Strategies for Protecting Intellectual Property (IP) on a Reduced Budget

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Shutdown orders due to the COVID-19 virus pandemic have created economic disruption, causing companies to scale back on intellectual property (IP) expense. This creates an opportunity to move ahead of the competition. This is especially true because the U.S. patent system, and many others around the world, reward the first inventor to file.

Below are some suggestions for protecting your IP on a reduced budget. This is not an exhaustive list. It is also not right for everyone. You should consult with legal counsel about your IP and what is right for your company.

Further, obtaining the best protection for your IP may involve filing for a utility patent, which is a long process. It involves, for example, understanding the client’s business and its goals; studying the technology; meeting with the inventors; discussing the invention, its genesis, and design alternatives; identifying target concepts to protect; meticulously drafting the claims and the written description; preparing the figures; and reviewing and revising the draft documents many times until they are right, among many other tasks.

By most measures, a pandemic is not an ideal time for many things, including companies trying to protect their IP. Consider discussing the following options with IP counsel to see if any of these might be right for you.  For fuller discussion of these and other techniques, this webinar on May 13, 2020 may be of interest.

1. Get your place in line – On a reduced budget

The U.S. and many non-U.S. patent systems reward the first inventor to file. It is therefore important to stake your place in line before the competition. Below are some suggestions for reserving your place in line – your “priority date” – while keeping expenses down.

A. Consider a U.S. provisional patent application filing.

A U.S. provisional patent application holds your place in line at the Patent Office for up to one year. The government filing fee is currently 280 USD (potentially discounted for “small entities” or “micro entities”).

Provisional applications do not require the same level of formality as a non-provisional application. For example, a sketch, a slide deck, or an informal set of notes from an inventor can be filed as a provisional application. While you will only get credit, for priority purposes, for the amount of detail you file, it may be beneficial to file something rather than nothing.

Within one year of the first provisional application filing, you can supplement it with one or more “follow-on” provisional filings. This may be useful, for example, to file a follow-on later when IP budgets are subsequently increased.

All of the filed provisional applications within that one year can then be “rolled up” into a single non-provisional application. If you ultimately decide to do nothing with the one or more filed provisional applications, they will never publish.

B. Consider “coaching” preparation of the patent application.

While ideally a patent attorney will draft your application, this involves additional expense. One option may be to have your attorney “coach” you through the preparation process. For example, the attorney may provide an application sketch or template for the inventor to complete. Then, the attorney can revise the draft to the extent desired. While this may risk losing some breadth in the scope of protection of the patent, it may still provide a suitable compromise between a “bare bones” provisional application and the ideal, fully-vetted application prepared by an experienced attorney.

C. Consider trade secret protection.

If your invention is not easily reverse-engineered, consider trade secret protection. Trade secret law addresses wrongful theft of certain secret, commercial information. Further, trade secrets protect more than just technological inventions. They can protect financial secrets, client lists, and other valuable commercial information.

Legal redress for “misappropriation” of your trade secret requires that you take certain measures within your business to protect and maintain secrecy of the idea, such as executing non-disclosure agreements, having password-protection, and using safes. You will need to show that you took reasonable measures to keep your invention secret, that it has commercial value by virtue of it being a secret, and that it was wrongfully acquired by the third party.

These are just some facets of trade secret protection, and you should consult with IP counsel regarding whether trade secret protection is right for you.

2.  Keep your place in line – on a reduced budget

You may already be in line (and thus have your priority date) with the Patent Office, so what can you do to maintain that filing date on a budget? Below are some suggestions for keeping your place in line while reducing or deferring expenses.

A. Consider filing a “placeholder” continuation patent application.

You may have a non-provisional U.S. application already pending with the Patent Office. If you get any kind of communication from the Patent Office regarding your application, it will likely have a deadline by which you must respond.

One option to defer costs associated with responding, while maintaining your rights in the application, is to file a new “placeholder” continuation application that claims priority to the presently-pending application, and allow the presently-pending application to go abandoned. If you do it right, you will not lose your priority date. For example, the abandoned application must have been in good standing (e.g. no extension fees due) and the continuation application must be filed prior to abandonment of the present application. Make sure to work with legal counsel to get this right, or else you risk losing your rights!

Patent Office filing fees can be paid months after you file the continuation application. You will get a notice setting a deadline to pay the required filing fees, which are typically due within two months from the date of the notice. If that is too soon, you may be able to delay payment for up to seven months after the date of the notice, but you will also have to pay extension fees. This strategy would allow you to delay costs until you have a bigger budget to pay for them.

B. Consider narrow claims with a higher likelihood of allowance.

Each round of negotiation with the Patent Office will incur expense. One way to reduce the number of rounds of negotiation with a utility application is to amend the claims to be narrow such that the likelihood of allowance is increased.

