Evidence Based Prosecution III: Publishing Patent Applications

In 2001, the PTO began publishing patent applications that had been filed eighteen months prior.  Prior to that change, essentially all U.S. applications had been kept secret throughout prosecution.

Under the new rule an application will publish after eighteen months unless the applicant explicitly requests nonpublication and promises that it does not intend to file any corresponding foreign applications.

To take a look at how applicants are responding to to the change, I pulled up a random sample* of 1% of all published applications (12,000+ sample size) then created a histograph based on serial number. The graph below shows the results.

The applications around the beginning of Series 10 (10/000,000) were filed around the end of 2001 while those at the end of Series 10 were filed in the later half of 2004. It appears that the major dip at 10/600,000 is a data anomaly, although I have not yet figured out why it is there.

There are several reasons for publishing your application:

• Law: If you plan to file file a foreign application (or already have filed) then you must allow the application to publish.
• Transaction Costs: Publication avoids the problem of later having to think about whether you are going to file foreign.
• Signaling: Publication can provide some signaling — i.e., to let everyone know how strong your technology is so that they don’t step on your toes. This is also a credible showing to investors.
• Rights: Publication can provide provisional rights if the claims that issue are “substantially identical” to those that are published and if actual notice is given to the infringer.
• Blocking: Publication creates world-wide prior art.

Notes

• *The data was actually collected in six random samples — Applications published in 2001, 2002, . . . , 2006.

Comments

[Ronald J Riley]

One reason that so many independent & small business inventors pending applications are being published is that most practioners are not informing the inventor that they can opt out. I hear again and again from inventors who are really upset when their patent applications are published. They had no idea that their patents were going to be published.

Publication costs an inventor hundreds of dollars which is better spent elsewhere and it gives patent pirates much more time to try and work around the invention. It makes it easier for disreputable companies to manufacture evidence of prior art. It allows them time to build a fence of nuisance patents around the inventor's core technology. This has long been the tactic of Japanese companies. When an inventor's patent is published long before they actually have rights to the invention disreputable deep pocketed companies can make enough money from stealing the invention that they can bury the inventor in litigation and still have a handsome profit.

While large business has little to lose from early publication the same is not true for startup companies. For a startup to survive they need to have secrecy until their patent rights are granted. They need to hit the market running and in so doing they have a head start. It is the profit from sales of product which gives the startup the cash flow they need to defend their patents. The right to sue conveyed by early publication is a hollow right in the absence of cash flow to pay to defend the rights.

Ronald J Riley, President
Professional Inventors Alliance
www.PIAUSA.org
RJR"at"PIAUSA.org

Ronald J Riley, Exec. Dir.
InventorEd, Inc.
www.InventorEd.org
RJR"at"InvEd.org

Change "at" to @
RJR Direct # (202) 318-1595

[James Hill, MD]

Ronald said, "The right to sue conveyed by early publication is a hollow right ...."

Publication does not confer a right to sue, but rather a right to damages that begin earlier, upon actual notice of the publication to the infringer. One still may sue only after issuance of the patent.

Although Ronald makes a good point, all is not lost for a startup that publishes its applications. If an infringer makes a lot of money by stealing an invention well-claimed in a published application, and substantially identical claims issue in the corresponding patent, many firms will take such a plaintiff's infringement case on a contingency-fee basis, making enforcement of the patent affordable. And the infringer will owe damages for a period (between notice and issuance) during which the startup presumably had no cash flow, resulting in a nice "bonus" for the company.

Also, if the application does not publish, the startup loses an earlier opportunity to create inventive-step (obviousness) prior art outside the U.S.; without publication, the application is prior art for novelty only in foreign countries until issuance. And in the U.S., the nonpublished application is prior art under 102(e), which can be sworn behind, whereas if it publishes, it becomes 102(b) -- hard to get around -- one year later.

[Ronald J Riley]

http://www.patentlyo.com/patent/2006/09/evidence_based__1.html

The majority of independent inventors are better off to not pursue coverage outside the US. While there are exceptions to this they are rare. Broad coverage worldwide can cost twenty fold or more than what a US only patent costs. Enforcement outside the US is even more costly and much more difficult than in the US.

Generally an inventor is better off spending the money on commercialization in the US.

