IP Management and StrategiesKarl F. Jorda

David Rines Professor of Intellectual Property Law & Industrial InnovationDirector, Kenneth J. Germeshausen Center for the Law of Innovation & Entrepreneurship

Franklin Pierce Law CenterTwo White Street, Concord, NH 03301 USA

SeminarSiam Cement GroupBangkok, Thailand

December 19-20, 2006

INTRODUCTION• Live in “Golden Age” for IPRs• Patent filings and issuances are skyrocketing• Talk of patent “revolution,” “explosion,” “frenzy”

• “Anything under the sun that is made by man” is patentable• Courts, Congress, Justice Department — pro IPRs• Corporations built on patented technologies• Motto: Innovate or perish

• Value of IPRs for securing exclusivity — simply invaluable• Royalties for licensing IPRs in 2002: $150 billion• Over $1 billion for some companies• Universities jumped on bandwagon• Getting patents, concluding licenses, collecting royalties

THE AMERICAN PATENT SYSTEM

• The Constitution gives Congress the power to promote the progress of the useful arts by securing for inventors the exclusive right to their discoveries for limited times. (U.S. Const. art. I, § 8, cl. 8.)

• “The issue of patents for new discoveries has given a spring to invention beyond my conception.” (Thomas Jefferson)

• “The patent system added the fuel of interest to the fire of genius.” (Abraham Lincoln)

• “The American patent system has promoted countless applications of the arts and sciences to the needs and well-being of our people.” (Franklin D. Roosevelt)

• “The advancement of the arts, from year to year, taxes our credulity and seems to presage the arrival of that period when human improvement must end.” (Henry L. Ellsworth, Commissioner, Patent Office Annual Report for 1843)

The Global Landscape

A. Favorable Development & Trends Abroad

India– a sea change total about-face• IP taught in schools• “Patent or Perish” (Chamber of Commerce)• “IP literacy,” “IP awareness”– buzzwords• “Bring IP down to the people”

Changes in philosophy:Indonesia, Canada, “south of the border”

Substantial revisions of IP systems– pre- and post-TRIPS

The Global Landscape Sea change in India in Viewing IPRs

In 1992 at a WIPO IP Education Program at the Delhi University•There was small attendance—academics •I was crucified for my pro-patent views

In 2001 at a similar WIPO Program in New Delhi•I experienced a complete about-face. Now that IP is available in abundance in India.

•IP being taught in “all academic schools” under government sponsorship•New Chamber of Commerce slogan: “Patent or Perish”•“IP literacy” and “IP awareness” have become buzzwords•Efforts to “bring IP from a legalistic ivory tower down to the common man”•Initiatives for IP studies springing up all over

The Global Landscape Seachange in India in Viewing IPRs

(con’t.)• Only skeptical undertones

•Reservations about pressure coming from developed world and •Deep seated believe that knowledge should be free and not monopolized

In 2002 I lectured at such an institute in Mumbai to a receptive audience for two days on Patent Management, Patent Licensing, Trade Secrets, Patents/Trade Secret Interface and Reverse Technology Transfer

For the past 5 years or so Indian students have been our biggest country group of students

• India still pushes the “development agenda” of developing countries at WIPO but no longer asserts that “IP is the common heritage of mankind and should be free”

The Global Landscape

B. Antipathy, hostility still persists in many countries

“Spreading the gospel” in developing countries:• Conveying my Credos-Insights-Truisms• Fending off critical comments and test

questions• Urging a six-phase course of action for

implementing effective IP systems

International Harmonization

• Paris Convention• PCT• TRIPs

• Patent Law Treaties

• EPC• OAPI/ARIPO• EAPC• NAFTA

Steady advance of harmonization of IP systems

Increasing discussion and growing literature on global, universal or world patent

Stepping stones:Extant and pending international regional treaties:

“World Patent”:Ongoing initiatives: Kyoto Action PlanFocus on Europe, Japan, USA 90% of patent activityMajor harmonized featuresOther Possible vehicles: PCT, EPOMossinghoff: will come “sooner rather than later”

WORLD PATENT

A. Stepping (Miles) Stones1. International Treaties

• Paris Convention (1882) – WIPO• Patent Cooperation Treaty (PCT) (1970)– WIPO• Trade-Related Aspects of IPRs (TRIPS) (1995)—

WTO/WIPO• Patent Law Treaty Proposals (WIPO)

2. Regional Treaties• European Patent Convention (EPC) (1973)• European Community Patent Convention (CPC)

(when?)• OAPI (1958), ARIPO (1976) in Africa• Eurasian Patent Convention (EAPC) (1995)• North American Free Trade Agreement (NAFTA-

Chapter 17 (1994)

WORLD PATENT(con’t)

B. World Patent System (as per Gerald Mossinghoff—38 IDEA 529 (1998) and J.C. Rasser, Procter & Gamble, IPO Mtg, 4/1/98)1. Essential Characteristics

• Unitary Patent Grants by Regional Patent Offices• First-to-file Priority• Provisional Applications• One-year Grace Period • English Language for Examination and

