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Top 5 Legal Issues for Podcasters – Number 5: Patents

Avoiding Lawsuits

Although podcasting is at an all-time high, most podcasters still do not understand the legal issues that can land them in court. Given the high cost of defending a lawsuit, if you get sued, it may not even matter whether you are right or wrong. The cost of the lawsuit itself may be more than enough to shut down your podcast and put you on the hook for a default judgment that includes an injunction, large compensatory damages, punitive damages, and attorneys’ fees. Making matters even more complicated, many podcasting activities that technically violate the legal rights of others are unlikely to land you in court, while activities that are otherwise legal might can end up making someone angry enough to sue you, even if they are unlikely to win at trial.

Compounding the problem is that even if you successfully defend a lawsuit, the damage to your reputation and your pocketbook may be enough to erase any traction and goodwill you had hoped to achieve with your podcast. For these and many more reasons, winning a lawsuit is far less preferable than not getting sued over your podcast in the first place. While you may get sued for many things, some of the most costly and complex lawsuits over podcasts involve intellectual property disputes. Intellectual property disputes over podcasts typically fall into one of the following five categories: patent infringement, copyright infringement, defamation, trademark infringement, and right of publicity/right of privacy. In this five-part series, we will examine each of these potential pitfalls and the steps you can take to reduce the likelihood of having one of these issues be the centerpiece of a lawsuit with your podcast’s name on it.

5. Patent Infringement

Patent infringement is one of the least likely intellectual property problems your podcast will face. However, if you do receive a patent infringement cease and desist letter, how and when you handle that letter can mean the difference between whether your podcast lives or dies. Given the growing maturity of the podcasting market, it is unlikely a patent has or will issue covering a portion of your podcast activities. It is far more likely that a patent does or will exist that someone may simply claim you infringe. Patent holders know that the cost of successfully defending a patent infringement lawsuit through a jury trial runs about two and a half million dollars in attorney fees alone. Unscrupulous patent owners may leverage this knowledge to extort monetary settlements out of small podcasters. They know that there is a high probability that if they sue you for patent infringement, you will run out of money and give them their default judgment long before you ever get the chance to present your defense to a jury.

Patent owners who do not make, use, or sell the invention, but merely sue infringers are called patent trolls. These patent trolls know that few podcasters have the resources to fight a patent infringement lawsuit. But they also know that taking the case all the way to trial could mean a court might rule their patent is invalid and unenforceable, putting an end to their shakedown activities. So what patent trolls often do is demand money in exchange for agreeing not to file a patent infringement lawsuit. The amount of money they demand is calculated to be just enough to convince the accused infringer to pay them, rather than fight them. That is what happened to podcasters in the face of United States Patent Number 8,112,504 (the “‘504 Patent”). What the owner of the ‘504 Patent did not count on however, was that podcasters would rally together, pooling funds and crowdsourcing resources to actually fight the patent.

The fees expended in the podcaster’s defense of the ‘504 Patent infringement lawsuit far exceeded the amount of patent infringement damages any one podcaster would have had to pay. The hope was that once the patent owner realized the funds were available to fight, the patent owner would back down. And that is exactly what happened. The patent owner filed a patent infringement lawsuit against a podcaster, the podcaster used the funds to fight the case, and the parties eventually settled the lawsuit, with the patent owner agreeing to not only drop the lawsuit, but to not pursue patent infringement lawsuits against other small podcasters as well. That was not even the end of it. After the lawsuit was settled, the Electronic Freedom Foundation attacked the ‘504 Patent before the United States Patent and Trademark Office, using its own resources and crowdsourced documents to show the invention claimed in the ‘504 patent had been invented years before the patent was filed. As a result, the Patent Office’s Patent Trial and Appeal Board invalidated all of the claims of the ‘504 patent, based on two documents showing the invention had already been invented by someone else.

Thankfully, the story of the ‘504 patent had a happy ending, but that is unusual. Had the podcasters not pooled their resources behind a large podcaster willing to spend more money to fight than to simply pay the amount demanded by the patent owner, or had the public not scoured the internet to find the two documents showing the invention had already been invented, things might have turned out very badly for all podcasters. The chance of such a lucky confluence of circumstances and such successful document crowdsourcing ever happening again is small at best. Do not count on ever being this lucky. If you receive a patent infringement cease and desist letter, the key is to act quickly. Contact an intellectual property attorney immediately to determine the strength of the patent infringement claims against you and discuss your possible options. There may be creative solutions available to get you out of the patent infringement crosshairs and back to podcasting with a minimal expenditure of time and money. Even if there are no simple of inexpensive options in your particular case, ignoring a cease and desist letter is the surest way to turn a manageable problem into a problem that brings down your entire podcast.

Be sure to check out the other posts in this Top 5 Legal Issues for Podcasters series:

Number 1: Copyright Infringement
Number 2: Trademark Infringement
Number 3: Defamation
Number 4: Rights of Privacy and Publicity

Posted in General, Patent Law.

