Strategic IP Management

Don't Patent It!

When an invention comes to the attention of a strategic IP manager s/he asks, “Is a patent the best way to protect this?”, “Is it worth the costs?” and “Is it worth the risk?”.

The risk is that your application never matures into a granted patent. Your application, in which you divulged the best way to practice your invention, is published 18 months after it's submitted and anyone can practice it if you don't get it patented.
If the invention could be practised in-house (say, a means of manufacturing) and the product not reverse engineered easily, the IP could be maintained as a trade secret instead of risking it through the public scrutiny of patent prosecution.

There's no certainty that you'll get a patent but there is certainty that you will not get a patent if your invention, specified in the claims you’re drafting, is described in the prior art or obvious in view of the prior art. What's an IP manager to do? Strategic IP managers search for prior art.

Looking for trouble

Some are of the opinion that you should not search for prior art because it's an extra cost, there is no guarantee that it will be complete (the patent examiner might find something missed), it delays filing so you'll get a later priority date, the patent office will conduct a search anyway and, ironically, if you uncover prior art relevant to your application, you must divulge it to the patent office in your application. All that is true but it is wrong to conclude that you should not search before you submit. Here's why.

The legal fees associated with submitting a patent application are an order of magnitude higher than the fees charged by a search professional so it is “penny wise and pound foolish” to dismiss a search due to the costs

Concern about receiving a later priority date is an excuse for any sloppy, rushed job. That's a bad strategy. Applications should be submitted promptly not quickly.

It's true that even the best search professional cannot guarantee that an examiner won't find something missed in the pre-submission search. (Information in the public domain is constantly increasing and the examiner has access to prepublication applications not available to the searcher.) But the point of a search, is not to prove there is no prior art, but to prove there is! Of course it's bad news if a search uncovers prior art but you save a lot of money by “failing early”. If a “hit” is found that will destroy your novelty or non-obviousness, you will not hire an attorney to prepare the application, so money is saved. And the IP is saved too – maintained as a trade secret.

A professional searcher finds “documents of interest” which may or may not be Prior Art. To kill your claim(s), the document(s) must provide a description sufficient to teach the invention to a person “skilled in the art” (the average worker in the field) of the subject matter you are claiming. Searchers are experts in databases, categories and fields but cannot be skilled in all the arts they search. So, if a searcher finds a “hit” – don’t panic. Get conformation from an expert. Patent attorneys and patent agents are NOT experts in identifying and interpreting the prior art. They are experts in writing and interpreting patent claims. Your Chief Scientific Officer would be a good choice but probably is also an inventor, co-inventor or otherwise biased. If you must, find an outsider skilled in the art, get a Confidentiality Agreement in place and ask, “does this paper describe the invention in these claims we're drafting?”.

If the answer is “No, and here's why ... ”, then you should think about getting a patent to protect your invention (assuming it could prove profitable).
If the answer is “Yes”, you might be able to patent it if you can limit your claim(s) in such a way as to differentiate them from the Prior Art. Of course, if you limit the claims (which you'd have to do, anyway, once the Examiner sees the Prior Art), you reduce the coverage of the claims, so the newly defined invention might no longer provide the protection you want.
Some IP managers might suggest filing the application anyway - hoping the Examiner doesn't discover the prior art that you discovered. This is not strategic IP management. It's gambling, foolish and ignores a glaring dilema. It's a gamble that the Examiner won't find the prior art that you or your searcher found. There may be a statistical value you could attribute to that gamble, but it's unlikely that you can predict the odds and that is the most foolish kind of gambling. This strategy presents a dilemna because "Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the Office, which includes a duty to disclose to the Office all information known to that individual to be material to patentability" (37 CFR 1.56) - such as “documents of interest”.
If that's the case, your best strategy is to continue to keep it a trade secret.

Trade secrets

All patents start as trade secrets.
Trade secrets are information not known to the public which confer economic benefits derived specifically from its not being publicly known. Companies maintain these secrets by requiring its employees sign an employment contract containing non-disclosure and non-compete clauses. Trade secrets, unlike patents, do not require a lawyer and nothing is submitted so a trade secret can be in effect immediately and costs nothing. Unlike patents, trade secrets do not expire, but the a competitor might independently discover it, duplicate it and commercialise it. That's the risk in trade secrets.

