Adam Corolla Fights Patent Trolls But Anti-Troll Legislation is Back Under the Bridge

By Stephen B. Schott
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Comedian and podcast host Adam Corolla recently visited Capitol Hill to complain about patent trolls. Discussing a patent infringement lawsuit targeting his podcast’s technology, Corolla stated “I’m just a small business … I understand wanting to protect your innovation, but this is run amok.” He also complained that in spending money to fight the litigation, he was losing out on an opportunity to buy a new Lamborghini.
There’s worse news for the former Man Show host, however. Yesterday, Senate Judiciary Chairman Patrick Leahy shelved patent reform legislation, including the anti-troll reforms that had been brewing for months. Despite pressure from the public, companies like Google, andThe White House, Leahy noted that there was "not sufficient support behind any comprehensive deal.”
The groups opposing the legislative reform had been arguing that the reforms would hurt small inventors, stifle innovation, and come just a few years after the most comprehensive patent reform in 40 years. Further, they argued, curbing patent trolls should be the job of the US Patent and Trademark Office and courts.
I will keep you updated on the reforms if they resurface in 2015.
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Show ‘Em What You Got: Patents and the Duty of Disclosure

An Article in Schott, P.C.’s IP Law For Start-ups Series
By Stephen B. Schott
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Have you ever found out about something that you wish you could forget? The forgetting presents a particular conundrum for inventors with applications at the US Patent and Trademark Office. Inventors are often the most knowledgeable people about their inventions and what others are doing in the competing industry. And sometimes an inventor stumbles across a material reference that could decrease his chance of securing a patent. In such a case, what must the inventor do?
The Statute: 37 CFR 1.56 Duty to Disclose
The US Code of Federal Regulations creates a duty to disclose that is defined in part as "a duty to disclose to the Office all information known to that individual to be material to patentability….  [I]nformation is material to patentability when it is not cumulative to information already of record or being made of record in the application, and (1) It establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim; or (2) It refutes, or is inconsistent with, a position the applicant takes in (i) Opposing an argument of unpatentability relied on by the Office, or (ii) Asserting an argument of patentability.”
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The inventor thus has a duty to disclose that he cannot ignore. The rational for this is also given in the regulation, which reminds us that patents are affected with the public interest and “the public interest is best served, and the most effective patent examination occurs when, at the time an application is being examined, the Office is aware of and evaluates the teachings of all information material to patentability.”
Consequences of Failing to Meet The Duty of Disclosure 
To inventors, the duty of disclosure often seems counterintuitive. Why should an inventor “help” the patent office do its job? If an inventor finds the public interest rationale to be wanting, he should understand the consequence of failing to meet his obligations.
Failure to comply with the duty of disclosure may result in a party asserting that a patent was secured through inequitable conduct. Inequitable conduct requires proof of:

  1. an affirmative misrepresentation of material fact, failure to disclose material information, or submission of false material information, and
  2. intent to deceive the patent office by the act under (1).

The consequence of having been found to engage in inequitable conduct is that the patent may be unenforceable, and it may allow an accused defendant to argue that it deserves its attorney fees.
Who Has the Duty to Disclose?
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Every person associated with the filing and prosecution of a patent application—while it is pending—has a duty of candor and good faith in dealing with the patent office and, therefore, a duty to disclose material information. These people include inventors, attorneys/agents, and any other persons substantially involved with the application. 
What is Material Information?
Material information includes references (publications, patents, websites, etc.) thata reasonable examiner would be likely to consider important in deciding whether to allow an application to issue as a patent. These include office actions in related and unrelatedapplications.
Material information extends to representations about entity status (for paying lesser fees) and  statements to speed patent prosecution.
The Manual of Patent Examining Procedure sets forth several categories of references to consider citing to meet the duty of disclosure:

  1. References cited in related foreign applications
  2. Information relating to or from co-pending US applications
  3. Information from related litigation

What is Not Material Information?
It is safest to assume that everything is material, but information that is not as pertinent as that before the examiner or merely cumulative of information already submitted need not be cited.
If you are in doubt about whether to disclose something, contact your patent attorney who will help you decide.
If you have questions, contact me.
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Patent Haiku