Patent Application Indicates Google Has Eyes On What You Do In Your Bedroom

Patent applications are just that, applications. They do not indicate that a product has been commercialized, or even the existence of an operational prototype. Patent applications do, however, give some indication of the research the patent applicant has been conducting behind close doors.

One patent application I found of particular interest is United States Patent Application Number US20160260135A1. This patent application, the Orwellian-entitled “Privacy-aware personalized content for the smart home,” envisions a home system that harnesses the Internet of Things, such as “computers, smart televisions, tablets, smart thermostats, lighting systems, alarm systems, entertainment systems, and a variety of other electronic devices” to collect otherwise unattainable private homeowner data to provide the homeowner with more targeted content, such as advertising, that is more likely to result in “converting user viewing of the content to user interaction with the content.”

If that does not sound frightening, I do not know what does. While the Google application does not come right out and provide a wiring diagram for Mr. Charrington’s junk shop honeypot, it is fairly easy to put two and two together in this application to come up with five. Google’s patent application describes deploying various types of sensors, such as microphones, cameras, passive infrared sensors, heart rate monitors, voice and facial recognition systems, etc. to determine things like the number and identity of all of the people in a room, the heat being given off by those people, their physical activity level etc. The application teaches combining that information with additional information received from other sensors, like microphones, to determine what is happening in a room and ostensibly using that data for the benefit of the homeowner in ways such as adjusting the thermostat, ambient lighting, music etc.

One of the less creepy suggestions in the application for use of the technology is to combine data from the sensors with rules-based inference engines or artificial intelligence provided through a cloud-computing system, to detect or monitor the progress of Alzheimer’s Disease in a homeowner.

A somewhat creepier use of the Google system involves combining data from the sensors with other data to make suggestions to the homeowner. One example given in the patent application is the system using a camera to identify a copy of the novel “The Godfather” on the homeowner’s nightstand, using optical character recognition to identify the title, and sending the homeowner the following message:

“I noticed you have a copy of ‘The Godfather’ by your bed. The movie based on this novel is showing tonight at 9:30 PM on channel 5.”

It is difficult to imagine that statement not being read in Hal 9000’s voice.

Another example provided in the patent application is the system using a camera to identify a “tee-shirt on a floor of the user’s closet and recognize the face on the tee-shirt to be that of Will Smith. In addition, the client device may determine from browser search history that the user has searched for Will Smith recently. Accordingly, the client device may use the object data and the search history in combination to provide a movie recommendation that displays, ‘You seem to like Will Smith. His new movie is playing in a theater near you.’”

Getting creepier for sure, but the scariest implementation can only be read between the lines of the application.

Google’s patent application notes in its description the use of video cameras, and placement of devices in ceilings and bedrooms. The system also details the use of application program interfaces to allow “applications executed by the third parties to initiate specific data processing tasks that are executed by the central server or the cloud-computing system 64, as well as to receive dynamic updates to the home data 82 and the derived home data 88.” Given all of the foregoing, it is not difficult to extrapolate that the system could be used to identify all of the people in a bedroom, infer the activity they are currently involved in, and send video of the activity to a third-party provider.

In fairness, the application does state that the system may be configured to use a private network to communicate the people/object data between devices to preserve the privacy of the user, since the data is not sent to the external server. So, if you trust the system to differentiate between the information you want maintained on your private network and the information to send to third party advertisers, this system may be for you. Otherwise, you may want to pass on installing this first generation privacy-aware personalized content in your bedroom.

Brett Trout

Posted in General, Internet Law, Patent Law.

The Most Valuable Sentence Ever Written

I go to encounter for the millionth time the reality of experience and to forge in the smithy of my soul the uncreated conscience of my race.

James Joyce, “A Portrait of the Artist as a Young Man”

The immense value of that sentence is undeniable. However, without some evidence that in its absence someone would have paid Mr. Joyce $125 billion to forge that particular sentence in the smithy of his soul, it is not the most valuable sentence ever written.

Opinions as to which sentence is the most valuable sentence ever written have been wide-ranging since the day the first reed stylus was put to to the first clay tablet by the first ancient Sumerian scribe back in 3200 B.C. While top literary contenders, like the James Joyce sentence above, are certainly compelling in their aesthetic, much like the created conscience of Mr. Joyce, they are simply not susceptible to an objective quantification of their value. From a subjective standpoint, there is no way to quantify opinions to determine the most valuable sentence ever written. This post, therefore, leaves the centuries-old “literary value” debate to scholars and aficionados of the literary arts. This post inquires less of the aesthetic and more of the uncultured pedestrian endeavor of quantifying the most valuable sentence ever written, in terms of cold hard cash.

In terms of money, it would be quite challenging to argue the most valuable sentence ever written is anything other than a patent claim. A patent is a document that both describes an invention and outlines the metes and bounds of the monopoly the patent affords its owner. Regardless of the complexity of the invention, or of the patent, these metes and bounds are contained within a single sentence. Patent claims may be short, or may be over one thousand words long, but they must be only a single sentence.

