Smith Hopen IP Weblog

U.S. Inventors to Pay it Forward

The USPTO has set an admittedly aggressive budget plan to raise fees again in October.  Fee increases on October 1, 2012 are a common occurrence but not after a recent 15% surcharge fee schedule that was imposed ten days after the September 16, 2011 Patent Reform legislation signed into law by President Obama.

USPTO Director David Kappos (right) plans to introduce a new fee schedule the first quarter of 2013.  See full press release here.

Apollo 11…42 years later

The Apollo 11 mission blasted off from the Kennedy Space Center in Florida at 9:32 AM on July 16, 20169.  On board were Lieutenant Colonel Michael Collins, Colonel Edwin “Buzz” Aldrin and Commander Neil Armstrong. On July 20th, Apollo 11 began to orbit the Moon.  Armstrong and Aldrin went through a crawlway to the Eagle, the landing module to begin their descent.  At 10:56:20 pm, US EST, Neil Armstrong stepped onto the surface of the Moon saying “That’s one small step for man, one giant leap for mankind.”  But the leap in technology had already arrived before the giant Saturn rocket has blast off four days earlier.

Software designed to manage a complex series of systems onboard the capsules is an ancestor to the software that today is used in retail credit card swipe devices. Race car drivers and firefighters today use liquid-cooled garments based on on the devices created for Apollo astronauts to wear under their spacesuits. The freeze-dried foods developed for Apollo astronauts to eat in space are used today in military field rations, known as MREs, and as part of survival gear.

Two years after Apollo 11, NASA created the Innovative Partnerships Program has connected NASA resources to private industry.  For an interesting list of NASA spin-off technologies, check out this link.

What Osama bin Laden’s death means to Innovation

In the abstract, the violent death of an individual is difficult to celebrate. However, the dispatch of Osama bin Laden by U.S. Special Forces last Sunday marked a far more meaningful event than retribution. Whether desperation, ignorance or fanaticism was the motivator, bin Laden’s actions and rhetoric were a threat not just to the United States, but to the foundation of civilization and progress world-wide. Read full analysis.

USPTO Budget Crunch Sidelines New Initiatives

USPTO Director Kappos noted Congress effectively cut $100 million from the USPTO budget.  As a result:

• Track One of the Three-Track program, which offers expedited patent examination and was scheduled to go into effect on May 4, 2011, is postponed;

• The opening of the planned Nationwide Workforce satellite office in Detroit, as well as consideration of other possible satellite office locations, is postponed;

• Hiring—both for new positions and backfills—is frozen;
• IT projects will be scaled back;
• Funding for Patent Cooperation Treaty (PCT) outsourcing will be substantially reduced;

• Employee training will be reduced;

• All overtime is suspended.

Trademarks is unaffected and will maintain normal operations. 

Supreme Court Hears Microsoft v. i4i Oral Argument Today (April 18, 2011)

Two lower courts in the U.S. have ruled that Microsoft used i4i's technology in some versions of its best selling Word software program with a Texas jury awarding the company US$290 million in damages in 2009. Microsoft removed the contested sections of code in January 2010,has nevertheless continued challenging the presumption of validity afforded to issued patents.

When the U.S. Patent and Trademark Office (USPTO) rejected its second request to have the validity of i4i's patent re-examined, Microsoft appealed to the U.S. Supreme Court which agreed to hear the case last November.

Microsoft will argue that the current standard for invalidating a patent is too high, asking the court to lower the standard from "clear and convincing evidence" to what is called a "preponderance"  when the invalidating prior art was not originally considered by the patent examiner.

"If patents are too easy to invalidate, the risk of invalidation -as well as the prospect that every infringement suit will be met with a burdensome validity challenge -may raise the cost of enforcing a patent to the point where the expected value of the patent cannot justify the outlays entailed in innovation," U.S. acting Solicitor General Neal Kumar Katyal wrote in his submission to the court.

Each side will be given 30 minutes to present its opening statement to the eight sitting justices, since Chief Justice John Roberts has recused himself. Malcolm L. Stewart, United States Deputy Solicitor General, will speak on behalf of the U.S. government for 10 of i4i's minutes.

