Selected Papers

SOFTWARE PATENTS

Patent Protection for Computer Software

THE 17TH ANNUAL MINNESOTA JOINT
COMPUTER CONFERENCE

THURSDAY, MAY 4, 1995

MINNEAPOLIS, MN

MAY 3, 1995

Presented by:

Steven W. Lundberg

Attorney at Law
Schwegman, Lundberg & Woessner, P.A.
3500 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
(612) 339-0331

TABLE OF CONTENTS
I. OVERVIEW OF PATENT APPLICATION PREPARATION AND PROSECUTION
II. IDENTIFICATION OF INVENTIONS
III. INVENTORSHIP
IV. OWNERSHIP OF PATENT RIGHTS
V. STATUTORY BARS
VI. PATENTABILITY
VII. PARTS OF A PATENT APPLICATION
VIII. DRAFTING A SOFTWARE PATENT APPLICATION
IX. PROSECUTION OF APPLICATIONS
X. REEXAMINATION
XI. REISSUE
XII. FOREIGN FILING STRATEGIES
XIII. PATENT INFRINGEMENT

I. OVERVIEW OF PATENT APPLICATION PREPARATION AND PROSECUTION

II. IDENTIFICATION OF INVENTIONS

A. What is a Software Invention?

1. Generally.

This first paragraph has been changed from the original paper: There is much less confusion in the software industry over the exact status of the patenting of computer software since the USPTO issued guidelines in 1997. It is now possible to patent a machine readable medium containing a computer program which causes a computer to perform a statutory process. It is even possible to claim a data structure or signal in some cases. Further information may be found at the USPTO web site.

Under the patent law, software inventions are viewed either as a computer process, or as a programmed computer which has a unique set of functionality.

The vast majority of software inventions are in the realm of industrial technology, such as a computer-controlled carburation system or a flight-control system. In most of these inventions, software is a substitute for what used to be accomplished using electronic circuits. In these cases, the line between electronic and software implementation is fluid, and depends on factors such as cost and performance. Patenting of these inventions is typically approached in a traditional way.

In other cases, software inventions are mixed up with some other underlying development. For example, a method of medical treatment or diagnosis may entail the use of software to filter or analyze data. Since the focus of development is often on the software, the inventor mistakenly believes that the invention is a software invention. These cases, however, are often patented not in terms of the software performance, but in terms of the overall process. For example, as a method of medical treatment wherein one step of the process is performed by analyzing data, but which is not necessarily limited to analysis by a computer program (such analysis could, for example, be performed by a special purpose electronic circuit). Another example of this type of invention might be a new method for controlling the head of a disk drive. Although the control might be effected using a computer program, the invention would comprise a method for moving the head without reference to the computer program.

Even in operating system inventions, the line between a software invention and an electronic invention is often blurred. Consider a new operating system method for speeding up mathematical operations. If this new method can be implemented with hardware if desired, is the invention a hardware invention or a software invention?

In the final analysis, any software invention is just a combination or series of electronic operations performed by a computer, and a special purpose hardware device can be devised to mimic the operation of any computer program. Therefore, a software invention is a hardware invention is a software invention.

Within the software publishing industry, software inventions are usually thought of more narrowly, usually as something that pertains only to use or operation on a personal computer or other general purpose computer. Examples of such inventions include:

word processor inventions;

electronic spreadsheet inventions;

operating system inventions;

database system inventions;

software tool inventions;

data structures;

and business software.

2. Mathematical Algorithms

Mathematical algorithms are not patentable, unless properly "applied." A "mathematical algorithm" is a formula or step-by-step procedure to solve a mathematical problem, wherein one or more numbers are produced from one or more other numbers. Merely comparing two numbers or other such procedures are not mathematical algorithms.

Determining when an algorithm is or is not properly "applied" so as to permit it to be part of a patented invention is often difficult. A couple of examples may help give a feel for when an algorithm is applied. A mathematical algorithm used in a data compression process, for example, is "applied" because data compression is a recognized statutory type of process. On the other hand, using a mathematical algorithm in accounting software will not be properly applied if it merely calculates a new balance or other number which does not control the flow of the software.

3. Software used in Method of Doing Business

Methods of doing business are not patentable. However, machines and apparatus used in business are. For instance, a cash register is patentable, even though it is used in business. Paine Webber obtained and successfully enforced a patent on a system for moving funds into different accounts depending on certain predetermined algorithms. Software used to create and print coupons is another example of software that is of a patentable nature even though it is used as part of a method for doing business. Still another example might be a computer program and database which is designed to help match home buyers with home sellers.

B. Identifying Valuable Inventions

In general, the most valuable inventions are those that your competitors seek most aggressively to copy. Unfortunately, it is often hard to know this at the time the decision to file must be made. Inventions which may establish or modify a standard are also valuable, since even if narrow in scope, competitors will need them to maintain full compatibility with the standard.

Inventions made in the course of dealings with another entity also can be quite valuable, particularly where the other party attempts to or does adopt the invention, as if it were the inventor when such is not the case. Having a patent in this situation can give a smaller developer leverage in their dealings with a much larger company that would otherwise not exist.

"Broad" or "pioneering" inventions are usually more valuable than "narrow" or "incremental" inventions (however, very few inventions are truly pioneering). The breadth of coverage available to an invention is assessed by a review of the prior art.

Inventions which cannot be protected as trade secrets are better candidates for patent protection than those that can.

Inventions which satisfy a long-felt need or solve a difficult problem are usually good candidates for patent protection.

Finding inventions in a software product can be difficult at times. In many cases, there simply aren't any good inventions in a new product, even if it is a major new release. Sometimes a new software product is unique, but only in the sense that it is a novel aggregation of features and functions which do not interact with one another so as to produce any brand new functionality or capability. In other cases, there are many small advances throughout the product, none of which is critical to the product. In still other cases, the important inventions are not fully recognized even by the developers.

If uncertain about which aspects of a product are patentable, it is possible to file a patent application which describes the entire product in some level of detail, and claim everything that looks even remotely inventive. The Patent and Trademark Office will sort through the claims and help you determine the patentable content of the product. This approach, however, is very costly. It is much more cost effective to hone in a specific invention that can be economically described and claimed.

III. INVENTORSHIP

U.S. patent law requires that the inventor(s) be named in a patent application.

To be an inventor, one must make an inventive contribution to the conception or reduction to practice of the invention. Generally, this means that the inventor must help devise at least part of what is claimed to be new or patentably distinct from the prior art.

It is not enough that one helps construct or create an invention, if that person is merely following the instructions of the inventor or another, and makes no creative contribution.