Counterintuitively, longer patent claims are not always the best patent claims. Indeed, since patent claims list all of the elements something must have to infringe the patent, the longer a patent claim is, the more opportunity there is for a competitor to simply eliminate a single element in the sentence from their competing product and avoid infringement. So why then are patent claims not all incredibly short?

Counterpoised to this desire to shorten a patent claim, is the need to include within the patent claim enough elements so as not to have the patent claim cover something that is already out in the public, or something that would be an obvious modification therefor (the “prior art”). The reason the government grants patent owners a limited monopoly is that the grant is in exchange for the inventor telling everyone how to make and/or use their invention. If the inventor is simply telling everyone how to make something that already exists, the quid pro quo for the monopoly is absent, and the inventor is not entitled to a patent.

The sentences that make up patent claims are typically drafted by special attorneys, called patent attorneys. Patent attorneys must have an undergraduate degree in a STEM field, or at least have completed a minimum number of college STEM classes, to even be allowed to sit for the patent bar exam. All patent attorneys must pass the very challenging patent bar exam before thy are allowed to practice before the United States Patent and Trademark Office.

In drafting a sentence that will make up a patent claim, these specially trained patent attorneys must avoid making the patent claim too narrow by including everything and the kitchen sink. This would make it too easy for a competitor to eliminate one of these “kitchen sink” elements and avoid infringing the patent. Conversely, patent attorneys must avoid including in the patent claim only a short collection of elements that are already in the prior art. This would make the claim legally unpatentable, since it would improperly cover things already known to society. The challenge, therefore, is for a patent attorney to include in the sentence enough elements to define the invention over the prior art, but not include so many elements that competitors have commercially feasible options to capitalize on the inventor’s efforts by simply eliminating one or more of the claimed elements.

Drafting a patent claim that precisely balances these dual purposes is as much of an art as it is a science. If one were to hire fifty patent attorneys to draft a patent claim covering a complex invention, it is unlikely that any two of the resulting sentences would be identical. A well-crafted patent claim may take even a seasoned patent attorney dozens and dozens of hours to draft. Add to that the hundreds of hours sometimes required to adequately review all of the relevant existing prior art in the form of patents, products, and methods, an inventor can easily have hundreds of hours and tens of thousands, if not hundreds of thousands, of dollars invested in attorney fees just to create the perfect patent claim. Thankfully, most patent claims do not require nearly that amount of time or money to prepare. However, in a situation where even a slight variance in the interpretation of the patent claim can mean multi-millions of dollars in lost revenue, resulting from a patent claim later deemed invalid or easily circumvented, the return on investment for the extra effort in drafting the perfect patent claim can be massive.

So what is the answer? What is the most valuable patent claim, and therefore the most valuable sentence ever written? While there are many patents worth one billion dollars or more, the likely top contender for the most valuable sentence ever written is contained within United States Letters Patent No. 6,605,636 covering “atorvastatin hemi-calcium form VII,” more commonly known as the cholesterol-lowering drug “Lipitor.” During its lifetime, the 6,605,636 patent generated over $125 billion in revenue over 14.5 years, sometimes generating over $1 billion per month.

And just what does $125 billion look like in sentence form? Prepare to be underwhelmed:

“Atorvastatin hemi-calcium Form VII or a hydrate thereof having a powder X-ray diffraction pattern substantially as depicted in FIG. 1.”

(Fig. 1 is the X-ray diffraction pattern associated with this post.)

Brett Trout

Posted in Choosing the Best Lawyer, General, Patent Law.

Girl Scouts Sue Boy Scouts For Trademark Infringement

Girls Scouts of the United States of America (GSUSA) has just filed a federal lawsuit against Boy Scouts of America (BSA) claiming federal trademark, infringement, trademark dilution, and unfair competition. In the lawsuit, GSUSA claims that only GSUSA has the right to use the word “scouts” with leadership development for services for girls.

While the two organizations had peacefully co-existed for over 100 years, GSUSA took issue with BSA’s public statement, released on October 11, 2017, that BSA would open its Boy Scouts programs to girls beginning in February of 2019.

The 50-page lawsuit includes several examples of allegedly infringing use of the Scout trademark used to recruit girls, allegations of actual consumer confusion, claims of interference with prospective economic advantage, etc. The lawsuit seeks a permanent injunction prohibiting BSA from using the terms “scout,” “scouts,” or “scouting,” without an inherently distinguishing preceding term like “boy”, to market or provide services directed to girls.

The suit also seeks withdrawal with prejudice of several trademark applications BSA currently has pending before the United States Patent and Trademark Office and the award of attorneys’ fees and punitive and compensatory damages for all profits BSA has earned as a result of the alleged infringing activities.

