Claiming a "System" in Your Business Method Patent? Think Apparatus: MPEP Reminder

If you are claiming a computerized "system" of some kind in a patent application related to software or business methods, be sure to think of the claim in terms of how the PTO will examine it. Your system will probably be viewed as an apparatus and will need to have hardware and tangible elements built into the claims that support its novelty. The fact that the system is used for a novel purpose is great in method claims, but might not be of any help in a system claim unless you recite novel structure.

A friendly examiner at the USPTO recently explained that Section 2114 of the MPEP should be consulted when contemplating system claims. This section offers important reminders about how to claim an apparatus, and why a novel use of a prior art device (like a server) is not sufficient for an apparatus claim:

2114 Apparatus and Article Claims - Functional Language [R-1] - 2100 Patentability

2114 Apparatus and Article Claims - Functional Language [R-1]

For a discussion of case law which provides guidance in interpreting the functional portion of means-plus-function limitations see MPEP § 2181 - § 2186.

APPARATUS CLAIMS MUST BE STRUCTUR-ALLY DISTINGUISHABLE FROM THE PRIOR ART

While features of an apparatus may be recited either structurally or functionally, claims directed to an apparatus must be distinguished from the prior art in terms of structure rather than function. >In re Schreiber, 128 F.3d 1473, 1477-78, 44 USPQ2d 1429, 1431-32 (Fed. Cir. 1997) (The absence of a disclosure in a prior art reference relating to function did not defeat the Board's finding of anticipation of claimed apparatus because the limitations at issue were found to be inherent in the prior art reference); see also In re Swinehart, 439 F.2d 210, 212-13, 169 USPQ 226, 228-29 (CCPA 1971);< In re Danly, 263 F.2d 844, 847, 120 USPQ 528, 531 (CCPA 1959). "[A]pparatus claims cover what a device is, not what a device does." Hewlett-Packard
Co. v. Bausch & Lomb Inc., 909 F.2d 1464, 1469, 15 USPQ2d 1525, 1528 (Fed. Cir. 1990) (emphasis in original).

MANNER OF OPERATING THE DEVICE DOES NOT DIFFERENTIATE APPARATUS CLAIM FROM THE PRIOR ART

A claim containing a "recitation with respect to the manner in which a claimed apparatus is intended to be employed does not differentiate the claimed apparatus from a prior art apparatus" if the prior art apparatus teaches all the structural limitations of the claim. Ex parte Masham, 2 USPQ2d 1647 (Bd. Pat. App. & Inter. 1987) (The preamble of claim 1 recited that the apparatus was "for mixing flowing developer material" and the body of the claim recited "means for mixing ..., said mixing means being stationary and completely submerged in the developer material". The claim was rejected over a reference which taught all the structural limitations of the claim for the intended use of mixing flowing developer. However, the mixer was only partially submerged in the developer material. The Board held that the amount of submersion is immaterial to the structure
of the mixer and thus the claim was properly rejected.).

A PRIOR ART DEVICE CAN PERFORM ALL THE FUNCTIONS OF THE APPARATUS CLAIM AND STILL NOT ANTICIPATE THE CLAIM

Even if the prior art device performs all the functions recited in the claim, the prior art cannot anticipate the claim if there is any structural difference. It should be noted, however, that means plus function limitations are met by structures which are equivalent to the corresponding structures recited in the specification. In re Ruskin, 347 F.2d 843, 146 USPQ 211 (CCPA 1965) as implicitly modified by In re Donaldson, 16 F.3d 1189, 29 USPQ2d 1845 (Fed. Cir. 1994). See also In re Robertson, 169 F.3d 743, 745, 49 USPQ2d 1949, 1951 (Fed. Cir. 1999) (The claims were drawn to a disposable diaper having three fastening elements. The reference disclosed two fastening elements that could perform the same function as the three fastening elements in the claims. The court construed the claims to require three separate elements and held that the reference did not disclose a separate third fastening element, either expressly or inherently.).

Cheaper Drugs or Missing Drugs? Why Patents on Drugs Help Consumers

Many voices are clamoring for abolition of patent protection on drugs or compulsory licensing of patent drugs at reduced rates. Some nations already demand this. The simple-minded thinking behind this is that by eliminating the high royalties that patent holders can command for their drugs or other products, prices will be lowered and the masses will be blessed. It takes only a little consideration to realize that this movement is more about gaining political power and popularity than it is about strengthening health care, for if the profit incentive is removed, there is no incentive to invest billions in drug discovery, development, and testing. There would be no incentive to take on the extreme risks of marketing a drug. In short, there would simply be far fewer drugs.

Tamoxifen is one example. A brief summary of the issues is provided in a letter-to-the-editor today in the Wall Street Journal by Michael Murphy of Cambridge, Massachusetts:

Regarding the letters of Oct. 7, 15 and 19 responding to your editorial "The 'Pay For Delay' Rap" (Oct. 5): The underlying assumption seems to be that lower drug prices will always benefit consumers. However, this assumption is not just wrong; it has the potential to significantly harm consumers as well.

To demonstrate how, consider the story of tamoxifen, a drug originally developed in 1962 by ICI (now AstraZeneca PLC) as a contraceptive. Although this research was unsuccessful, an unrelated study at the time found another potential use for tamoxifen: treating breast cancer. However, ICI also considered abandoning its tamoxifen research because of economic concerns, most notably its ongoing inability to patent tamoxifen in the U.S. Fortunately, one of the scientists was able to convince ICI to continue development.

AstraZeneca was finally granted a U.S. patent for tamoxifen in 1985, but two years later this patent was challenged by Barr Pharmaceuticals (which wanted to market a generic version). In 1992 the patent was ruled unenforceable, which was likely a fluke ruling, seeing as the patent was upheld in three later challenges. But despite the likelihood that it would prevail on appeal, AstraZeneca instead agreed to a reverse settlement with Barr that preserved its patent while allowing Barr to immediately market tamoxifen at a slightly reduced price.