Enforcement• Single Electronic Prior Art Database• World Patent Court

WORLD PATENT(con’t)

2. Additional Problem Areas• Definition of Patentable Subject Matter• Definition of Prior Art• Claims Interpretation—Peripheral or Central• Best Mode Requirement• Rule 56 Practice• Patent Term Extensions• Nature of Post-grant Procedures (Opposition or

Re-examination)• Doctrine of Equivalents• Sanctions for Infringement (also criminal?)• Governing Structure of the World Patent System

WORLD PATENT(con’t)

C. Potential (intermediate) Alternatives)1. Trilateral Initiatives—on-going- between Europe, Japan, USA– have

90% of world patent activities—”Kyoto Action Plan”: Trilateral Network, Common Searches, Website (1998)

2. European Patent ConventionUlrich Schatz, EPO: EPC is already existing mechanism for a Global Patent as any country can join EPC.

3. Expanded PCT could be vehicle for Global Patent (Francois Curchod of WIPO, Dieter Hoinkes of USPTO)

4. “Rapid Patent” Proposal (AIPPI) (for Third World): patent application is filed, published and kept pending for 20 years when it goes abandoned, unless someone had requested examination during pendency. (The ultimate deferred examination system.) Premise: developing countries can’t live up to TRIPS standards.

5. “Reference System” Proposal (Robert Sherwood) (for Third World) –Comparable to former confirmation paten system (PCT taken a step further.) Same premise as 4. above.

WORLD PATENT(con’t)

D.Future of World, Global, Universal PatentFact we live in a knowledge-based “global village” will require full harmonization—only matter of time– how soon? With TRIPS in place, “sooner rather than later”, per Mossinghoff

And Lios Boland of USPTO goes as far to predict:“At some point in the future, we will have an

international patent system that will have characteristics similar to those we find in the copyright area. That is, the right of an inventor will be universally recognized without having to seek patent protection in each of the countries of the world.”

THREE STAGES OF A CORPORATE PATENT

MANAGEMENT PROCESS

A.Harvesting InventionsExtracting and Processing Invention Disclosures

B.Patent SolicitationPreparing, Filing and Prosecuting Patent Applications

C.Patent ExploitationEmploying, Licensing and EnforcingPatents

Harvesting Inventions(Discovering Discoveries)

1. Have a simple, easy Invention Disclosure system (policy, procedure and forms)

2. Establish rapport with inventors—”hand-holding”3. Practice MBW– “Management by Wandering Around” 4. Make periodic trips to R&D sites5. Make presentations to R&D personnel to foster IP awareness6. Distribute IP bulletins to R&F personnel7. Read R&D’s technical reports regularly8. Attend R&D meetings9. Have written procedures for cooperation between R&D and IP

Departments10.Have patent liaison people at R&D sites11.Review the invention disclosure in patent committee meetings12.Have a reasonable standard employment/invention agreement with

all R&D personnel13.Conduct IP Audits 14.Institute an inventor award of incentive system

Invention Review

Invention Disclosure

EntityPatent Coordinator

MeetingEvaluation Guidelines

Group GM Survey Results

Publish Disclosure

Technical Publication

Process

Hold asTrade Secret

Recommendations byEngineering Management

Recommendations byIP Managing Counseland Staff Attorneys

FilePatent

Application

In- HouseLegal Staff

OutsideCounsel

LiaisonEngineers

Standards RFQ

COOPERATION BETWEEN R&D & IP DEPARTMENTS

1) Correct laboratory notebook keeping2) Inform the IP Department of projects, developments,

discoveries, etc.3) Submission to the IP Department of Invention

Disclosures4) Informing the IP Department of every change and

modification in existing patented or unpatented products or processes.

5) Submission to the IP Department for clearance of every form of release or divulgation of technical information

6) Consultation with the IP Department as to any other problems relating to IPRs, i.e. patents, trade secrets, trademarks, copyright, etc.

JOINT INVENTORSHIPThe Problem- Who Is The Inventor?

The exact parameters of what constitutes joint inventorship are quite difficult to define. It is one of the muddiest concepts in the muddy metaphysics of the patent law.” --District Judge Newcomer, Mueller Brass Co. v. Reading Industries, 176 USPQ at 372 (ED Pa. 1972)

INVENTORSHIP

•Joint Inventorship •prevalent

•Determination of Joint Inventorship•critical issues of non-joinder or misjoinder

•Conception is Key•Joint Conception

•Joint Invention•Sole Conception

•Joint Invention•Joint Conception

•Sole Invention•Superior/Subordinate Relationship

•sensitive issues•Resolution of Doubt

•in favor of joinder

INVENTORSHIPDETERMINATION

An inventor is:

•A person who conceives the subject matter of at least one claim of the patent.•Two or more persons who collaborate to produce the invention through aggregate efforts.

An inventor is not:

•Someone whose only contribution is reducing an invention to practice by exercising ordinary skill in the art.•A technician who simply performs experiments or assembles the invention.•The supervisor or department manager of the person who conceived the invention.•Someone whose only contribution is an obvious element to the invention.

