COURSE ON INTELLECTUAL PROPERTY LAW

1. COURSE ON INTELLECTUAL PROPERTY LAW Department of Information Engineering and Computer Science University of Trento academic year 2007/2008 (Lecturer: avv. Maria Cristina Osele)

2. Course on Intellectual Property Law Lecture no. 3 Patent in general february 22, 2008 from 4.00 p.m. to 6.00 p.m M.C. Osele - Course IP Law 2008

3. Patent What is a patent? A patent is: • a document issued, upon application, by a government office (Patent Office, or USPTO) which contains the description of an invention. • It is, in essence, a government-sponsored monopoly to recognize and reward inventor by granting inventors exclusive control of the patent subject matter M.C. Osele - Course IP Law 2008

4. Patent • What is the purpose of a patent? - A patent creates a legal situation so that the invention can be exploited with the authorization of the owner of the patent. - A patent gives inventors the right to exclude others from making, using, offering for sale, or selling the inventions. This exclusion is only applicable in the countries where the invention is protected by the patent. - Patent protection provides an award for the disclosure of the creation and a reward for the invention and for its development, since it is feasable and marketable. - Patent protection is an incentive to promote additional creativity and encourage companies in innovation and exploitation of new technologies. M.C. Osele - Course IP Law 2008

5. Patent Patentable Subject Matter • What sort of things can be patented? By international agreements (Paris Convention, Patent Cooperation Treaty (PCT), Patent Law Treaty (PLT), Patent Act in U.S.A.) patents are available for any inventions, whether processes or products, in all areas of technology both for breakthroughs in technology and for small technological increments. Are patentable: - traditionally physical inventions; - In an Information economy, new inventions asset including . Innovations form R&D labs in software development . Inventions in computer science, robotics, artificial intelligence . Biotechnology, life science . Genetics M.C. Osele - Course IP Law 2008

6. Patent Patentable Subject Matter What sort of things cannot be patented? - things already existing in nature, naturally phenomena - scientific laws, theories or mathematical methods - inventions excluded for public order or morality grounds - therapeutic methods for treatment of humans and animals - abstract ideas/purely mental processes Exception:things producing a useful result. The sun itself is not patent subject matter, but a use of the sun (photovoltaic cells transforming sunlight into energy) may be patentable. M.C. Osele - Course IP Law 2008

7. Patent The requirements An invention or discovery to be patented must be • Novel - The invention must non have been invented, patented or published before - When there is a prior art, the invention is not patentable (art. 54 EPO Convention) - Prior art may be found in Patent Office, USPTO site, trade publications, books, journals, conference proceedings. 2. Useful (Patent Act U.S.A.) – Industrially applicable (TRIPS Agrement) - Somehow the invention operates something useful - with a pratical benefit, not necessarly with commercial/marketable application (see: U.S: Patent 5, 443,036 Method of exercising a cat; U.S. Patent 5,993,336 Method of executing a tennis stroke) 3. Nonobvious - invention must take an “inventive step” - must be non obviuous/anticipated to a person having ordinary skill - differences between the invention and the prior art must not be obvious M.C. Osele - Course IP Law 2008

8. Patent Types of Patents There are three classes of patents • Utility patents (new and useful process, machine, article of manufacture, composition of matter or improvements, including business methods patents) • Design patents (new, original, and ornamental design for articles of manufacture) • Plant patents (inventions or discoveries relating to reproducing any distinct and new variety of plants, i.e. Basmati rice Patent) M.C. Osele - Course IP Law 2008

9. Patent Patent Rights • Exclusive right nobody can produce, use, sell your invention • Territorial right a patent in one state does not affect patent in other countries • Timed right protection is limited to a certain period (20 years) • Transferable right the patent owner can assign or sell (license) the patent/patent application to others • One-Time right If a patented invention/product is marketable (put on the market) the patent right is exhausted • Passive right prevents other to exploit your invention, but you are not guarantee to exploit it M.C. Osele - Course IP Law 2008

10. Patent Term of duration • By international Treaty the term of a patent has to be within 20 years form the filing date of the patent application, 10 years of duration for utility models or less for the “short-term patent”. • During the validity of the patent the developer of the invention has the right to have it to himself in exchange for full disclosure to the public of how to use it. • When the patent rights expire, the invention/technology becomes public property and everybody is free to use it for is own good M.C. Osele - Course IP Law 2008

11. Patent Compulsory licensing • In order to prevent abuses or in case of non-use of the patent invention within a prescribed period (usually 4 years from the filing date of application for patent, or 3 years from the issue of the patent), the exclusive rights of a patent owner can be used without his/her authorization How? - byacompulsory licensing authorized to a third party either by the competent court or by a Patent Office, as provided under the Paris Convention and the TRIPS Agreement(art. 31). M.C. Osele - Course IP Law 2008