Though consumers paid less for tamoxifen as a result of this settlement, the Federal Trade Commission opposed it, believing this was a "weak" patent that deserved far less protection. Had ICI been aware of this in 1972, it may have abandoned its tamoxifen research after all. Instead, an estimated 400,000 people are alive today who otherwise would not be thanks to tamoxifen, and I doubt many are concerned that they overpaid.

Related reading: Barr's press-release about their patent victory resulting in lower prices for Tamoxifen. But if the patent pain ICI/Astrazeneca faced had been recognized initially, we simply wouldn't have had this drug today. We need patent protection to give innovators a chance of realizing significant gains for those few and rare drugs that puss through the increasingly difficult hurdles the FDA and other have put in the path to market. Without incentives, innovation dies--and so do those who could have benefited from the drugs.

Score One for the Big Guys: How to Trick a Future Nobel Laureate into Walking Away from a Patent and Giving Away His Rights for Free

Tim O'Reilly (@timoreilly on Twitter) had a recent tweet about the Nobel Laureate Andre Geim who discovered graphene and many potential uses for the super strong two-dimensional diamond-like material. His tweet was "Puts the lie to the claim that patents help small inventors: Why Geim Never Patented Graphene http://bit.ly/9QrEC3". The link is to a discussion on Slashdot that begins with this observation about why Dr. Geim didn't patent graphene. Turns out he almost did, but chose not to after a conversation with someone from a big multinational company that could become a major user of graphene in the future. Here's the content that Tim O'Reilly and others feel shows why patents don't help small business owners:

gbrumfiel writes

"As we discussed on Tuesday, Andre Geim won this year's Nobel prize in physics for graphene, but he never patented it. In an interview with Nature News, he explains why: 'We considered patenting; we prepared a patent and it was nearly filed. Then I had an interaction with a big, multinational electronics company. I approached a guy at a conference and said, "We've got this patent coming up, would you be interested in sponsoring it over the years?" It's quite expensive to keep a patent alive for 20 years. The guy told me, "We are looking at graphene, and it might have a future in the long term. If after ten years we find it's really as good as it promises, we will put a hundred patent lawyers on it to write a hundred patents a day, and you will spend the rest of your life, and the gross domestic product of your little island, suing us." That's a direct quote.'"

While some people, including some in the anti-patent community, see this as a self-evident case for the problem with patents, it's actually just the opposite, in my opinion.

Look at the story again. A genius on the verge of filing a foundational patent for a major breakthrough in technology approaches a large corporation who might benefit from the technology. The company learns that the inventor is about to file a patent. A valid patent would mean that the company would have to pay royalties for the invention, perhaps very expensive royalties. If no patent is filed, the company can use the technology for free and develop its own patents without having to cross-license or worry about what Andre Geim owns. Hmm, which would be better: paying a lot, or paying nothing? Having to work with an inventor or tech transfer office or new patent owner who may end up thinking an invention is worth billions, or having the whole thing pretty much gratis? Tough call, but I think the corporate leader was quick to recognize the advantages to nipping the patent threat in the bud. How could he talk the inventor out of a patent? What negotiating tactic to deploy? ah, how about the Hindenburg? That's where you explain to the other party that their intended course of action would be a flaming disaster, with burning bodies falling out of the sky--oh, the humanity!--resulting in the adversary becoming toast themselves.

The Hindenberg it is. The corporate leader then explains that IF Geim is so foolish, so greedy, so inhumane as to file a patent, disastrous suffering will follow and he'll be burned. "100 patents a day!" Overwhelming force! You'll go into debt suing us for nothing! You'll be toast, baby. One big flaming Hindenburg crashing into the ground.

Baloney! All bluff and bluster. But the intimidation and scare tactics work. "OK, OK, I won't file my patent. Sorry for even thinking about that. Now I see that patents don't help the little guy, Mr. Big. Here, take what I've got for free. I'm just honored to watch you commercialize my work."

Patents are the great equalizer. It's what gives lone inventors a fighting chance against the big corporation that wants to take what they've got for free. It's not easy and may not work, but with patents you've got a chance and corporations know it. Good ones respect that and will work with out. Others will try to take what you've got anyway, or better yet if they can, talk you out of pursuing a patent. Without one, you've already surrendered. You might as well throw the keys of your car to any passing stranger and hope they will pay you someday after they drive away.

The story isn't about why patents don't help the little guy. In fact, I think it's about how much some big corporations despise and loathe patents in the hands of little guys. So much so that they would make outrageous statements to trick a brilliant scientists into NOT doing the one thing that could have helped him most: filing a patent. Instead, he handed them his inventions for free. Score one for the big guys.

Genome Patents Are from Venus, Genome Sharing Is from Mars: The Cocoa Genome Published, not Patented

In the UK, The Independent reports an interesting story about discovery the details of the cocoa genome, a major scientific project that could help cocoa producers worldwide become much more productive in raising this sensitive crop. What I found interesting was the decision by the corporation behind the work, Mars, Inc., to not seek patents based on the work but rather to publish their discovery so that everyone, even competitors, might benefit from the work. Of course, they hope to benefit by having more abundant and higher quality cocoa as a raw material, but I'm still delighted with the decision. Genome patents are tempting and have a role (with over 3 million genome-related patents having been filed in the US, it must be a pretty big role), but are highly controversial and sometimes rather questionable. It's a complex issue to be debated another time. For now, let's just savor the decision by Mars and look forward to major advances in cocoa agriculture.

Here's an excerpt from The Independent:

Scientists have sequenced the genetic code of the cocoa tree, which they say could triple the yield of the disease-prone crop and transform the lives of millions of poor farmers in Africa and around the developing world who rely on it for their livelihood.

The US chocolate firm Mars, working with the computer firm IBM and the US Department of Agriculture, took two years and two months to unlock the genetic code of the tree, Theobroma cacao ("food of the gods").