It is easy to see how dwindling enrollment in scouting programs has led to an inevitable overlap in marketing efforts between GSUSA and BSA to target an increasingly smaller and smaller pool of children interested in scouting. It will be more difficult, however, to anticipate how the courts might rule on the issue of prohibiting the marketing of trademarked services to protected classes of consumers. Regardless of how the courts rule on this issue, the one thing we know for certain is that whatever the ruling is, it will be sure to have far-reaching ramifications for Trademark Law for years to come.

Brett Trout

Posted in Internet Law, Trademark Law.

Do I Need to Patent My Invention?

What Is a Patent and Why Do I Need One?
One of the first things people think of when they come up with a great idea is “I should get a patent on this.” But what is a patent? A patent is simply a document describing your invention and telling everyone which parts of your invention you want to protect. A good patent describes your invention in broad terms, making it more difficult for your competitors to simply change a few things and get around your patent. As you might imagine, good patents are hard to get. If you write them too broadly, they cover things that are already out in the public. This makes it easy for your competitor to invalidate your patent. The key is to draft a patent that is narrow enough to avoid covering anything already out in the public domain, but broad enough to prevent competitors from easily circumventing your patent. This is not an easy task. Patents are so complex, that ordinary lawyers are not even allowed to get them for their clients. Patents are drafted by special patent lawyers, who receive special training, have undergraduate studies in a science and pass a special Bar exam, allowing them to practice before the United States Patent and Trademark Office (USPTO).

How Much Does a Patent Cost?
As with anything, different patents have different prices. A very narrow patent on a very simple invention might run $3,000. But it is unlikely that a $3,000 patent would get you much protection, or be easy to enforce against infringers. On the opposite end of the spectrum, you can pay $100,000 or more for a broad patent on a complex invention. It is important to talk to several patent lawyers to get quotes for the cost of obtaining a patent and the scope of protection they believe they can obtain for you. You will likely get a range of price quotes for your patent. Any quotes substantially below the average are likely to be too narrowly drafted to be of much value, while quotes substantially above the average are likely to be overkill. $9,000 to $12,000 is the price range you can expect for a quality patent covering a simple mechanical invention.

How Long Does It Take to Get a Patent?
For a simple mechanical invention, it may take three years or more to get your patent. While there are ways to reduce this time, these expedited options typically come with dramatically increased costs. Once you file your patent application, you can start marking your invention “patent pending.” While you cannot sue infringers while your invention is patent pending, the patent pending marking serves as a warning to competitors that you may have a patent shortly, that may force them to stop selling their infringing products immediately. Getting your patent faster is not always a good thing though. If you are still developing your invention, having the patent in the pending stage allows you to adjust the scope of your patent protection to narrow it ways that do not affect its commercial viability and broaden your scope of protection to cover aspects of your invention you may not have believed were as important early on. While you cannot add additional material to your patent application once you file it, you can adjust your scope of coverage to cover things you may have described in the original patent application, but may not have originally sought to protect. As you can see, having a detailed patent application from the start allows you adjust your scope of protection as your invention develops. This is another good reason to spend a little more time finding a patent lawyer who focuses not only on where your invention is today, but on where it may be three years from today.

Is My Invention Even Patentable?
To determine if your invention is already out in the public you can obviously Google your idea. In addition, you can conduct a cursory search of patents and patent applications at Google Patents. If you do not find anything similar in your searches, your patent lawyer is available to perform more comprehensive searches. Some of these searches include infringement searches, to determine if your invention infringes anyone else’s patent, and patentability searches to determine if your invention is patentable.

Should I Get a Patent?
From your patent lawyer’s perspective, it is always a good idea for you to pursue a patent. From your perspective, however, getting a patent is not always your best option. If your invention will only be of interest to buyers for a year or two, you are unlikely to need a patent. If your invention is similar to competitors in terms of value and maximum buyer price point, you are unlikely to need a patent. If your invention will not generate enough revenue to pay for the patent, you are unlikely to need a patent. However, if your invention will allow you to: 1) manufacture your product more cheaply than the competition; 2) provide buyers with increased value over the competition; and/or 3) allow you to charge more for your product than the competition, you may want to pursue a patent. Some important questions you should ask before pursing a patent include: What kind of annualized profit can I expect with a patent? How many years, if ever, will it be before my patent pays for itself? Are there non-infringing alternatives competing, or likely to compete, in my market space? Will my product be obsolete before the patent issues? Will less expensive “trade secret” protection suffice? Will anyone be interested in buying or licensing my technology? How you answer these questions will determine whether or not you should pursue a patent.

Do I Need a Patent Lawyer to Get My Patent?
Technically no. You do not need a patent lawyer to file your patent. Although you can file your patent application yourself, the odds of you drafting a better patent than a reputable patent lawyer are very small. The technicalities associated with preparing a patent application and arguing back and forth with the Patent Office are just too complex. You very well may end up with a patent, but it is unlikely that patent will be as broad or enforceable as that same patent drafted by a good patent lawyer. While you need a patent lawyer, it is unlikely that you need the best patent lawyer in the word. You just need the best patent lawyer for you.