There may be more than one invention disclosed in a patent application, and it is possible that one or more of the named inventors did not make a contribution to one or more of the disclosed inventions. However, a named inventor must have contributed to at least one the patented embodiments of the invention.

In naming inventors, care must be taken to not exclude inventors where there is a motivation to alter ownership of the patent rights. In the absence of such motivation, errors in naming inventors do not typically invalidate a patent, and can be corrected.

IV. OWNERSHIP OF PATENT RIGHTS

The ownership of patent rights by inventors are determined by state law. Generally, in the absence of an agreement, an employee inventor will own the patent rights, even if the inventor makes the invention using an employer's facilities and on company time. The company does, however, receive "shop rights" in such inventions, which are a royalty free license to use the invention in the employer's products and operations. The exception to this rule is if an employee is hired expressly for the purpose of making a particular invention. It is not good enough that the employee is hired to do research and development, unless it is expressly contemplated the employee will make inventions for the employer.

Therefore, it is critical to have written patent assignment agreements with employees (and agents and outside developers). Many states restrict the scope of such assignments to exclude inventions made by an employee on his or her own time with their own facilities if the invention is not directly related to the employer's research and development efforts.

The federal patent statute (35 United States Code) provides for a peculiar result in the case of joint ownership of a patent: both owners can treat the patent as if it were the sole owner with no duty of accounting to the other owner. In other words, one owner can license the patent without the other owner's consent and furthermore not be obligated to share the royalties with the other owner.

V. STATUTORY BARS

35 U.S.C. § 102(b) requires that a U.S. patent application must be filed within one year of any of the following three events:

1. The disclosure of the invention (by any person) in a printed publication (probably includes public disclosures using overheads and slides, "video" publications, trade literature);
2. The offering for sale (or sale) of the invention (by any person) - does not include efforts to license patent rights to others; or
3. The commercial use of the invention (by any person) - called "public use."

To obtain protection in foreign countries (except for a limited exception in Canada), an application must be filed in the U.S. before the invention is sold or disclosed to the public.

Some of the most important statutory bars are quite subtle. One that deserves attention is what is called the "continuation-in-part" or "CIP" bar date. A CIP application is one which typically describes an improvement to an invention disclosed in an earlier application. The invention of the earlier application becomes prior art to the improvement (1) year after any of the three events mentioned above (this is the CIP bar date). Therefore, where possible, it is highly desirable to file on an improvement before the CIP bar date. If the improvement is filed on before the CIP bar date, it will stand a much better chance of gaining patent protection.

VI. PATENTABILITY

A. Standards for Patentability

The provisions of 35 U.S.C. § 102 are:

§ 102 Conditions for patentability; novelty and loss of right to patent
A person shall be entitled to a patent unless-

(a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent, or

(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States, or

(c) he has abandoned the invention, or

(d) the invention was first patented or caused to be patented, or was the subject of an inventor's certificate, by the applicant or his legal representatives or assigns in a foreign country prior to the date of the application for patent in this country on an application for patent or inventor's certificate filed more than twelve months before the filing of the application in the United States, or

(e) the invention was described in a patent granted on an application for patent by another filed in the United States before the invention thereof by the applicant for patent, or on an international application by another who has fulfilled the requirements of paragraphs (1), (2), and (4) of section 371(c) of this title before the invention thereof by the applicant for patent, or

(f) he did not himself invent the subject matter sought to be patented, or

(g) before the applicant's invention thereof the invention was made in this country by another who had not abandoned, suppressed, or concealed it. In determining priority of invention there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other.

(July 19, 1952, ch. 950, § 1,66 Stat. 797; July 28, 1972, Pub. L. 92-358, § 2,86 Stat. 502; Nov. 14, 1975, Pub. L. 94-131, § 9,89 Stat. 691.)

- 35 U.S.C. § 103 states:

§ 103 Conditions for patentability; non-obvious subject matter

A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made.

Subject matter developed by another person, which qualifies as prior art only under subsection (f) or (g) of section 102 of this title, shall not preclude patentability under this section where the subject matter and the claimed invention were, at the time the invention was made, owned by the same person or subject to an obligation of assignment to the same person.

(July 19, 1952, ch. 950 § 1,66 Stat. 798; Nov. 8, 1984, Pub. L. 98-622, § 103,98 Stat. 3384.)

- Key provisions of § 102 and § 103 can be summarized as follows:

- 1. To obtain a patent, the applicant(s) must be the inventor(s) i.e., they must have originated the invention, not copied (derived) it;

- 2. The invention must be novel - that is, it must be different from prior art inventions;

- 3. The invention can not be "obvious" to one of ordinary skill in the art to which the invention pertains;

- 4. Prior art generally includes all technology publicly known prior to the invention, and all technology known after the invention if it was disclosed in a publication, offered for sale or publicly used for more than a year before the filing date of the patent application on the invention; and

- 5. "Non-obviousness" is subjective, but can be established by looking at the following factors:

- (a) the invention solves a long-felt need;

- (b) the invention obtains unexpected results;

- (c) the invention enjoys commercial success;

- (d) the invention evokes surprise in the trade; and

- (e) the prior art teaches away from the invention.

B. Patentability Searching

1. Patent and Trademark Office
2. Software Patent Institute
3. Commercial Databases
   1. DIALOG
   2. Derwents
   3. LEXIS-LEXPAT
4. Libraries/Textbooks

C. Classification

Patents in the Patent and Trademark Office are organized by class and subclass. The current "software" classes are:

Schedule of Subclasses

1. COMMUNICATION AMONG PROCESSING SYSTEMS
2. INFORMATION TRANSFER WITH BUFFERING
   FUNCTIONS
3. INTERCONNECTION TECHNIQUES FOR
   COMMUNICATION CONTROL
4. I/O PROCESSING
5. INSTRUCTION PROCESSING
6. STORAGE ADDRESS FORMATION
7. STORAGE ACCESSING AND CONTROL
8. COMPATIBILITY/SIMULATION/EMULATION TIMING
9. TIMING
10. RELIABILITY
11. DATABASE AND FILE MANAGEMENT SYSTEM
12. PROCESSING MANAGEMENT
13. SYSTEM UTILITIES
14. ARTIFICIAL INTELLIGENCE
15. CONTROL PROCESSING
16. PROCESSING SYSTEM ARCHITECTURE

VII. PARTS OF A PATENT APPLICATION

- 35 U.S.C. § 111 sets forth:

§ 111 Application for patent
Application for patent shall be made, or authorized to be made, by the inventor, except as otherwise provided in this title, in writing to the Commissioner. Such application shall include (1) a specification as prescribed by section 112 of this title; (2) a drawing as prescribed by section 113 of this title; and (3) an oath by the applicant as prescribed by section 115 of this title. The application must be accompanied by the fee required by law. The fee and oath may be submitted after the specification and any required drawing are submitted, within such period and under such conditions, including the payment of a surcharge, as may be prescribed by the Commissioner. Upon failure to submit the fee and oath within such prescribed period, the application shall be regarded as abandoned, unless it is shown to the satisfaction of the Commissioner that the delay in submitting the fee and oath was unavoidable. The filing date of an application shall be the date on which the specification and any required drawing are received in the Patent and Trademark Office.

