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H-1B workers continue to be an important resource for U.S. tech and other companies, particularly in the STEM fields.  Many such employers are subject to the annual H-1B cap. The U.S. Customs and Immigration Service (USCIS) recently decided to reverse cap lottery selection beginning this year, with electronic registration of petitions being required at some point in the future.

Full details are available on the Fox Rothschild Immigration View blog, available at this link.

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U.S. patent law states that any invention that was “on sale in this country, more than one year prior to the date of the application for patent” is not eligible for patent protection.

The Supreme Court recently confirmed that a confidential sale — such as a sale under a nondisclosure agreement — is still a “sale” that can trigger loss of patent rights. In Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., the Court considered agreements by which the patent holder (Helsinn) agreed to license and sell palonosetron, which is the active ingredient a drug that treats chemotherapy-induced nausea. The agreements required the licensee/buyer to keep dosage and other product information confidential. Two years later, Helsinn applied to patent a method of treatment using the dosage.

In its decision, the Court held that “an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential can qualify as prior art under §102(a)” of the Patent Act. The Court also noted that its ruling is consistent with long-standing precedent on the subject, and that the changes that Congress made to §102(a) in the America Invents Act of 2011 did not alter this premise.

Notably, the facts that led to the Court’s decision involved a sale from the patent holder to a third party. In 2016, the Federal Circuit held that a sale from a contract manufactuer to the patent holder would not trigger the on-sale bar because it was a sale of manufacturing services, and not a sale of the invention. (See The Medicines Co. v. Hospira, Inc.) The Supreme Court’s decision in Helsinn did not address a sale in the contract manufacturing context. However, in its holding the Court specifically mentioned that it was considering “an inventor’s sale of an invention to a third party,” So, it does not appear that the Court’s decision will affect contract manufacturing arrangements.

However, the Court’s decision highlights the importance of filing for patent protection before any offer to sell the invention – even if the offer is made under a nondisclosure agreement. Also, even though U.S. patent law provides a one-year window for filing, most other countries’ patent laws provide no such grace period.

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A recent intellectual property infringement lawsuit between Puma and Forever 21 regarding Puma’s Fenty X shoes garnered a lot of attention in the popular press. In no small part, the attention resulted because Puma’s creative director for its Fenty line was Rhianna.

A recent article in The Fashion Law examined whether a creative director (such as Rhianna) should be listed as an inventor in the company’s patents covering the creative director’s product line.

The answer to this question (with input from yours truly) is available in the article that is linked here. (Hint: it depends on whether the creative director actually participated in design of the product claimed in the patent.)

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At the end of each fiscal year, the USPTO releases a Performance and Accountability Report, with statistics about patent and trademark allowance rates, average pendency, and other details. The USPTO recently released its Performance and Accountability Report for Fiscal Year 2018. This means that it’s time for IP Spotlight’s annual review of the question:  “how long does it take to receive a patent or register a trademark?”

To answer that question, here are a few highlights from the USPTO’s FY 2018 report:

Patents:  The USPTO continued a seven-year trend of reducing overall patent application pendency in FY 2017. The average time between filing and first office action was 15.8 months, which is down a few week’s from last year’s measure. Average total pendency (time from start to grant or abandonment) also dipped to 23.8 months.

The report did not discuss the effect of the USPTO’s “Track 1” expedited examination option on the overall timeline. Applicants who pay the additional fee for Track 1 processing typically receive a first action within 4-6 months of filing, and allowance or final action within 12 months of filing.