How do I Pick My Patent Lawyer?
Finding the best patent lawyer for you means looking at factors like cost, skill, experience, and communication. Not surprisingly, all patents are not created equally. If you hired fifty different patent lawyers to draft a patent on your invention, all fifty patents would be different, each having a different scope of protection and enforceability. Skilled patent lawyers, who have obtained hundreds of patents for their clients, typically obtain better patents than more inexperienced patent lawyers, who have drafted fewer patents. While better patent lawyers often charge more, the best patent lawyer for you is not necessarily the most expensive. Ask around. Ask friends. Ask other lawyers. Search the internet for patent lawyers in your area. Go to the USPTO.gov Web site and see how many patents the patent lawyer has drafted. Go visit with the patent lawyer. If you like the lawyer, confirm that he or she will be the one actually drafting your patent and that he or she will not simply be passing your patent off to an inexperienced underling. Ask if the patent lawyer has experience defending patents in court. Success defending patents in court, often translates into drafting better patents. The most important thing to remember when choosing the best patent lawyer for you is that you feel comfortable working with that lawyer. You need to feel that you understand them and that they understand you. There are a lot of patent lawyers out there. Meet with as many as you can. Once you have weeded out the low end and high end lawyers, choose the one who makes you feel the most comfortable that they can address all of the concerns noted above. Spending a little more time up front picking the right patent lawyer will save you time, money, and heartache down the road.

Posted in General, Patent Law.

The Future of Artificial Intelligence in Cyborg Cybernetics

We are all familiar with the science fiction vision of cyborgs. From Luke Skywalker to the Terminator we have an idea in our heads that a cyborg is a futuristic combination of human and computer. Science fiction cyborgs are typically depicted as anthropomorphized machines that look and act, for the most part, like humans. That future is probably closer than you might think. Indeed, if you use a smart phone, you are technically a cyborg, combing your human body with the knowledge you input and output using your hand-held wireless computer.

Machines, such as robots, do a few things quickly and precisely. Humans do a very large number of things slowly and clumsily. Cyborgs can combine the efficiency of robots, with the problem-solving of humans. While there are relatively few problems a human can solve that a machine cannot be programmed to solve, many problems that companies need to solve occur so rarely, that it is inefficient to program a robot to accomplish them all. That is where the wide-ranging, albeit much less efficient, problem-solving of a human comes in handy. The cyborg is a symbiotic relationship. The cyborg can solve reoccurring problems and perform reoccurring tasks much faster than a human, and a human can solve more rare problems and perform more rare tasks than a robot.

As technology develops, we are seeing a full range of new cyborgs integrating humans with computers. Many of these task-specific cyborgs are readily distinguishable from mere humans. An example of such a task specific cyborg is detailed in Amazon’s United States Patent No. 9,280,157. Patent ‘157 describes a mobile metal cage that contains a human. The cage is designed to allow a human to safely navigate a work area populated with autonomous cybernetic robots in a setting such as an Amazon warehouse. Since these robots may or may not be programmed to identify humans in their workspace, a human simply walking into a warehouse with robots whipping by at high speed can lead to injury or death for the human.

The device described in the ‘157 patent has wheels under the cage and is controlled by the human operator inside the cage. The human can maneuver the mechanical/human cyborg to where it is needed to fix or retrieve items in the workspace. The computer monitors the other robots in the area to avoid collisions and protect the human. The system also has extensible barriers that allow the human to exit the cage while still protecting the human from nearby robots. While this particular cyborg is not in use, and is not planned to be placed into use anytime in the near future, it provides some insight into what future cyborgs might look like.

Industrial cyborgs, like Amazon’s moving human cage, combine the robot’s ability to move quickly and safely, with a human’s ability to solve unique problems. For most industrial applications, there is no need to make the cyborg look like a human. This allows designers to maximize the utility of future cyborgs to exploit the best aspects of the machine aspect of the cyborg, namely speed and precision, and the best aspects of the human, namely ready adaptation to a number of novel problems too numerous and rare to all be cybernetically programmed into the machine. So for the immediate future, it is likely that most of the industrial cyborgs being developed will look much more like Amazon’s mobile human cage than the Terminator.

While machines currently lag behind humans in the number of mundane tasks they can accomplish, the use of artificial intelligence, or computer learning, is quickly closing that gap. Within a generation, it is likely that artificial intelligence will allow machines to surpass humans in nearly every situation. Humans simply transmit information too slowly to compete. No matter how much computing power you hold in your hand, there is simply no interface that can allow you to access that power as quickly or efficiently as a computer can.

To allow humans to compete with artificial intelligence on a more even playing field, researchers are developing improved personal human machine interfaces that link your brain directly to your computer. One such system is the mesh-brain implant. Such an implant would be injected directly into your brain, to allow you to send and receive information directly to a computer. While the mesh-brain implant is still a ways off in terms of human testing, more practical, albeit less efficient, human/computer interfaces like Elon Musk’s Neuralink interface are likely to be announced as a viable product in the relatively near future.

