Patent, Trademark & Copyright : Law Office of Kloss, Stenger & LoTempio

Guest Blogger: Arthur S. Cookfair, Registered Patent Agent

 “A country without a Patent Office and good patent laws is just a crab and can’t travel anyway but sideways and backways.”

Declared Mark Twain (speaking through his character, Sir Boss, in a Connecticut Yankee in King Arthur’s Court). In his homey way, Sir Boss was simply restating the philosophy that guided the framers of the U.S. Constitution when they established the constitutional basis for the U.S. patent system.

 The Congress shall have the power...to Promote the progress of science and useful arts, by securing for limited time to authors and inventors the exclusive
rights to their respective writings and discoveries.

                  Article 1, Section 8, U.S. Constitution.

The Constitution not only provides the authority for the establishment of our patent system, but clearly establishes the purpose: “to promote the progress of [the] useful arts”. Thus, the basic purpose of our patent laws is not simply to protect inventors’ rights to their inventions. It is a broader, societal purpose: to promote the progress of technology. The purpose has been well served. The 235 year history of our nation is interwoven with invention and technological progress.

In 1790, three years after the drafting of the Constitution, Congress passed a bill titled “Act To Promote The Progress of The Useful Arts”. The bill was signed by President Washington on April 10, 1790 and the United States Patent System was established.

In that same year, Samuel Hopkins of Philadelphia received the first patent. His invention was a chemical process for making potash from wood ashes. The patent was signed by Thomas Jefferson (Secretary of State), Edmund Randolf (Attorney General) and President George Washington.

Technological innovation is linked to three-quarters of America’s post-WW II growth rate. Two innovation-linked factors—capital investment and increased efficiency—represent 2.5 percentage points of the 3.4 percent average annual growth rate achieved since the1940’s.

Since that first patent more than 7.8 million U.S. patents have been granted. Our nation has grown from a population of about 4 million to more than 300 million and the granting of patents, like every government activity, has grown correspondingly in quantity and complexity.

The U.S. Patent and Trademark Office (USPTO), a branch of the Department of Commerce, employs nearly 10,000 persons (6,100 are patent examiners) and issues patents at a rate of about 190,000 per year.

There are three types of U.S. Patents:

1. Design Patents are granted for the protection of any new and original ornamental design for an article of manufacture.
2. Plant Patents are granted for the invention or discovery of a distinct and new variety of plant.
3. Utility Patents are granted for any new and useful process, machine, article of manufacture, or composition of matter.

Plant patents and design patents, although commercially important, are special categories of patents and account for a relatively small proportion of the U.S. patents granted. (There have been approximately 9,000 plant patents and somewhat more than 360,000 design patents granted, while more than 7,800,000 utility patents have been granted.)

The utility patent is the type of patent that most people associate with invention and is the type of patent to which the following remarks are directed.

WHAT A PATENT IS

The answer to the question “What is a patent?’ may vary greatly, depending on the person answering the question and that person’s association with patents or the patent system.

There are three basic characteristics commonly attributed to patents:

1. The contractual characteristic. In viewing the patent as a contract, the focus is on the contractual exchange between two parties the inventor and the government. The inventor gives a full disclosure of the invention and how to make and use it so that when the patent expires, the public will be in possession of the invention. In return, the government gives the inventor the right to exclude others from using his/her invention for a limited period of time.
2. The property characteristic. Patents have a right of ownership similar to real property that can be transferred in whole or in part. In a manner analogous to real estate, a patent can be sold, or it may be “rented” (licensed) and “rent” can be collected for its use (royalties).
3. The monopoly characteristic. The “monopoly” associated with patents is limited in time and negative in nature (i.e., exclusionary).

 The U.S. patent law defines the patent grant as

“...a grant to the patentee... of the right to exclude others from making, using or selling the invention throughout the United States...”

In this definition, the word “exclude” is key to an understanding of patents. The patent grant provides the patentee with the right to exclude others from practicing the invention.

WHAT A PATENT IS NOT

A patent is not a license to make, use or sell your invention. It does not give the patentee the right to practice his/her invention.

The most common misconception concerning patents is that a patent gives one a right to practice his/her invention. In fact, it is not uncommon for an inventor to be granted a patent and not have the right to practice the invention.

The patent merely grants the patentee the right to stop or exclude others from practicing the invention. At the same time, the patented invention may be directed to subject matter that falls within the exclusive rights of someone else’s broader patent. In such an instance, the broader patent is said to dominate.

Such a situation commonly occurs when the second patented invention represents an improved version of an earlier issued, more basic patent. The owner of the earlier dominating patent may be free to practice the basic invention (but may not be free to practice the improved version of the second patentee). The second patentee may not be free to practice either invention without permission of the first patentee.

Related post:

Patent Fundamentals (Part 2)

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I would like to thank the Buffalo, New York legal community for selecting me as one of the “Who’s Who in Law" in the 2010 edition of the award published by the Buffalo Law Journal and the Buffalo Business First. 