(July 19, 1942, ch. 950, § 1,66 Stat. 798; Aug. 27, 1982, Pub. L. 97-247, § 5,96 Stat. 319.)

THE APPLICATION - 37 C.F.R. § 1.51 states:

§ 1.51 General requisites of an application.

(a) Applications for patents must be made to the Commissioner of Patents and Trademarks. A complete application comprises:
(1) A specification, including a claim or claims, see ßß 1.71 to 1.77.
(2) An oath or declaration, see ßß 1.63 and 1.68.
(3) Drawings, when necessary, see ßß 1.81 to 1.88.
(4) The prescribed filing fee, see § 1.16

(b) Applicants are encouraged to file an information disclosure statement. See ßß 1.97 and 1.98.

(c) Applicants may desire and are permitted to file with, or in, the application an authorization to charge, at any time during the pendency of the application, any fees required under any of ßß 1.16 to 1.18 to a deposit account established and maintained in accordance with § 1.25.

(35 U.S.C. 6, Pub. L. 97-247; 15 U.S.C. 1113, 1123)

A. Title

- 37 C.F.R. § 1.72 requires:

§ 1.72 Title and Abstract

(a) The title of the invention, which should be as short and specific as possible, should appear as a heading on the first page of the specification, if it does not otherwise appear at the beginning of the application.

(b) A brief abstract of the technical disclosure in the specification must be set forth on a separate sheet, preferably following the claims under the heading "Abstract of the Disclosure." The purpose of the abstract is to enable the Patent and Trademark Office and the public generally to determine quickly from a cursory inspection the nature and gist of the technical disclosure. The abstract shall not be used for interpreting the scope of the claims.

(Pub. L. 94-131, 89 Stat. 685)

B. Copyright or Maskwork Disclaimer

If the application or drawing contains a copyright or mask work notice, the following must be included in the application:

The authorization shall read as follows:
A portion of the disclosure of this patent document contains material which is subject to protection. The {copyright or mask work} owner has no objection to the facsimile reproduction by anyone of the patent document or the patent disclosure, as it appears in the Patent and Trademark Office patent file or records, but otherwise reserves all {copyright or mask work} rights whatsoever.

C. Cross-Reference to Related Applications, if Any

If the application is a divisional or continuation application, it should be noted here.

D. Reference to a Microfiche Appendix, if Any

If the application contains source or object code in a microfiche appendix, the following notice must be provided, as in this example:

MICROFICHE APPENDIX

Included with the present specification is a microfiche appendix containing a listing of a source code computer program written in the C language. The program is adapted to execute on a Silicon Graphics Workstation Model CMNB003, Indigo R300 with Elan graphics, under version 4.05 of the Silicon Graphics IRIX operating system, as compiled using ANSI C compiler, version 3.10.

E. Statement as to Rights to Invention

If the invention was made with Government funding, the following notice must be given:

This invention was made with funding under [grant numbers and sponsoring agency]. The Government has certain rights in the invention.

F. Background of the Invention

Manual of Patent Examining Procedure (MPEP) § 608.01(c) sets forth:

§ 608.01(c) Background of the Invention The Background of the Invention ordinarily comprises two parts:

(1) Field of the Invention: A statement of the field of art to which the invention pertains. This statement may include a paraphrasing of the applicable U.S. patent classification definitions. The statement should be directed to the subject matter of the claimed invention.

(2) Description of the related art including information disclosed under 37 C.F.R. 1.97 and 1.98: A paragraph(s) describing to the extent practical the state of the prior art or other information disclosed known to the applicant, including references to specific prior art or other information where appropriate. Where applicable, the problems involved in the prior art or other information disclosed which are solved by the applicant's invention should be indicated. See also MPEP ßß 608.01(a), 608.01(p) and 707.05(b).

G. Brief Summary of the Invention

MPEP § 608.01(d) sets forth:

§ 608.01(d) Brief Summary of Invention

37 C.F.R. 1.73 Summary of the invention.

A brief summary of the invention indicating its nature and substance, which may include a statement of the object of the invention, should precede the detailed description. Such summary should, when set forth, be commensurate with the invention as claimed and any object recited should be that of the invention as claimed.

Since the purpose of the brief summary of invention is to apprise the public, and more especially those interested in the particular art to which the invention relates, of the nature of the invention, the summary should be directed to the specific invention being claimed, in contradistinction to mere generalities which would be equally applicable to numerous preceding patents. That is, the subject matter of the invention should be described in one or more clear, concise sentences or paragraphs. Stereotyped general statements that would fit one case as well as another serve no useful purpose and may well be required to be canceled as surplusage, and, in the absence of any illuminating statement, replaced by statements that are directly in point as applicable exclusively to the case in hand.

The brief summary, if properly written to set out the exact nature, operation and purpose of the invention, will be of material assistance in aiding ready understanding of the patent in future searches. See MPEP § 905.04. The brief summary should be more than a mere statement of the objects of the invention, which statement is also permissible under 37 C.F.R. 1.73.

The brief summary of invention should be consistent with the subject matter of the claims. Note final review of application and preparation for issue, MPEP § 1302.

H. Brief Description of the Drawings

MPEP § 608.01(f) states:

§ 608.01(f) Brief Description of Drawings

37 C.F.R. 1.74 Reference to drawings.

When there are drawings, there shall be a brief description of the several views of the drawings and the detailed description of the invention shall refer to the different views by specifying the numbers of the figures, and to the different parts by use of reference letters or numerals (preferably the latter).

Application Branch will review the specification, including the brief description, prior to assigning a filing date to the application to ensure that all figures of drawings described in the specification are present. If the specification describes a figure which is not present in the drawings, Application Branch will mail a "Notice of Incomplete Application" (form PTO-1123), MPEP § 601.01, stating that the filing date of the application will be the date of receipt of the omitted figures. Therefore, it is important that all figures of drawings be correctly labelled and described in the brief description and elsewhere in the specification. See also, MPEP § 608.02.

