Quibbles and Bits

Not Patently Obvious

And now for something completely different – a brief detour into an area which is not especially audio-related, but which I’m hoping you might find interesting.  Ever since 1989 I have managed to find myself responsible, at one time or another, and to one degree or another, for the patent portfolios of each of the companies I have worked for.  I am also an inventor on several issued patents, and have even been retained as an expert advisor on a patent-infringement lawsuit.  So I know a little bit about the subject – at least enough to have learned that most people have a seriously inadequate understanding of the purpose, nature, and value of patents.

Most people understand the basic concept of a patent.  If you invent something, by patenting it you will be able to prevent anybody else from taking advantage of it.  And while that simple summary is correct, it is misleadingly simple.  Patent law is an arcane and highly technical field, and making proper use of it requires great expertise.  So you really need to be professionally advised if you are thinking of patenting something yourself, or, worse, are concerned that you may be infringing on someone else’s patent.

What exactly is a patent?  Quite simply, a patent is a formal disclosure of an invention.  By virtue of publishing precisely what your invention is, a patent can be invoked to prevent others from using it without your consent.  Clearly it is a powerful concept.  But because it has significant and substantial legal and financial ramifications, a tortuous framework of patent law has grown up around it to enable inventors and patent holders to enforce their legal rights in a fair and consistent manner.  These legal strictures are very important.  Weaknesses in any of these areas can result in a patent application being rejected, or its applicability restricted – or even outright invalidated – at some point in the future.

First of all, it is important to understand what can be patented and what can’t.  A patent must describe either a specific thing, or a specific method of making a thing.  The inventor must fully and completely disclose exactly what constitutes the invention, and provide clear criteria that permit the reader to distinguish the invention from something which is not covered by the patent, leaving as little as possible in the way of ambiguity.  Ambiguity can end up being a fatal flaw.  You cannot obtain patent protection for something that you are not prepared to publicly disclose.

Next, there must be an ‘inventive step’ – a critical point at which the invention makes a notable advance beyond what was previously known (what patent law refers to as ‘prior art’).  Your patent must contain ‘full disclosure’.  The key test that will be applied is that it must contain everything that ‘a person skilled in the art’ would need to know to be able to successfully replicate the invention.  The inventor must not withhold some key “secret sauce” from the patent disclosure.   Nor can it rely on something that the inventors are not able to fully disclose (for example, that hasn’t yet been invented or discovered).

The patent should disclose who invented the invention.  There can be multiple inventors, and if so, each listed inventor must be able to point to a critical aspect of the ‘inventive step’ for which they are responsible, and all of the actual inventors must be included in the patent.  Just being the owner of the company for whom the inventor works does not entitle you to be listed as an inventor.  It is not unusual for all rights in the patent to be assigned to a third party, usually the employer of the inventor(s), although the inventors’ explicit consent is required for this to happen.

Finally, the substance of the invention cannot become public knowledge prior to the filing of the patent application.  If it does so, it will itself be considered to be part of the ‘prior art’ and therefore not patentable!  Something as innocuous as offering a product containing the invention for sale – even if no sales actually occurred – may be construed as placing the substance of the invention ‘in the public domain’.  Some key aspects of patent law deal with the public disclosure of material subject to a patent application, as there are various exemptions and grace periods which may apply.

The structure of a patent comprises two parts, the Specification and the Claims.  The Claims are the most important section of the patent.  Patent law protects only what is claimed in the Claims.  The Claims set forth in a highly formalized manner exactly what the inventor(s) are seeking to protect.  The wording of patent Claims always appears dry and arcane to a casual reader, because the legal language used has evolved to meet a specific purpose.  Because of this, improperly written Claims – even if they might appear to make sense to a casual reader – can actually render an otherwise valuable patent practically worthless.  But even when read by an expert, any Claim read in isolation will have room for uncertainty about what is actually being described.  Therefore, patents also include a Specification section in which the invention is described in detail, placed in the context of the pre-existing state-of-the-art, and illuminated with examples of specific embodiments of the invention.  The Claims are therefore intended to be read and interpreted – and any ambiguities resolved – in the light of the Specifications.

It is important that the Claims of a patent describe only the new inventions for which the inventor is seeking protection.  If a Claim is found to describe ‘prior art’, then that claim – and in some circumstances the entire patent – will be held to be invalid.  This will be the case regardless of whether or not the inventor was aware of it.  Usually the Specification will discuss the ‘prior art’ in some detail, and explain why and how the inventor’s claims are distinct and different, and this is an important aspect of a well-written patent.

Once you have written your patent, it must be submitted to the patent office for approval.  The patent office will assign it to a patent examiner who will make a cursory, but intelligent, examination of your patent and will attempt to establish whether or not the submitted document meets all of the requirements to be granted as a patent.  She may question whether the disclosure is complete.  Or she may raise specific objections based on existing patents or other publications which she considers may describe prior art.  You will then have the opportunity to address those objections and either re-submit the application or provide clarifying information to the examiner.  This can go back and forth many times, and the details of any such dialog will be retained in the patent’s history file, and may be referred to in future if the patent is ever challenged in court.  If all goes well, in due course a patent is issued; a patent only comes into force after it has been issued.

