Patenting Strategy A Pocket Guide
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Introduction This booklet is aimed at anyone who has to deal with patents at a practical level, with particular emphasis on companies new to IP such as start-ups. Based on over 100 years of IP experience at Kilburn & Strode LLP, this booklet can only touch on the topics but is intended to serve as a useful aide-mĂŠmoire.
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Overview Patents are one type of IP together with Trade Marks (for brands), copyright (for aesthetic creations, software) and Designs (for product appearance). A patent is a monopoly right lasting for 20 years, allowing the patentee to prevent unauthorised copying of a patented invention. It does not necessarily give the patentee the right to work with the patented invention, only the right to stop others. Patents must be obtained country-by-country, often using International systems to simplify matters. The patent application needs to have all relevant information in it when originally filed and includes broad ‘claims’ defining the scope of protection and a detailed ‘description’ explaining the workings of the invention in detail. The patent application is examined in each territory to see whether it is patentable over the ‘prior art’ (all information in the public domain before the patent application was filed including information publicly disclosed by the patent applicant). If the application contains a patentable invention it is granted. The process can take several years. Third-party infringers can then be sued in national courts although they can counter attack that their infringement is not covered by the patent or that the patent does not relate to a patentable invention. 2
The Patent System – What is Patentable? A patentable invention must be novel and inventive. To be novel it must be at least trivially different from a piece of prior art. To be inventive, that difference must be non-obvious. For example, if the invention solves a problem with the prior art, this can be a strong argument for patentability. Often, the invention as initially defined is not considered to be patentable, but the patent application can be amended subsequently to claim patentable subject-matter as long as this is based on the information already in the document. Both products and processes can be covered by patents. Some areas are not patentable, for example pure mathematical methods and pure business methods. Pure software is also not patentable, but its use in a technical field may be, for example, in controlling a chemical process or in improving the operation of a computer. At least in Europe, methods of medical treatment are not patentable, although products intended for medical uses may be. In the area of biotechnology there are some exclusions which address ethical concerns. The exact scope of these exclusions can vary from country to country. 3
The Patent System – What Does a Patent Look Like? A patent has a description and claims. The most important rules for the description are that it must explain how to make the invention work and should contain as much information as possible in case any of this is needed to define a patentable claim. Information cannot be added later. The description is followed by claims which are broader and directed to the underlying inventive concept providing commercially useful patent protection. When assessing patentability, the claims are considered and if necessary are amended. Similarly, when considering infringement, it is the claims that determine whether a third-party product or process is covered. Because of the territorial nature of the system, patents with different wording may be granted in different countries.
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Patent Protection Systems Various systems are in existence to help obtain patents in multiple countries cost-effectively. It is necessary for the patentee to file the patent application before disclosing the invention; otherwise the patent will not be novel. This only needs to be done in one country as long as it is filed in other countries within one year, ‘claiming priority’. At the one year stage, a common approach is to file an ‘International (PCT) patent application’ which covers well over 140 countries. This does not give an International patent, but maintains the application pending for a further 18 months. At the end of this period it is then split into the countries or regions of interest and is examined individually as discussed above. The 30 month period thus provided keeps the costs down whilst the commercial viability of the subject-matter of the patent application is considered. This approach is illustrated in the timeline on page 16. Many countries require individual patent applications after the 30 month period, but the European Patent Convention (EPC) allows a single European patent application to proceed from an International patent application - in fact at 31 months. Once granted, a European patent can be split to give protection in the specific European 5
countries of interest. At present, if there is infringement in multiple European countries then the infringer must be sued in each country. However, a “unitary patent” system is expected in the next few years which will allow action across multiple European countries in a single court. There are variants to this filing approach but this is probably the most common strategy for multinational protection. It will be seen that the time scales of patent applications are measured in years. The patent application is published at 18 months from the date of the first filing. Once the patent application is published, infringers potentially become liable for damages if they are later sued successfully with the granted patent. This is known as ‘provisional protection’. It is possible to accelerate the grant of patents down to one to two years which can be useful in such cases. Once the patent is granted renewal fees are payable, usually annually per country, to keep it alive.
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Ownership of the Patent Systems vary from country to country but generally the inventor owns the patent unless he was employed to invent, in which case the employer owns the invention. It is important to assess and agree ownership early as disputes can otherwise arise, particularly where the invention is successful. The patent can be owned by multiple parties, although again the respective rights should be agreed at an early stage. The patent can be sold to third parties, or licensed for a royalty which will be commercially agreed.