By Stephen B. Schott
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sea of ideas
many watch from the shoreline
inventors fishing
invent software program
sweat build stress hire build business
Court in Alice says ____
A invents before
B files application first
A’s AIA pain
subject matter test
machine or transformation
incomplete says Court
file wrapper tells tale
estoppel treasure’s the goal
interview hides all
20120403-072403Obama hunts trolls
Congress smells blood in the air
small inventor hurt
Special bonus: Haiku is an invariant noun, that is, a noun that is the same in its singular and plural form. I did not just post several haikus, but instead I posted several haiku.
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Supreme Court Makes it Easier to Penalize Misbehaved Patent Litigants

By Stephen B. Schott
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Yesterday, the Supreme Court invited district courts to use more discretion in awarding attorney fees in “exceptional” patent cases. This 9-0 decision delivered by Justice Sotomayor in a case involving elliptical machines will help judges penalize misbehaving patent litigants.
The law governing exceptional patent infringement cases reads in total:

The court in exceptional cases may award reasonable attorney fees to the prevailing party.

Following this statute, in order to get your attorney fees in a patent case, you need to meet two standards:
1. You must win.
2. The case has to be exceptional.
Winning is usually clear. What is less clear is the meaning of "exceptional."
Before 2005, district courts could find a case exceptional using their discretion to weigh case law and certain factors. But in 2005, the Federal Circuit set the standard for “ exceptional” when the defendant is the prevailing party, holding that a case is exceptional “when there has been some material inappropriate conduct” or when the litigation is “brought in subjective bad faith” and is “objectively baseless.”
This set a high standard for attorney fee awards and made attorney fees particularly hard to secure in a case where a defendant prevailed against a nearly baseless lawsuit.
In yesterday’s Octane Fitness v. Icon Health decision, the Court reviewed the Federal Circuit’s high standard and found it wanting.
The Supreme Court’s Decision
In defining “exceptional,” the Court looked to dictionary definitions, and in particular noted two dictionary definitions before 1952 when Congress wrote the statute.

From these definitions, the Court concluded that district courts should exercise their own discretion to decide when a case is exceptional, and offered this guidance for determining whether a case meets the exceptional standard.

We hold then, that an “exceptional” case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion.

The Court went on to chastise the Federal Circuit’s previous standard as too rigid.
Given the Congressional and Executive push to curb improper patent litigation, this newly found court discretion to award attorney fees should be a welcome decision to patent infringement defendants.
Interestingly, Senator Leahy has suggested an amendment to the exceptional attorney fee award statute:

The court in exceptional cases its discretion may award reasonable attorney fees to the prevailing party.

I am not sure if Congress will pass this but I will watch its progression and report back with updates.
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Comparing Common Law vs. Federally-Registered Trademarks

An Article in Schott, P.C.’s IP Law For Start-ups Series
By Stephen B. Schott
image-15_med_hrDo you have a business name? Are you using it in commerce? Or do you have a distinctive name for a product that you’re selling? Guess what: You may already have trademark rights. Even without filing an application with the US Patent and Trademark Office or with your state, you may be entitled to a common law trademark and the rights that accompany it. Common law trademark rights originate not from statute, but from the courts within each state. Thus, the protection afforded such rights are born of previous litigation and not the legislative process.
Even if you have these rights, however, it’s important to distinguish between the rights that you get when you federally register a mark and your common law rights.
Given the low cost of filing a trademark application and the many benefits, if your business name, slogan, or product name are important for your success, file a trademark application. It will protect you and build intellectual property value in your company.
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Start-up’s Primer on International Patent Protection

