Broad Patents Can Be Both Lucrative and Expensive

Patent attorneys often attempt to get the broadest possible coverage for a client's invention because that can usually make the patent quite lucrative.  Patenting broad claims can be expensive during the patent procurement process because patent examiners are reluctant to let broad claims issue and so there may be multiple back-and-forth communications between the patent examiners and patent attorneys.  However, patents with overbroad claims can be expensive to keep enforceable, e.g., when a third party requests the U.S. Patent & Trademark Office (USPTO) to reexamine an issued patent in view of prior art. 

For example, the Electronic Frontier Foundation (EFF) has apparently requested the USPTO to reexamine U.S. Patent No. 7,568,213.  According to the EFF, this patent is purportedly directed to "podcasting."  When a patent is under reexamination, the patent holder must expend resources (e.g., patent attorney fees) to work with the USPTO to define the appropriate scope of the patent's claims in view of the newly identified asserted prior art.

During prosecution, patent attorneys, inventors, and anyone involved in a patent application have a duty to cite all pertinent prior art they are aware of.  However, it is nearly impossible in most fields of human endeavor for the patent attorney, patent examiner, or even the inventor to be aware of all pertinent prior art.  Thus, it is quite easy for overbroad patent claims to issue.  Sometimes, the best prior art is not even found until the patent is asserted in an infringement lawsuit because the alleged infringer is motivated to prove that it is not infringing a valid patent. 

Thus, smart patent attorneys attempt to patent claims of varying scope -- from broadly encompassing the subject matter of the invention without crossing into the known prior art down to narrowly encompassing a specific implementation that is reflective of the client's commercializable product.

Inoculating Against Patent Value Depreciation

In an en banc ruling yesterday in Cardiac Pacemaker v. St. Jude, the Federal Circuit decided that method claims do not have extraterritorial reach under 35 USC 271(f). In earlier cases, courts have ruled that some claim types (e.g., system claims reciting one or more components) have some extraterritorial reach, such as when patented components are separately exported and combined abroad to produce the infringing system or device.

When a patent applicant files a patent application, the minimum government fees cover three independent claims and twenty total claims. Patent attorneys sometimes recommend paying "excess claims fees" to file additional claims. Some clients, however, prefer not to pay the excess claims fees and decide to limit their claim coverage. Cardiac Pacemaker serves as another example that having different claim types can be useful.

The law evolves and it can be difficult to predict which claim types will be valuable (or lose value) in the future. Good patent attorneys draft multiple claim types to inoculate their clients' assets against future depreciation. 

What's In A Name?

In Shakespeare's Romeo & Juliet, Juliet says to Romeo:

What's in a name?  That which we call a rose
By any other name would smell as sweet.

(Act II, scene ii.)  

GoDaddy doesn't agree with Juliet.  The company is no stranger to filing patent applications and owns scores of published applications and issued patents.  Some of these patent applications are directed to a market for domain names.  As Domain Name Wire reports, two such applications published today:

  • Patent Publication No. 20090171823  claims " A method comprising the step of underwriting a sale of shares of equity in a Domain Name." 
  • Patent Publication No. 20090171678 claims "A method comprising the step of protecting a Domain Name from an undesired transfer of ownership during a sale of shares of equity in the Domain Name."

If you know anything about patents or have read my prior blog entry on breadth, you know that these are quite broad claims.  A strategy commonly employed by savvy patent applicants is to initially file broad claims and then narrow them during prosecution of the patent application in view of prior art the patent examiner or the applicant identify.  Doing so can result in broader coverage than starting with narrow claims and then attempting to broaden them during prosecution.

The names Capulet and Montague may have smelled similarly sweetly to Juliet, but to the owners of some desirable domain names that can fetch a princely sum, some domain names smell more sweetly than others.

What Is A Patent Worth?

Entities sometimes need to determine what a patent or a portfolio of patents is worth.  Valuation of a portfolio may be useful when, among other things, an entity desires to:

  • determine whether to pursue a patent application;
  • evaluate a company's value (e.g., for merger, acquisition, or stock price); or
  • estimate damages.

The value of a patent can depend on a multitude of factors including but not limited to: 

  • breadth of a patent claim;
  • scope of the patent claim given up during prosecution;
  • validity of the patent given changes in patent laws;
  • price customers would be willing to pay for a product embodying the claimed invention;
  • license fees paid for similarly important components; and
  • costs to substitute the claimed technology with an alternative.

Often, the value of a patent is not publicly known because parties often settle matters out of court.  Other times, the value of a patent becomes abundantly clear after a blockbuster court case.  For example, a jury yesterday awarded nearly $1.7 billion to Johnson & Johnson, whose patent the jury determined was infringed by Abbott Laboratories' drug, Humira.  Abbott Labs plans to appeal the verdict.

Valuing a patent can thus require the skills of someone who understands both legal as well as business issues, or at least an interdisciplinary approach.

Data Center Flotilla

"Green energy" is a hot topic in the energy sector and many companies in that sector are filing patent applications to stake claims to their piece of that green pasture.  Google recently received a patent of its own. 

U.S. Patent No. 7,525,207 issued on April 28, 2009.  It is directed to "[a] system [that] includes a floating platform-mounted computer data center comprising a plurality of computing units, a sea-based electrical generator in electrical connection with the plurality of computing units, and one or more sea-water cooling units for providing cooling to the plurality of computing units," and issued with a couple of quite broad claims:

1. A system, comprising:

  • a computer data center proximate to a body of water comprising a plurality of computing units;
  • a sea-based electrical generator in electrical connection with the plurality of computing units; and
  • one or more sea-water cooling units for providing cooling to the plurality of computing units

16. A method of maintaining a computer data center, comprising:

  • generating electrical power using the wave, tidal, or current motion of water adjacent a data center;
  • providing the generated electrical power to the data center; and
  • circulating the water adjacent the data center through a heat exchanger to produce cooling for the data center equipment.


Small Can Be Big in Patent Law

Most people who are familiar with patents know that the fewer words a claim has, the broader its scope.   New clients who are not familiar with patents sometimes mistakenly think that the more features a patent's claim recites, the "broader" the claim is.  They quickly learn the truth.

Even when they have few words in their claims, many patents have quite long specifications.  For example, a patent a client is thinking of asserting is huge by any stretch of the imagination.  Its specification is scores of pages long.  An advantage to a long specification is that it probably describes multiple "embodiments" of the claimed inventions.  That can become important during licensing negotiations.

On the other hand, I've also seen some very short patents asserted.  For example, CNET reports that a company called Tune Hunter is asserting a patent that is 6 1/2 pages long (including 3 figures, about 3/4 page for 2 claims, the cover bibliographic page, and a short description) against some huge companies:  Samsung, Apple, Motorola, Amazon, Verizon Wireless, LG Electronics, AT&T Mobility, and others.  The patented technology "provides the listener with convenient means to record a segment of the music in which he/she is interested. The recorded music segment is played back into an apparatus which can identify the song based on the play back and provide the user with information on the identified song such as title, singer or artist, composer, producer, etc., and provide related purchasing information. "  (U.S. Patent No. 6,941,275, Abstract.)  Apparently Tune Hunter's iPhone application is quite popular.