Patent Law Insights : Software Patent Lawyer & Attorney : Perkins Coie Law Firm : Intellectual Property & Technology Law

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.

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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. 

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Some patent owners struggle in their decision of what to do with their patent.  If the patent owner is not already a company that practices the invention, the patent owner may be able to generate value by licensing the patent for future use, asserting the patent to retrieve damages for past use, or creating a company or product based on the patent.

SawStop took the last approach.  According to its web site, the company owns dozens of patents on its innovative technology for stopping table saw blades upon contact with flesh.  It has patents in the U.S., China, and India.

I have to admire an inventor who puts his own wellbeing at risk to demonstrate his invention.  See this YouTube video of a Discovery Channel segment on his invention:

http://www.youtube.com/watch?v=E3mzhvMgrLE&feature=player_embedded

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One way to eviscerate the value of a patent or portfolio of patents is to assert them unsuccessfully.

DealerTrack is a "provider of on-demand software and data solutions for the automotive
retail industry" and has a portfolio of four U.S. patents and at least five patent applications. As reported in the Wall Street Journal, the company announced today that a judge in the U.S. District Court of the Central District of California had declared a patent it was enforcing invalid in view of Bilski.  The company is planning to appeal.

I have not yet seen the judge's ruling, but the only two independent claims in the relevant patent are:

1. A computer aided method of managing a credit application, the method comprising the steps of:

• receiving credit application data from a remote application entry and display device;
• selectively forwarding the credit application data to remote funding source terminal devices;
• forwarding funding decision data from at least one of the remote funding source terminal devices to the remote application entry and display device;
• wherein the selectively forwarding the credit application data step further comprises:
  • sending at least a portion of a credit application to more than one of said remote funding sources substantially at the same time;
  • sending at least a portion of a credit application to more than one of said remote funding sources sequentially until a finding source returns a positive funding decision;
  • sending at least a portion of a credit application to a first one of said remote funding sources, and then, after a predetermined time, sending to at least one other remote funding source, until one of the finding sources returns a positive funding decision or until all funding sources have been exhausted; or;
  • sending the credit application from a first remote funding source to a second remote finding source if the first funding source declines to approve the credit application.

(Sic.)

5. A computer aided method of managing a credit application, the method comprising the steps of:

• receiving credit application data from a remote application entry and display device;
• selectively forwarding the credit application data to a first remote funding source terminal device;
• wherein the selectively forwarding the credit application data step further comprises:
  • facilitating the first remote finding source terminal device to selectively forward the credit application to a second remote funding source terminal device if the funding source associated with the first remote finding source terminal declines to approve the credit application; and;
  • forwarding funding decision data from at least one of the first and second remote funding source terminal devices to the remote application entry and display device.

I do not yet know which claim(s) were asserted and/or invalidated. 

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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.

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