Instead of patenting the genome, they have placed it online for anyone to use for free. They say that its discovery will allow breeders who use traditional methods to grow hardier, more productive and disease-resistant trees

See also The Cacao Genome Database where Mars and others have published the results of their sequencing of the cacao genome. Best enjoyed while sipping hot chocolate. You'll need a big cup.

Other reading on related topics:

• "Tycoon [Craig Venter] seeks patent for 'minimal genome' " - New Scientist
• "Gene Patents" - Wikipedia
• "Here Comes SuperCacao: Mars, Inc. Sequences the Cacao Genome" - FastCompany

Should Patents Have Background and Summary Sections?

Greg Aharonian's recent PATNEWS newsletter mentions that he is reviewing the book Drafting Patents for Litigation and Licensing, edited by Bradley Wright of Banner & Witcoff. A chapter in that book led Greg to raise the question about whether inventors and patent owners are helped in any way by including background and summary sections in patents. Greg mentions that numerous risks that can arise when prior art is improperly discussed or when statements in the background or summary sections are imported by judges as unwanted limitations in claims. With all the risks, and with no legal requirement to include such sections, why do it?

It's a fair question and perhaps patents will be more successful if unnecessary sections are left out, but there's another perspective to consider.

Greg is not alone, and in fact is thinking along lines of Irving Kayton et al. at PRG who have been advocating barebones approaches to skirt the numerous pitfalls from judges and courts. (I really enjoyed the "Drafting and Crafting Winning Patents" course I took from them several years ago where they introduced their minimalist concepts.) Skipping the background and summary makes a lot of sense with those concerns in mind. However, the chance of a judge abusing your issued patent is minuscule, and in fact is ZERO if it doesn't get past the Examiner. In light of KSR, I would argue (and do so argue in the book Conquering Innovation Fatigue from John Wiley & Sons, 2009) that it is valuable to build some storytelling into the patent to help the examiner avoid the temptation of applying hindsight to the invention and, when possible, to help the Examiner see that the invention involved more than just conventional problem solving to deal with known problems in standard ways.

Sometimes the key to a brilliant invention is discovering what the real problem was. Once understood, the solution may seem "obvious" and straightforward, and if the patent just presents the solution, the nonobvious nature of it may be lost upon the examiner. Examiners are people who will be most helpful in advancing patents when they get the story and have their imagination captured, and that is what can be done in the background and summary. Tell a story to advance your nonobviousness position, but do be cautious about discussing prior art and avoid listing benefits or "objects" of the invention which can certainly haunt you in future litigation. But when there isn't much of a story that needs to be told, skipping the background altogether might be wise.

Another consideration is the benefits of helping others besides judges appreciate and understand the invention. This might include members of a jury as well as potential licensees or business partners. Again, the storytelling role of the background can add value to the patent.

Storytelling: it's what marketing is, and patents need to be drafted with marketing insights and plans in mind for both long-term and immediate success.

The Miazaki Case: Raising the Bar for Definiteness in Patent Claims

A senior patent examiner at the USPTO in a phone interview recently stressed the precedential BPAI case, Ex parte Miyazaki, Appeal No. 2007-3300 (BPAI 2008). In this interesting case, the Board had trouble with the language in this claim:

1. A large printer comprising:
a paper feeding unit operable to feed at least one roll of paper, at least one substantially flat sheet of paper and at least one stiff carton, the paper feeding unit being located at a height that enables a user, who is approximately 170 cm tall, standing in front of the printer to execute the paper feeding process including replacement of the roll paper and setting at least one of the sheet of
paper and the stiff carton;

a printing unit located below the paper feeding unit;

a discharged paper stacking unit located below the printing unit; and

a paper feeding path extending in a substantially straight line from the paper feeding unit to the discharged paper stacking unit via the printing unit.

The claim tried to describe a relationship between a person of average height and elements of the printer, but the Board found that there were infinite possibilities in the actual structures described. Where was the person standing - on a platform, for example? And where was the printer - on the floor, or on a table, or what? Given the uncertainty, there is certainly an argument that the claim is indefinite and thus invalid.

However, the Board did more than simply identify the indefinite nature of the claim. They went much further in giving a new standard for finding a claim indefinite under Section 112, paragraph 2. Woodcock Washburn LLP notes the problem in their client alert, "BPAI Expands Definiteness Requirement During Patent Prosecution in Ex parte Miyazaki":

On November 19, 2008 the Board of Patent Appeals and Interferences (Board) announced in the above captioned case that “if a claim is amenable to two or more plausible claim constructions, the USPTO is justified in requiring the applicant to more precisely define the metes and bounds of the claimed invention by holding the claim unpatentable under 35 U.S.C. § 112, second paragraph, as indefinite.” Ex parte Miyazaki, slip op. at 11-12....

The mischief created by the Board in this case is not whether the claim is or is not indefinite under the statute but, rather, it is found in the Board’s broad holding regarding the application of 35 U.S.C. § 112, second paragraph. Many claim limitations are amenable to two or more reasonable constructions as that is what gives a patent claim breadth. If the Board’s holding is taken at face value, we can expect a flood of rejections of claim terms as being indefinite under the statute.

It may be increasingly important to review claim language carefully and make sure that at least some claims avoid multiple interpretations in ways that could fall under Ex parte Miyazaki. Naturally, almost every limitation of every claim has gray areas that could be interpreted in multiple ways. I hope reason will prevail in the quest for definiteness in claim language.

Inventions from the Fox Valley (Fox Cities) of Wisconsin

As a proud resident of Appleton, Wisconsin in the beautiful Fox Valley, I'm happy to report that this area has a surprisingly rich history of invention and innovation. In fact, the Fox Valley is one of the most patent-rich parts of the Midwest, largely due to the intense patenting activities of consumer products companies like Kimberly-Clark Corp. (which usually gets more patents each year than MIT!) and Georgia-Pacific.