An Article in Schott, P.C.’s IP Law For Start-ups Series
By Stephen B. Schott sbsc
The innovative start-up looking to protect its market and increase its value will often file for patent protection. But when making the decision to seek patent protection, it will quickly face a second question: Should the start-up file for international patent protection?
There are a few things that start-ups should know about international patent protection.
1. Patents are territorial. Patents give protection within the country that grants them. A US patent grants the right to exclude others from making, using, and selling infringing goods within the United States. It grants no rights in Canada or Japan.
1a. US Patents do have an extra-territorial property. A US patent includes the right to prevent others from importing goods into the United States. If an infringer produces a product that falls within a patent’s claim scope in Taiwan, for example, you can’t sue them for infringement in Taiwan. But if they try to import their product into the United States, you can sue them in federal court, or if your only goal is to block the product's importation, in a special court at the US International Trade Commission.
2. There is no such thing as an international patent but there is such a thing as an international patent application. (But see #4 below regarding the European Unitary Patent.) 148 countries,  including all the countries where a start-up might want to file a patent application except Taiwan, are signatories to the Patent Cooperation Treaty (PCT), which accepts PCT patent applications. A PCT application in most ways is the same as a US application, and within 30 months of its filing,* an applicant can transition the PCT application into individual countries, including the US.
The transition to individual countries, or national phase as its called, enters the PCT application as its own application in the individual countries. If you do this, you have to then pay filing fees for every country that you enter, usually at a slightly discounted rate. Thus, the national phase costs can add up quickly if you are entering multiple countries.
The PCT application never in itself matures into a patent. It undergoes a formality and patentability review but even if the conclusion of that review is that the claims are novel and inventive, it is up to individual countries to decide the application’s patentability based on their independent review, which may differ from the PCT receiving office’s conclusion.
3. A PCT application is a good way to delay the high cost of filing in individual countries. Because it’s so expensive to enter individual countries, filing a PCT application is a convenient way to put off the decision to file in those countries for 30 months while you develop your business. At the end of the 30 months, you may have success in certain countries and only file in them. Or you may only want to pursue your domestic rights and take no action. Or you might want to file all over the world. The PCT preserves all of those options for 30 months.
4. In Europe, you can get a European patent. Europe has its own European Patent Office(EPO) and a patent granted therefrom can be validated (become enforceable) in countries that have signed on to the treaty that governs it. Each validation costs money and must be accompanied by an appropriate translation but there is a large savings in that only one organization, the EPO, reviews the application for patentability.
A European Unitary Patent, coming in 2015, will grant patent rights throughout almost all European countries and will require no validation fees.
5. If you get a patent in the US and nowhere else, it’s not the end of the world. Your start-up will be ineligible for a patent monopoly in those other countries and your company's net worth will be less, but in terms of what happens in those other countries, you’re now just a player in the market. And yes, your competitors can copy your idea in those countries and sell it under their own brand names.
Stacks of money
6. The costs for filing internationally can be prohibitive to a start-up. Filing a PCT application, based on an already-prepared US application, can cost $4-5,000, mostly in governmental fees. For each individual country you enter, the costs vary but will be between $2,000-$5,000 per country. As you start prosecuting the patents and paying eventual grant fees, those costs will multiply depending on the number of countries you entered. To secure 10 international patents can easily cost $100,000.
Filing for international patent protection is a business decision based on:

  1. Where your future market will be;
  2. How much money you have to spend; and
  3. How much value you want to add to your company.

*The full rule is more complicated and the deadline for filing is actually measured from the earliest priority date claimed in the application.
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King Tut’s Accountant and the Supreme Court Oral Argument Over Software as Patent-Eligible.

By Stephen B. Schott
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On Monday, the Supreme Court heard oral argumentin Alice Corporation Pty. Ltd. v. CLS Bank International. For those hoping that the Supreme Court would declare that software patents are invalid, the argument will not provide comfort: The Justices expressed support for software patents and asked the litigants to define the patentable area that exists between purely abstract business methods and software. The answer to this question is what most people expect the Supreme Court to shed light on when it issues its opinion.
The Alice appeal focuses on a specific question:

Whether claims to computer-implemented inventions—including claims to systems and machines, processes, and items of manufacture—are directed to patent-eligible subject matter within the meaning of 35 USC Section 101 as interpreted by this Court?

