November 24, 2011
Managing Intellectual Property, Chinese edition
By Esther H. Lim; Mandy J. Song, Ph.D.
Authored by Esther H. Lim and Mandy J. Song, Ph.D.
1. What are the procedure, cost, and timing of patent applications?
A utility patent application can be filed at the U.S. Patent and Trademark Office (USPTO) either as a provisional application or a non-provisional application. A provisional application under 35 U.S.C. § 111(b) allows filing without a formal patent claim, oath or declaration, or any information disclosure (prior art) statement. The current filing fee for a provisional application is $250. Although a provisional application is not examined on its merit, applicant may file a corresponding non-provisional application within 12 months with benefit of the provisional filing date.
A non-provisional patent application must include a specification, including one or more claims; drawings, when necessary; an oath or declaration; and the prescribed filing, search, and examination fees. The required fees include a $380 filing fee, a search fee of $620, and an examination fee of $250. Additional fees are charged for claims in excess of 20 and for multiple dependent claims.
Applicant may also file a U.S. non-provisional patent application within 12 months of a foreign filing (e.g., filing of a Chinese patent application) under the Paris Convention. Alternatively, an applicant may enter national stage in the United States of a Patent Cooperation Treaty (PCT) application, within 30 months of the PCT application filing date.
Patent applications are examined and prosecuted before they can be issued as patents. In 2010, the median patent pendency at the USPTO is about 3.8 years for patents issued from original applications and 2.8 years for patents issued from continuation or divisional applications.
Under 35 U.S.C. § 103, an invention must be "non-obviousness" to be patentable. The Supreme Court outlined factors for determining obviousness in Graham et al. v. John Deere Co. of Kansas City et al., 383 U.S. 1 (1966), known as the "Graham factors":
1. the scope and content of the prior art;
2. the differences between the claimed invention and the prior art; and
3. the level of ordinary skill in the art.
In addition, the court also outlined factors that show "objective evidence of nonobviousness," also known as secondary consideration, including commercial success, long-felt but unsolved needs, and failure of others.
In a more recent case, the Supreme Court in KSR v. Teleflex, 550 U.S. 398 (2007) affirmed the Graham framework, and rejected the U.S. Court of Appeals for the Federal Circuit (CAFC)’s rigid application of the teaching-suggestion-motivation (TSM) test. Rather, the TSM test was characterized as one of the useful tools to determine obviousness under the Graham framework.
3. What types of inventions or ideas can be patented? Are there any notable or unusual exceptions?
35 U.S.C. § 101 sets forth patentable subject matter that can be patented, including any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.
In Diamond v. Diehr, 450 U.S. 175 (1981), the Supreme Court indicated three exceptions to patent-eligible subject matter: laws of nature, physical phenomena, and abstract ideas. In In re Bilski, the Supreme Court found the machine-or-transformation test to be a useful test for subject matter patentability of process clams under § 101, but not the sole test. According to the machine-or-transformation test, a process is patent-eligible if (1) it is implemented with a particular machine, or (2) it is transforms an article from one thing or state to another.
Literary works, compositions of music, compilations of data, legal documents (such as insurance policies), and forms of energy (such as data packets transmitted over the Internet), are generally not considered "manufactures" and hence, by themselves, are not patentable. The CAFC has ruled, in In re Nuitjen, that signals are not statutory subject matter, because articles of manufacture do not include intangible, incorporeal, transitory entities.
Additionally, products of nature, such as a human being or a living animal, are not patentable. However, human-modified products of nature that serve a purpose different from the naturally-occurring product of nature and that have characteristics different from the original may be patented.
4. How can you appeal a denied application? Are there any time limits on making an appeal?
If a USPTO examiner persists in the rejection of any of the claims in a patent application, or if the rejection has been made final, applicant can appeal to the Board of Patent Appeals and Interferences (BPAI) in the USPTO. If applicant decides to appeal the rejection, a Notice of Appeal must be filed within the period for reply (normally three months from the mailing date of the Office Action, and can be extended to six months with appropriate extension fees) identifying the rejected claim or claims appealed. The Notice of Appeal must be accompanied by the required appeal fee of $620. After that, the applicant has two months, which can be further extended for another five months to file an Appeal Brief. For an additional fee, an appeal can include an oral hearing.
The decision of the BPAI may be appealed to the CAFC or a civil action may be filed against the Director of the USPTO in a U.S. District Court for the District of Columbia.
5. Is it possible to file pre-grant or post-grant oppositions and if so how do these work?
In the United States, no pre-grant opposition proceedings currently exist. However, there is a procedure called reexamination that can be filed by any third party. Reexamination refers to the process of requesting that the USPTO once again review an issued patent based on patents or printed publications raising a substantial new question of patentability ("SNQ"). The recently enacted Leahy-Smith America Invents Act provide for opposition procedures in the United States in the future.