We’re still not done yet.  You have yet to decide where, geographically, you want your patent to have force.  If you have a US patent for example, your competitors in Germany, Japan, China, etc., can freely and legally enjoy full use of your patented inventions.  Your only remedy may be to stop that entity from importing infringing products into the US.  If you want the protection of your patent to extend to other countries of the world, then you have to file for patent protection in those countries too.  But be aware that your patent rights, the degree of protection offered, and the remedies available against infringement, may be different in each country.  Filing internationally gets to be very expensive, since your patent will usually require to be translated into each country’s native language, and rendered fully in compliance with each country’s patent codes.  Also, you cannot sit on your hands and see how things work out before deciding whether to file internationally.  You have to make that decision up front (within a maximum of 12 months, if you manage to line all your ducks up correctly).

Once issued, the patent has a severely restricted lifetime.  In the US this is 20 years from the date when the patent was first filed with the patent office, regardless of how long it may have spent going back and forth with the examiner’s office prior to issuance.  Once the patent expires, it no longer conveys any protection whatsoever, and anybody is free to make full use of it.  There are no ways to get around that.

It is one of the big mistakes that people make in regard to patents that they over-estimate the value of an issued patent.  All issuance demonstrates is that the examiner has been persuaded that the inventor has met the requirements for a valid patent.  It does NOT guarantee that the patent actually does meet those requirements!  This can – and regularly does – come as a big surprise to someone who has shelled out a lot of money to get to that point.

So what use is a patent then?  In reality, if you are the owner of a valid, issued patent, it gives you a legal basis on which to approach a third party who may be infringing that patent against your wishes and ask them to either stop doing so or purchase a license.  Generally, what happens next depends on whether the third party is bigger than you, and has greater financial clout.  If the party continues to ignore your entreaties, you will have the right to sue them for patent infringement.  But that is a very scary step to take.

A court of law is the only place where the ultimate blessing of validity can be bestowed upon a patent.  This is where you end up if you sue somebody – or if somebody sues you – for patent infringement.  A court of law will do what the patent examiner did not.  It will examine the patent in minute detail and pronounce with finality on whether or not the patent is valid.  It can choose to limit the patent’s validity, or even invalidate it entirely.  But a patent whose claims have been upheld in court can no longer be legally challenged as to validity.  The owner of a patent whose claims have been upheld (or even declared invalid, for that matter) in a court of law will also be $1M – and often more – lighter in the wallet.  Yes, that was an ‘M’.  A patent infringement lawsuit is not for the faint of heart – on either side.

On the other hand, in the US, the doctrine of triple damages applies.  This means that if you infringe on the patent rights of a third party, in full awareness of those rights, then you will be liable for not only the damages you are held to have caused, but triple the damages.  The fear of incurring triple damages ensures that even large and powerful entities will take a patent infringement lawsuit seriously, because triple damages presents even a penurious client with an opportunity to seek serious legal representation on a contingency basis.

So what does all this cost?  First of all, you will benefit from the services of a good patent attorney.  Yes, they can charge $400 an hour, but there are good reasons for that.  I wouldn’t dream of filing a serious patent without the assistance of top quality specialist counsel, and indeed I never have.  There are so many ifs and buts when it comes to costs, but I will give you two pegs in the ground that I think are fair.  To get to the point where you have a high-quality issued US patent will cost you $10k to $20k.  If your ambitions are international, a fully issued patent portfolio in a basket of countries in which a technology-oriented company might wish to do business will set you back $150k to $250k per patent.  That’s not chump change.  And on top of that there are annual ‘maintenance fees’ to be paid.  Remember, this is to arm yourself with a single issued patent, which may be willfully ignored by someone who doesn’t think you have the balls to sue them, and which may ultimately be shown to be invalid – whether in court, or in one of those “oh dear” moments when you open a letter containing a sheaf of technical documents that you wish had come to your attention before committing to the time and expense of filing the patent in the first place!

At this point, a quick detour into good business practice.  Because of the doctrine of triple damages, companies and individuals should always make it strict policy that nobody (but NOBODY, other than in-house counsel) should ever read the Claims of ANY patent of which they are not the author.  If such a policy is carefully implemented in practice, then it follows that neither employee nor employer can ever be aware of any infringement of any patent.  Such a policy, if diligently implemented, offers a degree of legal protection against being side-swiped with a triple-damages lawsuit.  Since only the Claims describe what is patented, even if you have read the Specifications section of a patent which you are accused of infringing, if you haven’t read the Claims you cannot know what has actually been patented.  This may sound devious – let’s be honest here, it IS devious – but if you retain a serious patent attorney this is the first lesson that he will hammer into you.

Patents exist mostly as a ‘barrier to entry’, intended primarily to obstruct your competitors from entering your line of business.  In that sense they are comparable to the padlock you put on the factory’s front door when you go home for the weekend, or the insurance policies that you pay for once a year.  Like the padlock and the insurance, you need to understand what you are protecting yourself against, what the costs are of indulging yourself in that degree of protection, and what risks you run in not doing so.  There are exceptions to every rule, but for most small businesses – and I think all high-end audio businesses are small businesses – patents are very rarely a justifiable form of protection.  But patents can also be used to generate income through licensing fees.  For example, RCA made a fortune licensing their color TV patents.  And when telecom giant Nortel’s assets were sold off in 2011 following their bankruptcy, their patent portfolio was sold for $4.5B, in cash.  Yes, that was a ‘B’.