$100 million in Fees Diverted from PTO

H.R. 1473, the Full-Year Continuing Appropriations Act, 2011, is the legislation reflecting the compromise on the Continuing Resolution to fund the government for fiscal 2011. Provisions of the bill related to the PTO appropriate $100 million less than the projected user fee revenues to be collected, essentially diverting that money to other government programs.

In addition, the bill lacks the appropriations "buffer" language included in previous bills to ensure that the Office may utilize the fee revenue that exceeds the original projected collections for the fiscal year.

Many complain the application, search, issue and maintenance fees paid to the PTO (a self-funded government agency) are again diverted to other government expenses.

The USPTO currently expects to receive about $2.19 billion in fee collections for 2011, but the bill would limit the PTO’s spending to $2.09 billion. That extra $100 million would then go to pay for other government expenditures. Although $100 million only about 5% of the USPTO's annual budget, the cuts ask for $100 million from the next five months, which would represent a 10% cut in spending over that time period

Walk to Defeat ALS

Many thanks to our firm sponsors that helped us walk to defeat ALS yesterday.

Walk to Defeat ALS - Smith & Hopen Team VIEW SLIDE SHOW DOWNLOAD ALL

Patent Reform Passes Senate 95-5–What it Means for Universities, Inventors, Businesses and Patent Firms

The Senate passed patent reform legislation yesterday which is the most sweeping change to patent practice in over 60 years.  The bill passed only after lawmakers dropped the thorniest issue: whether to narrow damages paid for infringing on a patent. By dropping the damages provisions, the legislation essentially leaves the matter of where to set damages up to the courts.   If the House legislation resembles the Senate legislation it will change the way a number of different organization handle innovation.

UNIVERSITY TECH TRANSFER:

The proposed legislation grants the U.S. Patent & Trademark Office (“USPTO”) authority to set it own fees.Trade groups like the Association of University Technology Managers (AUTM) will lobby the USPTO to establish “academic” filing fees that might even be aligned with the proposed “micro-entity” fees for individual inventors.  From a workflow standpoint, Universities will continue to file provisional patent applications to delay higher patent prosecution expenses while they seek licensees for their technology.  The post-grant patent opposition system may introduce a new and potentially expensive line-item in the patent prosecution budget if a response is required.  However, post-grant oppositions are likely to be a rare occurrence. 

INDIVIDUAL INVENTORS:

With fee-setting authority the USPTO will likely offer “micro-entity” fees for individual inventors.  Perhaps a provisional patent application fee will be $60 instead of $110 for a current “small entity” or $220 for a current “large entity.”  The first-to-file provision (as opposed to first-to-invent) will be meaningful to patent holders will limited financial resources.  When first-to-invent rights are invoked, the federal court litigation and/or proceeding before the Board of Patent Appeals and Interference easily can run over $600,000.  It is far less expensive and efficient to simply check who filed their application first. 

NON PRACTICING ENTITIES:

Otherwise known as “patent trolls,” patent attorneys that acquire unused patents and sue companies for patent infringement are probably relieved that the damages limitations were removed from the Senate bill prior to passage.  Although some patent litigation may involve tax strategy patents (which would be eliminated under the Senate bill), the U.S. Supreme Court’s Decision in Biski effectively rendered those type of patents highly questionable and difficult to assert. 

SMALL COMPANIES:

Small companies will likely start monitoring their competition more aggressively through their patent attorneys to take advantage of post-grant patent opposition claims.  For example, if a competitor’s patent application issues with dubious and economically disruptive patent claims, then the company may seek to oppose it’s issue rather than get sued in district court for infringement later on.  Additionally, the company may also file prior art with the patent examiner that is evaluating their competition’s patent application during patent prosecution (prior to issuance).

LARGE COMPANIES:

Fortune 500 companies will be pleased that the first-to-file system will remove a substantial amount of litigation involving who was first to invent.  Large companies typically have well-established patent filing workflows so they will continue to rapidly file patent applications on newly developed technology.  One technique used by our firm with larger entities is to file a series of provisional patent applications as the technology continues to develop.  At the one-year anniversary date of the first provisional patent application, a non-provisional patent application is filed claiming priority to all the provisional applications that were filed.  As noted above, large companies will closely monitor their competition and become more involved in prior art submissions both during the patent prosecution stage as well as during the post-grant patent opposition phase.  Large companies will certainly lobby the House to reintroduce damages limitations.  The USPTO’s fee setting authority will likely raise the filing fees substantially for larger entities (500 or more employees).

