Top Patent Stories

By Debby Winters

Every year Donald Zuhn recalls the top 20 patent stories for the past year.  You can find his selections for 2016 at these links: Stories 16 to 20, 11 to 15, 6- 10, and the top 5 stories.

Of note are the following:

#18 about the CRISPR patent.  CRISPR is an acronym for Clustered Regularly lnterspaced Short Palindromic Repeats.  There are many aspects about this, or should I say “these,” patents as more than one has been filed, and that’s part of the story itself.  Since these patents were filed in the days of first-to-invent, rather than first-to-file, therein lies an additional wrinkle to this story.  I will be blogging about CRISPR in the days to come, so won’t go into detail now, but it will be an interesting patent story in 2017 as well.

#16 about the new Trade Secret law, the Defend Trade Secrets Act of 2016 (“DTSA”) signed in law in 2016 by President Obama. Let’s keep our eyes on how this will morph in years to come, especially in light of a new Presidential Administration.

#4  is one of the important stories for both patent attorneys and inventors. In May of 2016, the U.S. Patent and Trademark Office issued the Subject Matter Eligibility Update, which provides further guidance for determining subject matter eligibility under 35 U.S.C. § 101.  We will see more to come on this topic to help clarify what is eligible subject matter for a patent and what is not.  This is also the topic of #2 in continuing fallout of the Supreme Court’s 2014 Alice Corp. v. CLS Bank.

#1- The top patent story, according to Dr. Zuhn was the Supreme Courts refusal to hear a case referred to as Sequenom.  Despite Sequenom’s petition for certiorari and a total of twenty-two amicus briefs that were filed encouraging the Court to grant certiorari, in June, the Supreme Court surprised many in the patent community by issuing an order denying certiorari in the case.  This story is from the Federal Circuit’s very controversial decision in Ariosa Diagnostics, Inc. v. Sequenom, Inc., in which the Federal Circuit affirmed the District Court’s grant of summary judgment of invalidity that the claims of U.S. Patent No. 6,258,540 concerning fetal DNA were patent ineligible.

For more details on any of these cases, click on the links above.

 

 

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Commemorating Five Years of the America Invents Act

On Wednesday, September 21, members of Congress and key congressional staff, USPTO leadership, and stakeholders from industry and the inventor community came together again to commemorate the 5th anniversary of the AIA on Capitol Hill.  What follows is a guest blog by Dana Robert Colarulli, Director of the Office of Governmental Affairs that appeared on the Director’s Forum Blog on the USPTO website. Enjoy!

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“We’ve come a long way in five years. The Leahy-Smith America Invents Act (AIA), signed in 2011 by President Obama, modernized the U.S. patent system and, as a result, helped strengthen America’s competitiveness in the global economy. Together with our stakeholders, the USPTO sought to implement the act consistent with the intent of Congress to increase certainty in our nation’s intellectual property (IP) landscape and enable the brightest ideas and most ambitious endeavors in the world to come to light.

I was there in 2011 and the years leading up to the President signing the AIA and have watched the agency embrace and implement the numerous provisions in the act. On Wednesday, September 21, members of Congress and key congressional staff, USPTO leadership, and stakeholders from industry and the inventor community came together again to commemorate the 5th anniversary of the AIA on Capitol Hill.

The event featured remarks from USPTO’s Director Lee, Representative Lamar Smith and Senator Patrick Leahy on the history of the AIA, the need for change, and the AIA’s impact on the IP system – even as we continue to evaluate these sweeping changes and look for ways to further improve our system. A panel discussion at the event focused on the impact the act has had on businesses and inventors of all sizes and what may be next in the way of improvements to the patent system.

The AIA implemented a number of significant changes to update and improve the U.S. patent system.  Upon signing the bill in 2011, the President described what the bill hoped to accomplish this way:

“It’s a bill that will put a dent in the huge stack of patent applications waiting for review. It will help startups and small business owners turn their ideas into products three times faster than they can today.  And it will improve patent quality and help give entrepreneurs the protection and the confidence they need to attract investment, to grow their businesses, and to hire more workers.”

The USPTO has delivered on that promise by reducing the patent application backlog by nearly 30 percent from its high in early 2009, speeding up examination including introducing a fast track option with discounts for small entities, and leveraging the increased financial stability and fee setting authority provided by the act to reinvest user fees into increasing quality under Director Lee’s Enhanced Patent Quality Initiative.

And just this week, the USPTO and the Economics & Statistics Administration at the Department of Commerce released an updated report on the impact of IP on the U.S. economy, reiterating in quantifiable terms the importance of a well-functioning IP system.

The increased attention and focus on our IP system in recent years is critical, and our job to look for ways to further improve did not end with the AIA. Again, the President stated in 2001:

“And we have always succeeded because we have been the most dynamic, innovative economy in the world. That has to be encouraged. That has to be continued.”

Inventors and innovators in the U.S. and around the world deserve a system that evolves and improves right along with the pace of technology – an important reminder as we celebrate the 5th anniversary of the AIA.”

Learn more about the impact AIA has had over the last five years in:

Trade Secret Theft Can Be A Big Deal

By Debby Winters

Most of the time that I write about IP, it is about patents, trademarks, or copyright, but a fourth form of IP that doesn’t get talked about much does exist. That’s the intellectual property protection of trade secrets. There are many companies that protect their IP with Trade Secret protection.  If you don’t know of any, think Coca Cola’s trade secret formula or Google’s proprietary search algorithm, for example.  Trade Secret is defined in the  Uniform Trade Secrets Act (“UTSA”)  as:

  • information, including a formula, pattern, compilation, program, device, method, technique, or process,
  • that derives independent economic value, actual or potential, from not being generally known to or readily ascertainable through appropriate means by other persons who might obtain economic value from its disclosure or use; and
  • is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

One of the problems with enforcing trade secret law is that it is largely state-based law, unlike Trademark, Copyright, or Patent law.  While there has been a push to nationalize trade secret law,  that hasn’t been accomplished. Most states have adopted some form of the UTSA, giving companies some form of uniform way to recover damages from such theft.

