Intellectual Property Directions

I doubt that it’s news to many people that the US is changing from a so-called first-to-invent priority system for awarding patents to a first-(inventor)-to-file system. And that pending change (March of 2013) has a lot of people running around as if the sky were falling. It’s not. You aren’t really in a race to the patent office to beat another inventor.

For most inventors this switch, per se, will have no effect on their patent applications. The chances that you and another inventor more or less simultaneously invent and file the same invention is small. After all, there are currently just a handful of “interference” procedures to sort out who was the first to invent. And in those procedures, the first inventor to file usually comes out on top anyway.

That’s not to say the switch will not have an impact on you. The collateral damage from the switch to first to file is that the scope of problematic prior art is significantly increased. In the present system you can “swear behind” a piece of prior art by presenting evidence that your date of invention was earlier than the date of the prior art.

Such swearing behind only makes sense when the date of invention is important (as it is now). Essentially you are proving that you had fully conceived your invention before the piece of prior art was known to the public; even if it took a year of diligent work to reduce your invention to practice (during which time the prior art became public) you are still entitled to the patent.

Under first-to-file, the idea of using the date of conception to provide priority goes out the window… all first to file cares about is, not surprisingly, when you file. But even this change is not a totally new concept to wrap your head around. If you’ve even been interested in getting a patent outside the US you have seen this issue before. In virtually the rest of the world, “absolute novelty” reigns; if your invention has been disclosed to the public, you lose.

Admittedly, under the new US rules things are even more difficult since prior art can be invalidating for both novelty AND obviousness, but the basic principle of needing to file before someone else makes a public disclosure is the same.

So, after March 16, 2013, there’s no race to beat another inventor to the patent office but there is an imperative to file before some (academic sort?) publishes something that will destroy your right (and everybody else’s) to get a patent. But right now, before first to file, you should make a concerted effort to file (at least a provisional application) on any potentially patentable invention you’ve been working on.

If you don’t, the piece of prior art you can swear behind on March 15th will be invalidating on March 16th.

During the Cold War era, the United States and Soviet Union engaged in a game of nuclear chicken called MAD, Mutual Assured Destruction. Essentially the doctrine said that the two superpowers realized that each had such large nuclear stockpiles that any preemptive attack would be tantamount to suicide. For smaller nations, the implicit threat was that a first strike would be assured destruction for them, without the “mutual” part. In the IP world, we call MAD a “defensive patent strategy”. With an appropriately designed, strong patent portfolio, anyone who tries to sue you for infringement is probably infringing your patents, so you both stand down and don’t actually end up in court.

Happily, the Cold War is over and MAD is gone too (at least as a stated policy). However, on April 17 Twitter posted their new “Inventor’s Patent Agreement” which is really not much more than a statement that they will utilize a purely defensive patent strategy. Their blog post suggests that they are eschewing offensively asserting their patents against alleged infringers because they don’t want to stifle innovation; in reality, given their dominance in their social media niche, NOT going after alleged infringing competitors unless sued for infringement gives them a license to steal any small competitor’s ideas without much cost to their business.

How so? First let’s posit that in the short text message space – or whatever tweets are – Twitter has a first mover advantage so large as to become nearly impossible to unseat. Unlike hardware or software products, social media products have a tipping point or critical mass after which competition is almost useless. Unlike hardware products, where what coffee maker I use has almost no effect on your choice of a Kurig or Mr. Coffee, your choice of social media tools  is very much affected by what social media I use… or more to the point, what social media most people you know use. If you “short message”, you tweet; if you want to share your life, you use Facebook.

Second, let’s posit that anyone trying to out-twitter Twitter is likely to infringe some Twitter patent, even as they perhaps add some interesting feature on top of Twitter’s IP. And if they don’t infringe, they probably come close enough that it would not be a frivolous suit if Twitter sued.

SO, what do you do if you are Twitter and a startup, Quacker, has developed a novel and interesting addition to tweeting? Do you pull out your patent suite and use it offensively (and look like an ogre)? NO, you copy their novel and interesting addition, taking away any competitive advantage it might have given little Quacker before more than a handful of tweeters become quackers.

And what if the interesting addition is patented by Quacker? You don’t care(!) since if they try to sue you then, well, your Inventor’s Patent Agreement says you’ll only use the patents “defensively” to deflect patent suits. Out come all those defensive patents which just happen to be able to crush Quacker, so they’ll cross-license with you…but you’re “paying” with the patents you were letting them infringe for free anyway.

