IP Management and Strategies Karl F Jorda David

IP Management and Strategies Karl F. Jorda David Rines Professor of Intellectual Property Law & Industrial Innovation Director, Kenneth J. Germeshausen Center for the Law of Innovation & Entrepreneurship Franklin Pierce Law Center Two White Street, Concord, NH 03301 USA Seminar Siam Cement Group Bangkok, Thailand December 19 -20, 2006

INTRODUCTION • • • Live in “Golden Age” for IPRs Patent filings and issuances are skyrocketing Talk of patent “revolution, ” “explosion, ” “frenzy” • • “Anything under the sun that is made by man” is patentable Courts, Congress, Justice Department — pro IPRs Corporations built on patented technologies Motto: Innovate or perish • • • Value of IPRs for securing exclusivity — simply invaluable Royalties for licensing IPRs in 2002: $150 billion Over $1 billion for some companies Universities jumped on bandwagon Getting patents, concluding licenses, collecting royalties

THE AMERICAN PATENT SYSTEM • The Constitution gives Congress the power to promote the progress of the useful arts by securing for inventors the exclusive right to their discoveries for limited times. (U. S. Const. art. I, § 8, cl. 8. ) • “The issue of patents for new discoveries has given a spring to invention beyond my conception. ” (Thomas Jefferson) • “The patent system added the fuel of interest to the fire of genius. ” (Abraham Lincoln) • “The American patent system has promoted countless applications of the arts and sciences to the needs and well-being of our people. ” (Franklin D. Roosevelt) • “The advancement of the arts, from year to year, taxes our credulity and seems to presage the arrival of that period when human improvement must end. ” (Henry L. Ellsworth, Commissioner, Patent Office Annual Report for 1843)

The Global Landscape A. Favorable Development & Trends Abroad India– a sea change total about-face • • IP taught in schools “Patent or Perish” (Chamber of Commerce) “IP literacy, ” “IP awareness”– buzzwords “Bring IP down to the people” Changes in philosophy: Indonesia, Canada, “south of the border” Substantial revisions of IP systems– pre- and post. TRIPS

The Global Landscape Sea change in India in Viewing IPRs In 1992 at a WIPO IP Education Program at the Delhi University • There was small attendance—academics • I was crucified for my pro-patent views In 2001 at a similar WIPO Program in New Delhi • I experienced a complete about-face. Now that IP is available in abundance in India. • IP being taught in “all academic schools” under government sponsorship • New Chamber of Commerce slogan: “Patent or Perish” • “IP literacy” and “IP awareness” have become buzzwords • Efforts to “bring IP from a legalistic ivory tower down to the common man” • Initiatives for IP studies springing up all over

The Global Landscape Seachange in India in Viewing IPRs (con’t. ) • Only skeptical undertones • Reservations about pressure coming from developed world and • Deep seated believe that knowledge should be free and not monopolized In 2002 I lectured at such an institute in Mumbai to a receptive audience for two days on Patent Management, Patent Licensing, Trade Secrets, Patents/Trade Secret Interface and Reverse Technology Transfer For the past 5 years or so Indian students have been our biggest country group of students • India still pushes the “development agenda” of developing countries at WIPO but no longer asserts that “IP is the common heritage of mankind and should be free”

The Global Landscape B. Antipathy, hostility still persists in many countries “Spreading the gospel” in developing countries: • Conveying my Credos-Insights-Truisms • Fending off critical comments and test questions • Urging a six-phase course of action for implementing effective IP systems

International Harmonization Steady advance of harmonization of IP systems Increasing discussion and growing literature on global, universal or world patent Stepping stones: Extant and pending international regional treaties: • Paris Convention • PCT • TRIPs • Patent Law Treaties • • EPC OAPI/ARIPO EAPC NAFTA “World Patent”: Ongoing initiatives: Kyoto Action Plan Focus on Europe, Japan, USA 90% of patent activity Major harmonized features Other Possible vehicles: PCT, EPO Mossinghoff: will come “sooner rather than later”

WORLD PATENT A. Stepping (Miles) Stones 1. International Treaties • Paris Convention (1882) – WIPO • Patent Cooperation Treaty (PCT) (1970)– WIPO • Trade-Related Aspects of IPRs (TRIPS) (1995)— WTO/WIPO • Patent Law Treaty Proposals (WIPO) 2. Regional Treaties • European Patent Convention (EPC) (1973) • European Community Patent Convention (CPC) (when? ) • OAPI (1958), ARIPO (1976) in Africa • Eurasian Patent Convention (EAPC) (1995) • North American Free Trade Agreement (NAFTAChapter 17 (1994)

WORLD PATENT (con’t) B. World Patent System (as per Gerald Mossinghoff— 38 IDEA 529 (1998) and J. C. Rasser, Procter & Gamble, IPO Mtg, 4/1/98) 1. Essential Characteristics • Unitary Patent Grants by Regional Patent Offices • First-to-file Priority • Provisional Applications • One-year Grace Period • English Language for Examination and Enforcement • Single Electronic Prior Art Database • World Patent Court