INVENTORSHIPDETERMINATION

(cont’d)

•Someone whose only contribution is participating in consultations about the invention before or after conception of the inventions

•A person who only conceives of the result to be obtained but not the idea of how to achieve it.

•A person who only discovers the problem (unless he contributes to the solution).

•A person who merely provides a suggestion or improvement but who does not work to fix the suggestion or improvement into the invention

•A second inventor of the subject mater of the invention who did not collaborate with a first inventor of the subject matter of the invention.

INVENTORSHIPCommon Misconceptions

•Authorship is equivalent to inventorship.

•Someone who works hard on an invention deserves to be an inventor

•The head of the company, lab, institute, (etc.) should be named as an inventor.

•Knowledge derived in the course of proving an invention entitles one to be an inventor.

INVENTORSHIPCriteria for Inventorship

•Conception is the touchstone of the invention.

•Conception is complete only when the idea is so clearly defined in the inventor’s mind that only ordinary skill would be necessary to reduce to invention to practice, without extensive research or experimentation

•But an inventor need not know that his invention will work for conception to be complete; he need only have the ability to describe his invention with particularity.

Conception

The conception of the invention consists in the complete performance of the mental part of the inventive act. All that remains to be accomplished, in order to perfect the act or instrument, belongs to the department of construction, not invention. It is therefore the formation in the mind of the inventor, of a definite and permanent idea of the complete and operative invention, as it is thereafter to be applied in practice, that constitutes and available conception within the meaning of the patent law. Mergenthaler v. Scudder, 11 App. D.C. 264, 276, 1897 C.D. 724, 731 (1897)

INVENTORSHIP

Standards for determining inventorship in the U.S.1. 35 USC § 101, 1162. Case law:

a. Standard often difficult to applyb. Standard different from authorshipc. Cannot be determined by contractd. Co-inventors need not have worked together or

contemporaneouslye. True inventors must be namedf. Incorrect inventorship does not invalidate patent so long as no

intent to defraudg. Inventors can be changed at any timeh. If inventorship dispute of patent application, resolution properly

by interferencei. If inventorship dispute of issue patent, resolved by federal

district court

COINVENTORS

No exact rules for determination of joint inventorship some negative and positive guideposts

Requirement: parties worked in concert and contributed to unitary resultmutual counsel, mutual effortcontributions do not have to be equal

Conception is key: formation in the mind of the inventor(s) of a definite and permanent idea of the compete and operative invention as it is thereafter to be applied in practice.

COINVENTORS (con’t.)

Different possibilities:Sole conception – joint inventionJoint conception – joint inventionJoint conception – sole invention

Superior – Subordinate Relationship

Resolution of Doubt

Inventorship Discrepancies

•Corresponding foreign and US applications may reveal discrepancies due to differences in the laws on (co)inventorship.

•3 actual or possible practices existForeign applications file US applications with identical inventorship

Possible result: invalidityCorrect designation of true inventor is critical– abroad often irrelevant to right to patent– standards unrelated related to US standardse.g. 10 Japanese on one compound patent e.g. 21 Russians on a magnesium salt powder patent

Foreign applicants file foreign application with inventors who are true inventors under US law- foreign and US application have same inventors – can cause problems with inventor compensation laws and morale problems

Foreign applications file with discrepant inventorship—possible complications in PTO during prosecution– can be overcome: there is no requirement of identity of inventorship—identity of invention counts (sec. 119)-- so discrepancy is no obstacle

INVENTION OWNERSHIP

General Rule: employee owns invention(Ownership follows inventorship)

But if the employee:1. has a fiduciary position,2. was hired to invent,3. was specially assigned to work on a project or4. Signed an invention or employment agreement,

Then employer owns invention

N.B. even if none of these apply and employee owns invention, employer may have shoprights (implied non-exclusive non-transferable license), if employee used company time, resources, know-how.

OWNERSHIP FACTORS

1) The previous assignments of inventions by the employee inventors.2) The standard practice that applies to other employees of similar status and

responsibility.3) Whether the idea for the invention occurred before or after the employment

relationship began.4) Which party posed the original problem to be solved by the invention.5) The employee’s authority within the company.6) The previous acts by the employer that imply an assumption that patent

rights are owned by employees.7) A promise to make specific compensation, over and above standard wages,

to use or buy the patent.8) Whether the employer paid for the cost of developing the invention9) Whether the employer paid for the cost of obtaining the patent10)Whether the coworkers aided in the development of the invention

Courts look to the totality of the circumstances to reach a fair an equitable solution.

Patent Department Guidelineson

Whether or Not to File Patent Applications1) Where invention clearly patentable and commercially important—file

promptly

2) Where invention unpatentable and not important-- preserve record only, keep as trade secret

Difficult and vast area in-between

3) Where invention patentable but not important--file in due course, especially if original piece of work or new class of chemicals

(Other legitimate reasons for filing: defensive position, licensing potential, inventor recognition)

4) Where invention important but of doubtful patentability--file as long as it is novel – rationale for commercialization may provide basis for patentability arguments – fall-out data