The Section 101 law in question relates to patentable subject matter:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

That simple statute and the “useful process, machine” standard is what the Supreme Court will use in its review of US Patent 7,725,375 claim 1, one of the claims at issue:

1. A data processing system to enable the exchange of an obligation between parties, the system comprising:
a first party device,
a data storage unit having stored therein
(a) information about a first account for a first party, independent from a second account maintained by a first exchange institution, and
(b) information about a third account for a second party, independent from a fourth account maintained by a second exchange institution;
and a computer, coupled to said data storage unit, that is configured to
(a) receive a transaction from said first party device;
(b) electronically adjust said first account and said third account in order to effect an exchange obligation arising from said transaction between said first party and said second party after ensuring that said first party and/or said second party have adequate value in said first account and/or said third account, respectively; and
(c) generate an instruction to said first exchange institution and/or said second exchange institution to adjust said second account and/or said fourth account in accordance with the adjustment of said first account and/or said third account, wherein said instruction being an irrevocable, time invariant obligation placed on said first exchange institution and/or said second exchange institution.

When considering whether software is patentable, the Supreme Court will give the above lettered steps that relate to software the most scrutiny.
King Tut’s Accountant Hints at Patentability of Software
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Early in the oral argument, Justice Breyer introduced a hypothetical that resurfaced several times.

[I]magine King Tut sitting in front of the pyramid where all his gold is stored, and he has the habit of giving chits away. Good for the gold, which is given at the end of the day. And he hires a man with an abacus, and when the abacus keeping track sees that he's given away more gold than he is in storage, he says, stop...So what is it here that's less abstract that the computer says, stop?

Justice Breyer was simplifying the claim above that relates to intermediate settlement but his question goes to the heart of the issue: Does programming a set of method steps, in his example steps related to accounting, make software patentable? The patent owner never got a chance to respond but Justice Scalia answered the question and indicated an interest in protecting software patents.

Why isn't ... doing it through a computer not enough? I mean, was the cotton gin not an invention because... you're doing through a machine what people used to do by hand?

Scalia’s point is a salient one: Computer software is a tool—the fact that it’s a tool that you can’t hold in your hand does not make it any less of a tool than the cotton gin.
Justice Roberts added a hypothetical that supported Scalia’s premise.

[W]hat if you can do it without a computer, but it's going to take... 20 people a hundred years? In other words, theoretically, you can replicate what the computer does ­­but it's impractical without looking to do it on the computer?

From this, it seems that Roberts also sees the value of the software as a useful—and that’s the key word in the subject matter statute—tool.
Scalia added more support for software as patent-eligible later in the oral argument when he summarized the patent law on abstract ideas.

By the way, ­we have said that you can't take an abstract idea and then say use a computer to implement it. But we haven't said that you can't take an abstract idea and then say here is how you use a computer to implement it.

And it’s with this second sentence that Scalia hints at where the Court may be headed: Specifying how to implement method steps related to an abstract idea within software may be patentable.
Both parties and even the US Solicitor General agreed that some aspect of software is patent-eligible subject matter. The patent owner suggested the broadest approach—one that preserved the patents-in-suit, but even the other parties proposed tests that would permit software patents. The Solicitor General’s proposal was in his first moments of argument, a clear sign that the administration supports software patents.

A computer makes a difference under Section 101 when it imposes a meaningful limit on the patent claim. That occurs when the claim is directed at improvement in computing technology or an innovation that uses computing technology to improve other technological functions. That's the test that we believe is most faithful to this Court's precedents.... It keeps patents within their traditional and appropriate domain and it is capable of being administered consistently by courts and by PTO examiners.

At another point when discussing whether encryption technology would be patentable subject matter, the Solicitor General stated that it “might well be patent eligible. It’s a technology that makes conduct of business more efficient or effective.”
The Bogeymen and Other Distractions
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No discussion of the patentability of software would be complete without some discussion about whether earlier ideas were patentable subject matter and how that might have affected the world. Justice Kagan and Solicitor General Verrilli raised two common specters in the patentable subject matter discussion.

Justice Kagan: Let’s say... 30 years [ago] somebody took a look around the world and said, a lot of people seem to order products by mail. They get the catalogues in the mail and then they send back their return forms. And let's say that one of the founders of the Internet said, wouldn't this be an amazing system, we could actually do this by computer, and they had patented that.