One option is a “picture claim” that recites all or most of the features of the invention. Even though the scope of protection may be sacrificed, you can still have a claim that actually covers the product or process. Further, such narrowly-drafted claims may be more difficult to invalidate than a broad claim.

Additionally, if you do get an acceptance of the narrow claim, you can then file a continuation application and pursue broader claims in the continuation application. This may defer, until examination of the continuation application, the higher costs typically associated with pursuing a broader scope of protection. The continuation application could be a “placeholder” continuation to try and defer costs even farther down the road (see section 2.A above).

C. Consider the PCT “holding pattern.”

If you already have an application pending in the U.S., then consider filing a related “PCT” application that claims priority to the U.S. application. The Patent Cooperation Treaty (PCT) is an international treaty signed onto by most of the developed nations of the world. It allows an inventor in one of the signatory countries to file an international PCT application with one of the designated patent offices. You can then wait up to about 30 months (some countries are sooner, some are later) from the earliest priority date of your application before deciding in which PCT countries to file the national application.

The PCT application filing fees are typically more expensive than a U.S. non-provisional application filing. However, the PCT application may buy precious time before incurring the expense of examination in multiple foreign countries.

Further, you may file a provisional application in the U.S. and then in one year file the PCT application. You will then have the remaining time – about 18 months – to decide whether to file in the U.S. or any other PCT country.

There are many other requirements for the international route, and rights can easily be lost if any requirements are not met. For example, the PCT application must be filed within 12 months of the earliest priority date, or you risk losing foreign rights all over the world. Further, some countries like China have “absolute novelty” requirements that bar patent protection if the invention is disclosed prior to the filing date. Make sure to consult with IP counsel with experience in international patent protection.

D.  Consider delaying U.S. patent examination.

The Patent Office allows for extensions of time for some responses. For example, when the Patent Office issues an “Office Action,” you typically must file a response within 3 months. You can usually extend the response deadline for up to 3 more months (6 months total), but each month of extension will incur an additional, increasingly higher extension fee. The extension fees normally are not due until you file the response.

Although this is a mechanism for deferring costs, there are some drawbacks beyond the higher costs. For example, you may lose patent term if you take an extension of time. Further, if it is a “Final” Office Action, you may risk abandonment of the application if the extension is not obtained correctly. Make sure to consult with IP counsel regarding extensions of time.

CONCLUSION

These are some of the options available to you for protecting your valuable IP in this time of economic uncertainty. This discussion merely scratches the surface of available options, however. We strongly recommend that you consult with experienced IP legal counsel to determine which options are right for you.

Tom Cowan
Tom is a Partner in the San Diego office and serves clients worldwide in aerospace, mechanical, and medical technologies. He counsels clients on overall IP strategy, performs IP audits, prosecutes patents and trademarks, conducts pre-litigation enforcement of IP rights, negotiates licenses, and conducts offensive and defensive diligence such as patentability and infringement studies. As a former aerospace engineer with experience at NASA and Northrop Grumman, and holding a master’s degree in biomedical engineering, Tom’s legal services are supplemented with his advanced technical abilities in a wide range of inventive domains. Tom has particular experience with assisting startups from the conceptual design phase through acquisition. One recent example is Millipede, Inc., developer of a heart valve annuloplasty device. Tom prosecuted their patent portfolio and provided defensive patent diligence, resulting in investments and an acquisition by Boston Scientific totaling $540,000,000. Other example particular technologies in Tom’s patent experience include cardiac devices, intracranial sensors, prosthetics, aircraft and rockets, robotics, unmanned aerial vehicles (drones), semiconductors, imaging and biosensors, high altitude balloons, control systems, thermal management systems, software, and more. Additional highlights include: Keynote Speaker, “Patent Basics for the Aerospace Industry,” at the 2019 Space Foundation Space Commerce Workshop Former Mechanical engineer at Northrop Grumman, where he designed and tested complex structures and mechanisms for various spacecraft programs Interned at NASA Armstrong Space Center, Aerodynamics Branch, where he analyzed data for the Quiet Supersonic Platform Inventor of the “Inflate-A-Brake,” a system for de-orbiting small satellites to reduce space debris Publications Coordinator for the firm’s medical device practice group, which leads the nation in medical device patent prosecution having obtained over 4,800 medical device patents since 1976 and 2,700 medical device patents since 2010 Member of the firm’s pro bono committee and coordinates with the U.S. Patent & Trademark Office’s regional patent pro bono program to assist indigent individuals and non-profit organizations Co-Chair of the Licensing Executives Society (LES) for the San Diego Chapter Holds a minor in Chinese and studied Chinese language and history at Shaanxi Normal University in Xian, China
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