Wednesday, December 5, 2018

Maximizing portfolio value through smart claim drafting - targeting potential infringers in method claims

Patent claims are the most important part of a patent, as the claims define the invention for which the patent holder holds an exclusive monopoly. Patent portfolio value is dependent on a variety of factors. Three very important factors are:
  • Likelihood of use of the claimed invention by attractive target companies,
  • Ease of enforcement of infringement of the patent claims, and
  • Difficulty of invalidation of the patent claims.
Typically the main driver of value of a patent portfolio is the value of the United States (US) patents. Therefore US law is pertinent. Since a US patent is valid for 20 years from the date of filing, the state of US law at the time of discovery of an alleged infringement is pertinent.

Two well-known types of patent claims are system and method claims. A system claim covers the structural features of an apparatus which has been invented. A method claim is usually a series of steps describing how an invention is to be applied. Each of these types of claims have advantages and disadvantages.

For a method claim to be infringed in the US, it is necessary for every step in the method claim to be performed. A major issue with method claims in the US is “divided” infringement, that is, where different parties perform the steps described. For ease of enforcement of infringement, it is best to avoid divided infringement by asking the following questions:
  1. Who is/are the potential infringer(s) to be targeted by the claim? 
  2. What steps are they likely or not likely to perform?
  3. How should the claim be written to cover the steps in (2)?
Here are some example implementations of this process.

Example 1: Patent revolving around a software application or “app”

To answer question 1, there is a need to determine the intended target of the claim. It would be in the best interest of the patent holder to target either
  • The producer of the app, or
  • The vendor who makes the app available for the end-user
and not the end-user.

For question 2 which concerns steps likely or unlikely to be performed, it is important to remember that the producer or vendor is unlikely to be using the app themselves. Rather the producer or vendor is likely to perform the steps of providing tools to the end-user to use the app, or enabling the end-user to perform a function via the app.  

Then to address question 3, the method claim can be written as a series of “providing” or “enabling” steps or similar. If in doubt, it may be useful to write more than one method claim. Furthermore, the drafter should revisit the specification and drawings to ensure that there is sufficient support for such method claims.

Example 2: Patent for a physical product

For question 1, it is likely that the patent holder would want to target either:
  • The manufacturer of the physical product, or
  • The vendor who makes the physical product available for the end-user,
For question 2, the manufacturer is likely to be assembling the physical product. The vendor is likely to be selling the physical product to the end-user.
  
Question 3 can then be addressed by drafting the method claim as a series of “assembling” or “providing” steps or similar. Again, if in doubt, it may be useful to draft two or more different method claims. As with example 1, the drafter should revisit the specification and drawings to ensure sufficient support.
 
Finally, it is important to remember that the fact pattern of each case may be unique. Furthermore, the future state of US patent law is uncertain and unpredictable. One mitigating strategy in the US to address both these issues is by filing continuation applications. This helps keep the family alive, and therefore adapt the claims to ever-changing patent law and to address different fact patterns and potential targets.

Monday, October 15, 2018

Re-examination as a tool for US patent litigation: Waymo vs Uber


Re-examination can be a useful tool to address United States (US) patent litigation. The utility of re-examinations in US patent litigation was demonstrated recently in the Waymo vs Uber case. Waymo sued Uber for patent infringement and trade secret misappropriation on its Light Detection and Ranging (LIDAR) technology. Uber agreed to settle the lawsuit by redesigning its LIDAR technology so as to avoid the Waymo patent, and giving Waymo USD 245 million of equity and a commitment not to copy Waymo technology.
       
The main patent in question in this infringement case was US Patent 9,368,936 to Lenius et al (the “’936 patent”). Eric Swildens, an engineer working for a cloud computing startup, then decided to challenge the ‘936 patent by requesting the United States Patent and Trademark Office (USPTO) to undertake an ex parte re-examination .

Briefly, in an ex parte re-examination request, the challenger can submit prior art patent and other printed publications to the USPTO to show that a patent’s claims were either anticipated or obvious in light of the prior art. The USPTO then decides if a substantial new question (SNQ) of patentability has been raised. If an SNQ has been raised, and the USPTO agrees with the challenger’s assertions, then the patent claims are rejected. The patent owner can make arguments, add new claims or amend existing claims to address these rejections.

Mr. Swildens submitted the prior art against the ‘936 patent in August 2017. In December 2017, the USPTO issued an office action rejecting all the claims of the ‘936 patent. After a response by Waymo, followed by another USPTO rejection and a further Waymo response, in September 2018 a final office action was issued by the USPTO rejecting all but 3 claims of the ‘936 patent. Waymo can still act to defend the ‘936 patent but has not done so as yet.

While the final outcome is unclear at this moment, it points to the utility of re-examinations as a tool against litigation. Based on USPTO statistics from December 2017, ex parte re-examinations have resulted either in all claims cancelled or claims having to be amended around 79% of the time. This makes them a potentially useful and low-cost weapon in litigation, as long as the claims can either be cancelled completely or are amended sufficiently to allow noninfringement arguments to be made. This will depend on factors such as the quality and scope of the prior art.

A competently filed ex parte re-examination costs around USD 50,000 including both USPTO and legal fees. Mr. Swildens did a prior art search, drafted and filed the re-examination request himself, keeping the cost down to USD 6,000.

There is a good chance that Uber may 

- not have had to undertake a costly redesign of its LIDAR technology, or 
- have had to pay Waymo less than USD 245 million in equity. 

It is interesting that Uber did not challenge the ‘936 patent. Mr. Swildens expressed surprise that Uber had not filed a re-examination.

In short, re-examination can be a useful and potentially low-cost tool to address US patent litigation. Even the threat of re-examination using relevant prior art can act as a deterrent or be used as a negotiating tool to obtain a more favourable settlement. To mount an effective re-examination, the defendant should make sure that a high quality prior art search is performed, and that a strong written submission is made to the USPTO.

Disclaimer: The above is not meant as legal advice. The author is not a lawyer. In the event of litigation, the author recommends seeking out legal advice from a lawyer.