12. Patent Patent Protection • National Patent Application the Protection cover only the state of application (principle of territoriality) • European Patent Application (EPO) - one application filed at one Office (EPO Munich, EPO The Hague, EPO Berlin, Patent Office of contracting State (all except NL) - one EP patent with a protection for “X” chosen states (28 Member states); - convenience: it costs about less than 3 national patent • International Patent Application (PCT) - grants a simplified procedure: one application for up to 115 PCT member States - International Search Report - PCT doesn’t grant patent: each country grants a patent based on PCT Application - EPC states can be considered collectively as a region M.C. Osele - Course IP Law 2008

13. Patent Patent Protection At the present • There isn’t a single European Patent • There isn’t a Worldwide Patent • In each country where patent is (is going) in force, you have to pay cost of examination, cost of translation, cost of maintenance (a substantial annual fee..) • If you fail to pay the maintenance fee, your patent would lapse and you would lose your patent protection M.C. Osele - Course IP Law 2008

14. Patent Contents of a (European) Patent Application • Request for grant • Description of the invention - Disclosure of prior art - Detailed description • Claims - claims define the scope or extend the protection of the patent - a patent agent or attorney states in the application the broadest possibile statement of the invention first that will cover the most claims • Drawings - used to interprete claims • Abstract M.C. Osele - Course IP Law 2008

15. Patent First to invent versus First to file a patent Two inventors want a patent on the same invention at the same time Who does win? • U.S. Patent Office worked on a first-to-invent system. Inventors - needed only keep record of their inventions as they make progress - had time to make refinements and get feed-back - were encouraged in inventiveness and innovation • The European Community and other states follow the first-to-file system The first-to-file system - discourage feedback - create an atmosphere of secrety - favors large organizational entities with a corps of support staff - reduce interferences or dispute , M.C. Osele - Course IP Law 2008

16. Patent The Grace period/On-sale Bar in U.S.A. • An inventor is barred from acquiring patent protection if the application is filed more then one year after the earliest date of sale, or public use of the invention in the United States or more then one year after the date of a printer publication in any country. • For example, a company invented a fog-making apparatus. • In January 2000 the invention was disclosed in a printed publication to a convention of engineers. • In April 2001 the company applied to patent the device and the application was rejected. , M.C. Osele - Course IP Law 2008

17. Patent The Grace period/On-sale Bar in U.S.A. The case Pfaff v. Wells Electronic Inc. Facts of the case (from the decision) • In November 1980 Pfaff commenced work on the socket when representatives of Texas Instruments asked him to develop a new device for mounting and removing semiconductor chip carriers. • Pfaff prepared detailed engineering drawings and sent them to a manufacturer in February/March 1981. • Prior to March 17, 1981, Pfaff showed a sketch of his concept to representatives of Texas Instruments. • On April 9 1981, they provided Pfaff with a written confirmation of a previously oral purchase for 30100 of his new sockets for a total price of $ 91155. • Pfaff did not make and test e prototype of the new device before offering to sell in commercial quantities. M.C. Osele - Course IP Law 2008

18. Patent The Grace period/On-sale Bar in U.S.A. The case Pfaff v. Wells Electronic Inc. • The manufacturer took several months to produce the device and Pfaff did not fill the order until July 1981, so that Pfaff first reduced his invention to practice in the summer 1981 • The socket achieved commercial success before Patent no. 4,491,377 issued to Pfaff on January 1, 1985 • After the patent issued, Pfaff brought an infringement action against Wells Electronics Inc. the manufacturer of a competing socket, alleging that the modifications infringed six of the claim of ‘377 Patent. • The District Court held that two of those claims (1 and 6) were invalid because they had been anticipated in the prior art, while four other claims were valid. In any case Pfaff had filed application for the ‘377 patent less than a year after reducing the invention to practice , M.C. Osele - Course IP Law 2008

19. Patent The Grace period/On-sale Bar in U.S.A. The case Pfaff v. Wells Electronic Inc. • The Court of Appeal reversed, finding all six claims invalid, four of which described the socket that Pfaff had sold to Texas Instruments prior to April 8, 1981. • Because that device had been offered for sale on a commercial basis more than one year before the patent application was filed on Aprile 1982, the court concluded that those claims were invalid CONCLUSION • The conclusion on the Court’s view that as long as the invention was “substantially complete” at the time of sale the 1-year period began to run, even though the invention had not yet been reduced to practice. • As far as the other two claims, describing a feature not included in the Pfaff’s initial design, the Court of Appeals concluded that the additional feature was not itself patentable because it was an obvious addition to the prior art. the Supreme Court established a twopart test to determine the commencement of the on-sale bar: • there must be an offer for commercial sale and not only a sale for experimentation • the invention must be ready for patenting, so that it is easy to create a working version of the invention , M.C. Osele - Course IP Law 2008