In the United States, patent prosecution include pre-grant prosecution, which involves negotiation with the USPTO for the grant of a patent, and post-grant prosecution, which involves post-grant amendment (reissue) and opposition (reexamination). Applicant may amend the application during both stages.
During pre-grant prosecution, applicant may amend the claims, specification, and drawings as long as the prosecution of the application is open. Amendments can be made either voluntarily, such as through a preliminary amendment, or in response to a rejection.
Once a patent issues, the patent holder may request a "reissue" of the patent to correct mistakes in the issued patent. The patent holder may even seek to broaden the scope of the invention through reissue within 2 years from grant. The patent may also be amended during a reexamination process.
7. How can patents be enforced in your jurisdiction? What options do patent owners have?
U.S. patents can be enforced by bringing an action for patent infringement in a U.S. federal court that has proper jurisdiction and venue. If infringing products are being imported into the United States and there is domestic industry, the patentee can also file a complaint in the U.S. International Trade Commission ("337 Action") to exclude further importation.
8. Where does the burden of proof lie for infringement allegations?
Under the U.S. patent law, an infringement occurs when someone makes, uses, sells, offers to sell, or imports an infringing product or its equivalent. To prove infringement, the patent owner has the initial burden to establish by preponderance of evidence that the accused infringer practices all the elements of at least one patent claim, either literally or under the doctrine of equivalents. Once the patent owner meets this initial burden, the burden shifts to the defendant to prove noninfringement or invalidity.
9. What are the typical remedy options for infringement? How are damages awards calculated?
Generally, there are three types of remedies that may be granted to the patent owner. First is an injunction prohibiting future infringement. Under certain circumstances, courts may grant interim remedies, such as a temporary restraining order or a preliminary injunction to protect the patent owner from irreparable harm. The second type of remedy is damages that provide monetary compensation. Damages are not less than a reasonable royalty. In certain situations, patentees may obtain lost profits. The court or arbitrator may increase the damage award up to three times in case of “willful” infringement. The third type of remedy is the cost associated with litigation, such as attorney fees.
One measure of damages is the lost profit. Under the Panduit test, the patent owner must establish four factors: "(1) demand for the patented product, (2) absence of acceptable noninfringing substitutes, (3) [the patent holder’s] manufacturing and marketing capability to exploit the demand, and (4) the amount of the profit [the patent holder] would have made." Sales figures, business plan projections and the factual basis for those projections may be useful to determine the figure. Then subtracting this amount from the amount that the patent holder actually did make gives a measurement of actual damage.
The alternative measure of damages is the "reasonable royalty" the defendant would have paid to a prudent patentee willing to grant a license at the time infringement began. The Georgia-Pacific factors are usually considered for determining a reasonable royalty, including: (1) royalty rates received from prior licenses by the licensor; (2) prior rates paid by the licensee; (3) the nature and scope of the license, such as whether it is exclusive or nonexclusive; (4) the licensor’s licensing policies; (5) the commercial relationship between the licensor and licensee; (6) the existing value of the invention to the licensor as a generator of sales; (7) the duration of the patent and term of the license; (8) the established profitability of the product made under the patent; (9) the utility and advantages of the patent property over older modes or devices; (10) the benefits to those who have used the patented invention; (11) the extent to which the infringer has used the invention; (12) reasonable royalties within the industry; (14) opinion testimony by experts; and (15) the amount that the licensor and licensee would have agreed upon in voluntary negotiations.
10. How can you appeal an enforcement decision? How long and how costly is the process?
The losing party may appeal a trial court decision to the CAFC, which has exclusive jurisdiction over all patent appeals. The case is usually heard by a panel of three judges. For cases of great significance, CAFC may hear the case en banc (the entire court). The decisions of CAFC are binding precedent throughout the United States. The CAFC is a court of last resort for most patent cases unless the Supreme Court grants a petition to review in rare situations.
Industrial designs are protected in the United States not by registration, but by the examination and granting of a design patent.
2. If so, how long is the term for and what is the scope of protection? What types of designs are eligible? Are there any notable exclusions? What is the application fee?
The term of a U.S. design patent is fourteen (14) years from the grant of the patent.
In the United States, design patents protect the ornamental design for an article of manufacture. Ornamental designs of jewelry, furniture, automobile parts, beverage containers and computer icons are examples of objects that are covered by design patents. However, a design for an article of manufacture that is dictated primarily by the function of the article lacks ornamentality is not patentable under 35 U.S.C. § 171. In addition, 35 U.S.C. § 171 requires that a design must be "original," and thus, a design that simulates a well-known or naturally occurring object or person is not original as required by the statute. Furthermore, subject matter that could be considered offensive to any race, religion, sex, ethnic group, or nationality is not proper subject matter for a design patent application (35 U.S.C. § 171 and 37 CFR § 1.3).