The wait times vary depending on the technology involved. Patent applications for computer architecture and mechanical engineering inventions generally experienced the longest waits, while applications for communications and semiconductor technologies moved relatively quickly. The breakdown by technology included:

  • biotechnology and organic chemistry (USPTO Technology Center 1600) had an average wait time of 12.5 months to first action, and an average total pendency of 22.9 months;
  • chemical and materials engineering (USPTO Technology Center 1700) had an average wait time of 18.0 months to first action, and an average total pendency of 27.3 months;
  • computer architecture (USPTO Technology Center 2100) had an average wait time of 19.4 months to first action, and an average total pendency of 28.4 months;
  • networks, multiplexing, cable and security (USPTO Technology Center 2400) generally waited 15.9 months to first action, and have an average total pendency of 25.3 months;
  • communications technologies (USPTO Technology Center 2600) had some of the shortest average wait times — 11.0 months to first action, and an average total pendency of 19.9 months;
  • semiconductors, electrical systems and optical systems (USPTO Technology Center 2700) had an average wait time of 12.7 months to first action, and an average total pendency of 21.6 months;
  • methods relating to transportation, construction, agriculture and e-commerce (USPTO Technology Center 3600, in which the e-commerce inventions are often considered to involve “business methods”) had an average wait time of 18.2 months to first action, and an average total pendency of 25.5 months; and
  • mechanical engineering products (USPTO Technology Center 3700) had an average wait time of 19.0 months to first action, and an average total pendency of 28.4 months.

339,534 patents issued in FY 2018 — a 2.3% decrease from last year’s all-time high. The overall patent allowance rate was 56.3% – a dip from last year’s 59.4% allowance rate.

The number of patent applications filed in FY 2017 was 647,349 — a slight (1% decrease from last year’s number. Of these applications, approximately 596,000 were utility filings and 169,000 were provisional filings. The other patent applications were design, plant, or reissue filings.

Trademarks:  In FY 2018 the average time from filing to first Office Action in a trademark application increased to 3.5 months, up from 2.7 months in 2017. Average total pendency remained about the same as last year: 9.6 months as compared to 2017’s 9.5 months.

The total number of trademark applications filed was 638,647, an all-time high and the third consecutive year of double-digit growth. The total number of registrations granted was 367,382, also an all-time high and a 12.2% increase over last year’s grant rate.

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On January 4, 2019, the U.S. Patent and Trademark Office released new guidance documents that USPTO Patent Examiners are to use when evaluating whether a patent application claims patent-eligible subject matter under Section 101 of the Patent Act. The new documents also address whether claims directed to computer-implemented inventions should be considered to be purely functional and/or indefinite under Section 112 of the Patent Act.

Taken together, the new guidance documents may narrow the situations in which Examiners issue rejections under Section 101 of the Patent Act, but may expand the number of rejections issued under Section 112 of the Patent Act. The documents indicate that inventors who want to patent computer-implemented inventions must be sure that the patent application: (a) describes and claims a practical application of the invention; and (b) discloses specific algorithms for performing claimed functions.

2019 Revised Patent Subject Matter Eligibility Guidance (Section 101)

Unlike previous USPTO patent-eligibility guidance, the new Section 101 guidance focuses on situations in which patent claims should be eligible, and it limits situations in which USPTO Examiners should issue rejections under Sections 101 of the Patent Act.

In particular, the 2019 Revised Subject Matter Eligibility Guidance opens the door to patent-eligibility for patent claims that are limited to practical applications. In particular, the Section 101 guidance states that “a patent claim or patent application claims that recites a judicial exception [i.e., a law of nature, a natural phenomena or an abstract idea] is not ‘directed to’ the judicial exception if the judicial exception is integrated into a practical application of the judicial exception.”

The new Section 101 Guidance states that to determine that a claim recites an abstract idea, Examiners must “(a) identify the specific limitations(s) in the claim … that the examiner believes recites an abstract idea; and (b) determine whether the identified limitation(s) fall within the subject matter groupings” — that is, one of the following judicial exceptions to patentability: (1) mathematical concepts; (2) certain methods of organizing human activity; or (3) mental processes. Laws of nature or natural phenomena are another subject matter grouping to be considered. If the Examiner believes that the claim falls within one of these groupings, the Examiner must “evaluate whether the claim integrates the judicial exception into a practical appplication.”

