The High-touch Legal Services® Blog…for Startups!

© 2009-2017 Dana H. Shultz, Attorney at Law

What are Novelty and Non-obviousness?

Logo for Quora, where Dana Shultz answered a question about novelty and non-obviousness for utility patentsNovelty and non-obviousness are requirements for a utility patent to be granted in the United States.

This post explains the meaning of novelty and non-obviousness. I have based this on my answer to a Quora question. Please see What exactly defines novelty and non-obvious in regards to patenting?

USPTO on Novelty and Non-obviousness

I have copied, below (emphasis added), portions of what the U.S. Patent and Trademark Office says about these criteria. For more information, please see General information concerning patents. (more…)

How to Perfect an Intellectual Property Security Interest

COpyright Office Document Cover Sheet - can be used to record an intellectual property security interest

Copyright Office Document Cover Sheet

Last week I explained what a security interest is and how it can be perfected, i.e., made effective against third parties. (See What is a Security Interest, and Why Should I Care?) This post discusses how to perfect an intellectual property security interest.

To recap, a security interest is an interest in an asset (the “collateral”) intended to secure performance of an obligation. Typically, that obligation is payment of a debt. Perfection typically consists of filing, with one of more secretaries of state, documents that identify the debtor, the creditor and the collateral. (more…)

I’m One of Several Inventors – Who Owns the Patent?

A recently-acquired client is one of three inventors of a device that received a U.S. patent. She asked me whether she can freely license to an LLC owned by two of the inventors the right to manufacture products covered by the license. I replied “yes” – here’s why.

35 U.S.C. Section 262 says:

In the absence of any agreement to the contrary, each of the joint owners of a patent may make, use, offer to sell, or sell the patented invention within the United States, or import the patented invention into the United States, without the consent of and without accounting to the other owners.

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Present Assignment is Important for Patents, Too

Stanford University logo

In “Copyright: Why You Need Presence of Mind about Present Assignments“, I wrote about why copyright assignments should be expressed as present assignments (e.g., “I hereby assign”) rather than obligations to assign in the future (e.g., “I hereby agree to assign”). This suggestion applies to assignment of patents, too.

A researcher at Stanford University, in collaboration with Roche predecessor Cetus, developed methods for quantifying Human Immunodeficiency Virus in human blood samples, and correlating those measurements to the therapeutic effectiveness of antiretroviral drugs.

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How to Assign a Patent Application to Your Startup Company

Detail from an illustration of a machine by Leonardo da Vinci

Detail from an illustration of a machine by Leonardo da Vinci

Your invention is so novel and non-obvious that you have applied for a patent. You have formed a legal entity (see Should I form an LLC or a corporation?) to turn the patent, once it issues, into a revenue stream. How do you assign the patent application to your new entity so your startup company can begin conducting business?

First, you need to prepare an Assignment Agreement. The most important point is that the agreement must assign not just the application, itself, but any patents that are issued with respect to the invention. Here is an example of operative assignment language adapted from Drafting Patent License Agreements by Brian G. Brunsvold and Dennis P. O’Reilly:

I hereby sell and assign to ABC Company the entire right, title and interest in and to the [name of invention] invented by me as described in U.S. patent application number __________, and any and all applications for patent and patents in any and all countries, including all divisions, continuations,reissues and extensions thereof, and all rights of priority resulting from the filing of said U.S. application.

Second, you need to record assignment of the application using the U.S. Patent and Trademark Office’s Electronic Patent Assignment System (EPAS).

Related post: How Can I Switch from a Sole Proprietorship to a Corporation?

Photo credit: HaMyT via flickr

Dana H. Shultz, Attorney at Law  +1 510-547-0545  dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.

Professors Confirm Limits on Startup Interest in Patents

Last November, I wrote You Can Have a Successful Business Even if You Don?t Have a Patent. Many of the points that I made in that post are reiterated in an article that will be published this summer in the Berkeley Technology Law Journal.

The article, “High Technology Entrepreneurs and the Patent System”, is available as a Free Download on the Downloads page. Among the findings presented in the article:

  • Whereas life sciences companies see patents as critical, software and Internet companies rely more on copyrights and trademarks.
  • Patents are used to reduce competition and to attract capital; they do not provide strong incentives to innovate.
  • The major reason why companies do not apply for patents is that they are expensive to obtain and to enforce.
  • Many companies find it is more important to be the “first mover” than to obtain patents.

Dana H. Shultz, Attorney at Law  +1 510-547-0545  dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.

Where to File Your Patent Case? Probably NOT Where You Think

Stanford Law School Professor Mark A. Lemley has published a draft paper, Where to File Your Patent Case.

Lemley started with the assumption that plaintiffs frequently look for forums that favor patentees, where cases go to trial (summary judgments strongly tending to favor defendants), and that move cases along quickly. Defendants are likely to want the opposite, a forum that is unlikely to send cases to jury trial, that regularly rules for defendants, and that takes a long time to do both.

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You Can Have a Successful Business Even if You Don’t Have a Patent

I recently met a software developer who wants to start a business. He immediately started talking to me about obtaining a patent. Condensed a bit, our conversation went roughly as follows:

  • Dana: Without giving away information that would jeopardize your ability to obtain a patent, what would the software do?
  • Developer: It is enterprise customer relationship management (CRM) software.
  • Dana: What is novel and non-obvious about it?
  • Developer: It will be based on a unique algorithm.
  • Dana: You cannot patent an algorithm.
  • Developer: I can get a patent on software that implements an algorithm.
  • Dana: Perhaps. But there are other means, such as trade secrets, that might adequately protect the software [cut off in mid-sentence]….
  • Developer: VCs want to invest in companies that have patents.

Leaving aside the singular focus on VC funding – something that few entrepreneurs obtain (see Realistic Financing Options for Startup Companies) – the would-be entrepreneur was similarly myopic in focusing on a patent as the only type of intellectual property that matters.

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Eminent Domain: The U.S. Giveth, the U.S. Taketh

Photo of a hand grabbing money, symbolizing the US government's eminent domain powersA fundamental tenet of patent law is that the owner of a patent can preclude others from using or manufacturing inventions that the patent covers. Because of eminent domain, however, that there is a major loophole regarding the U.S. government.

Section 1498(a) of Title 28 of the U.S. Code says, in part:

“Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be action against the United States in the United States Court of Federal Claims for recovery of his reasonable and entire compensation for such use and manufacture.”

(Section 1498(b) provides similarly with respect to copyright infringement by the United States.) (more…)