A Publication of WTVP

Innovators typically think of patenting their products early on. Nevertheless, significant issues repeatedly arise for small, entrepreneurial companies and expanding midsized companies. Many problems can be easily obviated by early awareness of simple documentation and deadline protocols.

Proper record keeping and calendaring is consequential. The average cost of utility patent infringement litigation is now over a million dollars in the United States. Proper documentation of the development process can eliminate issues in litigation, any one of which could cost five or six figures—or even be fatal to a patent holder’s case. Similarly, inadequate documentation may be seized upon in licensing negotiations as grounds to lower a price point.

Accordingly, innovators should be aware of the following:

Documenting Conception
In the United States, unlike the rest of the world, the patent goes to the first to invent—not the first to file—in a patent application. The date of conception of an invention to be patented should be well-documented. This is the date of the formation in the mind of the inventor of the complete idea as later claimed in patent. The degree of conception must be complete enough to enable the relevant technology—i.e., the invention as conceived must work. Established companies keep routine lab notebooks for engineers and inventors. These notebooks are dated when a new concept arises, and the description is signed by a co-worker as a witness and may even be notarized.

If the invention is something upon which the inventor and company want to proceed, a record of invention form should be filled out and forwarded to patent counsel or the relevant decision maker in-house. Drawings should be included where applicable.

In the U.S., the ownership of the patent on an invention is first vested in the inventor. If the invention is the product of the joint work of two or more, the ownership is a joint tenancy of the co-inventors. That is, each co-inventor owns an undivided 100-percent share. And, like a joint checking account, any individual co-inventor can assign 100 percent of the rights to make, use or sell the invention if it is later patented. Accordingly, it is very important to consolidate ownership in a common entity. This is usually the company employing the inventors, or hiring the independent consultants who may be co-inventors. A simple assignment form is adequate. Preferably, it would be witnessed and notarized. After a patent application, is filed the assignment may be recorded at the patent office.

Employee contracts and independent contractor agreements should clearly obligate the employee or contractor to assign to the hiring company all patent rights for any technology generated pursuant to the contract.

Deadlines apply for filing patent applications. If they are missed, patent rights may be lost. In the U.S., the applicant has one year to file a utility or provisional patent application after certain events that trigger the beginning of this grace period. Those events include public use of the invention, selling a product embodying the invention, offering to sell the product, and publication. If such a disclosure is made at a point when the technology is developed sufficiently that it is “ready for patenting,” the deadlines will apply. This rule has many pitfalls. For example, offers to develop technology are often considered offers for sale and it is not always clear when the stage of development is “ready for patenting,” and therefore, when the deadlines would apply. Another potential problem is grant applications and the stage at which they may become public. Yet another issue is the sale of a product of a process that may be patented.

Worse, the one-year grace period does not apply overseas. Hence, if an applicant is anticipating sales in foreign countries, they may run afoul of the “absolute novelty” rule. Trade shows are usually the death knell of overseas patent protection, if an application has not been filed beforehand. The key takeaway from this legal situation is that competent patent counsel should be consulted very early.

Experimental Data
Experimental data should be retained throughout the lifetime of the patent (20 years from filing) for a variety of reasons. It can be used as evidence of surprising results in overcoming an obviousness rejection, or to prove enablement and the date enablement was achieved, and may be relevant to a variety of other issues. Innovators should recall that the issuance of a patent is not an end to the time when such documentation can be useful, but is often only the beginning. The validity of the patent may be attacked again in reexamination, licensing negotiations, and of course, in litigation, where the validity of each claim is always an issue. Accordingly, innovators should plan on keeping all relevant data surrounding a patent in long-term storage.

Product Data Relevant to the Patent
Occasionally, in both prosecution at the patent office and in litigation, the progress of the product that embodies a patented invention will be examined. Product success may be relevant to overcoming a challenge to the validity of patent claims based on obviousness, or may be relevant to damages information in infringement litigation. Relevant information includes number of units sold, profit margin data, sales projections and any available data comparing the sales and profitability of a product incorporating the invention relative to the same product that does not incorporate the invention.

Other documentation protocols would apply to product clearance, documentation of trademark rights, copyrights and trade secret rights. Innovators are well advised to be aware of these protocols, as they are simple to execute and the failure to execute them can have magnified consequences affecting value over the lifetime of the property right.

While a full workup of a patent application or establishment of other intellectual property rights may represent a moderately-sized investment for an entrepreneur, educating oneself about documentation and deadlines is a wise and affordable step to take. Innovators should call their patent attorneys sooner, rather than later. iBi

Bob Haldiman is an attorney and partner with the firm Husch Blackwell Sanders LLP. He represents industry, academia and entrepreneurs on intellectual property issues and can be contacted at [email protected].