WORLD PATENT (con’t) 2. Additional Problem Areas • Definition of Patentable Subject Matter • Definition of Prior Art • Claims Interpretation—Peripheral or Central • Best Mode Requirement • Rule 56 Practice • Patent Term Extensions • Nature of Post-grant Procedures (Opposition or Re-examination) • Doctrine of Equivalents • Sanctions for Infringement (also criminal? ) • Governing Structure of the World Patent System

WORLD PATENT (con’t) C. Potential (intermediate) Alternatives) 1. Trilateral Initiatives—on-going- between Europe, Japan, USA– have 90% of world patent activities—”Kyoto Action Plan”: Trilateral Network, Common Searches, Website (1998) 2. European Patent Convention Ulrich Schatz, EPO: EPC is already existing mechanism for a Global Patent as any country can join EPC. 3. Expanded PCT could be vehicle for Global Patent (Francois Curchod of WIPO, Dieter Hoinkes of USPTO) 4. “Rapid Patent” Proposal (AIPPI) (for Third World): patent application is filed, published and kept pending for 20 years when it goes abandoned, unless someone had requested examination during pendency. (The ultimate deferred examination system. ) Premise: developing countries can’t live up to TRIPS standards. 5. “Reference System” Proposal (Robert Sherwood) (for Third World) – Comparable to former confirmation paten system (PCT taken a step further. ) Same premise as 4. above.

WORLD PATENT (con’t) D. Future of World, Global, Universal Patent Fact we live in a knowledge-based “global village” will require full harmonization—only matter of time– how soon? With TRIPS in place, “sooner rather than later”, per Mossinghoff And Lios Boland of USPTO goes as far to predict: “At some point in the future, we will have an international patent system that will have characteristics similar to those we find in the copyright area. That is, the right of an inventor will be universally recognized without having to seek patent protection in each of the countries of the world. ”

THREE STAGES OF A CORPORATE PATENT MANAGEMENT PROCESS A. Harvesting Inventions Extracting and Processing Invention Disclosures B. Patent Solicitation Preparing, Filing and Prosecuting Patent Applications C. Patent Exploitation Employing, Licensing and Enforcing Patents

Harvesting Inventions (Discovering Discoveries) 1. Have a simple, easy Invention Disclosure system (policy, procedure and forms) 2. Establish rapport with inventors—”hand-holding” 3. Practice MBW– “Management by Wandering Around” 4. Make periodic trips to R&D sites 5. Make presentations to R&D personnel to foster IP awareness 6. Distribute IP bulletins to R&F personnel 7. Read R&D’s technical reports regularly 8. Attend R&D meetings 9. Have written procedures for cooperation between R&D and IP Departments 10. Have patent liaison people at R&D sites 11. Review the invention disclosure in patent committee meetings 12. Have a reasonable standard employment/invention agreement with all R&D personnel 13. Conduct IP Audits 14. Institute an inventor award of incentive system

Invention Review Invention Disclosure Group GM Survey Results Evaluation Guidelines Publish Disclosure Technical Publication Process Entity Patent Coordinator Meeting Hold as Trade Secret Recommendations by Engineering Management Recommendations by IP Managing Counsel and Staff Attorneys File Patent Application In- House Legal Staff Liaison Engineers Outside Counsel Standards RFQ

COOPERATION BETWEEN R&D & IP DEPARTMENTS 1) Correct laboratory notebook keeping 2) Inform the IP Department of projects, developments, discoveries, etc. 3) Submission to the IP Department of Invention Disclosures 4) Informing the IP Department of every change and modification in existing patented or unpatented products or processes. 5) Submission to the IP Department for clearance of every form of release or divulgation of technical information 6) Consultation with the IP Department as to any other problems relating to IPRs, i. e. patents, trade secrets, trademarks, copyright, etc.

JOINT INVENTORSHIP The Problem- Who Is The Inventor? The exact parameters of what constitutes joint inventorship are quite difficult to define. It is one of the muddiest concepts in the muddy metaphysics of the patent law. ” --District Judge Newcomer, Mueller Brass Co. v. Reading Industries, 176 USPQ at 372 (ED Pa. 1972)

INVENTORSHIP • Joint Inventorship • prevalent • Determination of Joint Inventorship • critical issues of non-joinder or misjoinder • Conception is Key • Joint Conception • Joint Invention • Sole Conception • Joint Invention • Joint Conception • Sole Invention • Superior/Subordinate Relationship • sensitive issues • Resolution of Doubt • in favor of joinder

INVENTORSHIP DETERMINATION An inventor is: • A person who conceives the subject matter of at least one claim of the patent. • Two or more persons who collaborate to produce the invention through aggregate efforts. An inventor is not: • Someone whose only contribution is reducing an invention to practice by exercising ordinary skill in the art. • A technician who simply performs experiments or assembles the invention. • The supervisor or department manager of the person who conceived the invention. • Someone whose only contribution is an obvious element to the invention.