The bottom line for Twitter is that they have turned potential competitors (innovators) into an unpaid R&D source. By letting them infringe, Twitter loses very little because of the critical mass nature of social media; by copying the innovators’ innovations, Twitter removes any competitive advantage the potential competitor might have developed; by having a “defensive” strategy, Twitter can position itself as a “good guy” even as it holds its WMD’s over the heads of the little guys.

The lesson for the rest of us… if you are not in the social media space, think twice about forswearing the offensive use of your patent portfolio since your customers are unlikely to have “brand loyalty” if your competitors have a better/faster/cheaper product. And if you are in the social media space, well, don’t try to compete with Twitter unless you are very, very good.

The story of Prometheus proves that bringing good things to mankind may not always have a good payback. In case you forgot, the Greek Titan Prometheus stole fire from Zeus and gave it to us mere mortals. Zeus punished him for his crime by having him bound to a rock while a great eagle ate his liver every day only to have it grow back to be eaten again the next day. While Prometheus the Titan’s crime might have been clear, not so with Prometheus Laboratories, whose patent on certain diagnostic blood tests might or might not have been patentable.

Prometheus Labs has had its patent eaten and regrown at least twice. However, with a Supreme Court ruling it seems the cycle is finally over (at least for Prometheus). For the rest of us, the Supreme Court’s invalidity ruling for Prometheus raises significant questions about the value of investing in certain types of research activities.

To put the case in a nutshell, Prometheus discovered/observed/researched that the lowest effective dose of a particular class of drug could be determined by the level of its metabolite (the product that remains after the drug is broken down by the body) measured in the blood. Their patent claim(s) essentially said “administer the drug to a patient and determine from a blood test if the metabolite is within the desired range”. From the perspective of the Supreme Court, these claims were nothing more than a statement of a law of nature (that the body produces the metabolite in proportion to how effectively it uses the administered drug) along with the instruction to observe nature in action. And, since laws of nature are not patentable, Prometheus lost the right to keep others from selling competing test kits. Note that the test kits were not patented, just the use of the kits to guide doctors in determining the proper dosage.

This ruling is important to the rest of us because the basis for invalidity was that the invention was ruled “not patentable subject matter”. To the Supreme Court the patent was the equivalent of saying “put more wood on the fire if you’re cold, break the fire apart if you are too hot.” Basic law of nature; more fuel equals hotter fire, less fuel equals cooler fire.

But this perspective is flawed, since it presumes that coming up with the acceptable range of the measurement has no inventive, patentable value. But saying that the acceptable range has no patentable value is really an issue of obviousness – just like knowing when to throw wood on Prometheus’s gift to man is obvious. The Supreme Court said “we don’t care how hard it is to come up with the right limits to make this a medically valid test. The Constitutional directive to reward inventors and discoverers of advances to the useful arts will not be applied to tests like this“.

We all may suffer from this ruling. How many research dollars will flow into medical tests that are simple to perform but whose diagnostic value comes from knowing how to interpret the results?

The validity of Prometheus’s patent should have been determined by obviousness, not by subject matter. If measuring the single metabolite in a hundred patients was all that was needed, then maybe it’s obvious. If figuring out which metabolite to measure, out of a hundred in the blood stream, was required, well, maybe not so obvious.

How about your company – how much of your value comes from a key bit of hard won knowledge? Are you the next company to have your liver eaten?

If you’ve ever watched a patent application flow through the USPTO examination process and said “What the heck is going on? I know of some prior art that should wipe that application out ASAP.” Well, your time is coming. But be careful what you wish for!

Under the new America Invents Act, third parties – outsiders like you – get several new chances to muck up someone else’s patent and/or application. Of course, you may actually end up making that inventor’s patent stronger, so think twice before acting. There are actually three opportunities for non-inventors to interject themselves:

First, you can submit information to the patent office during the examination process. This new, pre-issuance submission process is limited to printed materials such as patents, published patent applications and other printed publications. What is new is that these submissions are accompanied by “concise” descriptions of their relevancy. Thus, rather than just dump prior art on the examiner and hope s/he will read and understand their significance, under this program you get to point out why they should block your competitor’s pending application.

• Can be anonymous
• Must be submitted within 6 month of application publication (as a practical matter)
• Effective 16-Sept-12 BUT applies to any pending application.