Here is a small sampling of the innovations that have come from this region with a population under 200,000 people (Appleton, the largest city in the Valley, has just 75,000).

• Carbonless paper and a host of innovations related to microcapsules applied to paper. Appleton Paper helped lead the way, developing the coating processes that allowed microcapsules to be applied to paper at high speed without crushing them. Recently Procter & Gamble licensed Appleton's encapsulation technology to apply long-lasting fragrance in microcapsules to laundry via Downy laundry sheets. Numerous innovative applications remain to be developed.



• Cellucotton or creped tissue paper: the absorbent paper wadding material used as a wound dressing and then as the basis for Kotex feminine care products, invented by Ernst Mahler of Kimberly-Clark Corporation. This also led to Kleenex facial tissue and numerous related innovations, including anti-viral tissue, many innovations in processing and packaging, and eventually soft uncreped tissue (with about 50 patents protecting this significant advance in technology, the basis now for several leading products).



• High performance disposable diapers were invented in the Fox Valley. Key innovations include the use of superabsorbent polymers to increase absorbency and a variety of structures for reducing leakage and improving comfort.



• In April of 1969, Dr. Lawson Winton cloned the world's first test-tube tree, a triploid quaking aspen, at the Institute of Paper Chemistry. Genetic engineering of trees is now the basis for some of the world’s largest suppliers of renewable fiber, such as Fibria of Brazil.



• Appleton was home to the first electric street car. The first electric street cars began operating in Appleton on August 16, 1886. Appleton was also the first community in the nation to have electric street cars. They ran until 1930. Sources: Wisconsin Historical Society and http://www.apl.org/history/firsts.html.



• Appleton made history for having the first buildings in the world with electric lighting from hydroelectric power. From http://www.apl.org/history/firsts.html: “On the evening of Saturday, September 30, 1882, Appleton Paper and Pulp Company, the Vulcan Paper Company, and the Hearthstone (home of H. J. Rogers), became the first buildings in the world lighted by electricity generated from the Edison hydroelectric central station.”



• Inverter power sources for arc welders from Miller Electric. See http://www.millerwelds.com/about/1988.html. Miller Electric has been the source of many significant innovation in arc welding, including the world's first engine-driven inverter. See http://www.millerwelds.com/about/1998.html.



• The Fox Valley is home of many significant advances in packaging for microwave-heated foods, such as US Pat. No. 4,861,958, “Packaging Container for Microwave Popcorn Popping,” by Tim Bohrer (Neenah, WI), Tom Pawlowski (Neenah), and Richard Brown (Appleton, WI) of Fort James Corp., now Georgia-Pacific. This was part of a series of patents for “microwave susceptor” technology that allowed a portion of the package to heat up to properly deliver heat to the food being cooked. They were part of the Fox Valley team that developed the first microwavable popcorn package which insured that more kernels would pop and that the package would expand to accommodate the popped corn. The invention was a huge success selling over a billion units per year in North America. The technology was expanded using chemical deactivation technology which resulted in patented processes for products used by Kraft, Heinz Ore-Ida, ConAgra, and others.



• LiveYearbook (http://www.liveyearbook.com/). This is a startup company that is inventing new ways to provide long-lasting, dynamic yearbooks at low cost for schools and organizations. They were the first IT company and first Northeastern WI company to win the Governor’s Business Prize Award (2010). The programming for this concept is being done here in the Fox Valley.



• The famous enMotion® paper towel dispenser, the one that automatically delivers towel by waving your hands in front of it, was developed in Neenah by a Georgia-Pacific team.



• A variety of papermaking advances have their origins in the valley, including Georgia Pacific's foam-based tissue forming technology that was commercialized in France and novel fabrics for papermaking from Kimberly-Clark, Appleton Wire (now Albany International), and Asten Johnson. The famous Crecent Former, used worldwide for making tissue, was a local innovation from Kimberly-Clark. Also, dryer bars--the rods used in rotating steam-filled driers to enhance heat transfer in drying tissue and paper around the world--were invented in the Valley at Kimberly-Clark Corp. and have saved vast amounts of energy over the years. The Pulmac Classifier for detecting "stickies"--polymer junk that can interfere with papermaking--was also developed in the Valley.



• Some of the most valuable advances in nonwoven textiles and fabrics came from Fox Valley inventors working for Kimberly-Clark Corp. This includes the foundation for many of the laminated fabrics that are used in medical gowns and other health care products, the soft webs used in diapers and many other products, stretchable nonwovens, and polymer-paper fiber composites.

If you would like to see other inventions from this region featured, let me know.

PCT Fees to Drop in September

The IP Factor reports that PCT filing fees are dropping in September. About a 15% reduction. Nice! May US fees start moving downward as well--wishful thinking.

Patent Reform and Medical Innovation: There Are Reasons To Be Concerned

One of the constant challenges in crafting policy and law is to avoid unintentional consequences. This cannot be done by living in an ivory tower. When it comes to the business world in particular, there is a need for careful communication with small business owners and entrepreneurs to understand what they are facing and what they might face in light of proposed changes. When it comes to some of the proposals for patent reform, the need to listen to the "voice of the innovator" becomes particularly great. Unfortunately, there is sometimes a human tendency to listen to the voice of one's own staff and the voice of major contributors rather than the voice of the many who will be affected.

What will proposed patent reform legislation do for the economy? I hope there will be careful hearings and investigations into that matter, far more than the efforts so far. Consider the medical industry, an area where innovation can have tremendous impact not only on the economy but directly on human lives. Will changes in patent laws hinder innovation and weaken the industry? Whatever changes we make, let's hope they will strengthen this vital area.

