Basic Concepts in Device Development
Intellectual Property and Strategy Development
Neil K. Nydegger, Esq
Intellectual property (IP) is a business asset. It is important to understand what this IP protects, how it can be established, and how it can be exploited for maximum commercial value to the IP owner. The answers here depend primarily on the business interests of the IP owner.
There are four different types of IP assets. Importantly, these four different types of IP assets protect four different interests in the marketplace. The different types of IP assets discussed here are: a) patents; b) trademarks and service marks; c) copyright; and d) trade secrets. This is then followed by a brief discussion of assignments and licensing.
Determining what interests are protected by IP and how different types of IP protection are applicable in the marketplace is considered in this chapter in reference to a hypothetical product (e.g., the stereotypical “widget”). For present purposes, the widget will be a generic medical device. As you will see, all four types of IP may be applicable.
In general, patents protect inventions and discoveries that pertain to any new and useful process, machine, manufacture, composition of matter, or an improvement on any of these. Conceptually, inventions that are protected by patents are combinations of old things. Thus, the reference above to “new” really means “new” combinations. Patents protect combinations of elements, components, ingredients, or procedural steps. Contrary to popular belief, patents do not protect ideas.
As a legal instrument, a patent is a deed of property rights, granted by a sovereign to an inventor for the purpose of protecting his/her invention for a limited period of time. The underlying intent here is to stimulate innovation and to advance technology for the benefit of society by rewarding the inventor with a commercial advantage in the form of a limited monopoly (i.e., patent rights). Under these rights, a patent owner has the right to exclude others from making, using, offering to sell, selling or importing the patented invention.
Each country has its own sovereignty and establishes its own laws. Accordingly, each country grants its own patents. In the United States, the power to grant patents is reserved to the federal government by the U.S. Constitution. Consequently, there is no such thing as a California patent or a New Hampshire patent. Moreover, there is no such thing as an international patent. On this last point, even the so-called European Patent can be enforced only in designated countries in accordance with the consent of the particular sovereign.
In the United States there are three different types of patents: a) utility patent; b) design patent; and c) plant patent. Plant patents pertain to asexually reproduced plants. For the vast majority of inventions, however, only the utility patent and the design patent are of commercial importance. Of these, a design patent is the least complicated (i.e., least expensive).
A design patent protects only the “ornamental aspects” of an invention and nothing more. Even so, this limited protection may be valuable in certain respects. For example, if the widget is particularly attractive with a unique, stand-alone appearance, the ornamental aspects of the widget may be very valuable for the purpose of differentiating and distinguishing the protected widget from competitive products. If granted, a design patent is effective for 14 years from the date of grant (1).
When people normally speak of “patents,” they are generally thinking of a utility patent that protects the actual process, machine, manufacture, composition of matter, or improvement that is the subject matter of its invention. To obtain a patent, however, an application must first be prepared, filed, and prosecuted before the U.S. Patent and Trademark Office (PTO) (1). In this process, it is helpful to know that the PTO has jurisdiction over only pending applications. Once a patent has been issued, the PTO no longer has jurisdiction and the issued patent is then in the province of the federal courts. With this in mind, the focus here is on the prosecution of patent applications in the PTO.
An application for a utility patent is generally referred to as a non-provisional application (1). It is non-provisional in the sense that once the non-provisional application has been filed, its disclosure cannot be changed. Thus, a patent applicant is well advised to “get it right the first time.” By law, the non-provisional application must teach (i.e., enable) a person of ordinary skill in the pertinent art how to make and how to use the invention (1). Importantly, this requirement must be satisfied without any post-filing additions. To do this, a non-provisional application must expressly describe the invention in a written specification and, where applicable, it must include a drawing(s) of the invention. Most importantly, as supported by the specification and drawings, the non-provisional application must particularly point out and distinctly claim the subject matter that the applicant regards as his/her invention.
From a legal perspective, the claims for the invention are “everything.” The disclosure of the application (i.e., the written specification and drawings) is merely supportive of the claims. Nevertheless, the disclosure must accurately describe the invention, as the disclosure may eventually be needed to support amendments to the claims during prosecution. Prosecution of the patent application (i.e., examination of the application) begins when it is filed in the PTO and once it is filed, the application (invention) immediately becomes “Patent Pending.”
In a variation of the patent application examination process, before filing a non-provisional application, an applicant may opt to file a “provisional” application. Essentially, a “provisional” application is only a stopgap measure. Unlike a non-provisional application, a provisional application can be subsequently altered, at least to some extent. Specifically, an applicant can file a provisional application with the intention of subsequently filing additional information and documentation that will convert the provisional application into a non-provisional application. There are consequences that attend the filing of a provisional application.
The most important consequence of filing a provisional application is it must be converted to a non-provisional application within the year immediately following its filing (2). After 1 year, the provisional application becomes abandoned. Moreover, as noted below in detail, the filing of a provisional application affects the foreign filing opportunities of the applicant by triggering the beginning of the 1 year in which corresponding foreign patent applications, or a Patent Cooperation Treaty (PCT) application, must be filed (3). Like the non-provisional application, the provisional application is immediately in a “Patent Pending” status at the time it is filed.