The new Section 101 guidance instructs Examiners that analysis of whether a claim includes significantly than the judicial exception is only needed if “a claim recites a judicial exception and fails to integrate the exception into a practical application.” The guidance also states that “a practical application will apply, rely on, or use the judicial exception in a manner that imposes a meaningful limit on the judicial exception, such that the claim is more than a drafting effort designed to monopolize the judicial exception. When the exception is so integrated, then the claim is not directed to a judicial exception … and is eligible.”

Examples of practical applications include:

  • an element that improves the functioning of a computer or other technology;
  • an element that effects a particular treatment or prohylaxis for a disease or medical condition;
  • an element that is operates in conjunction with a particular machine or manufacture that is integral to the claim; or
  • an element that applies or uses the exception in a menaingful way beyond generally linking the use of the exception to a particular technological environment, so that the claim is more than a drafting effort designed to monopolize the exception.

The Section 101 guidance also states claims that include elements that are not well-understood, routine or conventional in a way that does not simply append those elements to the claim may be eligible.

Also significant: even if an Examiner rejects claims under Section 101, the Examiner must still examine each claim under Sections 102, 103 and 112 of the Patent Act.

The 2019 Section 101 guidance “supercedes all versions of the USPTO’s Quick Reference Sheet[s]” and indicates that those prior documents “should not be relied upon” by Examiners or Applicants.

Guidance for Examining Computer-Implemented Functional Claim Limitations for Compliance with 35 U.S.C. §112

The USPTO’s 2019 Guidance for Examining Computer-Implemented Functional Claim Limitations for Compliance with 35 U.S.C. 112 provides cautionary warnings to patent applicants who describe and claim computer-implemented inventions in only broad, general terms. This new guidance is intended to address the “problem with broad functional claiming without adequate structural support in the specification” and address “when a claim is purely functional in nature rather than reciting with any specificity how the claimed function is achieved.”

In the past few months, USPTO Examiners have more frequently issued Section 112 rejections against computer-implemented invention claims, even if the claims do not explicitly use means-plus-function language. The new guidance suggests that this is not appropriate by stating that “a claim limitation that does not use the term ‘means’ will trigger the presumption that 35 U.S.C. §112(f) does not apply.”

However, the guidance notes that certain phrases can be generic placeholders for means-plus-function language, in particular: “module for,” “device for”, “unit for,” “component for,” “element for,” “member for,” “apparatus for,” “machine for” and “system for.” The guidance also cautions against phrases that use the term “module” in connection with the module’s function.

The guidance also states: “for a computer-implemented … claim limitation, the specification must disclose an algorithm for performing the claimed specific computer function, or else the claim is indefinite” (emphasis added). The guidance notes that “the requirement for disclosure of an algorithm cannot be avoided by arguing that one of ordinary skill in the art is capable of writing software … to perform the claimed function.”

The new guidance documents took effect on January 7, 2019, the USPTO is accepting public comments on the new guidance through March 8, 2019.

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Is the U.S. Patent and Trademark Office still operating during the current federal government shutdown? So long as the shutdown does not extend beyond the first few weeks of January 2019, the answer is yes.

According to the USPTO: “the agency has access to prior-year fee collections, which enables the USPTO to continue normal operations for a few weeks. Should the USPTO exhaust these funds before a partial government shutdown comes to an end, the agency would have to shut down at that time, although a small staff would continue to work to accept new applications and maintain IT infrastructure, among other functions.”

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A new Federal Circuit decision found the claims of a patent directed to software license verification to be eligible for patenting under Section 101 of the Patent Act.

In Ancora Technologies, Inc. v. HTC America, Inc., the court reviewed the claims of U.S. patent 6,411,941, which involved methods of restricting software operation on a computer to be within a license for that computer. Representative claim 1 of the patent is:

A method of restricting software operation within a license for use with a computerincluding an erasable, non-volatile memory area of a BIOS of the computer, anda volatile memory area; the method comprising the steps of:

selecting a program residing in the volatile memory,

using an agent to set up a verification structure in the erasable, non-volatile memoryof the BIOS, the verification structure accommodating data that includes atleast one license record,

verifying the program using at least the verification structure from the erasable non-volatile memory of the BIOS, and

acting on the program according to the verification.