The magazine Medical Innovation and Business recently devoted an entire issue to the challenges of patent reform. The lead article, "Patent Reform: Effects On Medical Innovation Businesses" by Renee Kaswan, David Boundy, and Ron Katznelson, speaks in strident tones about the scope of the problem:

We, as the editors of this special issue, are deeply concerned that the Patent Reform Act will severely harm medical and small company innovation. As an academic researcher who invented a blockbuster drug, Restasis®, a patent lawyer who has helped small companies and their investors, and an inventor/entrepreneur who founded and raised investment capital for two start-up companies based on patentable inventions, we have seen how the robust American patent system enables new, innovative companies to secure investment funding and to negotiate with strategic partners. We have seen how patents enable entrepreneurs and researchers to turn raw ideas into useful products. A strong patent system benefits patients and helps the economy grow by giving companies the competitive position and incentives they need to get new pharmaceuticals, medical devices and procedures into the technology pipeline. Innovators can invest in R&D, testing and FDA approval because patents allow investors to recoup their investments in these staggeringly expensive activities. We are very concerned that the Patent Reform Act undercuts the entire idea-to-product pipeline by weakening the investment value of patents in several ways that selectively impact the most innovative companies. If Congress gets Patent Reform wrong, products characterized by high development costs and low production costs, typical in medical innovation, will die in the lab. The capital investment necessary to get ideas to market will simply dry up, and be diverted to companies that don't need patents to attenuate risk.

Some of the many articles in the issue include:

• "Venture Capital - The Buck Stops Where?" by Gary Lauder


• "What Is A Bad Patent? 1" by Patrick Doody


• "Patent Reform's Weakened Grace Period: Its Effects On Startups, Small Companies, University Spin-Offs And Medical Innovators" by David E. Boundy and Matthew Marquardt


• "Post-Grant Review-Our Next Nightmare? VC Perspective" by John Neis


• "Patent Reforms Must Focus On The U.S. Patent Office" by Ron D. Katznelson, Ph.D.

Good Reminder from Paul Jones: The Hidden Costs of "Free" Grant Money for Innovators

I'm happy to announce that Paul Jones, an attorney and highly connected champion of innovation with lots of experience helping startups, now has his own blog where he posts about innovation, startups, and the like. One post that caught my eye is "Grant Money: When “Free” is not “Free”." He discusses the temptation to pursue government grants to help a new business, and points out the downsides to taking the free money. He scores several good points. Be sure to read it. In conclusion, he says this:

Now I am not suggesting that grants shouldn’t be part of a good start-up’s financial model. But the financial model should serve the needs of the business and it’s investors, not the needs of grant writers. So by all means, use grants – sparingly – to establish credibility. And, if from time to time you run across a grant opportunity that actually dovetails nicely with your real business needs and timing, by all means go for it. But if you ever find yourself thinking that getting grants is what your business is all about – well, don’t tell that to your investors.

Wise words. Thanks, Paul!

Bed Metrics and Unintended Productivity Losses

One of the constant challenges in innovation, a topic we address in Conquering Innovation Fatigue, is finding the right metrics to encourage meaningful innovation. The problem is that poor metrics can lead to all sorts of unintended bad behaviors that can waste resources or even squelch real innovation. If you measure and reward innovation primarily based on the number of patents a group files, you may gets lots of patents--and lots of legal fees and wasted time, including internecine rivalries as groups try to keep others in the corporation from sharing in the credit for patent filings. One must have a variety of metrics and must constantly scrutinize their impact and application to keep the behaviors they engender aligned with the objectives of the corporation.

To bring the problems with weak metrics down to earth, let me share an example from a Midwest grocery store chain, as reported to me by one of their employees. Upper management imposed challenging goals for cashier productivity as measured in terms of IPM - Items Per Minute - a measure of how rapidly a cashier scans and processes items as customers check out. Naturally, for good customer satisfaction and good ROI on cashier salaries, the Corporation should want high IPM, right? Sure, but there are unintended consequences arising from the way the metrics are determined. The problem comes from the use of "terminal secure mode." Terminal secure mode is intended to essentially shut down a cashier's terminal when a terminal is not in use or the cashier is momentarily away. But it also provides a slick way to game the system and get better statistics, for when the terminal is secured, the clock stops ticking. Thus, local management in at least one store has urged all cashiers to use terminal secure mode frequently. If you have to pause for any reason - helping with bagging, etc. - they are told to use terminal secure mode to stop the clock. This requires two keyboard actions to initiate, and then further actions to bring the terminal back up, all resulting in lost time. But even worse, going into terminal secure mode nullifies the credit card scan that the customer may already have done to prepare for payment, so the puzzled customer finds that they have to scan their card again for payment, causing delay and irritation. Time is lost, customers are annoyed, productivity is lower, and the in-store experience deteriorates, but IPM stats look good and management is happy. Counterproductive metrics. So easy to do.

Always scrutinize your innovation metrics (and all other metrics) for unintended consequences and for alignment of behaviors and incentives with corporate goals. It's something that Innovationedge can help you with today. Give us a call!

Bilski: Relief at Last

After much fretting and many weeks of puzzling delay, the Supreme Court has at last handed down an opinion for the Bilski case. For those of us who find legitimate merit in so-called "business method patents," I'm happy to announce that the decision seems reasonable and does not exclude business-related processes from patentable subject matter. Software patents in general appear to survive as well. There were concerns that the previous decisions that gave life to business method patents, such as State Street, would be completely struck down, but these decisions were not expressly rejected though also expressly not endorsed (the State Street test for patentability, i.e., that the invention "produces a useful, concrete and tangible result," was not upheld and may be dead, but business method patents are not excluded outright). The result, in my view, is no radical change other than clarifying that the machine-or-transformation test is not suitable as the sole test for determining patentable subject matter, a ruling that I think will be helpful to those who favor business method patents. It will probably be the default test for patentability, but failure to meet it is not necessarily fatal, and that's good news in my opinion. You can read the opinion at http://www.supremecourt.gov/opinions/09pdf/08-964.pdf.