INVENTORSHIP DETERMINATION (cont’d) • Someone whose only contribution is participating in consultations about the invention before or after conception of the inventions • A person who only conceives of the result to be obtained but not the idea of how to achieve it. • A person who only discovers the problem (unless he contributes to the solution). • A person who merely provides a suggestion or improvement but who does not work to fix the suggestion or improvement into the invention • A second inventor of the subject mater of the invention who did not collaborate with a first inventor of the subject matter of the invention.

INVENTORSHIP Common Misconceptions • Authorship is equivalent to inventorship. • Someone who works hard on an invention deserves to be an inventor • The head of the company, lab, institute, (etc. ) should be named as an inventor. • Knowledge derived in the course of proving an invention entitles one to be an inventor.

INVENTORSHIP Criteria for Inventorship • Conception is the touchstone of the invention. • Conception is complete only when the idea is so clearly defined in the inventor’s mind that only ordinary skill would be necessary to reduce to invention to practice, without extensive research or experimentation • But an inventor need not know that his invention will work for conception to be complete; he need only have the ability to describe his invention with particularity.

Conception The conception of the invention consists in the complete performance of the mental part of the inventive act. All that remains to be accomplished, in order to perfect the act or instrument, belongs to the department of construction, not invention. It is therefore the formation in the mind of the inventor, of a definite and permanent idea of the complete and operative invention, as it is thereafter to be applied in practice, that constitutes and available conception within the meaning of the patent law. Mergenthaler v. Scudder, 11 App. D. C. 264, 276, 1897 C. D. 724, 731 (1897)

INVENTORSHIP Standards for determining inventorship in the U. S. 1. 35 USC § 101, 116 2. Case law: a. Standard often difficult to apply b. Standard different from authorship c. Cannot be determined by contract d. Co-inventors need not have worked together or contemporaneously e. True inventors must be named f. Incorrect inventorship does not invalidate patent so long as no intent to defraud g. Inventors can be changed at any time h. If inventorship dispute of patent application, resolution properly by interference i. If inventorship dispute of issue patent, resolved by federal district court

COINVENTORS No exact rules for determination of joint inventorship some negative and positive guideposts Requirement: parties worked in concert and contributed to unitary result mutual counsel, mutual effort contributions do not have to be equal Conception is key: formation in the mind of the inventor(s) of a definite and permanent idea of the compete and operative invention as it is thereafter to be applied in practice.

COINVENTORS (con’t. ) Different possibilities: Sole conception – joint invention Joint conception – sole invention Superior – Subordinate Relationship Resolution of Doubt

Inventorship Discrepancies • Corresponding foreign and US applications may reveal discrepancies due to differences in the laws on (co)inventorship. • 3 actual or possible practices exist §Foreign applications file US applications with identical inventorship Possible result: invalidity Correct designation of true inventor is critical– abroad often irrelevant to right to patent– standards unrelated to US standards e. g. 10 Japanese on one compound patent e. g. 21 Russians on a magnesium salt powder patent §Foreign applicants file foreign application with inventors who are true inventors under US law- foreign and US application have same inventors – can cause problems with inventor compensation laws and morale problems §Foreign applications file with discrepant inventorship—possible complications in PTO during prosecution– can be overcome: there is no requirement of identity of inventorship—identity of invention counts (sec. 119)-- so discrepancy is no obstacle

INVENTION OWNERSHIP General Rule: employee owns invention (Ownership follows inventorship) But if the employee: 1. has a fiduciary position, 2. was hired to invent, 3. was specially assigned to work on a project or 4. Signed an invention or employment agreement, Then employer owns invention N. B. even if none of these apply and employee owns invention, employer may have shoprights (implied nonexclusive non-transferable license), if employee used company time, resources, know-how.

OWNERSHIP FACTORS 1) The previous assignments of inventions by the employee inventors. 2) The standard practice that applies to other employees of similar status and responsibility. 3) Whether the idea for the invention occurred before or after the employment relationship began. 4) Which party posed the original problem to be solved by the invention. 5) The employee’s authority within the company. 6) The previous acts by the employer that imply an assumption that patent rights are owned by employees. 7) A promise to make specific compensation, over and above standard wages, to use or buy the patent. 8) Whether the employer paid for the cost of developing the invention 9) Whether the employer paid for the cost of obtaining the patent 10)Whether the coworkers aided in the development of the invention Courts look to the totality of the circumstances to reach a fair an equitable solution.

Patent Department Guidelines on Whether or Not to File Patent Applications 1) Where invention clearly patentable and commercially important—file promptly 2) Where invention unpatentable and not important -- preserve record only, keep as trade secret Difficult and vast area in-between 3) Where invention patentable but not important --file in due course, especially if original piece of work or new class of chemicals (Other legitimate reasons for filing: defensive position, licensing potential, inventor recognition) 4) Where invention important but of doubtful patentability --file as long as it is novel – rationale for commercialization may provide basis for patentability arguments – fall-out data