While these personal cyborgs will look more like Terminators than industrial cyborgs like Amazon’s mobile human cage, they each have their place. Given the rapid development of human/machine interface, it is more likely than not that you will have a neural implant within your lifetime. As to whether these new interfaces will allow you to compete with the even more rapid development of artificial intelligence, that has yet to be seen.

Posted in Internet Law, Patent Law.

Why Do Intellectual Property Agreements Have to Be So Long?

Unique Problems
Why are intellectual property agreements so long when so many other agreements are only one or two pages long? The main reason is that there are a lot more things that can go wrong in an intellectual property agreement that would never arise in a typical sales agreement. A comprehensive intellectual property agreement needs to address these unique problems to prevent one party from taking advantage of the other. One situation that often arises in intellectual property agreements is the issue of guaranteed minimum sales. Without guaranteed minimum sales being required under the agreement, the exclusive “seller” may simply shelve the product and not make any sales at all. Since the agreement is exclusive no one else can make sales either. The seller can therefore effectively take the product off the market and sell its inferior product for a larger markup. A 50% royalty is meaningless if the seller never intends on selling the product in the first place.

Unknown Contingencies
Another reason intellectual property agreements are so long is to force the parties to come to an agreement regarding various situations they may not even have considered. This ensures both the parties are on the same page when it comes to the other party’s expectations as well as the metes and bounds of the agreement. Forcing the parties to agree on these contingencies up front makes expectations more attainable, thereby reducing the likelihood the parties will ever end up going to court over these contingencies down the road.

Judgment-Proof
No matter how well-written an intellectual property agreement may be, no agreement will allow you to recover money the other party does not have. The number one rule with intellectual property agreements is to not get into a deal with a “judgment-proof” party. The lack of sufficient capital raises several red flags that must be addressed. Even if you have a watertight agreement and spend all the money you have to sue the other party for breaching that watertight agreement, a multi-million dollar judgment is not worth much if the breaching party is bankrupt. Avoid getting into a business with an entity that may not have the resources to cover any damage they might cause you by breaching your agreement. In some cases you may want the intellectual property agreement to require the other party provide a bond in the amount of damage you estimate may occur.

Trust
The number two rule with intellectual property agreements is that you trust the other party. A well-written intellectual property agreement is no substitute for making sure the party with whom you are getting into business is honest and reputable. While the best case scenario is a well-written agreement AND a reputable party with a proven track-record on the other side, if you have to choose between a well-written agreement and a reputable party with a proven track-record on the other side, choose the reputable party. A little due diligence in researching the track record of the other party can save you a lot of heartache down the road. Do not sign an intellectual property agreement with a party you would not deal with on a handshake. The intellectual property agreement, even a well-written one, is simply a backup that you hope never even comes into play.

Customization
Even if you trust the other party and the other party has money to pay for a potential breach, you still need an intellectual property agreement customized to your precise deal. Unlike most boilerplate agreements, it is very rare that an intellectual property agreement written for someone else will be applicable to your proposed deal. Intellectual property, by its very nature, is unique, with unique hardships and advantages. Any agreement dealing with the license or assignment of that unique asset needs to be unique itself. By the same token, there is no reason to go overboard. The agreement need not cover every remote possibility. Adding clauses that cover contingencies that will never happen is simply padding the lawyer’s pocket and adding delay to the transaction. A tight, trimmed-down intellectual property agreement will be plenty to read and negotiate. There is no need to waste the time of either party on items that are unlikely to come into play.

A Roadmap
The primary benefit of a carefully-drafted intellectual property agreement is not that it allows you to win a case in court, which it should, but that it serves as a roadmap for the parties to follow. By confirming that both parties are in agreement on all of the unique issues relating to the license or assignment, a solid, customized intellectual property agreement dramatically reduces the likelihood of going to court in the first place. Going to court is typically only good for the lawyers. You can think of a lawsuit as you agreeing to shoot off your toe if the other party shoots off their foot. Sure, they are more unhappy than you, but you are still let without a toe. Agreeing to terms up front is much less painful than agreeing to terms after years of litigation.

Getting Everyone on the Same Page
Customized detailed agreements, especially where intellectual property is involved, make sure both parties are on the same page as to what everyone’s rights and obligations will be. Being detailed and hashing out hypotheticals right from the start may slow down the deal a little as the parties argue over things they had not considered. But resolving these issues at the beginning pays off down the road, when the parties are both making money, and not spending their money on lawyers, over what very well may be a good faith misunderstandings over who was responsible for what.

Better Contracts = Better Business
A contract is a lot like a rule book for a board game. A better rule book improves the game. Well-written rules eliminate ambiguities and allow the parties to simply play the game. A game where both parties spend all of their time arguing over rules, neither of them were clear on from the start, is no fun at all. The best written contract, like the best written rule book, is one that answers all of the questions and clarifies everything up front, so that no one ever has to look at it again and the parties can get to the business of playing the game.