Often employees steal these trade secrets to sell to the “enemy” for big bucks.  It happened recently to Dupont with their formula and process of making their “white” color from TiO2. And it happened to Coca Cola in 2006.  In some cases, the competitor is the one who notifies the company of the theft, but not usually. In 2006, when Pepsi, the usual bitter enemy of Coke got a letter offering Coke trade secrets, it went straight to its corporate rival. But if you protect your trade secrets in this manner, don’t expect your theft to turn out this way, Dupont’s certainly didn’t.

This is an interesting form of IP protection but a risky one to pursue, as the usual damage that occurs is the theft and sale of the “secret” to a competitor.  For more information on trade secret law, feel free to contact me or comment below. For more details on the Coca Cola or Dupont stories, click on the links above.

 

 

IP Provisions in Consulting Contracts- Part 5

By Debby Winters

Consulting contracts can be for work performed by an outside service provider or consultant, like market research, product design, product development, software implementation, employee benefit plan administration, and the list can go on. The consultant can begin to negotiate the consulting contract once the project proposal is accepted. Many times these contracts, as prepared by in-house counsel, are one-sided with intellectual property provisions that can be a disaster for the consultant with regards to future work. Believe me, I’ve been that in-house counsel drafting these contracts. The goal of in-house counsel is to protect your company but looking at these contracts from the consultant’s viewpoint, the contract can limit their ability to bid for and perform future work. In my last two blogs on this subject,  we looked at ownership of the work product and confidentiality provisions. This time, let’s look at the legal departments that large companies have and explore ways to deal with them.

Business People vs. Legal Department

As our final part on IP provisions in consulting contracts, we will talk about dealing with large entities and the competing factions within them.

When negotiating consulting contracts with large companies, the roadblocks that arise in the IP provisions are often driven by an in-house legal department that insists that certain provisions are “standard practice” or (if the lawyers are being honest) “that [big company] always gets this language” because of its inherent leverage over the consultants.

The business people at the customer who your client knows will often have a more nuanced view of the issues because they understand better than the lawyers (1) that the consultant landed the project because of its prior experience in the industry and (2) in most cases, the consultant’s services will be an adapted version of what has already been provided to competitors in the industry and not entirely newly created materials.

Whether to make an end-run around the in-house lawyers by having your client plead its case to the businesspeople is a judgment call. Depending on the corporate culture at the customer, the lawyers may have the last word on the IP issues or will instead be expected to take direction from the businesspeople. Try to get a sense of that culture before using your client to resolve disputed contract provisions, because a perceived breach of protocol may ruin your working relationship with the in-house lawyers.

On a related topic, you should counsel your consultant clients not to engage in the classic magical thinking about onerous, one-sided contract provisions as a way to shortcut the negotiations-  namely, that the customer businesspeople they know would never enforce the provision against them. If the contract clause is worth fighting about, your client should raise it with the customer and then assume that whatever version ends up in the final agreement can, and will. be enforced against them.

IP issues in consulting contracts are complicated and almost never one-size-fits-all. The range of what provisions will ultimately be acceptable to the parties will always depend on the specific context in which the negotiation is taking place, for example how competitive was the RFP process? How much profit is inherent in the pricing? How crucial are the services to the customer? How badly does the consultant need the work? The topics outlined ?above are not an exhaustive list, but they ?do represent the most common examples ?of the contentious IP issues that consultants and customers fight about in their negotiations.

Good luck with your IP provisions in your future consulting agreements!

IP Provisions in Consulting Contracts – Part 4

By Debby Winters

Consulting contracts can be for work performed by an outside service provider or consultant, like market research, product design, product development, software implementation, employee benefit plan administration, and the list can go on. The consultant can begin to negotiate the consulting contract once the project proposal is accepted. Many times these contracts, as prepared by in-house counsel, are one-sided with intellectual property provisions that can be a disaster for the consultant with regards to future work. Believe me, I’ve been that in-house counsel drafting these contracts. The goal of in-house counsel is to protect your company but looking at these contracts from the consultant’s viewpoint, the contract can limit their ability to bid for and perform future work. In my last two blogs on this subject,  we looked at ownership of the work product and confidentiality provisions. This time, let’s look at the non-solicitation provisions in consulting contracts and suggests some possible approaches for workarounds.

Non-Solicitation of Employees and Contractors

Always keep in mind that much of the intellectual property used by a consulting firm resides in the brains of its personnel. Many standard services contracts prepared by large entities will contain provisions prohibiting the consultant from soliciting and hiring the employees and other contractors who work for the customer. If you think about it, this isn’t an unfair request, because your consultant client will probably be interacting with hard-to-replace, specialized customer personnel. But the same rules should apply to the consultant’s personnel, as good people are hard to find, particularly in certain specialized consulting fields, and your client’s employees and contractors should not be raided by the customer.  If the form contract contains a one-sided non-solicitation clause, propose a mutual one. If the contract lacks a non-solicitation provision, be sure to add one in favor of the consultant.

Next time we will talk about dealing with large entities that may have legal departments that you have to deal with.