General Verrilli: And the concern in a situation like this one is that if this is patent eligible, it's hard to see why, for example, the first person who came up with a frequent flier program wouldn't have been able to claim a patent there, because, after all, that's a business method for improving customer loyalty implemented on a computer.

They give these two examples to make people imagine a “what if” world where someone got patents that protected those inventions. There are a few problems with these examples, however. First, exchanging miles flown for free tickets itself would be a pure business method and not patent eligible. Second, since these are hypotheticals, they come without detailed claims, so the scope of any patent monopoly is highly speculative. Third, people often design around patents and create new innovations and that’s often highlighted as a feature, not a disadvantage, of the patent system. For example, the iPhone has many patents for its touchscreen but it’s hardly the only touchscreen phone on the market. Finally, both examples imply a criticism that software-based solutions to existing problems are not new and should not be patentable.
It’s on this final point, whether merely performing a previously known act on a computer is new or novel, that the Court and parties spent considerable time during the argument. But as Justice Scalia and the patent owner’s attorney pointed out, those novelty questions must be answered under a different statute, that is, whether something is new (or non-obvious) is an inquiry under 35 USC Sections 102 and 103 and not relevant to the question of whether something is patentable subject matter. (Justice Ginsberg correctly pointed out that there is overlap between Sections 101 related to patentable subject matter and 102 related to novelty, as has arisen in earlier opinions like In re Bilski, but not enough to merit the time spent on it in oral argument.)
Reading the Tea Leaves
Predicting what the Supreme Court will decide based on oral argument is a fool’s wager. But it’s clear that the Court is grappling with where to draw the line between purely abstract ideas, business methods, and software. And in showing how they are struggling with that, they seem to tip their hand that they will not uniformly strike down software as patent ineligible. Where I suspect they will land is somewhere along the lines of recognizing software as patent eligible where it solves a technological problem, and cautioning future litigants that the real problem with software patents lies in whether they are new or non-obvious.
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How to Speed Up Patent Prosecution: Add a Glossary of Terms

By Stephen B. Schott
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The White House’s recent executive actions related to patent applicationsincluded one proposal for adding a glossary of terms. In response, the USPTO held a hearing and invited comments on a proposal for how such a glossary might look and last week, released its Glossary Pilot Programrules.
The pilot program, which is optional, starts on June 2, 2014 and will be available to the first 200 accepted applications or for 6 months, whichever comes first. The program comes with a nice reward: If you provide a glossary and enter the program, the USPTO will review your application as if it was filed with a Petition to Make Special. This could reduce the application’s prosecution time by more than a third.
There are several requirements for participating in the program and also some requirements for the glossary itself, all of which are available from the USPTO.
Requirements for Program Participation

  1. The application must be: (a) An original, non-reissue, non-provisional utility application filed under 35 U.S.C. 111(a) that does not claim the benefit of a prior filed U.S. application (i.e., cannot be a continuation or divisional application), except the application can claim benefit of a provisional application; or (b) a continuation-in-part application claiming the benefit of a prior non-provisional utility application under 35 U.S.C. 120 or 365(c) filed for the purposes of providing a glossary in accordance with this program. The application cannot be an international application, national stage application filed under 35 U.S.C. 371, design application, or plant application. Further, the application cannot also participate in any Patent Prosecution Highway (PPH) program.
  2. Upon filing, the application must contain a specification in the English language including a glossary section that meets all the Requirements below.
  3. Upon filing, all benefit and priority claims must be included in an application data sheet (see 37 CFR 1.76 and 1.78). If the application claims priority to one or more foreign applications, a copy of each the foreign application must be submitted concurrently with the filing of the application. If any prior-filed application (U.S. or foreign) is not written in the English language, an English-language translation of such prior-filed application must be submitted concurrently with the filing of the application with a statement that the translation is accurate.
  4. The applicant must file a completed Form PTO/SB/436 titled ‘‘Certification and Petition To Make Special Under the Glossary Pilot Program’’ with the application filing.
  5. Upon filing, the application must contain at least one claim, but no more than four independent claims, and thirty total claims. The application must not contain any multiple dependent claims.
  6. In order to be eligible for the Glossary Pilot Program, the application must be classified as a computer-related or business method patent application. This decision is made by the USPTO post-filing.
  7. The application and all following papers must be filed electronically with the USPTO via EFS-Web.
  8. If the applicant also requests advancement of examination based on another established procedure (e.g., Accelerated Examination, Prioritized Examination), then the application must satisfy all of the conditions and requirements of the other procedure(s), including payment of any fees required by the other procedure(s), in addition to the conditions and requirements specified herein for the Glossary Pilot Program.