Brett Trout

Posted in Choosing the Best Lawyer, Copyright Law, General, Patent Law, Trademark Law.

Iowa Lawyer Brett Trout selected for The Best Lawyers® 2019 in both Patent Law and Information Technology Law

Des Moines, Iowa patent lawyer Brett J. Trout has been selected by his peers for inclusion in the 25th Edition of The Best Lawyers in America® in the practice areas of Information Technology Law and Patent Law. The Best Lawyers in America® publication is the oldest peer-reviewed publication in the legal profession. This publication strives to ensure that a Best Lawyers® listing signals not only legal expertise, but also, ethics and professionalism of the highest caliber. “Since 1983, Best Lawyers® continues to be regarded, by both professionals and the public, as the definitive guide to legal excellence in the United States.”

The Best Lawyers in America®
The 2019 Best Lawyers in America® publication covers the largest and most targeted audience of any legal profession peer-review listing. Excerpts from the Best Lawyers® publication appear in The Washington Post, The Los Angeles Times, New York Magazine, and more than dozens of other regional publications, reaching more than 18 million readers. Best Lawyers® selection process is based upon exhaustive and rigorous peer-review surveys. Over four million confidential evaluations, submitted by leading legal professionals, are considered in the selection process. The American Lawyer and Corporate Counsel magazine describes The Best Lawyers in America® as “the most respected referral list of attorneys in practice.”

Disclaimer
“The fact that a lawyer has been voted by his or her peers into Best Lawyers in a legal practice area does not signify that the lawyer has been certified by a state board of legal specialization in that practice area or specialty. A listing in Best Lawyers does not guarantee a desired legal result.” – Best Lawyers

Posted in Iowa Law, Patent Law.

Patent Litigation Still Brings in Huge Awards

IBM’s intellectual-property licensing business, which owns over 45,000 patents, and which brought in nearly $1.2 billion in revenue last year put one more feather in its cap last Friday. The jury in IBM v. Groupon Inc., 16-cv-122 awarded IBM $83 million in damages. In what may turn out to be even worse news for Groupon, the jury also found Groupon’s infringement to be willful, allowing the judge to triple the damage award and order Groupon to pay IBM’s attorney fees.

Despite securing more U.S. patents over the past 25 years than any other company, and investing nearly $6 billion annually in research and development, IBM v. Groupon Inc. is the first patent infringement case IBM has brought to a jury in over two decades. Why has IBM been so reticent to bring patent infringement cases to a jury? It is important to note that IBM is not alone. Between 2013 and 2015 there was a 26% drop in the number of patent infringement lawsuits filed. And there was another 22% drop in cases filed between 2015 and 2016.

One reason for the recent drop in the number of patent lawsuits filed may include the new higher pleading standards required for patent infringement lawsuits. Another reason might be the high rate at which appellate courts overturn lower court patent infringement decisions. Since 1997, the Court of Appeals for the Federal Circuit has overturned at least some aspect of lower court’s patent infringement rulings 75% of the time it reviews such cases. Another reason may be the United States Supreme Court restricting the jurisdiction of courts over patent infringers, holding that an accused infringer’s residence for purposes of jurisdiction, is the state in which the accused infringer is incorporated. Still another reason for the drop in the number of patent infringement lawsuits may be the United States Supreme Court’s ruling in Octance Fitness v. Icon Health, in which the Court held that a court can force a patent holder to pay the attorney fees of a successful accused infringer if the patent infringement lawsuit stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.

While 2018 does not appear to be on track to surpass the record-breaking number of patent lawsuits filed in 2013, this massive jury award in IBM v. Groupon Inc. may signal the start of a turnaround in the recent trend of declining patent litigation.

Brett Trout

Posted in Patent Law.

Good Patents vs. Bad Patents

Are all Patents the Same?
You see it often on business investment shows like Shark Tank, “Do you have a patent on your product?” To properly value the company, the investors need to know whether or not the company has any patents. The answer to the question is typically “Yes,” “No,” or “We have a patent pending” and the discussion ends there. But does a “Yes” tell you everything you need to know? Are all patents created equal?

Unfortunately they are not. Not by a long shot. If you had one hundred patent lawyers each draft a patent on your invention it is very unlikely that any two of those patents would be the same. They would all be different, some better, some worse, each having a different scope of protection and enforcability based on the language each patent lawyer decided to use. Most people tend to think of a patent as a form a lawyer simply fills out and files with the Patent Office. In actuality, patent drafting is a mixture of art and science designed to explain how the invention works and define the metes and bounds of the protection afforded by your patent.

Defensibility
So what makes a patent “good” or “bad”? A good patent is a patent that is: 1) defensible; and 2) broad in scope. Conversely, a bad patent is a patent that is: 1) indefensible; and/or 2) narrow in scope. What makes a patent defensible? A defensible patent is a patent that is valid. Validity relates to whether there is something intrinsically wrong with the patent that makes it unenforceable against an accused infringer, regardless of whether the patent otherwise covers what the accused infringer is doing. A patent can be invalidated on many grounds. Some of the most popular ways that accused infringers invalidate patents is to show that there are items in the public domain (typically referred to as “prior art”) that the Patent Office did not have an opportunity to consider when granting the patent.