20. Patent The Grace period/On-sale Bar in U.S.A. The case Pfaff v. Wells Electronic Inc. CONCLUSION In the case of Pfaff v. Wells, the Supreme Court established a twopart test to determine the commencement of the on-sale bar: • there must be an offer for commercial sale and not only a sale for experimentation • the invention must be ready for patenting, so that it is easy to create a working version of the invention so that to enable a person skilled in the art to practice the invention the Supreme Court established a twopart test to determine the commencement of the on-sale bar: • there must be an offer for commercial sale and not only a sale for experimentation • the invention must be ready for patenting, so that it is easy to create a working version of the invention , M.C. Osele - Course IP Law 2008

21. Patent The Grace period/On-sale Bar • Printed Publication • A printed publication could include the result of an invention. If a skilled person can make the invention based upon the publication, than the inventor will be barred from patent protection if the application is filed more than one year after • Public Use or Sale • A sale need not be consummated to trigger the one-year-period • Experimental Use doctrine It is a rule excusing an inventor from the one year bar, in case of public use for the purpose of perfecting or testing the invention. In this case sale or use will not bar the grant of the patent. M.C. Osele - Course IP Law 2008

22. Patent In Europe there is no Grace period/On-sale Bar hence Printed publication or any other sale, public disclosure, use or offer of sale of the invention for any reason prior to filing a patent application WILL BAR THE GRANT OF PATENT PROTECTION! IMPORTANT In Europe there is a big dilemma on the controversial grace period There was a great debate on THE CASE FOR AND AGAINST THE INTRODUCTION OF A GRACE PERIOD IN EUROPEAN PATENT LAW M.C. Osele - Course IP Law 2008

23. Patent Proposal for a six month grace period… • In the troubled proposal directive for the patentability of computer-implemented inventions the amendment n. 10 to the article 4, pharagraf 3, proposed to recognize to the inventors a six months grace period also to favorite some testing of the invention between inventor and Universities/companies. • This solution was justified to help the SME for a deeper evaluation of the success of the invention before investing a lot of money in the application of a patent… M.C. Osele - Course IP Law 2008

24. Patent art. 55 of the EPO Non-prejudicial disclosures • For the application of Article 54 a disclosure of the invention shall not be taken into consideration if it occurred no earlier than six months preceding the filing of the European patent application and if it was due to, or in consequence of: • (a) an evident abuse in relation to the applicant or his legal predecessor, or • (b) the fact that the applicant or his legal predecessor has displayed the invention at an official, or officially recognised, international exhibition falling within the terms of of the Convention on international exhibitions signed at Paris on 22 November 1928 and last revised on 30 November 1972. M.C. Osele - Course IP Law 2008

25. Patent The European Patent Granting Procedure Main steps (I) • Filing (Patent application has to be filed at the Patent Office; applicant cannot amend content of description, claims or drawing before the Search Report) • Search carried out by the Examiners to find in databases (EPO database EPODOC, WPI, PAJ, INSPEC, etc.) and by esp@cenet the most relevant state of art, which are all information relevant to patentability made available to the public prior to the date of filing of the patent application • Search Report written by the Examiners it is sent to the applicant with copies of cited documents. M.C. Osele - Course IP Law 2008

26. Patent The European Patent Granting Procedure Main steps (II continue) • Publication Patent applications are published in language of proceeding as son as possible after the expiry of a period of 18 months after priority • Publication of the Patent Application is not the final Patent • The granted Patent is published after the Examination and Grant Procedure • Examination Examining Division (usually 3 examiners) decide together whether to grant or refuse the application • Grant At least 2 members of the Examining Division agree that the application meets the requirements of EPC or of Patent Laws. The grant is the approval of the final text, fees for grant and printing are to be paid File translation of claims in the other two official languages M.C. Osele - Course IP Law 2008

27. Patent The European Patent Granting Procedure Main steps (III continue) • Entry into the national phase filing of translation, payment of special fee and national fees, registering a transfer, licenses, etc. • Opposition It is a centralized EPO procedure for challenging the validity of a granted EP It must be filed by any person within 9 months of the mention of grant being published M.C. Osele - Course IP Law 2008

28. Patent The PCT Patent Granting Procedure INTERNATIONAL PHASE • Application applicant files application at a so-called receiving Office, designating the countries of interest • International Search It is done by the offices appointed by the PCT Assembly • Publication it is handled entirely by the Internarn Bureau in Geneva, by WIPO which is exclusively responsible • Country selection Applicant selects among the designated countries those which are still of interest NATIONAL PHASE • Grant of National or Regional Patents filing of translation, payment of special fee and national fees, registering a transfer, licenses, etc. M.C. Osele - Course IP Law 2008