With the above in mind, the provisional application is particularly appropriate when an invention is known, but its documentation lacks the legalistic formalities for disclosure required for a non-provisional application. A consequence of this shortcoming is that a provisional application is not examined.
As noted above, it is the objective of the patent prosecution process that each filed non-provisional application will eventually be issued as a utility patent. Indeed, U.S. patent law requires that a patent (singular) will issue for an invention (singular) if the claims that are presented in the application meet the requirements for patentability. In particular, as noted above, patents are issued for inventions that are “new,” “useful,” and “nonobvious.” Suffice it to say here, meeting these requirements can be a complicated and arduous task that demands thoughtful responses to a patent examiner, during a process that can easily consume several years. Although it is possible for an inventor to prepare, file, and prosecute a patent application on his/her own, pro se, solid advice here is to seek professional counsel.
Up to this point, only the prosecution of a single invention (widget) has been considered. It quite often happens that more than one invention may actually be involved or, perhaps, there is an improvement on a previously filed invention. Stated differently, there are many scenarios wherein there may be two or more “related” inventions. In these situations, it may be advisable to file respective additional, non-provisional applications for the corresponding “related” inventions. Within the legal community, applications for related inventions are collectively considered to be a “family,” and the earliest filed non-provisional application (or the patent that is issued therefrom) is referred to as the “parent.” The progeny of the parent can each be created for any of several different reasons and they will be named accordingly. In particular, they categorically include: a) a divisional application; b) a continuation application; and c) a continuation-in-part (CIP) application. In each case, as a part of the “family,” they are entitled to benefit from the priority of the filing date of the parent application (4).
A divisional application results when the PTO determines two or more inventions are claimed in the same parent application. When this happens, the PTO imposes a restriction requirement on the applicant that requires the applicant to elect which invention is to be further prosecuted in the parent application. Recall, you get one patent for one invention. The non-elected invention(s) can then be the subject matter of a divisional application that uses the same written specification and drawings as the parent and has the same priority date as the parent.
A continuation application, like a divisional application, has a common disclosure with its parent (4). The continuation application, however, results from slightly different circumstances than its sibling, the divisional application. Specifically, a continuation application results when the applicant, intentionally or unintentionally, discloses two or more inventions in a single application (i.e., the parent), but claims only one of the inventions (4). The unclaimed invention can then be the claimed subject matter of a separate continuation application, with possibly broader claims. Again, like the divisional application, a continuation application benefits from the same priority date as its parent.
Unlike either the divisional application or the continuation application, a CIP application introduces what is known as “new matter” (i.e., additional disclosure) into the parent application. The CIP provides an opportunity for protecting improvements to the invention of the parent. In essence, the disclosure of a CIP includes the disclosure of the parent plus the new matter. Accordingly, claims that issue from a CIP are entitled to the priority date of the parent, at least to the extent they are supported by disclosure in the parent. Otherwise, they must rely on the priority date afforded by the new matter that is added when the CIP application is filed.
It is noteworthy that U.S. patent law is in the process of changing. Heretofore, the United States has been a “First to Invent” country (5). This meant that only the first inventor was entitled to file for patent protection (5). Under the “America Invents Act” the United States is now tending toward the practice of other countries by eventually becoming a “First Inventor to File” country. The bottom line here is that, in order to beat out another inventor of the same or similar invention, an inventor is well-advised to have a patent application prepared and filed (by counsel) at his/her earliest convenience.
In conclusion, it is important to recognize that each non-provisional application, regardless whether it is a divisional, a continuation, or a CIP, is prosecuted on its own merits as a separate application. Consequently, in the end, each application may eventually issue as a separate patent that remains effective for 20 years from the date the application (provisional or non-provisional) was filed.
Trademarks and Service Marks
For purposes of this discussion, the word “mark” is sometimes used to refer to both trademarks, which protect “goods,” and service marks, which protect “services.” Legally, both trademarks and service marks are treated essentially alike.
Trademarks and service marks protect the goodwill of a business. Stated differently, they identify the source of the particular goods or services and they give the consumer a perception of the quality and efficacy of these goods or services. Also, a mark must be able to distinguish the owner’s goods or services from the goods and services of another party (6).
A commonly misguided tendency when selecting a mark is that it must somehow describe the goods or services. This is off point. In fact, the law requires that a mark not be merely descriptive of the goods or services with which it is used. For example, the word “car” cannot be used as a trademark if it is used with automobiles. In any event, it is not the goods or services, per se, that are protected by a mark; it is the goodwill of the business that is protected by the mark (6).
The most commonly encountered legal test regarding the registrability of a mark involves a determination of whether there is a “likelihood of confusion” between the applicant’s mark and the mark of another party. In this determination, the nature of the goods or services is considered, as well as the channels of commerce that are involved and the sophistication of the ordinary consumer of the goods/services. Additionally, the aural and visual distinctions between marks are considered.