The examiner should see to it that the figures are correctly described in the brief description of the drawing, that all section lines used are referred to, and that all needed section lines are used.

I. Detailed Description

37 C.F.R. § 1.71 sets forth:

§ 1.71 Detailed description and specification of the invention.

(a) The specification must include a written description of the invention or discovery and of the manner and process of making and using the same, and is required to be in such full, clear, concise, and exact terms as to enable any person skilled in the art or science to which the invention or discovery appertains, or with which it is most nearly connected, to make and use the same.

(b) The specification must set forth the precise invention for which patent is solicited, in such manner as to distinguish it from other inventions and from what is old. It must describe completely a specific embodiment of the process, machine, manufacture, composition of matter or improvement invented, and must explain the mode of operation or principle whenever applicable. The best mode contemplated by the inventor of carrying out his invention must be set forth.

(c) In the case of an improvement, the specification must particularly point out the part or parts of the process, machine, manufacture, or composition of matter to which the improvement relates, and the description should be confined to the specific improvement and to such parts as necessarily cooperate with it or as may be necessary to a complete understanding or description of it.

(d) A copyright or mask work notice may be placed in a design or utility patent application adjacent to copyright and mask work material contained therein. The notice may appear at any appropriate portion of the patent application disclosure. For notices in drawings, see § 1.84(o). The content of the notice must be limited to only those elements required by law. For example, "©1983 John Doe" (17 U.S.C. 401) and "M. John Doe" (17 U.S.C. 909) would be properly limited and, under current statutes, legally sufficient notices of copyright and mask work, respectively. Inclusion of a copyright or mask work notice will be permitted only if the authorization language set forth in paragraph (e) of this section is included at the beginning (preferably as the first paragraph) of the specification.

MPEP § 608.01(g) requires:

§ 608.01(g) Detailed Description of Invention

A detailed description of the invention and drawings follows the general statement of invention and brief description of the drawings. This detailed description, required by 37 C.F.R. 1.71, MPEP § 608.01, must be in such particularity as to enable any person skilled in the pertinent art or science to make and use the invention without involving extensive experimentation. An applicant is ordinarily permitted to use his or her own terminology, as long as it can be understood. Necessary grammatical corrections, however, should be required by the examiner, but it must be remembered that an examination is not made for the purpose of securing grammatical perfection.

The reference characters must be properly applied, no single reference character being used for two different parts or for a given part and a modification of such part. In the latter case, the reference character, applied to the "given" part, with a prime affixed may advantageously be applied to the modification. Every feature specified in the claims must be illustrated, but there should be no superfluous illustrations.

The description is a dictionary for the claims and should provide clear support or antecedent basis for all terms used in the claims.

MPEP § 608.01(h) sets forth: § 608.01(h) Mode of Operation of Invention

The best mode contemplated by the inventor of carrying out his or her invention must be set forth in the description. See 35 U.S.C. 112. There is no statutory requirement for the disclosure of a specific example. A patent specification is not intended nor required to be a production specification. In re Gay, 309 F.2d 768, 135 USPQ 311 (CCPA 1962). The absence of a specific working example is not necessarily evidence that the best mode has not been disclosed, nor is the presence of one evidence that it has. In re Honn, 364 F.2d 454, 150 USPQ 652 (CCPA 1966). In determining the adequacy of a best mode disclosure, only evidence of concealment (accidental or intentional) is to be considered. That evidence must tend to show that the quality of an applicant's best mode disclosure is so poor as to effectively result in concealment. In re Sherwood, 204 USPQ 537 (CCPA 1980).

The question of whether an inventor has or has not disclosed what he or she feels is his or her best mode is a question separate and distinct from the question of sufficiency of the disclosure, In re Gay, 135 USPQ 311 (CCPA 1962); In re Glass, 181 USPQ 31 (CCPA 1974). See 35 U.S.C. 112 and 37 C.F.R. 1.71(b). Sylgab Steel & Wire Corp. v. Imoco Gateway Corp, 357 F. Supp. 657, 178 USPQ 22 (N.D. Ill. 1973); H.K. Porter Co. Inc. v. Gates Rubber Co., 187 USPQ 692, 708, (D. Colo. 1975).

If the best mode contemplated by the inventor at the time of filing the application is not disclosed, such defect cannot be cured by submitting an amendment seeking to put into the specification something required to be there when the application was originally filed. In re Hay, 534 F.2d 917, 189 USPQ 790 (CCPA 1976). Any proposed amendment of this type should be treated as new matter.

Patents have been held invalid in cases where the patentee did not disclose the best mode known to him. See Flick-Reedy Corp. v. Hydro-Line Manufacturing Co., 351 F.2d 546, 146 USPQ 694 (CA 7 1965), cert. denied, 383 U.S. 958, 148 USPQ 771 (1966); Indiana General Corp. v. Krystinel Corp., 297 F. Supp. 427.161 USPQ 82 (S.D.N.Y. 1969), affirmed, 421 F.2d 1033, 164 USPQ 321 (CA 2 1970); Dale Electronics, Inc. v. R.C.L. Electronics Inc. 488 F.2d 382, 180 USPQ 235 (CA 1 1973); Union Carbide Corp. v. Borg-Warner Corp., 550 F.2d 355, 193 USPQ 1 (CA 6 1977); Reynolds Metals Co. v. Acorn Building Components Inc., 548 F.2d 155, 163, 192 USPQ 737 (CA 6 1977).

J. Claim or Claims

(h) Claim(s): (See 37 C.F.R. 1.75) A claim may be typed with the various elements subdivided in paragraph form. There may be plural indentations to further segregate subcombinations or related steps.

Reference characters corresponding to elements recited in the detailed description and the drawings may be used in conjunction with the recitation of the same element or group of elements in the claims. The reference characters, however, should be enclosed within parentheses so as to avoid confusion with other numbers or characters which may appear in the claims. The use of reference characters is to be considered as having no effect on the scope of the claims.

Claims should preferably be arranged in order of scope so that the first claim presented is the broadest. Where separate species are claimed, the claims of like species should be grouped together where possible and physically separated by drawing a line between claims or groups of claims. (Both of these provisions may not be practical or possible where several species claims depend from the same generic claim.) Similarly, product and process claims should be separately grouped. Such arrangements are for the purpose of facilitating classification and examination.

The form of claim required in 37 C.F.R. 1.75(e) is particularly adapted for the description of improvement type inventions. Such a claim is to be considered a combination claim and should be drafted with this thought in mind.