Thus, the method required storage of a license record in a “verification structure” created in a portion of the computer’s BIOS memory.

In its decision, the court noted that as in its Enfish, Visual Memory, Finjan, Core Wireless and Data Technologies cases, “[i]mproving security — here, against acomputer’s unauthorized use of a program — can be a non-abstract computer-functionality improvement if done by a specific technique that departs from earlier approaches to solve a specific computer problem.” The court also found that because in the representative claim “a license record is stored in a particular, modifiable, non-volatile portion of the computer’s BIOS … the claim addresses a technological problem with computers:  vulnerability of license-authorization software to hacking.”

Quoting its SAP America, Inc. v. InvestPic, LLC decision, the court also noted that the claim has “the specificity required to transform a claim from one claiming only a result to one claiming away of achieving it.” Therefore the court stated that it did not need to consider step two of the Alice analysis.

[1] ____ USPQ2d____ (Fed. Cir. Nov. 16, 2018).

[2] 127 USPQ2d 1597 (Fed. Cir. 2018).

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Historically, inventors who assign a patent to a company or other entity have been barred from later challenging the patent’s validity under the doctrine of “assignor estoppel.” This common-law doctrine has been in place for years. However, a new Federal Circuit decision scales it back by holding that assignor estoppel cannot stop certain inter partes review (IPR) proceedings filed by inventors with the Patent Trial and Appeals Board (PTAB).

In Arista Networks v. Cisco Systems, Inc. (Fed. Cir. Nov. 9, 2018), the court considered an appeal from the PTAB decision in an IPR proceeding. In the case, a company founded by an inventor (who was a former employee of the patent holder) argued that certain claims of the patent were obvious in view of prior art. While acknowledging that assignor estoppel is a “rule well settled by 45 years of judicial consideration and conclusion,” the court found that in the America Invents Act reveals Congress’ intent for a different rule in IPR proceedings. Specifically, since 35 U.S.C. §311(a) states that any “person who is not an owner of the patent” may file an IPR petition, the court ruled that an inventor who has assigned his or her interest — and who therefore is no longer an owner of the patent — may file an IPR petition that challenges validity of the patent.

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The Bayh-Dole Act and federal regulations implementing the Act permit government contractors to retain ownership of inventions developed with federal government funding. However, to retain ownership the contractor must take certain actions within certain deadlines. If the contractor misses these deadlines, the government agency can take title to the invention.

These deadlines are about to become even more important when a regulatory change takes effect on May 14, 2018. Significant deadlines to keep in mind include:

1.  Disclose the invention to the government agency within two months of discovery, and elect title within two years of the disclosure.

The first required action is disclosure of the invention to the contracting agency. The Bayh-Dole Act (at 35 U.S.C.  § 202(c)(1)) requires any contractor who receives government funding to “disclose each subject invention to the Federal agency within a reasonable time after it becomes known to contractor personnel responsible for administration of patent matters.” Regulations implementing the Act state that the “reasonable time” is “two months after the inventor discloses it in writing to contractor personnel responsible for patent matters.” 37 C.F.R. § 401.14(c)(1).

The second required action is that if the contractor wants to retain ownership of the invention, the contractor must elect to retain title within two years of the disclosure. 37 C.F.R. § 401.14(c)(2).

If the contractor fails to make the required disclosure to the Federal agency within two months, or if the contractor fails to elect to retain title within two years, the Federal agency may take ownership to the invention.

Currently, a time limit also applies to the Federal agency’s right to take title to the invention. However, that is about to change.

Until May 13, 2018, federal regulations stated that “the agency may only request title within 60 days after learning of the failure of the contractor to disclose or elect within the specified times.” 37 C.F.R. § 401.14(d)(1). This means that when a contractor misses the deadlines, the contractor could resolve the issue and retain ownership) by making the disclosure and waiting until the agency’s 60-day option expired.