PATENT FIRMS:

Patent firms and patent owners alike tend to support patent reform.  By switching to a first-to-file system a substantial amount of uncertainty is removed from patent valuation.  Patent litigators may take a financial hit by losing the first-to-invent discovery process in favor of the far more simple (read “inexpensive”) first-to-file determination.  With expanded ex parte prior art submissions during patent prosecution look for new patent monitoring services of competitors’ filings.  Patent attorneys will also be going “back to school” to develop skills in the post-grant opposition proceedings.  Overall, patent reform goes a long way to reducing uncertainties in the value of a patent and thus will likely foster innovation.

Sanford’s Dangerous Appeal to the Supreme Court

The Supreme Court on November 1, 2010, advised that it will review a Federal Circuit decision that a previous assignment of a university inventor to a private company trumped an employment agreement with the university and the university’s rights in the invention under the Bayh-Dole Act (Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., U.S., No. 09-1159, 11/1/2010).  Stanford's petition to the Supreme Court is available here.

In the author’s view, this is a dangerous issue to give to the U.S. Supreme Court.  Read why…Full Article Here.

PTO’s 2010-2015 Strategic Plan–Details versus Rhetoric

The United States Patent & Trademark Office (USPTO) released its 2010-2015 Strategic Plan.  Separating the rhetoric from real changes is not always easy.  There are plenty of statements about diversity, cooperation, outreach and the like.  All those objectives are important.  However, what meaningful changes can patent practitioners, inventors, universities and companies expect?

The USPTO identified a number of well-known challenges to operation:

• Funding authority to support agency performance objectives
• The volume of applications
• Rapid advances in technologies
• Necessity for global cooperation and protection
• Antiquated and decaying IT infrastructure
• Hiring, retaining, and training examiners
• Balancing competing objectives
• The need for greater transparency in defining accountability
• metrics for agency objectives and performance.

Now for the numbers.  The objectives by 2014-2015:

• Patent pendency time reduced to 10 months for a first office action.
• Trademark pendency times reduced to 2.5 and 3.5 months for a first office action.

To put these numbers in perspective, the expected average wait for a first office action this will is forecasted to be 25.4 months.  Reducing that to the goal of 10 months would be dramatic.

New Hiring of Patent Examiners

The USPTO is seeking to hire 1,000 new patent examiners in 2011 and 2012.  Whereas USPTO’s previous hiring has been focused on scientific background and experience,this new model places more emphasis on recruiting candidates with significant IP experience, such as registered patent attorneys and patent agents, former examiners, as well as skilled technologists having experience with the USPTO as inventors.

Telecommuting

The USPTO will develop a nationwide workforce using teleworker other appropriate measures that will allow them to hire experienced IP professionals interested in joining the USPTO, but who do not want to relocate to the Washington, D.C. region.  This is popular at the USPTO and we frequently have both our attorneys and the patent examiners "meeting" at the USPTO office in Arlington for interviews.  In one of my last interviews, the patent examiner took the train from his home in Boston.

Fee Increases

The USPTO wants more authority to set fees noting that the U.S. patent is "cheap" in comparison to other countries:

XML-Based Patent Applications

The USPTO wants to move patent applications to an XML standard.  In this context, it will simply mean that the document will identify the context of the sections (i.e., this is the invention title, this is the invention summary, these are the invention claims, etc...).  It is an ideal concept for streamlining the process.  However, it was attempted several years previously under the ABX system and was a disaster.  We would often spend more time getting the format in compliance than drafting a simple provisional patent application.

Other Objectives

The full report can be viewed here and includes a number of other sensible ideas.  Cloud computing, revisions to the examiner count system and other long-needed changes to USPTO operations are anticipated.  While no informed practitioner would agree with every objective proposed by Director Kappos, the direction appears to be positive and at least carefully considered.