In drafting claims in accordance with 37 C.F.R. 1.75(e), the preamble is to be considered to positively and clearly include all the elements or steps recited therein as a part of the claimed combination.

MPEP § 608.01(1) sets forth:

§ 608.01(i) Claims

37 C.F.R. 1.75 Claim(s).

(a) The specification must conclude with a claim particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention of discovery.

(b) More than one claim may be presented provided they differ substantially from each other and are not unduly multiplied.

(c) One or more claims may be presented in dependent form, referring back to and further limiting another claim or claims in the same application. Any dependent claim which refers to more than one other claim ("multiple dependent claim") shall refer to such other claims in the alternative only. A multiple dependent claim shall not serve as a basis for any other multiple dependent claim. For fee calculation purposes under § 1.16, a multiple dependent claim will be considered to be that number of claims to which direct reference is made therein. For fee calculation purposes, also, any claim depending from a multiple dependent claim will be considered to be that number of claims to which direct reference is made in that multiple dependent claim. In addition to the other filing fees, any original application which is filed with, or is amended to include, multiple dependent claims must have paid therein the fee set forth in § 1.16(d). Claims in dependent form shall be construed to include all the limitations of the claim incorporated by reference into the dependent claim. A multiple dependent claim shall be construed to incorporate by reference all the limitations of each of the particular claims in relation to which it is being considered.

(d)(1) The claim or claims must conform to the invention as set forth in the remainder of the specification and the terms and phrases used in the claims must find clear support or antecedent basis in the description so that the meaning of the terms in the claims may be ascertainable by reference to the description.

(2) See ßß 1.141 to 1.146 as to claiming different inventions in one application.

(e) Where the nature of the case admits, as in the case of an improvement, any independent claim should contain in the following order, (1) a preamble comprising a general description of all the elements or steps of the claimed combination which are conventional or known, (2) a phrase such as "wherein the improvement comprises," and (3) those elements, steps and/or relationships which constitute that portion of the claimed combination which the applicant considers as the new or improved portion.

(f) If there are several claims, they shall be numbered consecutively in Arabic numerals.

(g) All dependent claims should be grouped together with the claim or claims to which they refer to the extent possible.

K. Abstract of the Disclosure

37 C.F.R. § 1.72 states:

§ 1.72 Title and abstract.

(a) The title of the invention, which should be as short and specific as possible, should appear as a heading on the first page of the specification, if it does not appear at the beginning of the application.

(b) A brief abstract of the technical disclosure in the specification must be set forth on a separate sheet, preferably following the claims under the heading 'Abstract of the Disclosure.' The purpose of the abstract is to enable the Patent and Trademark Office and the public generally to determine quickly from a cursory inspection the nature and gist of the technical disclosure. The abstract shall not be used for interpreting the scope of the claims.

(Pub. L. 94-131, 89 Stat. 685)

L. Drawing

37 C.F.R. § 1.81 sets forth:

§ 1.81 Drawings required in patent application.

(a) The applicant for a patent is required to furnish a drawing of his or her invention where necessary for the understanding of the subject matter sought to be patented; this drawing, or a high quality copy thereof must be filed with the application. Since corrections are the responsibility of the applicant, the original drawing(s) should be retained by the applicant for any necessary future correction.

(b) Drawings may include illustrations which facilitate an understanding of the invention (for example, flow sheets in cases of processes, and diagrammatic views).

(c) Whenever the nature of the subject matter sought to be patented admits of illustration by a drawing without its being necessary for the understanding of the subject matter and the applicant has not furnished such a drawing, the examiner will require its submission within a time period of not less than two months from the date of the sending of a notice thereof.

35 U.S.C. § 113 requires: § 113 Drawings

The applicant shall furnish a drawing where necessary for the understanding of the subject matter sought to be patented. When the nature of such subject matter admits of illustration by a drawing and the applicant has not furnished such a drawing, the Commissioner may require its submission within a time period of not less than two months from the sending of a notice thereof. Drawings submitted after the filing date of the application may not be used (i) to overcome any insufficiency of the specification due to lack of an enabling disclosure or otherwise inadequate disclosure therein, or (ii) to supplement the original disclosure thereof for the purpose of interpretation of the scope of any claim.

(July 19, 1952, ch. 950, § 1,66 Stat. 799; Nov. 14, 1975, Pub. L. 94-131, § 8,89 Stat. 691.)

Generally, drawing must be within margins specified in MPEP § 608.02(b), and lettering must be 1/8" high minimum.

M. Signed Oath and Declaration

35 U.S.C. § 115 states:

§ 115 Oath of applicant

The applicant shall make oath that he believes himself to be the original and first inventor of the process, machine, manufacture, or composition of matter, or improvement thereof for which he solicits a patent; and shall state of what country he is a citizen. Such oath may be made before any person within the United States authorized by law to administer oaths, or, when made in a foreign country, before any diplomatic or consular office of the United States authorized to administer oaths, or before any officer having an official seal and authorized to administer oaths in the foreign country in which the applicant may be, whose authority is proved by certificate of a diplomatic or consular officer of the United States, or apostille of an official designated by a foreign country which, by treaty or convention, accords like effect to apostilles of designated officials in the United States, and such oath shall be valid if it complies with the laws of the state or country where made. When the application is made as provided in this title by a person other than the inventor, the oath may also be varied in form that it can be made by him. 37 C.F.R. § 1.63 states:

§ 1.63 Oath or declaration

(a) An oath or declaration filed under § 1.51(a)(2) as part of an application must:

(1) Be executed in accordance with either § 1.66 or § 1.68;

(2) Identify the specification to which it is directed;

(3) Identify each inventor and the residence and country of citizenship of each inventor; and

(4) State whether the inventor is a sole or joint inventor of the invention claimed.

(b) In addition to meeting the requirements of paragraph (a), the oath or declaration must state that the person making the oath or declaration:

(1) Has reviewed and understands the contents of the specification, including the claims, as amended by any amendment specifically referred to in the oath or declaration;

37 C.F.R. § 1.68 states: § 1.68 Declaration in lieu of oath.

Any document to be filed in the Patent and Trademark Office and which is required by any law, rule, or other regulation to be under oath may be subscribed to by a written declaration. Such declaration may be used in lieu of the oath otherwise required, if and only if, the declarant is on the same document, warned that willful false statements and the like are punishable by fine or imprisonment or both (18 U.S.C. 1001) and may jeopardize the validity of the application or any patent issuing thereon. The declarant must set forth in the body of the declaration that all statements made of the declarant's own knowledge are true and that all statements made on information and belief are believed to be true.

