 - Medimmune, Inc. v. Genentech, Inc. was decided, holding that a licensee of a patent can challenge the patent's validity without breaching the license agreement.

While it is easy to adjust to the rule upheld in Kimble today with regard to patent expiration (just follow one of the Supreme Court's "workarounds"), application of the Brulotte/Kimble rule to the risk of patent invalidation is much more complex.

As a practical matter, small companies and independent inventors usually have a disproportionate amount of their net value tied up in a few patent assets.  In a world where the Supreme Court and Congress are shifting the patent landscape with surprisingly aggressive and frequent acts, the question of who bears the risk of patent invalidity, where the patent is the independent inventor's largest single asset, is a critical one.  Typically, patent purchase price is negotiated with the risk of invalidity in mind.  That is, the inventor will sell for less (in many cases, far less) than the true value of the patent because even a 10% chance of invalidity represents a 10% chance of the inventor's largest asset becoming valueless.  If a middle class independent inventor is holding a patent worth $10 million, and the inventor's lawyer estimates the chance of having the patent invalidated in a lawsuit at 10%, it would be tough for the inventor to turn down an offer for $1 million.  $1 million in the pocket is, for many independent inventors, far preferable to a 90% chance of winning $10 million in five years (and a 10% chance of getting nothing).

Since independent inventors and small companies often sell patents at a steep discount to shift the risk to the purchaser, it is critical that the purchase and sale agreement for the patent not leave the inventor holding the risk.  This is precisely where Kimble case meets modern patent law's steeply increased risk of patent invalidity.

Patent purchase and sale agreements can be structured in a way that protects the inventor against this kind of risk.  The easiest approach is to sell the patent for a fixed amount of money with no future royalties.  This may not work well where the purchaser cannot afford to pay that amount in a lump sum, or where the purchaser is not sure that the invention will be commercially viable (so wants the inventor to share the risk of commercialization).

In that kind of case, one might assess a purchase price for the patent that reflects the actual value of the patent (for example, $10 million), require some amount to be paid up front (say, $1 million), and then tie the payout of the remaining $9 million to product sales (i.e. 3% of the gross sales are paid annually until the remaining $9 million is fully repaid).  This decouples the patent license fee (which is fully paid up front) from the stream of payments (which now takes the form of repayment of the original lump sum licensing fee).

There are plenty of other ways to deal with the Brulotte/Kimble rule, but the one way that doesn't work is to ignore it.  There is no substitute for good legal advice, and a lawyer well versed in the various risks that inventors and patents now face should be able to structure the deal in a way that avoids Stephen Kimble's very unpleasant surprise.