Some excerpts:

Adopting the machine-or-transformation test as the sole test for what constitutes a “process” (as opposed to just animportant and useful clue) violates these statutory inter-pretation principles. Section 100(b) provides that “[t]heterm ‘process’ means process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.” The Court is unaware of any “‘ordinary, contemporary, common meaning,’” Diehr, supra, at 182, of the definitional terms “process, art or method” that would require these terms to be tied to a machine or to transform an article....

The Court of Appeals incorrectly concluded that this Court has endorsed the machine-or-transformation test as the exclusive test....

This Court’s precedents establish that the machine-or-transformation test is a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under §101. The machine-or-transformation test is not the sole test for deciding whether an invention is a patent-eligible “process.”...

As numerous amicus briefs argue, the ma-chine-or-transformation test would create uncertainty as to the patentability of software, advanced diagnostic medi-cine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals....

[T]he Patent Act leaves open the possibility that there are at least some processes that can be fairly described as business methods that are within patentable subject matter under §101.

Yes, we need limitations and must not allow business method claims to be too broad or counterproductive, but the Court wisely found that there is no reason to exclude them from patent protection. That's good news, in my opinion.

PatentlyO has also reported on the "business as usual" decision, as has IPWatchdog. Both are good reads.

I'd also like to recommend Deepak Malhotra's review of the Bilski decision. Thorough and clear.

Is It Worth Patenting?

Gene Quinn's discussion of hitch-mounted toilets at IPWatchdog.com leads to a valuable point: just because something is patentable does not mean it should be patented.

Inventors often fail to recognize that companies and investors aren't interested in inventions but in solutions that improve people's lives. If your patentable invention isn't a step forward with practical value, why bother?

Outside eyes are helpful here. Inventors love their work, naturally, but what matters is how others react. If the problem being solved is one that people don't care about, or if the solution is too complex and awkward to be useful, the market won't be interested, no matter how brilliant your voice-activated dental floss dispenser is. It may be patentable, but should you patent it? Is it worth the expense? Get some market input and outside expertise to help you make that decision before you spend your savings on costly patents.

The Emerging Landscape of Biofuels IP

In my role as Chair of the Forest Bioproducts Division of AIChE, I've been involved with technical programming and webinars dealing with biorefineries, biofuels, and conversion of biomass, especially forest and cellulosic biomass. There are a variety of intriguing pathways for converting biomass to energy, including gasification or pyrolysis to produce gases and liquids that can be subsequently converted to fuels, enzymatic pathways, and chemical pathways. Whether the end product is ethanol, biodiesel, or other fuel substances, the economics are challenging and depend on a host of issues such as raw materials source, proximity to markets, regulatory and tax issues, etc. The technology itself is an interesting mix of old processes such as Fischer-Tropsch synthesis coupled with new twists, or in some cases radical new technologies altogether.

What many people have overlooked in their enthusiasm for biofuels and biorefineries is the complex nature of the patent estate. The IP landscape is complicated by a wide variety of patent classifications that are used to index the various technologies. In gasification of biomass, for example, the patents for some key commercial technologies may be grouped with cremation devices, or may be listed in categories pertaining to stoves and ovens, methods of reclaiming waste, or chemical processing. Numerous classification codes must be considered. There is also a complex mix of universities, research labs, start-ups, lone inventors, and large companies pursuing relevant technologies, making it difficult to aggregate the key players for a meaningful review of their IP estates. But in spite of all the complexity, there is a great need for improved reviews of the IP landscape to capture trends, whitespaces, and red flags for current and planned operations.

At Innovationedge, we are applying some of our tools and expertise to better deal with this issue. I'll be presenting papers on this topic at the AIChE Annual Meeting in November in Salt Lake City and at a bio-energy conference this fall in Rockford, Illinois. Stay tuned for more information.

Patent Irony: Crush Your Invention by Calling It Such

One of my favorite ironies in the world of intellectual property involves the deadly magic of the word "invention." By simply using that word in describing the invention in a patent, you may cast a spell that sucks the life out of your intellectual property and destroys the value of your invention. How can such self-referential doom be possible? This is only possible thanks to the deep magic of certain highly-trained wizards dressed in the dark robes of judges, who have developed dark techniques for taking various statements about the "invention" to teleport new, unintended limitations into patent claims, making their scope smaller and smaller until they practically vanish into thin air.

Ronald Slusky in the Feb. 2010 issue of Intellectual Property Today has a good article, "Writing the Detailed Description, Part II," in which he discusses some of the problems in using the word "invention." It's not that the word itself is poison or a deadly potion, but statements about the "invention," if not carefully accompanied with detoxifying qualifiers, can be used to override the language of the claims and add poisonous, unintended limitations. For example, if you say, "Figure 1 depicts the invention," then there is a risk that details shown in the figure that may be completely optional or peripheral to the "real" invention may be assumed to be an integral part when a judge interprets your claims. If an accused infringer doesn't have those peripheral features, he may escape even if he appears to literally infringe the "plain meaning" of your claims.

You can still use the word "invention," but use it with caution, as in these examples: "In one embodiment of the invention, there may be . . ." or "Figure 1 shows a system that may be considered for use in some versions of the invention."

Some practitioners now strive to avoid using the word "invention" at all, but perhaps that is unnecessarily restrictive.

Slusky urges practitioners to understand the invention thoroughly before writing the Summary or Detailed Description to avoid making sloppy statements about what the invention is or is not, in order to ensure that the specification really does justice to the claims. For inventors, make sure you are working a patent attorney or agent patient enough to learn from you and really understand what your invention is and what its points of novelty and nonobviousness are relative to the prior art. Make sure that the way she or he wants to describe your patent adequately reflects your real invention. It's the up-front work between you and your patent practitioner that will determine the value of the writing in the patent and the ability of your future patent to provide value.