(2) Believes the named inventor or inventors to be the original and first inventor or inventors of the subject matter which is claimed and for which a patent is sought; and

(3) Acknowledges the duty to disclose to the Office all information known to the person to be material to patentability as defined in § 1.56.

(c) In addition to meeting the requirements of paragraphs (a) and (b) of this section, the oath or declaration in any application in which a claim for foreign priority is made pursuant to § 1.55 must identify the foreign application for patent or inventor's certificate on which priority is claimed, and any foreign application having a filing date before that of the application on which priority is claimed, by specifying the application number, country, day, month and year of its filing.

(d) In any continuation-in-part application filed under the conditions specified in 35 U.S.C. 120 which discloses and claims subject matter in addition to that disclosed in the prior copending application, the oath or declaration must also state that the person making the oath or declaration acknowledges the duty to disclose to the Office all information known to the person to be material to patentability as defined in § 1.56, which became available between the filing date of the prior application and the national or PCT international filing date of the continuation-in-part application.

(35 U.S.C. 6, Pub. L. 97-247)

N. Filing Fee

MPEP § 607 sets forth:

§ 607 Filing Fee

Patent application filing fees are set in accordance with 35 U.S.C. 41 and are listed in 37 C.F.R. 1.16.

When filing an application, a basic fee entitles applicant to present 20 claims including not more than 3 claims in independent form. If claims in excess of the above are included at the time of filing, an additional fee is required for each independent claim in excess of three, and a fee is required for each claim in excess of 20 claims (whether independent or dependent). Fees for a proper multiple dependent claim are calculated based on the numbers of claims to which the multiple dependent claim refers, 37 C.F.R. 1.75(c) and a fee is required per application containing a proper multiple dependent claim. For an improper multiple dependent claim, the fee charged is that charged for a single dependent claim.

Upon submission of an amendment (whether entered or not) affecting the claims, payment of fees is required.

Application Branch has been authorized to accept all applications, otherwise acceptable, if the basic fee is submitted, and to require payment of the deficiency within a stated period upon notification of the deficiency. Amendments before the first action, or not filed in response to an Office action, presenting additional claims in excess of the number already paid for, not accompanied by the full additional fee due, will not be entered in whole or in part and applicant will be so advised. Such amendments filed in reply to an Office action will be regarded as not responsive thereto and the practice set forth in MPEP § 714.03 will be followed.

The additional fees, if any, due with an amendment are calculated on the basis of the claims (total and independent) which would be present, if the amendment were entered. The amendment of a claim, unless it changes a dependent claim to an independent claim or adds to the number of claims referred to in a multiple dependent claim, and there placement of a claim by a claim of the same type, unless it is a multiple dependent claim which refers to more prior claims, do not require any additional fees.

For purposes of determining the fee due the Patent and Trademark Office, a claim will be treated as dependent if it contains reference to one or more other claims in the application. A claim determined to be dependent by this test will be entered if the fee paid reflects this determination.

Any claim which is in dependent form but which is so worded that it, in fact, is not a proper dependent claim, as for example it does not include every limitation of the claim on which it depends, will be required to be canceled as not being a proper dependent claim; and cancellation of any further claim depending on such a dependent claim will be similarly required. The applicant may thereupon amend the claims to place them in proper dependent form, or may redraft them as independent claims, upon payment of any necessary additional fee.

After a requirement for restriction, non-elected claims will be included in determining the fees due in connection with a subsequent amendment unless such claims are canceled.

An amendment canceling claims accompanying the papers constituting the application will be effective to diminish the number of claims to be considered in calculating the filing fees to be paid.

The additional fees, if any, due with an amendment are required prior to any consideration of the amendment by the examiner.

Money paid in connection with the filing of a proposed amendment will not be refunded by reason of the non-entry of the amendment. However, unentered claims will not be counted when calculating the fee due in subsequent amendments. Amendments affecting the claims cannot serve as the basis for granting any refund.

37 C.F.R. § 1.16 states:

FEES AND PAYMENT OF MONEY

§ 1.16 National application filing fees.

(a) Basic fee for filing each application for an original patent, except design or plant cases:
By a small entity (§ 1.9(f)) - $365.00
By other than a small entity - $730.00

(b) In addition to the basic filing fee in an original application, for filing or later presentation of each independent claim in excess of 3:
By a small entity (§ 1.9(f)) - $38.00
By other than a small entity - $76.00

(c) In addition to the basic filing fee in an original application, for filing or later presentation of each claim (whether independent or dependent) in excess of 20. (Note that § 1.75(c) indicates how multiple dependent claims are considered for fee calculation purposes):
By a small entity (§ 1.9(f)) - $11.00
By other than a small entity - $22.00

(d) In addition to the basic filing fee in an original application, if the application contains, or is amended to contain, a multiple dependent claim(s) per application:
By a small entity (§ 1.9(f)) - $120.00
By other than a small entity - $240.00

(If the additional fees required by paragraphs (b), (c), and (d) of this section are not paid on filing or on later presentation of the claims for which the additional fees are due, they must be paid or the claims canceled by amendment prior to the expiration of the time period set for response by the Office in any notice of fee deficiency.)

(e) Surcharge for filing the basic filing fee or oath or declaration on a date later than the filing date of the application:
By a small entity (§ 1.9(f)) - $65.00
By other than a small entity - $130.00

(f) For filing each design application:
By a small entity (§ 1.9(f)) - $150.00
By other than a small entity - $300.00

(g) Basic fee for filing each plant application:
By a small entity (§ 1.9(f)) - $245.00
By other than a small entity - $490.00

(h) Basic fee for filing each reissue application:
By a small entity (§ 1.9(f)) - $365.00
By other than a small entity - $730.00

(i) In addition to the basic filing fee in a reissue application, for filing or later presentation of each independent claim which is in excess of the number of independent claims in the original patent:
By a small entity (§ 1.9(f)) - $38.00
By other than a small entity - $76.00

(j) In addition to the basic filing fee in a reissue application, for filing or later presentation of each claim (whether independent or dependent) in excess of 20 and also in excess of the number of claims in the original patent. (Note that § 1.75(c) indicates how multiple dependent claims are considered for fee calculation purposes):
By a small entity (§ 1.9(f)) - $11.00
By other than a small entity - $22.00

(Note: See ßß 1.445, 1.482 and 1.492 for international application filing and processing fees.)