The Patent Office may not have considered the prior art in question because no one was aware of the prior art at the time. Alternatively, the Patent Office may not have considered the prior art in question because the inventor or the inventor’s patent lawyer withheld the prior art from the Patent Office. This is an important distinction. If no one was aware of the prior art at the time, the court presiding over the patent infringement lawsuit can consider whether the patent should have been granted over the newly discovered prior art and: 1) leave the patent as it is; 2) invalidate the patent; or 3) eliminate some of the broader coverage of the patent, thereby leaving a valid, albeit narrower, patent. However, if the inventor or the inventor’s patent lawyer withheld some prior art from the Patent Office, the court may invalidate the patent, as a result of the fraud committed on the Patent Office. In this case, the court can invalidate the patent even if everyone agrees the Patent Office would have granted the patent even if it had been aware of the hidden prior art.

Broad Versus Narrow Patents
Once you determine whether a patent is valid and defensible, the question becomes how broad is the patent. Everything else being equal, a broad patent is better than a narrow patent. Both a broad patent and narrow patent would stop an infringer from selling an exact knock-off of the invention. But with a narrow patent, a potential infringer may only have to change or eliminate one minor part of the invention to avoid infringement.

A broad patent, however, carves out a much larger scope of alternatives that a potential competitor must avoid to avoid infringing the patent. To avoid infringement, the potential competitor has to eliminate several critical elements of the invention to avoid infringement, making the resulting non-infringing product more expensive, less efficient, heavier, more durable, harder to maintain, and/or generally less desirable. The broader the scope of the patent, the less desirable it is for a potential competitor to make a competing product. Keeping competitors out of the market increases the price the inventor can charge for the invention covered by the patent. It may be extremely difficult for a lay person, a business owner, or even a regular lawyer to determine whether a patent is broad or narrow. A skilled patent lawyer,however, can often quickly review a patent and determine flaws that make the patent narrower than it should be and therefore susceptible to a competitor legally “designing around” the patent.

The Devil is in the Details
So why not make all patents broad? Therein lies the rub. The scope of a patent is determined by one or more “claims” of the patent. A patent claim is a one sentence description of the invention. This sentence can be short or several pages long and typically includes a list of essential elements of the invention.

Inventors are often eager to include every feature of the invention in the claim. However, by including everything and the kitchen sink in the claim, that makes the claim narrower, rather than broader. To avoid infringing the patent, a competitor need only eliminate one element from the claim. If a patent claim covered a chair, defined as a seat, some legs, a back, arms, a rocker, and a footrest, you would only have eliminate the footrest to avoid infringement.

If a patent claim has 25 elements, your competitive product that includes 24 of those 25 elements does not infringe that claim as long as you do not include that 25th element. And you can pick whichever element you want to eliminate. Therefore a good, broad patent claim includes a short list of only those elements absolutely necessary for the invention to function.

So why not just draft a very short patent claim? The problem with short patent claims is that they must not be so broad as to cover the prior art. If any prior art would infringe the patent claim, then that patent claim is invalid. The perfect patent claim therefore strikes that difficult balance between being as broad as possible without covering anything in the prior art.


Good vs. Bad Patent Lawyers

Drafting a broad defensible patent claim can take even a seasoned patent lawyer eight hours or more. That is eight hours to draft a single sentence. Drafting a good patent claim is both a science and an art. You want to include the fewest number of elements, but not so few that the claim is invalid for covering the prior art.

To strike the perfect balance, you need a skilled patent attorney. While you do not need the most expensive patent lawyer to get you the best patent, choosing the least expensive patent lawyer is a recipe for disaster. Bad patent lawyers can cut costs and speed through the patent approval process by drafting very narrow claims. Narrow claims are much easier to draft and, because narrow claims are less likely to cover the prior art, the Patent Office grants narrow claims much more quickly. Unfortunately, the client often does not realize that their patent is nearly worthless until they try to sue and competitor for selling a similar product and realize the competitor simply “designed around” the patent by eliminating one of the many elements of the narrow patent claim.

Your patent will only be as good as the patent lawyer who drafted it. Choosing a good patent lawyer can be difficult. Many of the best patent lawyers spend little or nothing on advertising their services. They instead rely on word-of-mouth and attorney referrals to find high quality clients. Finding a good patent lawyer takes more than a simple Google search. Ask around about the patent lawyer’s reputation. Ask other attorneys and inventors who have worked with the patent lawyer in the past. Finding a good patent lawyer takes a little time, but the dividends will pay off for decades.

And the next time you hear someone say they have a patent on something, just remember that all patents are not created equal. If the patent was drafted by a bad patent lawyer, it may not be worth the paper it is printed on.

Brett Trout

Posted in General, Iowa Law, Patent Law.