6 Requirements for the Glossary
The glossary itself must meet the following requirements.

  1. The glossary must be placed at the beginning of the detailed description portion of the original specification, identified with a heading, and presented on filing the application, that is, an applicant cannot add the glossary after the initial filing.
  2. The glossary definitions cannot rely upon other parts of the specification for completeness, or upon any incorporation by reference to other sources such as patents, published patent applications, or non-patent literature reference.
  3. A glossary definition establishes limits for a term by presenting a positive statement of what the term means. A glossary definition cannot consist solely of a statement of what the term does not mean, and cannot be open-ended.
  4. Definitions provided in the glossary cannot be disavowed elsewhere in the application. For example, a definition cannot be presented in the glossary along with a sentence that states that the definition is not to be considered limiting.
  5. A glossary definition may include the usage of examples, synonyms, and exclusions. The glossary definition cannot, however, consist solely of a list of examples, synonyms, and/or exclusions.
  6. The glossary should include definitions that will assist in clarifying the claimed invention and creating a clear application file wrapper record. The USPTO suggests that definitions include key claim terminology (such as a term with a special definition), substantive terms within the context of the invention, abbreviations, acronyms, evolving technological nomenclature, relative terms, terms of degree, and functional terminology including 35 U.S.C. 112(f) functional limitations (previously 35 U.S.C. 112, sixth paragraph). If the glossary provides a definition for 35 U.S.C. 112(f) functional limitations, then the USPTO also suggests including the identification of the corresponding structure for performing the claimed function, in addition to any disclosure of the structure elsewhere in the specification.

The Patent Glossary Danger
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Most of the comments in support of the glossary section were vehemently positive, pointing out the need for clearer patents and defined terms that accused infringers can rely on. That said, the flip side of the glossary is a patent owner getting stuck with an ill-crafted definition in litigation. If you take advantage of this program, make sure that you work with your patent attorney to carefully craft the glossary and be sure not to include narrower definitions than you intend.
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Obama the Troll Slayer: The White House’s Patent-Related Executive Actions.