VIII. DRAFTING A SOFTWARE PATENT APPLICATION

There is no magic formula on how to draft a patent application, but an approach that usually works well is as follows:

1. Identify the invention.
2. Determine how the invention is different from the prior art.
3. Determine what features to highlight.
4. Draft the key claims to the invention.
5. Prepare drawings illustrating the data structure for the invention.
6. Prepare drawings illustrating the basic functions performed by the software (perhaps a top-down chart).
7. Prepare flow charts illustrating the basic processes associated with each function (somewhat like object oriented programming).
8. Describe the data structure, basic functions and flow charts.
9. Make sure claims are supported by description/drawing.

IX. PROSECUTION OF APPLICATIONS

Once filed, an application is assigned to an examiner in the relevant art unit. The application is examined in its "regular order" (unless made "special") which typically involves a wait of about one (1) year to examination in the software arts.

Most of the time, the claims are rejected by the Examiner in the first office action; whether or not the Examiner is inclined to ultimately allow them.

The rejection usually asserts that the invention, as claimed, defines subject matter which is "obvious" in view of one or more prior art references.

The applicant typically responds to the rejection with amendments to the claims highlighting the patentable features of the invention, and arguing that the prior art does not teach the invention.

The applicant's response either results in an allowance of the claims, or leads to another rejection. This rejection/response correspondence continues until the application is allowed, appealed or abandoned.

X. REEXAMINATION

Reexamination is a procedure by which the Patent and Trademark Office "reexamines" an issued patent. If the patent is successfully reexamined, it is issued as a "reexamined" patent, and given a new number. If a patent does not survive reexamination, it is abandoned to the public.

Only printed publications can be considered in a reexamination proceeding. Prior uses or "on-sale" bars will not be considered.

A reexamination request can be filed by any party, including parties hostile to the patent, and the patent owner. The request must present printed publications for consideration that raise a substantial new question of patentability. Publications previously considered by the Patent and Trademark Office typically will not provide a new question of patentability.

Once a reexamination is accepted, the patent owner must respond to office actions of the examiner, and attempt to distinguish the invention over the new publications. The owner can narrow, but not enlarge, the scope of the claims in a reexamination proceeding.

Generally, reexamination is a risky way to challenge a patent unless the new publication/prior art is very close and difficult to distinguish. If the patent survives the reexamination substantially intact, the publication will not be useful in invalidating the patent in a district court proceeding.

Reexamination is similar in some respects to reissue, discussed below.

XI. REISSUE

A reissue application may be filed to correct errors in a patent. Correctable errors include the failure to claim the invention as broadly as possible, or claiming the invention too broadly so as to render it invalid. Inventorship errors can also be corrected in reissue.

Reissue allows a patentee to broaden the claims if it is filed within two (2) years of the issue date of the patent. Otherwise, the claims can only be narrowed in a reissue.

A reissue application can only be filed by the patentee, and any prior art may be considered, including prior uses or "on-sale" bars.

Generally, it is more desirable for a patentee to file a reissue as opposed to a reexamination.

If the patent survives reissue intact, a "reissued" patent is issued with a new number.

XII. FOREIGN FILING STRATEGIES

Generally, small start-up software companies should avoid foreign filing. The costs are high and the benefits long-term in nature. Such filings are rarely critical or important to a company's early success.

If foreign filings are made, they should be made selectively.

XIII. PATENT INFRINGEMENT

Patent Infringement Generally

The owner of a U.S. patent has the right to exclude others from making, using and selling the patented invention for seventeen years from the date the patent issues. 35 U.S.C. § 171.

Note that this is the power to exclude others from making, using and selling, not the right to make, use and sell.

Broad or dominating patents usually cover a wide range of commercial embodiments or species of the dominating inventive concept. Many of these embodiments or species may themselves be patented as improvements to the dominating inventive concept. Many of these embodiments or species may themselves be patented as improvements to the dominating inventive concept.

Unlike copyrights, patent infringement cannot be avoided by independent development. Copying is not an element of a patent infringement claim.

To establish infringement, the patentee need only show that the infringer is making, using or selling the patented invention, or that the infringer is inducing others to commit such acts, or contributing (as legally defined) to such infringing activities. Contributory infringement is established by showing that the infringer is selling materials or apparatus which have no substantial non-infringing use.

A patent comes with a very strong presumption of validity. A patent can be invalidated only by "clear and convincing evidence."

Injunctive Relief and Damages

Once found liable for infringement, or upon the grant of a preliminary injunction, an infringer can be enjoined from further infringing acts, e.g., making, using or selling the patented invention.

In addition, the patentee is entitled to recover monetary damages from the infringer in the form of the patentee's lost profits, the infringer's profits, or in the alternative, an amount not less than a reasonable royalty.

In cases of willful infringement, damages can be increased by a court to up to three times the actual award, and the infringer can be required to pay the patentee's attorneys fees.

Willful infringement is established by showing that the infringer had knowledge of the patent and infringed without a reasonable basis to believe that the patent was invalid or not infringed.

Parts of a Patent

A patent has two basic parts: the specification and the claims.

The specification must include a description of the invention in its preferred form (the "best mode" requirement of 35 U.S.C. § 112). It must also teach one of reasonable skill in the art how to make and use the invention (the "enablement" requirement of 35 U.S.C. § 112).

The specification typically includes a narrative of the "background of the invention," a detailed description of the invention (wherein the parts or steps are referred to with reference numbers), and drawings.

The claims particularly point out the invention, and distinguish it from the prior art.

Basic Claim Structures

Claims are either "independent" or "dependent." An independent claim is simply a claim which does not refer back to another claim. A dependent claim refers back to and includes all the limitations of a prior independent or dependent claim.

Apparatus claims define an invention as a system or device, for example, a computer system or a screwdriver.

Method claims define an invention as a sequence of acts or steps, for example, a process for manufacturing a chemical or a method for operating a digital computer.

Software is claimed either as a method for operating a digital computer, or in terms of a system defined as a combination of software and hardware acting in cooperation to carry out one or more functions.

A "means plus function" claim defines an invention as a series of means-plus-function elements which state the function performed by the element. For example, a screw might be defined broadly as "means for fastening."

A means-plus-function element is interpreted to cover that shown in the specification, and equivalents.

Prior Art

Prior art is generally any technology known or used before an invention is made. Generally, these categories are:
technology publicly known or used by others;
technology described in a printed publication anywhere in the world;
technology on sale in the U.S.; and
technology described in a U.S. patent application filed before the invention was made.

Technology on-sale or described in a printed publication published more than a year before the filing date of a patent application is unavoidable prior art to that application.

Technology which is concealed from the public may not constitute prior art to a later invention, unless the public was given some direct use of the technology.

