Archive for January, 2013

Small/Micro-Entity Status

January 29, 2013

Under PTO rules, a “Small Entity” is entitled to pay certain PTO fees associated with patent prosecution at a reduced rate, usually 50%.  As the PTO raises filing and post-issuance fees, it is important to determine just who qualifies as a Small Entity.

In the early 1980s, Congress substantially raised many of the PTO fees associated with patent prosecution and introduced some new fees that had not previously been charged, such as issue fees and maintenance fees.  To help off-set the burden this would cause for smaller or non-profit parties, Congress also introduced the Small Entity Status.

PTO rules define a Small Entity as an individual inventor or inventors, a small business concern, or a nonprofit organization.  In order to qualify as one of these three types of entities, none of the rights associated with a patent or patent application may have been assigned or licensed to any party that would not qualify for Small Entity Status, nor must there be any obligation on the part of the small entity to make such an assignment or license.  All of the rights in the patent or patent application must be held by a small entity.

In other words, IBM cannot set up a small holding company for all of its patents in order to qualify for Small Entity Status if it wishes to retain any rights in the patents.  Nor can IBM pay Small Entity Fees and wait until the patent issues to assign it to the company if the inventor(s) had an obligation to assign the invention to the company at the time of filing.

An individual inventor is anyone who has not assigned his patent application to a business or other organization.  The rules define a Small Business Concern as a company having fewer than 500 employees.  The rules define a Nonprofit Organization as a university, 501(c)(3) organization, or a scientific or educational organization under any state law or in a foreign country.  If an individual inventor, small business concern, or nonprofit organization licenses the patent or patent application to a company that doesn’t qualify for Small Entity Status, the full price fees must be paid at the PTO.

Previously, the PTO required the applicant or assignee to sign a verification of Small Entity Status.  Now, the simple written assertion of such status or even the payment of Small Entity Fees is sufficient.  This puts more of the burden on the patent applicant and the patent attorney to verify Small Entity Status.

If a small entity pays large entity fees, the small entity may request a refund of the overpayment.  Conversely, if Small Entity Fees are paid by an entity that is actually a large entity, it can usually be corrected by simply paying the required deficiency, if the incorrect amount was paid in good faith.  The rules do warn, however, that fraudulently paying Small Entity Fees when the applicant is not entitled payment of such fees can result in the resulting patent being held unenforceable due to inequitable conduct.

The PTO notes applicants have a contiuing duty to conduct a thorough investigation of the facts surrounding a claim of Small Entity Status.  The facts should especially be revisited at the times of paying the issue fee and maintenance fees.  For example, a patent issued to a Small Entity may have been licensed to a non-small entity between the time of its issuance and the time to pay a maintenance fee, or the company itself might have grown to more than 500 employees, making Small Entity Status inappropriate.


The America Invents Act includes provisions for a new entity called a “micro-entity” that would pay certain fees at a 75% reduction of the normal amount that go into effect in March.  To qualify as a micro-entity, certain conditions must be met.

For unassigned applications, the entity must not include any inventors that have been named on 5 or more patent applications, not including provisional or non-US applications.  Thus, “micro-entities” are newer inventors.  The application must not be licensed or the inventors must not be legally obligated to license or assign the application.  Each inventor must have an income of less than 3 times the average gross income reported by the Department of Labor for the previous calendar year.

For assigned applications, the inquiry is similar.  None of the inventors must be named on 5 or more patent applications.  The application can only be assigned to an entity with 5 or fewer employees.  And the assignee must have an income of less than 3 times the average gross income for the previous calendar year.

Finally, for applications where the applicant receives the majority of his income from an institution of higher learning or where the applicant is under an obligation to assign or license the application to an institution of higher learning, micro-entity status applies.  This is regardless of the income level or number of applications previously filed by the applicant.

Thus, micro-entities will be a very small group of applicants, but it can result in significant savings on PTO fees.

When paying PTO fees, it is important to stay up-to-date on whether the applicant qualifies as a Small Entity.


Judge Rader Chides Supreme Court’s IP Decisions

January 24, 2013

Judge RaderLaw360 (subscription) is reporting a speech by Federal Circuit Chief Judge Randall Rader where he called out the Supreme Court’s recent patent decisions for judicial activism.  In the speech at the New York State Bar Association’s annual meeting, Judge Rader argued that the Supreme Court’s decisions have ignored or only partially applied the patent statute.  The Court instead relied on interpreting its own precedent.

Judge Rader specifically called out the Court’s decisions in Mayo v. Prometheus and eBay v. MercExchange.  In Mayo, the Court held that the claims to a method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder were not patentable because they were directed to natural laws and routine, conventional activity.

Judge Rader noted that the patent statute says nothing about laws of nature.  Instead, the Patent Act states that patents are permitted for “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.”  The Patent Act also states that inventions that are not novel or are obvious are not patentable.  Laws of nature can clearly not be patented because they are not novel and have not been invented.  The Supreme Court instead ignored the statute and instead interpreted its own judicially-created exception to patentable subject matter.