By Stephen B. Schott
President Obama wants to vanquish patent trolls. His 2014 State of the Union address called for Congress to "pass a patent reform bill that allows our businesses to stay focused on innovation, not costly and needless litigation.” Not satisfied with leaving reform in Congress’s hands, the White House recently announced executive actions targeting patents and patent trolls.
Stepping back for a moment in case this term is unfamiliar, “patent troll” is a colorful descriptor that is hard to define. Generally, a patent troll is an entity that asserts a patent for products that it does not itself make.
No party accused of being a patent troll accepts that pejorative mantle willingly, preferring instead to be called something more benign like a non-practicing entity. But the term patent troll persists due to its color and it’s not about to fall into the politically incorrect vernacular in the near future, so non-practicing entities are probably stuck with being called trolls.
Returning to the reforms, the White House Press Secretary Jay Carney recently released a fact sheet calling on Congress to pass legislation to curb patent trolls, summarizing its accomplishments since 2013, and announcing new executive actions.
The Patent Troll “Problem”
The problem of patent trolls is, as my friends across the Atlantic might say, a sticky wicket. A lot of people feel like there’s some kind of a problem but no one seems to agree on who’s an actual troll.
A few examples illustrate the difficulty of defining a patent troll. Let’s say that a major automobile manufacturer invests several million dollars developing a new diesel engine. Along the way, it secures 50 patents on the technology, but then decides not to pursue the diesel engine and instead focuses on hybrid engines. A few years pass and one of its competitors releases a diesel engine using the patented technology. Is our automobile manufacturer a troll if it pursues the competitor for patent infringement, just because it didn’t produce the diesel engines?
Another problem example that commonly arises is universities, which are petri dishes of innovation that rarely make any products. Most universities do, however, have a technology transfer office that secures patent protection for innovations. If a university sees a company using its patented technology and approaches the company seeking a royalty, is the university a troll that should be punished?
And a third category is also troublesome. Picture a small business that invents a new technology and secures a patent on it. Later, a multinational corporation starts using the technology. The small business doesn’t have millions of dollars to bring a patent infringement lawsuit so it sells its patent to a third party who has enough money to bring the lawsuit. In this David and Goliath scenario, small-business David needed a sling, and the third party provided it. The third party may be in the business of nothing more than collecting promising patents—but legislation attacking the third party patent collector harms the small business and stifles innovation.
At the other end of the spectrum is an example where a patent attorney purchased a patent from an inventor. The patent was for a consumer product. The patent-owner/attorney sued a manufacturer for infringement even though it was clear that there was no infringement. The manufacturer was faced with a terrible decision tree: Choice 1: Pay the patent-owner/attorney a small amount of money to settle the lawsuit, or Choice 2: Pay litigation costs (hundreds of thousands of dollars at least) to win the lawsuit and pray for the never-to-be-found Questing Beast that is judge-awared attorney's fees for bringing a frivolous lawsuit. Choice 1, as painful as it is, is often the better business decision.
The other problem with patent trolls is that they may be less of a problem than they appear. The argument is that while patent trolls may be a problem, the widespread reforms to combat them will harm innovators, universities, and small businesses and thus sweeping patent reform legislation is not necessary.
The outcry against patent troll reform has reached enough of a pitch that Congress seems to have slowed its troll hunt and while it will probably pass something in the next couple of years, it may be carefully crafted to target the more egregious offenders.
2013 White House Patent Reform
The White House fact sheet summarizes its 2013 goals and achievements:

  • Promote Transparency — The United States Patent and Trademark Office (USPTO) recently published a draft rule to ensure patent owners accurately record and regularly update ownership information when they are involved in proceedings before the USPTO. This effort is aimed at improving the quality of patents issued, enhancing competition, facilitating technology transfer, and making it harder to hide abusive litigation tactics behind shell companies. After receiving input from the public, the USPTO aims to issue a final rule in the coming months.
  • Make Patents Clear — The USPTO has developed and implemented a training program to help its examiners rigorously examine so-called “functional claims” to ensure claims are clear and can be consistently enforced. In the coming weeks, the USPTO will launch a pilot program that uses glossaries in patent specifications to promote patent clarity.
  • Protect Main Street from Abuse — To help ensure consumers and main-street retailers know their rights before entering into costly litigation or settlements, the USPTO is today launching an online toolkit aimed at empowering consumers with answers to common questions, information about patent suits, and details about specific patents. The toolkit will include information and links to services and websites that can help consumers understand the risks and benefits of litigation or settlement, and pick their best course of action.
  • Expand Outreach and Focused Study — Today, the USPTO is announcing the expansion of its Edison Scholars Program, which brings distinguished academic experts to the USPTO to develop and make available to the public more robust data and research on issues bearing on abusive litigation. USPTO will also continue to expand its engagement with stakeholders—including patent holders, researchers, advocates, and others—and build on the successful roundtables the agency hosted across the country over the past year on high-tech patent issues.
  • Strengthen Exclusion Order Enforcement — To make the enforcement of exclusion orders issued by the International Trade Commission more transparent, effective, and efficient, the Office of the U.S. Intellectual Property Enforcement Coordinator launched an interagency review and will, in the coming months, deliver its recommendations on refining that process.
  • Innovation For Global Development — In addition, today, the Administration is committing to sustain, going forward, the Patents for Humanity Program, which creates business incentives for using patented technology to address global humanitarian needs.

2014 Executive Actions for Patent Reform
The White House’s fact sheet also describes what it is doing this year through executive action.

