Nashville Tech Story (11/18/09)
Last week we had a stimulating discussion about Intellectual Property, seriously. I have been to many discussions about IP and this one topped the charts. The panelist were Edward Ramage, Baker Donelson; Suzanne Kessler, Partner, Hughes – Kessler Consulting; Dave Gilbert, Director Business Development, Griffin; and Eric Reuthe, VP Product Engineering at edo Interactive. The panelist was led by Kiwi (KAD) Camara, Partner, Camara Sibley.
Kiwi began the conversation with a quick update of the case before the Supreme Court – Bilski. It was great timing because the courts listened to oral arguments the day before. Both Kiwi and Edward pointed out the most interesting points of the conversation related to the questions by the judges as insight to where the court might head with regards to a decision.
The essence of the Bilski case is whether or not the business methods process will hold up against patent protection. In re Bilski, 545 F.3d 943, 88 U.S.P.Q.2d 1385 (Fed. Cir. 2008), is an en banc decision of the United States Court of Appeals for the Federal Circuit (CAFC) on the patenting of method claims, particularly business methods. The Federal Circuit court affirmed the rejection of the patent claims involving a method of hedging risks in commodities trading. The court also reiterated the machine-or-transformation test as the applicable test for patent-eligible subject matter, and stated that the test in State Street Bank v. Signature Financial Group should no longer be relied upon. The Supreme Court of the United States granted certiorari on June 1, 2009 and oral argument on the patent applicants’ appeal was heard on November 9, 2009.
Eric from edo discussed his issues with pursuing a patent for their “financial offsets” for credit cards. edo Interactive is the creator of the Facecard, a program where incentive dollars are loaded directly onto selected consumers’ payments cards that can then be redeemed in a single swipe at checkout, driving targeted consumers to purchase products.
Ed Ramage pointed out that the most important thing he can teach business people is that there is a one year time bomb for patents after you publish a Pending Application.
There was extensive discussion about worldwide protections. The most advanced office is the European Patent Office which will provide some protection, but can take up to 30-31 months to receive the protection. All of the panelist agree that worldwide protection is a very expensive proposition to both apply for and litigate.
In China, several of panelist equate the patent protection process as “whack-a-mole.” There are so many manufacturers that they can set up shop quickly, close it down, and then open another shop a few weeks later.
The average cost of filing a patent in the United States ranges from $1,500 to $3,000 for a provisional patent and $5,000 to $10,000 for a full utility patent. It usually takes 2-3 years to receive the final patent.
However, the most expensive process is patent litigation. In the simplest of cases, it could cost $750,000 to $1 million. If you are claiming losses of $25M to $50M, it would cost you $2.5M to $3.5M to litigate and if it is a full company damage, then the cost could run $4-6M. Kiwi pointed out that there are some firms who will work on contingency fee rates, depending on the strength of the case.
The panel also discussed willful infringement and that a lot of times, they recommend not to do too much research before filing a patent. If you believe you have a new idea, then go ahead and file a provisional patent and then you can add on to the patent as the product evolves. As pointed out by Mr. Ramage, your liability would be limited to retroactive reasonable fees in the form of licensable revenue as a result of knowingly infringing on a patent.
All of the panelist recommend Non-Disclosure Agreements (NDAs) when working with people that could potentially add to a patentable development process. When working in a co-inventor situation, be careful warned the panelist. Make sure you have a declaration document and an employment contract agreement for employees.