One of the reasons that coverage outside the US is not cost effective is that their patent systems and laws are in large part designed to favor big companies. In fact those big companies are doing their best to cut America's patent system off at the knees so that the American system no longer stands taller and prouder than the rest. Their efforts to do this are shrouded in "patent fairness".

So called patent reform is not really reform but rather a set of tools designed by and for patent pirates, especially by the group known as the Coalition for Patent Fairness, otherwise and better known as the Coalition for Patent Piracy.

If they succeeds in passing their legislative agenda it will not be practical for contingency litigators or patent enforcement businesses to pursue most cases. As it stands now the high cost of patent litigation means that patent pirates can steal invention of lesser value with impunity. Their idea of patent fairness is a system where they can take American inventions to low wage countries without paying the inventors a dime.

The effects of patent pirates legislative agenda are:

1) Increases the costs of small entity patent holders, often by at least an order of magnitude.

2) Shifts costs from large corporate infringers to the small entity.

3) Opens new causes for large entities to litigate.

4) Opens our patent system to a multitude of patent system abuses common in Japan which very much favors big companies.

5) Delays the possibility of start-ups obtaining investment capital by effectively increasing pendency.

6) Increases the power and potential abuse of such power by the USPTO which has become increasingly politicized.

7) Lowers the potential recovery for a patentee by at least one to two orders of magnitude.

8) It will not decrease the role of attorneys or litigation, but rather will increase their role and legal expenses in a multitude of ways.

9) Will lead to much higher filing rates for patents which will further bog down the USPTO.

====

The Professional Inventors Alliance USA was created more than a decade ago to protect American invention and encourage innovation. American inventors saw a need to track congressional legislation and federal policy that impacts independent inventors, small and medium-sized businesses and colleges and universities. The Alliance is the premiere organization in the nation, providing independent inventors a united voice in order to improve public policy.

The Alliance provides legislative counsel, congressional updates and strategy development to its members through a number of vehicles. Additionally, through its speaker’s bureau, Alliance members have an opportunity to provide expert opinion to many of the nation’s top-tier business, technology and mainstream media organizations. Over the years its members have testified before Congress, offered counsel to key Senate and House committee members, and successfully pushed legislation to protect America’s independent inventors.

Since its inception, the Alliance has grown into one of the most vocal advocates for America’s patent system.

Examples of areas of our expertise include David Vs. Goliath patent litigation, patent reform, and we have a unique view of the companies comprising the "Coalition for Patent Piracy".

Please call for a different perspective.

Ronald J Riley, President
Professional Inventors Alliance
www.PIAUSA.org
RJR"at"PIAUSA.org
Change "at" to @
RJR Direct # (202) 318-1595

[MaxDrei]

Good answer James Hill but for me, from Europe, there are more points to make, against the scenario imagined by Mr Riley which for me, frankly, seems pure wishful thinking fantasy.

Serious innovating companies are running their own R&D forward, and are not hanging around waiting for stimulus from the publications of private inventors. The serious companies are doing clearance studies. Their top management forbids product managers to proceed with new products that infringe. In this real world, hostile A publications of broad unexamined claims, 18 months after priority date, which cannot immediately be dismissed as hopelessly lacking in validity, are a real headache. The "quantum of damages" meter is running already. How many times do you think a US medical devices company beats a path to the door of a German medical doctor, to buy his(not often her) A published patent application before the competition does??

Provided the private inventor defines correctly in his/her claim what the invention is, and attaches an enabling disclosure, the boot on his/her foot is bigger when it is an 18 month published boot. The amount the VC boys, other tech investors, contingency fee lawyers and other trolls are willing to invest in your case (taking on the corporate juggernaut) depends on the size of the boot on your foot, no? In the real world, 18 month publication helps the little US or German inventor more than the Japanese corporate juggernaut.

[MaxDrei]

Mr Riley and I relied simultaneously. I leave it to US readers to comment on Mr Riley's ideas about the relative cost of litigation within and without USA. He's right that public policy on patent matters is different in civil law countries (mainland Europe, Asia) than in common law countries, but wrong that this public policy, as between the little guy and the corporate juggernaut, is biassed. It is a universal human trait to have a soft spot for the lovable little guy. To play successfully on an alien playing field, you have immediately to grasp and follow the different Rules of the Game. Open-minded players fare better.