In the drafting of the patent, make sure this simple commandment is obeyed: "Know thy Invention!" And then speak its name with reverence and caution, or you may cast a spell to aid your adversary.

You Could Win a Free Book: Call Me on GotInvention Radio This Thursday Evening

An exciting new radio show for inventors and entrepreneurs, Got Invention Radio (GotInvention.com), is the creation of master inventor and entrepreneur, Brian Fried. This Thursday night, March 18 at 7 pm CST, I have the privilege of being interviewed. The topic is quality patents and other IP-related topics from the book, Conquering Innovation Fatigue. We'll be giving away a couple of books to a few callers during the hour-long program, so call in with a helpful comment or good question and have a chance to get a free copy of this hardcover book.

The program is aimed at inventors and entrepreneurs, so we won't get too deep into some of my favorite topics, but we do hope to cover some basics on low-cost IA strategies, lessons learned from common and painful patent-related mistakes of inventors, the importance of a good prior art search, and other information that could help your future patents be more valuable and your future business more successful.

Also tune in next week on March 25 to hear Cheryl Perkins, CEO of Innovationedge.

When you are on the GotInvention shows page or most other pages on the site, click on the green box in the upper right-hand corner to launch your media player and listen to the show. It runs every Thursday evening at 7 pm CST. Be sure to call in! The call-in number is provided on the website (in the box you must click to listen, in fact).

Gauging Innovation: Sometimes An "Obvious" Change of Scale Can Be Revolutionary

I'm one of the skeptics who yawned when the iPad came out. "Just like existing products, only bigger, with fewer features and still no Flash...." I may have been dead wrong. Sometimes what looks like an "obvious" change in a something as simple as a physical dimension can enable who new levels of functionality. That wasn't terribly clear to me with the iPad, and still isn't, but another innovative company following suit opened my mind to the real possibilities here. Meet Spice 2.0, courtesy of Frito-Lay. Now I get it!

So the lesson for the rest of us is to consider what a change in some dimension of your existing products could do to change the way people solve real problems. Better yet, understand the unmet needs of the users of your products and competitive products, and understand how a change in some aspect of what now exists could provide surprising solutions to those problems. Doritos, you've taught us something here. I hope Apple's iPad will also realize similar potential.

Trademarks in China: The Toblerone® Case

Further progress in China's IP system is reflected in recent trademark litigation in China. See Vanessa Zhou's article on three-dimensional trademarks in China in a recent issue of World Trademark Review. She discusses the success that Kraft Foods experienced when suing to protect their trademark for the triangular 3D shape of their famous Toblerone® chocolate brand.

Along the way, she discusses the nature of trademarks on 3D shapes. Though unusual, they can be obtained.

A three-dimensional mark may consist of the configuration of the goods, the package of the goods or other three- dimensional designs. Popular examples of three-dimensional marks include the ridged Coca- Cola bottle, the Rolls-Royce figure of the Spirit of Ecstasy and Ronald McDonald, the McDonald’s clown character. In practice, however, not all three-dimensional signs can be registered and protected as trademarks.

This is because three-dimensional marks must not be merely functional. Article 12 of the Trademark Law states that "where an application is filed for registration of a three-dimensional sign as a trademark, any shape derived from the goods itself, required for obtaining the technical effect, or giving the goods substantive value, shall not be registered".

She continues to explain further details in deciding if a 3D trademark registration is possible.

Kraft prevailed against a Swiss competitor in protecting their Toblerone® brand. Given the track record of foreign companies increasingly prevailing against Chinese companies in IP litigation, when the facts are in their favor, I suspect and hope that the outcome would be similar if the infringer had been a local Chinese company. There may yet be cases of this kind to observe.

One of the challenges for 3D trademarks arises from related design patents, which may be held by other parties. Ms. Zhou gives a recent case in China where Nestlé sought to sue a Chinese soy-sauce manufacturer for infringement of their 3D trademark of a particular brown bottle shape for their soy sauce product. The competitor, Weishida, actually received a design patent for their bottle shape in 1991 and have been selling the product since 1983, and have sales far greater than Nestlé. Ms. Zhou says that these facts will make it very difficult for Nestlé to prevail.

A related problem occurs in patents, when companies doing business in China find that patents on their products have been filed and issued by others in China. Sometimes their own published patents have been filed by someone else, or in other cases someone has drafted a new patent that may seem to be based on the company's original patent or at least their internationally protected products. These problems are correctable, but can add to the challenges. It's important to have careful searches of Chinese patents done to detect such problematic patents and take appropriate action. As the Chinese IP system becomes more sophisticated and strengthens its resources, questionable patents will become much less of a problem.

Economic Development in Brasilia: Many Lessons for Government Officials

Below are two recent Pixetell presentations where I share some recent learnings about the exciting economic experiment that has been underway in the small Federal District of Brasilia, a region with 2.6 million people but a GDP of $61 billion, larger than that of many nations. The efforts since 2006 of the government in Brasilia have created an environment where respect for the rule of law and respect for the creative powers of the private sector have unleashed economic growth and resulted in their lowest unemployment rate in history. Next steps will be strengthening financial resources for small business and further strengthening Brazilian IP.

Special thanks to Adriano Amaral, Secretary of State for the State Department of Economic Development in Brasília for meeting with me and sharing his insights and experiences. Like many of the leaders in Brasília, Adriano is not a career politician, but an experienced business leader who has led successful startups, stepped in to bring struggling businesses to life, advised large and small companies, and taught some of the best MBA students in the world. Special thanks also to Hugo Teophilo, former Undersecretary of Economic Development for Economic Studies and Strategy, Government of Brasilia. Hugo is currently a 2nd-year MBA student at the National University of Singapore. I met Hugo in Singapore recently, and he sparked my interest in Brazil and introduced me to Adriano.

