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GUEST POST: David Lisch on the Basics of Intellectual Property Law for Start-Ups (Part 2-Patents)

Guest Post: Gray Reed intellectual property attorney David Lisch provides this two part Lisch_111x105series on Basics of Intellectual Property Law for Start-Ups. Part one focused on trademarks and entity formation. This part focuses on patent law.

Patent Protection

A patent protects “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” 35 U.S.C. § 101. Unlike trademarks, which protect a brand name and recognition, a patent protects an invention, including functionality or design thereof. A patent gives the owner the exclusive right to manufacture products or employ processes covered by the patent for 20 years from the earliest priority date.

1. Do a Prior Art Search

Prior to filing a patent application, a business may elect to perform a prior art search to become informed of possible prior art which may be cited against the invention and/or preclude patentability. Moreover, it may assist the drafting attorney to craft claims which capture the invention but avoid overlapping with potential prior art, thus (hopefully) reducing the likelihood of the application being issued one or more office actions which will incur additional costs for the attorney to draft a response to.

2. Know your deadlines

The urgency of filing for a patent application wholly depends on when the first public disclosure, public use, or sale occurred. See 35 U.S.C. § 102. In the United States, there is a one-year grace period after such occurrence to file either a provisional or nonprovisional patent application. A provisional patent application may be filed to establish a “filing date,” and usually costs significantly less than a nonprovisional due to requiring less time to draft. Filing a provisional application will give the business one year to test the market and explore if filling a nonprovisional patent application is worthwhile. However, the follow-on nonprovisional patent application must be filed within that one year timeframe of filing the provisional application and claim benefit thereto, or the provisional application will become prior art to any future patent applications for the same invention.

3. Know what is not patentable

There are a few judicially created exceptions which preclude patentability, including if a claim is directed to a law of nature, a natural phenomenon, or an abstract idea. This last exception of being an abstract idea is particularly relevant to web based companies due to the likely desire of patenting search or coding algorithms and other software and/or business method related inventions. More specifically, these areas have received significant attention since June 19, 2014, when the Supreme Court decided Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 1247 (2014). This article (Wave Of USPTO Alice Rejections Has Cos. Tweaking Strategies) succinctly explains the current state of the U.S. Patent and Trademark Office, and the likelihood of obtaining a software or business method patent. A few quotable comments include:

“In recent months, USPTO patent examiners who handle applications in the area of e-commerce have been rejecting more than 90 percent of applications under Alice”

“It has become clear from the statistics that applications for patents on ways of performing business methods more efficiently using a computer face a difficult or nearly impossible path at the USPTO.”

While keeping this article to the fundamentals, it is worth noting some exceptions to the above may apply depending on the timeline of development of the part or invention being claimed, along with if any public uses were “experimental,” however that is beyond the scope of this article. Moreover, it is a best practice to not have to rely on these exceptions in the first place. Additionally, while the one-year grace period applies to the United States, such first disclosures may bar protection in other jurisdictions, such as Europe, Japan, and China, which employ a worldwide “absolute novelty” rule (any disclosure worldwide prior to filing the patent application, even a disclosure by the applicant, may be cited as prior art, thus possibly barring patentability).