29. Patent What may be done with a Patent? • A patent does not in and of itself represent any return on investment • It is up to te patent owner to make business decisions to exploit the value of the claims covered by the patent How to make it? By the valuation of intangible asset • Just the ownership of the patent creates two value - Financial/monetary/market value of the patent itself - monopoly effect: huge barriers to entry and competitive advantage • Patent commercialization and Knowledge Transfer Strategies create further value - by Technology transfer - by assignments - by licensing (revenue for the investors with somewhat less risk) M.C. Osele - Course IP Law 2008

30. Patent Ownership of Patents Other issues of the ownership of patents arise in case of coinventors working together They might be located in different places and working on different aspects of the same process To avoid disputes it is important to detail: • joint ownership agreement (If they are not part of an employment arrangement) including • A method of making decisions on the invention • The percentage interest and proportionate sharing of revenues from the interest • Right to manufacture or sell or sublicensing the invention in a geographic area • A method of resolving disputes between the parties M.C. Osele - Course IP Law 2008

31. Patent Ownership of Patents • employment agreements (In case of employment arrangement) outlining • Resource allocation • Development and ownership of inventions • Creations • Trade secret • Etical obligations M.C. Osele - Course IP Law 2008

32. Patent Shop rights • Shop Rights Issue arises when an invention is invented by an employee using employer resources. In this case: - in general and in U.S.A. employers enjoy a shop right in the patent and are entitled to a royalty-free nonexclusive license to the patent - in Italy under the New Industrial Property Code – D. Leg. 10.2.2005, n. 30there are at the present two different shop rights M.C. Osele - Course IP Law 2008

33. Patent Shop rights • The first - under art. 64: if the inventor is employed in a private company or in general in a public administration IPR are of the employer and the employee has only the right to be quoted as author • The second- under art. 65 if the inventor is employed in Universities, Public Research Center IPR are exclusively of the employee who may apply for the patent of his invention. The University/Research Center may exploit the invention but al least 50% of economic rights must be given to the employee Attention! This rule is going to be early updated with an amendment as to the proposal approved by the Italian Parlament on June 29, 2005 and now sent to the approval by the “Senato” – see art. 13 of the proposal of law n. 3533 M.C. Osele - Course IP Law 2008

34. Patent Assignments and Licenses The majority of discoveries and inventions that are patented are not commercially successfull. Why? • because the inventor is unaware…. that the invention has little commercial potential • No effort has been made to commercialize the invention HOW IS POSSIBLE TO EXPLOIT THE INVENTION? • By PATENT ASSIGNMENT • By LICENSES M.C. Osele - Course IP Law 2008

35. Patent Assignments and Licenses • PATENT ASSIGNMENT It is a transfer of the ownership of the patent, for which the inventor may receive: • Continuing royalties during the life of the patent • A lump sum payment • Both • And/or Shares in a start-up or company interested in exploitation • Assignment can be made before the patent application is filed during the application process or after M.C. Osele - Course IP Law 2008

36. Patent Assignments and Licenses • LICENSES A License is a grant of rights as to the patent. It may be referred to all rights or to a percentage interest in the rights, or referred to a specific geographic area or suject matter - A license agreement generally includes • Description of the invention • Rights granted • Obligations of the parties • Payments and Records • Right to sublicense • Patent prosecution and Infringement • Warranties and Indemnity M.C. Osele - Course IP Law 2008

37. Patent Enforcement of Patent Rights In general • Conservatory or provisional measures • Civil remedies • Criminal sanctions Remedies • Equitable remedies This is the most important of the remedies. Court have the power to assign patents, rewrite inventorship, and prevent violations of any rights secured by the patent • Damages including - what a reasonable royalty would have been - interest and costs - any lost profits, to be proven - in U.S.A. Court may increase by three times this amount for cases of willful infringement • Attorney’s fees M.C. Osele - Course IP Law 2008

38. Patent Enforcement of Patent Rights U.S.A Theories of Liability for Patent Rights Infringment • Literal Infringement Under the Patent Act, infringement is defined as one who makes, uses, offers to sell, or sells any patented invention, or actively induces infringement on any of the claims covered by the patent. The statute allows for equitable relief, as well as damages. Case Law Amazon.com, Inc. v. Barnesandnoble.com, Inc. M.C. Osele - Course IP Law 2008

39. Patent Enforcement of Patent Rights U.S.A Theories of Liability for Patent Rights Infringment • The Doctrine of Equivalents It is a rule that competitors cannot simply make insignificant changes to a patent object to avoid infringements claims; it takes the incentive away from reverse engineering and making minor changes so as to avoid literal infringement charges. Thus doctrine of equivalents permits a finding of patent infringement, even when the claims are not literally infringed. Case Law Noninfringement: ACTV, Inc v. Alt Disney Co, The Supreme Court decided a challenge to the doctrine of equivalent in the case Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co, Ltd M.C. Osele - Course IP Law 2008