The success of the Federal District of Brasília demands further attention, and will be covered in our next book. Our first book with John Wiley & Sons, Conquering Innovation Fatigue, teaches several lessons that resonate with the experiment in Brasilia, as I observe in these presentations. We continue to look for further experts to interview as we explore the many stories and lessons from this region and from Brazil in general. Let us know if you have experiences and expertise to share! Email me at jlindsay at innovationedge.com. And if you'll be there in early June, let me know - we might run into each other!

The Pixetell below, created for InnovationFatigue.com, is set to 480 x 320 pixels). To see the full-sized presentation in higher resolution, click on the full-screen icon in the lower right-hand corner, or to view this in a new window, use this Pixetell link. Pixetell, by the way, is an incredibly easy and extremely innovative tool for sharing information from your computer.

Here is a 14-minute Pixetell presentation prepared for Innovationedge.com, further describing some of the good news coming from Brasilia, focusing on efforts to create an ecosystem for success. Again, I suggest clicking on the full-screen icon for better viewing.

Finding IP.com and Other References Cited in US Patents

For those new to patent searching, here's a quick example of how to see what issued US patents are citing IP.com publications, or other references. Yes, the PTO is increasingly turning to IP.com in its prior art searching.

A quick answer is that you can search for the string "IP.com" in the search field for "Other references" in some search tools such as FreePatentsOnline.com or the USPTO.gov search engine, though some search engines make it more difficult.

The video below is 480 pixels wide to fit on this blog. To see the full-screen presentation at higher resolution, click on the full-screen button in the lower right corner of the video. To see it in a new browser window, click here. It's about 9 minutes long since I show you some results and pontificate a bit on defensive publications and IP.com as a resource.

Patentable Subject Matter in Europe

IPKat has a good review on patentable subject metter in Europe. here's a brief excerpt:

In Europe, all inventions that are new and not obvious are patentable [Article 52(1) EPC], but this is subject to various exceptions and exclusions. The exceptions [Article 53 EPC] are:

• inventions the commercial exploitation of which would be contrary to "ordre public" or morality;


• plant or animal varieties or essentially biological processes for the production of plants or animals; and


• methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practised on the human or animal body.

The exclusions, being things that are not considered to be inventions [Article 52(2) EPC] are:

1. discoveries;
2. scientific theories;
3. mathematical methods;
4. aesthetic creations;
5. programs for computers;
6. presentations of information; and
7. schemes, rules and methods for performing mental acts, playing games or doing business.

These are, however, only excluded from patentability to the extent that a patent application (i.e. the claimed invention) relates to one or more of these things as such.

As an aside, Lord Hoffmann (who was, until recently, the most senior IP judge in the UK) has come up with two reasons that could be used to at least explain these exclusions. Exclusions 1-6 above fall within what he considers to be the 'practical application principle', that these things cannot be the subject of a patent in themselves, but this would not necessarily stop practical applications being patentable (for example, the practical application of the discovery of the electrical nature of lightning to the invention of a lightning rod). The last exclusion falls within the 'human behaviour principle', since mental acts, playing games and doing business are all aspects of human behaviour that should not (presumably for practical as well as ethical reasons) be patented, even though they may be new, useful and inventive. See here for more details.

With the Bilski case coming before the Supreme Court, the scope of patentable subject matter in the U.S. may also soon become smaller.

Personally, I am puzzled why so many people reject software and business methods as patentable, when the world of innovation and discovery is increasingly moving away from compounds and gadgets per se and increasingly being found in how information is handled. Software and business methods are the future and represent some of the most exciting opportunities for valuable innovation, but the world's patent systems tend to emphasize more tangible innovation. The technical aspects of innovation in these realms are just as meaningful, clever, and impact tangible reality just as much or more than any clever new potato peeler.

Reinventing the Patent System

IBM, a world leader in obtaining patents, is also working to reinvent the way we do patents. "Reinventing the Invention System" is an article by IBM about the issues of patent quality and innovations such as crowd-sourcing to improve prior art searches. They helped support Beth Noveck in developing an exciting pilot program at the USPTO, Peer To Patent, a system in which inventors could expose their pending patents to the world for commentary and prior art suggestions, in exchange for receiving a rapid examination. The best prior art submitted would be sent to the PTO, who then would ensure that a substantial first office action was delivered within a year from entering the Peer to Patent system.

I tried Peer to Patent with a security system patent of my own. I was thrilled with the results and appreciated the insights shared by others. Of course, I especially appreciated the allowed claims and rapid prosecution! In principle, I'd much rather have a narrow patent that has been subjected to searching from many eyes than a broad one of more questionable validity. Plus I'd much rather have a patent that issues quickly, as mine did, than one that takes five or more years to get a first office action, as has happened to some patents I've been involved with.

Will crowd-sourcing be relied on in the future? I hope so. While the Peer to Patent pilot has closed for now as it reviews the results of its US pilot program, I understand that it will be coming back in some form, perhaps expanded and better than ever. It has its weaknesses, such as the difficulty of motivating searchers to take part and the lack of legal knowledge by the community doing the reviews. "Oh, this is obvious!" is so easy to say, but if you don't understand the legal definition of obviousness, you may condemn a claim that clearly is patentable, or fail to recognize why something that appears novel is probably not patentable after all. Without understanding the law, you may not know what art to search for and what prior publications or products are truly relevant.

Mark Nowotarski, President of Markets, Patents, and Alliances, has proposed an alternative system, the Examiner Advocate, in which skilled patent attorneys and technical experts evaluate sponsored patents and write a proposed office action for USPTO examiners to consider. The proposed office action would be posted on a website and could be used by the PTO, if desired. Of course, there would be a fee for this service. Great concept, one that could greatly enhance the quality of the office actions that are provided. Perhaps a combination of Peer to Patent's crowd-sourcing and the skilled approach of the Examiner Advocate could be the way of the future. Stay tuned!

Peer To Patent pilots have also been launched in Australia and in Japan. This could become a more global phenomenon.