Basic Requirements for a Patent

The invention claimed in a patent must fall into an accepted statutory category (as required by 35 U.S.C. § 101), have utility (as required by 35 U.S.C. § 101) and be novel (as required by 35 U.S.C. § 102) and non-obvious to one of ordinary skill in the art (as required by 35 U.S.C. § 103).

Most all technology is statutory, with the notable exception of mathematical algorithms (which can be claimed as part of an otherwise statutory invention) and methods of doing business.

Utility merely requires that the invention has some use, a requirement that is easily met.

Novelty requires that an invention be different from that shown in the prior art.

Nonobviousness takes the novelty requirement a step further and requires that the invention be unobvious to one of ordinary skill in the art. This requirement is subjective, but can be proved by secondary considerations such as commercial success of the invention, surprise in the trade at the effectiveness of the invention or that the invention is an unexpected result.

In addition, an applicant for patent must disclose the best way known to practice the invention, and teach how to make and use it in her specification.

Prosecution and Prosecution History

All patent applications are examined by the Patent and Trademark Office (PTO). The PTO conducts a patentability search, and then either allows or rejects the claims presented with the application. Most of the time, one or more of the originally filed claims are rejected for failure to define a patentable invention. The PTO and the applicant then engage in a negotiation, in which the applicant argues for the patentability of her claims, and often presents amended claims which attempt to define the invention over the prior art.

The process of negotiation with the PTO creates a "prosecution history."

Literal Infringement

If there is one-to-one correspondence between the elements of a claim and an infringing structure or method, it is said that the claim is literally infringed. Literal infringement is the most powerful form of infringement, since it is much less subjective than infringement by the doctrine of equivalents.

If any element of a claim is missing from the accused structure, or the elements are not connected as specified by the literal language of the claim, then there is no literal infringement.

In the case of means-plus-function claims, the patentee must show that the elements of the accused structure which correspond to the means-plus-function elements are equivalents to those illustrated in the patentee's specification.

Infringement by Doctrine of Equivalents

Sometimes, there is not a one-to-one correspondence of the claim elements to the accused structure, but yet the accused structure includes all the elements of the claim. In this case, infringement might possibly be found by application of what is known as the "doctrine of equivalents," which is an equitable doctrine developed to protect a patentee from having her invention misappropriated by an infringer whom obtains the benefit of the inventive advance but cleverly avoids literal infringement by rearranging the claim elements.

The doctrine of equivalents does require, in any event, that all of the elements of the claim be found in the accused structure, even if not in the same arrangement. Further, it requires that the accused structure perform substantially the same function, in substantially the same way, to obtain the same result, as the invention as literally claimed.

Design-Around Strategies

Certainly the most powerful approach to designing around a patent is to simply use an approach clearly documented in the prior art to the patent (assuming this prior art is not itself patented). By definition, a patentee cannot read her claim on the prior art, or the claim is invalid for want of novelty.

Another powerful design-around tool is the doctrine of "file wrapper estoppel," also knows as "prosecution history estoppel." This doctrine prevents a patentee from reading her claim, either literally or by the doctrine of equivalents, to cover a structure or method which the patentee argued was not covered by her claim during the prosecution of the patent, or which the patentee abandoned during prosecution.

To use this tool, the prosecution history is obtained and studied, and design-around options which are protected by prosecution history estoppel are identified. These options can then be used to develop a non-infringing product.

Another powerful design-around tool is to leave out at least one element of the patented invention. As noted above, if an accused structure lacks one or more elements specified in the claim, there can be no infringement either literally or under the doctrine of equivalents.

Generally, because of the strong presumption of validity a patent has, the odds do not favor an attempt to invalidate a claim for defining obvious subject matter. However, if a ready design-around option is not available, the validity of the claim can be attacked as a way of avoiding infringement. An invalid claim is unenforceable. Here, the only relatively safe defense is that a claim is invalid because each and every element of the claimed invention is clearly found in a single prior art reference (a "novelty" defense). In such cases, validity becomes essentially an objective as opposed to a subjective inquiry, greatly increasing the predictability of the outcome. An "obviousness" defense is much more difficult to mount, because of the presumption of validity coupled with the subjectivity of the decision. Few juries feel competent to second-guess the Patent and Trademark Office.

Infringement Clearance Searches and Strategies

Infringement situations can be classified in two categories:
(1) those involving an aggressive competitor; and
(2) those involving a non-competitor or competitor whose principal interest, if any, is in licensing the patent for royalties.

Each situation suggests a different strategy. In the case of aggressive competitors, one must assume that litigation is a real possibility, and infringement clearly avoided unless prepared to litigate. Thus, one should always keep a close eye on the competitors' patent portfolios. Usually, finding a competitor's relevant patents is inexpensive (less than $500). Typically, most such patents are quickly ascertained to be irrelevant. If relevant patents are located, precautionary measures, such as designing around the patent in question, can be taken on a proactive basis.

It is not, however, generally advisable to search out every possible patent that might be infringed by your company's products or methods. If a patent is not held by a competitor, the owner is much less likely to aggressively pursue infringers with litigation. In fact, in many cases a non-competitive patent holder may not even be aware that the invention is being used by another party, or even care. Even if the patentee is seeking to license the patent, they will start their enforcement effort by suing only one or two selected infringers. If these suits succeed, the patentee moves on to the next set of infringers. The object in this scenario is to avoid being the first sued, and wait and see how the patent fares in litigation. If the patent is successfully asserted against competitors, and licensed industry-wide, then obtaining a license will not put your company at a competitive disadvantage. On the other hand, signing up early for a license with its associated royalty payments, leaves your company at risk that it may be the only one or one of just a few industry competitors that ever take a license, leaving your company at a competitive disadvantage.

It is equally unwise to be the last to license a patent, since your company may pay a higher royalty as a result of holding out to the end.

Therefore, as to patents held by non-competitors, it is best to keep a low profile and neither lead nor lag the industry as a whole in resisting the patent.

Searching for Competitors' Patents

Since U.S. Patents are held in secret, they cannot be found until issued.

However, many companies file foreign patent applications that correspond to their U.S. applications. These applications are published 18 months after the U.S. filing date of their U.S. counterpart, and can be identified in an electronic database search.

Derwent's World Patent Index in the Dialog Database is an effective searching tool. Also, Lexis has a complete database of all U.S. patents still in force.

Conclusion

Designing around patent infringement begins with vigilance. The patent portfolios of all direct competitors should be monitored, and relevant patents analyzed. Relatively risk-free design-around options can usually be identified, and unwelcome surprises avoided.