  • Crowdsourcing Prior Art — To help ensure that U.S. patents are of the highest quality, the USPTO is announcing a new initiative focused on expanding ways for companies, experts, and the general public to help patent examiners, holders, and applicants find relevant “prior art”—that is, the technical information patent examiners need to make a determination of whether an invention is truly novel.
  • More Robust Technical Training — The USPTO is expanding its Patent Examiner Technical Training Program to help patent examiners keep up with fast-changing technological fields by making it easier for technologists, engineers, and other experts to provide relevant technical training and guidance to patent examiners. To make the most of these changes, the Administration is calling on innovators to volunteer their time and expertise to help ensure that USPTO training is robust and reflects the state of the art.
  • Pro Bono and Pro Se Assistance — To increase the accessibility of the patent system, the USPTO will dedicate educational and practical resources to assist inventors who lack legal representation, appoint a full-time Pro Bono Coordinator, and help expand the existing America Invents Act pro bono program to cover all 50 states. The Administration is calling on members of the patent bar to participate in the program.

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What is a Design Patent and How is it Different than a Utility Patent?

An Article in Schott, P.C.’s IP Law For Start-ups Series
By Stephen B. Schott
The patent that you think of when you hear the word patent is a utility patent. But it’s not the only kind of patent that there is. 5% (over 30,000) of all patent applications filed per year are design patent applications. 0.1% of all patent applications filed per year are plant patent applications. From a marketing perspective, that’s why this article is about design patents.

Design patents protect a manufactured article's ornamental appearance. The protection for ornamental appearance is what differentiates a design patent from a utility patent. A utility patent protects the way an article is used and works (35 U.S.C. 101), while a design patent protects the way an article looks (35 U.S.C. 171), and the way that the patents express this protection reflects this difference. In a utility patent, the scope of protection is expressed in a series of carefully-worded claims. In a design patent, there is a single claim that defines the scope of protection according to its drawings. For example, consider the difference between claims for a utility patent  (left) versus a design patent (right) for the same product: the iPhone.

While the iPhone utility patent has drawings, its claim scope is not solely limited to the drawings, but instead the claim words themselves define its scope. The iPhone design patent, on the other hand, is limited in scope to its drawings. The design patent thus provides a more narrow scope of protection.
The above iPhone example answers a common question about utility and design patents: Can they both cover the same product? The answer is yes. In fact, multiple design patents may cover a single product, with each one covering the ornamental appearance of a different feature. I could secure on design patent for a watch face and another for the band.
Design patent infringement requires proof that an “ordinary observer, familiar with the prior art designs, would be deceived into believing that the accused product is the same as the patented design….If the claimed design is close to the prior art designs, small differences between the accused design and the claimed design assume more importance to the eye of the hypothetical ordinary observer.” “The ordinary observer test applies to the patented design in its entirety, as it is claimed. [T]herefore, minor differences between a patented design and an accused article’s design cannot, and [do] not, prevent a finding of infringement.”
It’s this "ordinary observer” test that is at the heart of deciding whether there has been design patent infringement. Here are some examples of cases and how they were decided.

You can see other comparisons in this excellent article.
1. Design patents costs less than utility patents. The cost for filing a design patent application is substantially less than a utility patent application, as much as 80-90% less. The majority of the cost of a design patent is in preparing the drawings, which are critical. Due to their narrow scope, design patent applications usually require less back-and-forth with the US Patent and Trademark Office (USPTO), so you will also save attorney fees. Design patent fees due at the USPTO are less than utility patent fees. Finally, design patents do not require payment of costly maintenance fees that utility patents require.
2. Design patent terms are measured differently than utility patents. Utility patents have a term of 20 years from the earliest U.S. application to which priority is claimed. Design patents have a term of 15 years from their issuance (for design applications filed before December 15, 2013, the term is 14 years from issuance).
3. Design patents don’t take as long to get as utility patents. It takes about 2 years to get a design patent on average, but more than 3 for a utility patent.
4. Design patents start with the letter “D” followed by a number; utility patents are just a series of numbers. 
Design patents offer a narrow scope of protection but they are less expensive and easier to secure than utility patents. In applying for one, you can use the valuable “patent pending” wording and once you receive the design patent, you can mark your product as patented. Thus, design patents are valuable if your product’s appearance is important to its success. Design patents are commonly filed for shoes, electronic device housings, jewelry, clothing, and automobiles.
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