In eBay, the Supreme Court held that an injunction should not automatically issue in a patent case upon a finding of infringement.  Instead, courts must go through a four part test to determine whether the injunction is appropriate.  Judge Rader noted that the patent statute states that upon a finding of infringement, courts “may grant injunctions.”  The statute does not refer to the four part test.  He argued that injunctions should issue in most cases of infringement, unless there is good reason, such as where the public interest is affected or where health would be endangered.

Judge Rader also argued that other groups are also seeking to interpret patent law in a way that is not reflected or intended by the statute.  For example, a number of groups seek restrictions on infringement actions brought by so-called patent trolls, entities that do not practice the patented invention.  Courts should not decide cases based on the status of the parties, but rather based on the law.  Courts should not permit parties to extend the scope of patents beyond the actual contribution of the invention to the field.

New PTO Fee Schedule

January 17, 2013

Tomorrow, the PTO will be publishing the Fee Schedule in the Federal Register.  The new schedule should take place by mid-March.

The original proposal was published for comment in September.  The final rules are quite similar to the proposal.  The current fees and new fees are listed below for many common fees.  The fees are listed as large entity, small entity, micro entity.

Current New % Change
Utiliity Filing Fee $390 $280 -28.2
$195 $140 -28.2
Utility Search Fee $620 $600 -3.2
$310 $300 -3.2
Utility Examination Fee $250 $720 188.0
$125 $360 188.0
Total at Filing $1,260 $1,600 27.0
$630 $800 27.0
Excess Ind. Claims $250 $420 68.0
$125 $210 68.0
Excess Claims $62 $80 29.0
$31 $40 29.0
Priorized Examination $4,800 $4,000 -16.7
$2,400 $2,000 -16.7
1st RCE $930 $1,200 29.0
$465 $600 29.0
Subsequent RCE $930 $1,700 82.8
$465 $850 82.8
Notice of Appeal $630 $800 27.0
$315 $400 27.0
Appeal Brief $630 $0 -100.0
$315 $0 -100.0
Forwarding to Board $0 $2,000
$0 $1,000
Total Appeal $1,260 $2,800 122.2
$630 $1,400 122.2
Utility Issue Fee $1,770 $960 -45.8
$885 $480 -45.8
Publication Fee $300 $0 -100.0
$150 $0 -100.0
Maintenance Fee 1 $1,150 $1,600 39.1
$575 $800 39.1
Maintenance Fee 2 $2,900 $3,600 24.1
$1,450 $1,800 24.1
Maintenance Fee 3 $4,810 $7,400 53.8
$2,405 $3,700 53.8

The PTO will also publish new fees for post grant and other patent reviews.

Current New
Ex Parte Reexamination $17,750 $12,000
Request for Sup. Exam. $5,140 $4,400
Ex Parte Rexam Order $16,120 $12,100
Total Supplemental Exam $21,260 $16,500
Inter Partes Review Request $9,000
Inter Partes Institution $14,000
Total Inter Partes Review $27,200 $23,000
Post-Grant or Bus. Method $12,000
Review Request
Post-Grant or Bus. Method $18,000
Total $35,800 $30,000
Post-Grant or Bus. Method

The new rule also raises other fees by smaller amounts, such as requests for extension of time.  The PTO plans to eliminate the current $40 assignment recordation fee for assignments recorded electronically.  Finally, the PTO will also institute a registration fee for attorneys and agents.  The fee for active practitioners will be $120 per year; inactive status will cost $25 per year.

Virginia State Bar IP Section

January 15, 2013

2013 Student Writing Competition.  The Virginia State Bar Intellectual Property Section is seeking papers written by law students who are attending law school in Virginia or are residents of Virginia attending law school outside of Virginia and relating to an intellectual property law issue or the practice of intellectual property law.  The winner receives a cash prize of $4,000.  The judge of the final round of the competitor is the Honorable Richard Linn, judge of the U.S. Court of Appeals for the Federal Circuit.  The deadline for submissions is Friday, May 24, 2013 at 4:00 EDT.

A complete set of rules and a flyer for use in advertising the competition are attached.  Additional information is available at the section’s website:

Patent Deadlines

January 14, 2013

Many new inventors and start-ups attempt to nagivate the patent system on their own to save money.  This is understandable to a certain extent because obtaining a strong patent portfolio is not a cheap endeavor.  Aside from problems with not being familiar with PTO practice and procedure or with Federal Circuit caselaw on how certain language used in patent applications and claims can affect patent strength (or the ability to obtain a patent at all), the most dangerous aspect of “going it alone” is the potential loss of patent rights due to missed deadlines.

Currently, under U.S. patent law, an inventor can publicly disclose his invention without losing patent rights, provided that he files a patent application within one year of that disclosure.  To a certain extent, this rule will be changing in a rather significant way as the America Invents Act goes into effect.

Problems can arise, however, when the inventors are advertising the new invention for sale, such as on a website, or even if they disclose the invention to potential investors.  A website publication is quite obviously public, but what about a disclosure to potential investors?  Provided that the investors are required to sign a non-disclosure agreement, this can be OK.  Many investors, however, won’t sign these agreements.  In this case, the inventors should disclose as little as possible regarding the invention.  If too much is disclosed, this could have a significant negative effect on patent rights.  Even if the complete invention is not disclosed, the amount of the disclosure may cause the invention to be adjudged obvious in light of other prior art.