Starting May 14, 2018, the 60-day time limit on the agency’s option is removed. This means that if a contractor misses the deadlines listed above, the agency may choose to acquire title to the invention from the contractor at any time.

While Federal government agencies very rarely exercise this right, the elimination of the 60-day period could create a cloud over ownership of any invention that is not properly disclosed or elected within the required time periods.

With the change soon to take effect, government contractors who may have inadvertently missed the deadlines should make a corrective disclosure as soon as possible. In addition, government contractors should ensure that their patent administration personnel are aware of the two-month disclosure and two-year election periods, and that they diligently adhere to those periods for new inventions going forward.

2. Convert provisional applications within 10 months, rather than the usual 12.

The rule changes add a requirement that if the contractor files a provisional application for the invention, the contractor must file a formal application within 10 months of filing the provisional. 37 C.F.R. § 401.14(c)(3).

Contractors may request up to a one-year extension of this time period, which can be useful if the invention is not yet developed enough to support a nonprovisional patent application. However, the Federal agency will have 60 days to decide whether to grant or deny the request. This means that a contractor must either convert a provisional within 10 months or request an extension within no more than 8 months from the provisional’s filing date. If the contractor does not meet this deadline, the Federal agency may elect title and complete the filing before the 12-month life of the provisional application expires.

Although not affected by the change, contractors also should keep in mind that if they elect title to an invention, they must file an initial patent application within one year of electing title.

3.  File foreign applications within 10 months of the priority date.

A carryover from the previous rule is that if the contractor wants to file patent applications outside of the U.S., the contractor must do so within 10 months of the first filed patent application (unless international filing was prohibited by secrecy order). 37 C.F.R. § 401.14(c)(3). The Federal agency may file foreign applications in any country where the contractor does not do so within this time period.

4. Notify the federal agency at least 60 days prior to abandoning any patent or patent application.

If the contractor decides to abandon any patent or patent application (such as by stopping prosecution or not paying a maintenance fee), the contractor must notify the Federal agency before doing so. The new rule increases the notification period to 60 days before the due date for the response or fee.

[Special thanks to my colleagues Jeff Schwartz and Flynn Barrison for the information that led to this post.]

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A recent Federal Circuit decision provides patent holders and applicants some guidance as to when patent claims that include methods of treatment may be eligible for patenting.

In Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals Int’l Ltd. (Fed. Cir. Apr. 13 2018), the decision involved U.S. Patent 8,586,610, which is directed to a method of trating a patient who is suffering from schizophrenia with iloperidone. The representative claims included the steps of performing a genotypic assay on the patient, and administering one of multiple dosages of iloperidone to the patient depending on the results of the assay.

The defendant argued that the claims were not patent-eligible “because they are directed to a natural relationship between iloperidone, CYP2D6 metabolism, and QT prolongation, and add nothing inventive to those natural laws and phenomena.” The patent holder argued that while the claims may “touch upon” laws of nature, they are not directed to any law of nature.

The court agreed with the patent holder, nothing that while the “inventors recognized the relationships between iloperidone [and certain natural phenomena,] that is not what they claimed. They claimed an application of that relationship. Unlike the claim at issue in Mayo [v. Prometheus], the claims here require a treating doctor to administer iloperidone in the amount of either (1) 12 mg/day or less or (2) between 12 mg/day to 24 mg/day, depending on the result of a genotyping assay.” Thus, the court found that the “patent claims are ‘a new way of using an existing drug’ that is safer for patients because it reduces the risk of QTc prolongation,” rather than purely a law of nature.

The Vanda decision can be a useful reference point for applicants who seek to claim personalized medicine delivery methods. The court’s discussion of claims that touch on, but are not directed to, laws of nature may be helpful for those who are inventing new and useful methods that rely on laws of nature, but which aren’t inherently laws of nature on their own.

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