Typically a United States design patent application will include a transmittal, the filing fee, a specification including a claim, drawings (or photographs), and a declaration. A design patent application may only have a single claim (37 CFR § 1.153). Of primary importance in a design patent application are the drawings or photographs, which depict the design being claimed. The application filing fee is $530 and the issue fee is $990. There are no maintenance fees or annuities.
The scope of the design patent is defined by the drawings or photographs, but is not confined to the exact design depicted. The design patent gives the owner the right to prevent others from making, using, offering for sale, importing, or selling a product that so resembles the patented product that an "ordinary observer," who has knowledge of other related designs, might purchase the infringing article, thinking it was the patented product.
3. Is there substantive examination of designs? If so what are the details?
The application for a design patent is examined by the USPTO. The examination entails checking for compliance with formalities, ensuring completeness and clarity of the drawings or photographs and a comparison of the claimed subject matter with the "prior art." "Prior art" consists of issued patents and published materials predating the filing of the design patent application. The examiner may reject the claim in an Office Action if the disclosure cannot be understood or is incomplete, or if a reference or combination of references found in the prior art shows the claimed design. The Office Action may sometimes also contain suggestions by the examiner for amendments to the application.
After receiving an Office action, applicant should file a timely reply that includes a request for reconsideration or further examination, along with any amendments desired by the applicant. If the examiner has rejected the application due to issues involving the drawings or photographs, corrected versions may be filed with the amendment. If the examiner has rejected the claim over prior art, the reply should specifically point out how the design is patentable over the prior art.
Upon submission of a reply to an Office Action, the examiner will reconsider the application. If the examiner is not persuaded by the remarks and/or amendments submitted, he can repeat the rejection and make it "final." Applicant may then file an appeal with the BPAI or file a new application prior to the abandonment of the original application, claiming benefit of the earlier filing date, to allow continued prosecution of the claim.
The application will be allowed, and patent issued, once it has been determined that the application complies with all rules and statutes.
4. Is it possible to bring an invalidity action and if so how is this done? What evidence is required? How is the validity assessed?
There are reexamination proceedings available at the USPTO for invalidating issued patents, whether they are a design patent or a utility patent. To have a patent reexamined, an interested party must submit prior art that raises a "substantial new question of patentability," in other words a legal issue not previously addressed by the examiner. An examiner will exam the claimed design against cited prior art for anticipation or obviousness. Issues not related to prior art, such as the adequacy of the drawings or photographs, or ornamentality, cannot be raised in a reexamination.
In addition, one may also ask a court to declare a design patent invalid, if and only if the design patent has been asserted against the party asking the court to invalidated it. A design patent may be invalidated in a court by demonstrating non-compliance with any applicable patent laws, not merely based on prior art.
5. Is there any protection for unregistered designs? If so how long does this last and how can it be taken advantage of? Are there any steps the design owner needs to take?
In certain situations, where a product design has the attributes of a trademark (the shape of the product communicates to the public a specific source for the product and it is not functional) trademark rights may arise under common law simply through "use in commerce." If the design acquires trademark rights in the United States (also called "trade dress rights"), those rights are perpetual as long as the product design is treated as a trademark and is used in commerce. After a period of time, such a product design may be the subject of a trademark registration. Such registration does not expire, as long as the proper fees are paid, the product continues to be used, and the product design is treated as a trademark.
6. Can designs be enforced in court? What remedies are available and how are damages calculated?
Like a utility patent, a design patent owner can bring a civil action in a federal district court. The patent owner may obtain an injunction preventing others from making, using, offering for sale, importing, or selling a product that infringes the design patent.
Monetary damages resulting from infringement of a design patent are recoverable under 35 U.S.C. § 284 or under § 289. According to § 284, "the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer." In addition, § 289 awards a design patent owner either a total of $250, or the total profit associated with the product in which the design is used. This allows the owner of a design patent for a component in an assembly to obtain damages in the amount of the profit of the assembly, when the profit from just the patented component cannot be ascertained.
With this framework, a court can consider the appropriate damages award in connection with design patent infringement either the infringer’s profits from the sale of the design but not less than a reasonable royalty pursuant to § 284, or lost profits for the entire article using the design pursuant to § 289, or $250 total damages. However, a court cannot award a combination of damages under § 284 and § 289 as damages.
The calculation of lost profits and reasonable royalty is similar to that of a utility patent.
Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm’s clients.
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