As noted above, a mark must be in use in order to be registered as a U.S. trademark/service mark. And, this use must be in interstate commerce. In general, marks are registered for 10 years, subject to requirements for declarations of use and incontestability. Further, marks can be subsequently renewed for successive 10-year periods. In all cases, registration is based on the essential requirement that the mark is being used in commerce.
Copyright protects the expression of a work (7). In accordance with U.S. copyright law, copyright subsists from fixation (i.e., from the moment it is created). To infringe a copyright, an alleged infringer must capture the “expression” of the original work.
Contrary to popular belief, there is no set percentage of a work that needs to be copied before there is an infringement. In general, copyright protection for works that are not “made for hire” continues for the life of the author plus at least 50 years.
Importantly, to introduce a subtle distinction, a copyright does not protect the subject matter of the work. This distinction is, perhaps, best appreciated by example. In this example, it is to be understood that everyone is free to draw a picture of a dog and to claim copyright of the picture. Further, everyone is free to draw a picture of a beagle hound and to portray the beagle hound with the author’s own expression. No one, however, is free to draw a picture of the Peanuts character “Snoopy.” The expression of “Snoopy” is protected by copyright.
The above example is equally applicable to all protectable works of authorship, such as literary works (including software and code); musical works; dramatic works; pictorial, graphic, and sculptural works; motion pictures; audiovisual works; and sound recordings. Insofar as the widget is concerned, any of the above works of authorship that may be used, individually or collectively, to promote, advertise, or describe the product may be protectable by copyright.
To enforce a copyright, it is necessary to first register the work of authorship with the Copyright Office in the Library of Congress (7). In a sense, copyright registration is the key to the courthouse. Even without a copyright registration, however, a notice claiming copyright can be placed on the work (e.g., an advertising brochure) and publicly given at any time. At a minimum, such a claim requires a notice of copyright, the name of the author, and the year of the work (e.g. © Nydegger 2012). As an added feature, you may want to also include the words “All Rights Reserved.”
Trade Secrets are effective as a form of IP merely because they are secret. The legal import here is to preserve the secret (8). To do this, the owner of a trade secret must take all necessary and reasonable efforts to protect and maintain secrecy. The resultant protection afforded by a trade secret will then last as long as the secret remains a secret.
In the case of the widget, trade secret protection can be somewhat problematic. The main difficulty here may be the widget itself. This is because of the fact that once the widget has been sold, it then belongs to the purchaser, perhaps a competitor.
Once a widget has been sold, destructive testing or reverse engineering can then be performed by the new owner of the widget. Whatever information may have been obtained by the new owner through these activities is then no longer secret. Thus, the so-called “secret formula” may not really be so secret (8).
As a practical matter, valuable business interests that are necessary, but that do not pertain directly to the physical embodiment of the widget, may be protected by trade secret. For example, vendor lists, manufacturing schedules, and pricing information may be sensitive for the manufacture and distribution of the widget. Further, measurements such as temperature and/or pressure ranges, or “know how” such as procedural sequences that are necessary for manufacturing the widget, may be protectable by trade secret. With this in mind, in order to effectively commercialize the widget, it may be very important that such information and documentation be kept secret. If so, and if proper procedures are appropriately implemented, trade secret protection may well be available.
Assignments and Licenses
Like other forms of personal property (e.g. a car, a ring or a hand tool), intellectual property can be sold or leased (9). In a legal context, the instrument for selling IP is referred to as an assignment and an agreement for renting or leasing IP is referred to as a license. The significant difference between these conveyances is that an assignment (sale) transfers the entire right, title, and interest (i.e., ownership) in the defined IP. On the other hand, a license transfers something less. In any event, it is important that the property to be transferred is properly identified. Further, in the case of a patent property, it is advisable to have the assignment recorded in the PTO to protect against a subsequent purchaser of the patent or patent application. As implied above, because licenses (i.e., rental agreements) do not transfer ownership, they can be somewhat more complicated than an assignment.
There are essentially two types of licenses. They basically differ from each other depending on whether the license is exclusive or nonexclusive. An exclusive license is unique in that, in addition to its other provisions, it also grants the licensee the right to sue third parties for infringement of the defined IP (10). A nonexclusive license does not grant litigation rights (10). In essence, a nonexclusive license is more in the nature of a covenant not to sue.
Regardless whether the license is exclusive or nonexclusive, there is a great deal of flexibility in drafting the licensing agreement. A popular analogy to illustrate this flexibility involves reference to a bundle of sticks. In this analogy, each stick in the bundle represents a particular attribute of the conditions pertinent to the license agreement. To name but a few of such attributes, consider territorial limitations, time constraints, quantity obligations, reporting requirements, quality standards, and, of course, royalty payment schedules. In particular, the license then identifies the attributes of importance and specifically defines each identified attribute within the license. As with many other aspects of IP, having professional counsel for the drafting of a license agreement is very advisable.
This chapter is meant to provide an overview of the process and an overview of the most important terms and definitions. It is recommended that you speak to a patent lawyer outside your institution, hospital, or company to gain insight and advice on how to best handle situations with which you may be confronted.
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