In the UK and its Commonwealth offspring, trade secrets are regarded as an equitable right and revealing them is a “breach of confidence ”. The information must have the “necessary quality” of confidence about it and it must have been disclosed in confidence. Unauthorized use of that information to the detriment of the party communicating it is a criminal act.
In the USA, trade secrets are protected under state laws but the Uniform Trade Secrets Act (UTSA) of 1997, has been enacted in all states except North Carolina (but its laws are similar to UTSA), New York and Massachusetts. That simplifies things. Also, the Economic Espionage Act of 1996 makes the theft or misappropriation of a trade secret a federal crime!

Damages for trade secret misappropriation - by industrial espionage or through a former employee (for example) can include both the actual loss caused by the misappropriation plus the ”unjust enrichment” caused by misappropriation. In trade secret cases, unlike patent cases, the “reasonable royalty” damages measure is rarely used because the “unjust enrichment” analysis almost always leads to greater damage verdicts. A verdict of misappropriation follows from evidence of access plus “substantial similarity” – it does not require a showing that all the elements have been copied, as in a patent.

Injunctive relief is the primary remedy in a trade secret lawsuit because “a trade secret once lost, is lost forever.” An injunction to prevent trade secret misappropriation can be issued to prevent both the “actual” or “threatened” misappropriation of trade secrets. The “inevitable disclosure doctrine” provides the trade secret owner the right to seek injunctive relief based upon the “inevitable disclosure” of trade secrets against head-to-head competitors even before there is any proof of actual misappropriation.

If you are considering trade secrets to protect your invention, keep in mind that it must be a secret globally. You cannot protect the IP by trade secret in one country while allowing the secret to slip out in another. And you certainly cannot patent it in one country and keep it secret in another.

Patent first then trade secret improvements

Don't file a patent application that withholds relevant information. Patent or trade secret. You can't have both.

Best Mode is still required!

Since the America Invents Act of 2011, failure to disclose the best mode is no longer a basis for invalidating or rendering unenforceable an issued patent (35 U.S.C. 282(b)). Previously, a common defence against charges of infringement was to assert that the patent application failed to disclose the best mode. If you could convince the judge (at the infringement proceedings) that the patent was obtained under the false pretence that it divulged the best mode, the patent would be ruled invalid. The applicant would be guilty of inequitable conduct, having breached the applicant's duty of candour and good faith to the USPTO, while applying for a patent. Under the current law, insufficient disclosure is no longer an allowable defence against patent infringement.

However, the law retains the best mode requirement. It is still a statutory requirement that applicants disclose the best mode of practising their inventions in patent applications. 35 USC § 112, still states that a patent applicant must "set forth the best mode contemplated by the inventor of carrying out his [or her] invention." It is true that the best mode defence was the primary means of enforcing the best mode requirement but patent applicants and practitioners will likely continue to disclose the best mode of practising inventions in patent applications. Here's why.
Applicants must sign an oath or declaration acknowledging their duty to provide all information material to patentability. Best mode is material because it is a requirement for patentability (35 USC § 112), and failing to disclose the best mode would result in the PTO not issuing the patent. Submitting such an oath that the applicant knows is lacking the required best mode disclosure could be construed as a false representation. It could subject the applicant to criminal sanctions under the Federal Fraud and False Statements Statute.
Patent practitioners (patent lawyers and agents) are subject to strict ethics rules that prevent them from submitting an application they know conceals the best mode. An applicant would find it difficult to conceal, from his own representative, the best mode while working together to write the disclosure and construct the claims. Practitioners who aid inventors in concealing the best mode risk disciplinary action by either the PTO or the practitioner’s state ethics board.

If the inventor develops a better mode after submitting the application, the better mode can be held as a trade secret. There's no requirement that the applicant update the application. Therefore, a good strategy would be to develop an invention “good enough” to be novel and non-obvious, submit the application and then get back to the lab to find ways to improve it. Keep these innovations as a trade secret. People who fail to think strategically about IP, and who have a knee-jerk reaction to file applications, will file a “continuation in part” (CIP). In most cases, it would be better to keep that as a trade secret.

That's strategic IP management.

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(© Dr Jamie Love 2015)