"Who's Who in Law" is an annual feature by the Business First of Buffalo, in which attorneys practicing in the 8th Judicial District nominate their peers as leaders in the legal community. I was selected in the intellectual property category.

I would also like to congratulate all the attorneys who were selected in the 2010 edition. Of the more than almost 4,000 nominations for this coveted award, just 216 attorneys were chosen, this is a testament to the exclusive nature of this honor in general and their excellent work in particular.

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Today is Christopher Columbus Day and if you remember he invented America. No that's not right... he discovered America. Of course he thought he landed in India and we've been mistakenly calling Native Americans Indians ever since and today we celebrate his mistake.

It used to be you would plant a flag into the ground and stake a claim to that land for your country or your family. Today if you invent something you file a patent application and put everyone on notice that this is my intellectual property.

This past weekend I saw the movie  "The Social Network," which is about how Facebook was invented and how  they fought over who owned the company and the intellectual property rights for the Facebook "idea." The movie is set as a series of flashbacks of what the witnesses testify about in a pretrial discovery deposition. What is at stake? The multi-billion dollar pie that is Facebook.

The movie "The Social Network" revolves around two lawsuits. One brought by Cameron and Tyler Winklevoss, twins at Harvard who claim they had hired Mark Zuckerberg to build for them a Facebook type website. Instead Zuckerberg took the idea and created  Facebook. They settled for $65 million.

And a lawsuit brought by Eduardo Saverin, Facebook’s initial CFO and investor, who was "tricked" out of his 30% share of the company by Silicon Valley venture capitalists when Facebook was reorganized.

Mark Zuckerberg the founder and creator of Facebook is listed by Forbes as one of the world's 212 billionaires, he is listed as number 35.

The Harvard dropout's fortune surged $4.9 billion over the last year as private equity deals place Facebook's value at around $23 billion. (Illiquid private shares in secondary markets point to an even richer valuation.) Facebook has more than 500 million members.

This movie is so attractive to viewers because it is everyone's dream is to be the next billionaire. "The Social Network" is the no.1 movie at the box office this week. When clients ask me whether or not a patent will stop anybody from copying their idea, I answer "most likely when you start making money somebody will copy it. But that is a good thing because it means you're making money."

Ezra Klein a Washington Post Staff Writer delves into the deeper issue of  "how do we protect and promote innovation?" in the article entitled "A story bigger than Facebook."

The movie recasts a story of inevitable technological change as the saga of a socially inept genius, two or three of his most important relationships and the social pressures of Harvard University. That makes for a better film, of course. But it misses the richer drama behind transformative innovations like Facebook, and it's part and parcel of the way we misunderstand, and thus impede, innovation.

Robert Soave reporter for the Daily Caller penned an article entitled "The Social Network’ and the case against intellectual property rights" where he queries if Tyler and Cameron Winklevoss had any evidence showing that Facebook founder Mark Zuckerberg stole ideas like “profile pages” when they met in college.

Soave wonders "what if" the twin brothers were able to serve and enforce a "cease and desist" order through a United States court early in the process and stopped Zuckerberg from going forward with Facebook? Would it have been fair to stifle Zuckerbergs' innovation and eliminate the muti-billion dollar Facebook before it ever started to get rolling?

Simply put, Tyler and Cameron Winklevoss can’t claim ownership over what they accuse Zuckerberg of stealing. Ideas — in this case, an online student network — bear none of the qualities of property. They are abstract and intangible. They don’t exist in any physical sense. If another thinker has the same idea, the original thinker is not suddenly deprived of access to the idea; it simply multiplies.

I recently posted that ideas alone are not protectable, the thing, not the idea, is what generates IP rights. But what about protecting the idea by contract? A contract that says "we're going to work together on a project and you will not take the idea and compete against me." So why couldn't Tyler and Cameron Winklevoss claim "Breach of Contract?"

Often times these contracts are called a non-competition or a non-compete contract or agreement. This is the case when a company hires somebody to start a new project and a contract is signed that enunciates that the intellectual property is owned by the company and if the employee leaves the employee will not be able to use that information to compete with the company.

It used to be that a social contract based upon a handshake was all you needed to be protected. 

Recently the US Supreme Court handed down the decision in the Bilski case that ruled that "abstract ideas" were not patentable subject matter.

Is Facebook an abstract idea? Is there a machine or transformation of matter that would allow Facebook to pass the Bilski test? If I was to start a Facebook page that was identical to Facebook right now and call it FacePad would I be able to get away with using ideas such as "a wall" and a "profile" page etc.? Just checked, too late... they are using Facepad already.

Facebook has been working on getting their own patents and purchasing patent rights from others to protect their ideas. Certainly their name Facebook (.PDF) is a registered trademark, try to use something close like the word BOOK. It is very interesting to see how intellectual property has evolved through the virtual world of the Internet. Is Facebook an abstract idea?

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