One potential solution is to file a provisional application prior to disclosure to investors.  If the inventors don’t have the money for such a filing, this may not work either.

Foreign Patent Rights

Another problem arises when new inventors and start-ups begin patenting on their own without realizing that there are deadlines for foreign patent filings, or realizing the significance of not obtaining foreign patent protection.  Maybe they think they will file outside the US once they make a few sales of the invention and get more funding.  Or, they don’t consider foreign markets, focusing initially only on the US market.

Under the Paris Convention, a patent application that is filed within one year of the filing date of a first patent application is effective as if filed in that country on the filing date of the first application.  For example, if an applicant files first in the US and then files in Japan within 12 months of the US filing date, the Japanese application is effective as if filed in Japan on the same date as the US application.  This generally includes provisional applications as well.  If the first filed application is a provisional application, any applications filed within 12 months and claiming priority are effective as if filed on the date of the provisional application.

Conversely, if the one year deadline is missed, the application is treated by the foreign patent office as if filed on its actual filing date and not on the date of the earlier filing.  Thus, a “wait until we have money” or a “I didn’t think about foreign markets” approach can result in loss of rights.  One way to extend the time required to deal with these decisions is to use the Patent Cooperation Treaty.

The risk with waiting more than one year after the earliest application’s filing date to file in foreign countries is that most countries have an absolute novelty requirement.  Thus, any type of public disclosure, use, publication, or offer for sale destroys patent rights in those countries.  If an inventor files a US patent application, then discloses his invention to get more funding, and waits more than one year from the public disclosure to file for foreign patent protection, he will not be entitled to any foreign patent rights in absolute novelty countries.  Furthermore, even if the inventor doesn’t disclose his invention, the PTO publishes most patent applications 18 months after their earliest priority date, unless the inventor requests otherwise.  This also results in loss of foreign patent rights.

The bottom line is that patent deadlines that can result in loss of patent rights are another reason that inventors should work with a patent attorney who can guide them through the various deadlines and provide advice regarding US and foreign patent filings.  Saving a bit of money up front often results in the loss of patent rights in the end.

Supreme Court Won’t Review Claim Construction

January 8, 2013

The Supreme Court has denied the request to hear Retractable Techs., Inc. v. Becton, Dickinson & Co.  The case involves claim construction and whether deference should be given to the district court’s interpretation on appeal.

In 1998, the Federal Circuit issued its decision in Cybor Corp. v. FAS Techs., Inc.  The en banc court ruled that district court claim construction rulings should be reviewed de novo on appeal.  This means that the court held that claim construction was purely a matter of law.  Traditionally, factual issues are reviewed by appellate courts under a different standard of review than legal issues.  The district court actually heard the witnesses and reviewed the evidence and is thus entitled to deference when reviewing factual issues on appeal.  Not so with legal issues.

That decision has led to extremely high reversal rates on appeal at the Federal Circuit.  A district court will issue and claim construction order, conduct an infringement trial and then be reversed on appeal.  The court would then have to try the case all over again.  This procedure is highly inefficient given the high costs of patent litigation.

Sometimes, parties would stipulate to infringement or non-infringement if they lost the claim construction battle at the district court.  This would tee the case up for appeal without the need for multiple trials.  If the case was affirmed, there was no need for trial; if it was reversed, the final word on claim construction permitted a single trial on infringement.

Since Cybor Corp., there have been a number of calls for the Federal Circuit to reconsider the standard of review.  Claim construction should not be viewed as a purely legal matter.  There are always underlying issues of fact that the district court reviews.  During hearings on claim construction, the court may review evidence of the invention, hear witness testimony, and review expert reports.  The Federal Circuit does not provide any deference to the district court’s review of this evidence as it does most other factual issues.

In Retractable Techs., the district court construed the term “body” to include multi-piece and one-piece bodies.  On appeal, a divided panel of the Federal Circuit held that the specification limited the term to one-piece bodies.  When the court declined to rehear the case en banc and reconsider the standard of review, Judge O’Malley wrote a vigorous dissent that was joined by Chief Judge Rader and Judge Moore.  Judge O’Malley is a former district court judge and is thus familiar with the other side of the issue.

It was thought that this dissent might lead the Supreme Court to hear the case.  Alas, yesterday, they declined to do so.  One would surmise that this issue will not go away and will continue to be raised in future cases.

UPDATE: Congress Passes AIA Technical Corrections Bill

January 2, 2013

Both houses of Congress have now passed the AIA Technical Corrections bill.  Notably, the bill does not contain the language regarding patent applications filed prior to June 1995:  there is no longer any requirements regarding the length of patent term for any granted patent, nor any requirement for a PTO study of the issue.

Indeed, the bill does very little other than permit granted patents to be immediately subject to inter partes review and a few other minor provisions.

The bill now requires President Obama’s signature before becoming law.