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Patent Strategy If a company innovates then it should consider securing exclusivity for those innovations through patenting. Otherwise third parties will be able to copy without having invested in research, hence potentially undercutting the price. It is essential that the patent strategy supports the company’s business strategy. The company should understand whether it wants true exclusivity or, for example, a licensing model. The company may simply wish to base its value at least partly on its intellectual property to raise funding or sell a company outright. A company wishing to patent its innovations should start with an IP capture scheme. In one system, a clearing house is provided for employee innovations. These innovations can then be assessed to consider which are worth patenting. An inventor reward scheme can often stimulate the capture process. Once within the patent process, it is important to have clear documentation of the various cases being pursued in order that decisions can be made on whether to maintain them at the appropriate milestones. However, it is prudent to keep records of all innovations regardless of whether they are patented. It is essential that the relevant staff be educated in identifying potentially patentable subject-matter as 8
well as the capture systems implemented by the company. In particular, the company should identify an individual or department responsible for handling IP and the innovators must know who this point of contact is. Typically the person in charge of IP would liaise with any outsourced resources such as patent attorneys.
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IP Assessment Although it is preferable to capture all possible IP, it may not be cost effective to pursue all of it as patent applications. In any pre-filing assessment it is not obligatory to carry out searching to find prior art – the Patent Office will do it. However, it may be worthwhile at least asking the inventor to do a basic check to make sure that they are not ‘re-inventing the wheel’. The potential commercial strength of the invention is an important factor. Also, it is worth considering whether a third-party infringer could even be detected. For example, if the invention related to proprietary software this might not be detectable. In a similar manner, it may be that the IP is best protected by keeping it a secret - as long as the secret cannot be broken, for example by reverse engineering or movement of staff.
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When and Where to File The patent application has to be filed before the invention is disclosed (although the US, exceptionally, provides a limited one year ‘grace period’) and it is essential that the inventors understand this and notify their IP adviser in advance of any public disclosure. If a concept is being developed, then a series of patent applications can be filed sequentially as developments occur which can effectively prolong the patent protection beyond 20 years. When it becomes necessary to select the specific countries for protection, issues to be considered include where the invention might be made, where it might be sold, where major competitors are based and where potential licensees can be found. It is important to assess the relative strength of national patent systems as enforcement and infringement detection may be more difficult in some countries than others. A significant issue in any patent filing strategy is budgeting. Patent costs are often budgeted within a related project, or a company may dedicate a specific annual IP budget.
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More Aggressive Patenting Strategies In addition to patenting a company’s core products they may consider building a ‘buffer zone’, patenting alternative or second-best solutions, reducing the options for competitors further. Companies may even consider assessing competitor activity and putting blocking patents in their way. However the resources required for doing this, both in terms of innovation and expense, should not be underestimated.
Patent Box The UK government is keen to promote innovation. The Patent Box enables companies to apply a lower rate of Corporation Tax (10%) to profits from its patented inventions and certain other innovations. The relief is phased in from 1 April 2013.
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Third-Party Intellectual Property It is essential to bear in mind that competitors may also be seeking patent protection. Patent infringement does not require copying or even knowledge of someone else’s IP and having your own patents is not a defence, so a level of due diligence should be adopted. It may be decided that competitors would never sue or that they would always license such that detailed searching is not required. On the other hand it may be necessary to conduct detailed searches for other patents with broad claims that may catch a company’s product or processes. A middle ground can be to monitor known competitor patenting activity and a system can be simply set up to do this. Third-party IP can usually be attacked. For example, it is possible in Europe to oppose or revoke a third-party patent if it can be shown that it is not patentable.
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Other Intellectual Property We concentrate in this booklet on patents but your company’s brand and ‘get-up’ may be protectable by trade mark and design protection. Software and marketing copy can be protected by copyright, and technical information which is not published through patents or otherwise can be protected through confidentiality and licensed in ‘know-how’ contracts, often as part of a larger deal involving patents as well.
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Dealing with Kilburn & Strode LLP We have a wealth of experience across the IP arena and in all technologies from software and telecoms through engineering to chemistry and life sciences. We work with entities ranging from individual inventors to multinationals and have enormous expertise in drafting and obtaining patents internationally, as well as assessing and attacking third-party IP. Through experience with many start-up and SME companies we have a good understanding of how to create an efficient, cost effective and commercially useful IP strategy. Vitally, we recognise that any strategy must be realistic and tailored to the needs of the company. For further information you can contact any of the following, or visit our website at www.kilburnstrode.com Engineering and IT Gwilym Roberts groberts@kilburnstrode.com Richard Howson rhowson@kilburnstrode.com Life Sciences and Chemistry Nick Bassil nbassil@kilburnstrode.com Jennifer Harris jharris@kilburnstrode.com Trade Marks Carrollanne Lindley clindley@kilburnstrode.com 15
Typical patent timeline
Priority date First application is filed 12 months International (PCT) application is filed
18 months International application is published
31 months Entry into National/Regional Phase e.g.: US, EP, Japan etc.
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The information contained in this document should not be applied to any particular set of facts without first seeking professional advice. Kilburn & Strode LLP is a limited liability partnership registered in England and Wales. Registered number: OC342299. Registered office: 20 Red Lion Street, London, WC1R 4PJ. 17