International Treaties and Protection in Other Countries

Patent protection is territorial and depends on the domestic laws of each country. Still, there are a number of international treaties that facilitate patent acquisition in other countries, some of which simplify the process and save costs.

•   Paris Convention for the Protection of Industrialized Property. The Paris Convention guarantees the priority date of a patent application if within a year of applying in a mem­ber country the inventor decides to file in another member country. The Paris Convention does not provide for any cost saving or collective filing procedures.

•   Patent Cooperation Treaty (PCT). The PCT came into effect in 1978 with over 85 mem­ber countries. It provides for an international application to the World Intellectual Property Organization (WIPO) PCT office for a patent, with a listing of the member countries in which the applicant seeks protection. The office conducts prior art searches and issues a response to the applicant. The applicant can request that the same office examine the application for patentability, but the decision will not be binding on the member coun­tries. Pursuant to that the applicant has to apply to each of the countries where protection is sought. This process saves considerable costs, as the prior art searches are performed collectively, and allows around 30 months for the applicant to test the invention in the market before deciding to apply for patents in the designated member countries. Where such countries are members of the European Union, another treaty is of help.

•   European Patent Convention (EPC). The EPC provides for central filing and examina­tion of the patent application for countries within the European Commission. A success­ful application will result in the issuance of a European patent that has to be registered in the designated European countries before it can be enforced. The patentee also has to pay separate fees for the registration and maintenance of the patent in each of the designated countries.

•   Trade-Related Aspects of Intellectual Property Rights Agreement under the GATT (TRIPs). The TRIPs agreement, effective in 1996, harmonizes the IP laws of member countries. When it comes to patents, it introduced patent protection of chemical and pharmaceutical products in developing and least developed countries, and harmonized the protection term to 20 years. In addition, it resulted in the repeal of domestic laws, including those in the United States, that provide for discriminatory treatment based on the place of the invention.

Implications for Legal Management

The most important considerations for management of patents in the United States are the fol­lowing:

•   To provide adequate resources and databases for inventors to search prior art. This reduces the costs and avoids investment of R&D time and resources in projects that are already covered by prior art, and are thus in the public domain.

•   To ensure that the organization owns the inventions of its employees. As a matter of law, the inventor owns the patent except if it has been assigned to the organization. Therefore, employment agreements should include a provision that the employee assigns any inven­tions to the employer in the course of employment. Lacking such a provision, the employer may be entitled to a nonexclusive royalty-free license, called shop right, if, among other conditions, the invention is in the same area of business of the employer.

•   To provide verifiable evidence in cases in which the first-to-invent status is challenged by keeping clear lab books, records. Under the U.S. patent law the one who first reduces the invention to practice, and not the one who files for a patent first, is the one entitled to the patent. Lab notes and records help establish when the invention was actually conceived of and reduced to practice.

•   To accurately state the names of the inventors. Despite the fact that the invention and the patent may be assigned to the employer, stating the wrong inventors, or excluding a right­ful inventor, from a patent application may invalidate the patent.

Infringement, Enforcement, and Litigation—What to Do When You Suspect Your Patent Is Being Infringed

1.   Determine the occurrence of infringement.

•   Monitor the products of the competitors to find any infringing products.

•   Reverse engineer the products of the competitors to find whether your process is being infringed.

2.   Collect the required evidence.

•   Obtain a sample of the infringer's product.

•   Obtain a description of the infringer's process and maintain records of your investi­gation, as circumstantial evidence may be used in such cases.

3.   Determine the type of infringement.

•   Direct infringement. The alleged infringer makes, uses, offers to sell, sells, or imports the patented invention.

•   Contributory infringement. The alleged infringer contributes to the infringement by knowingly selling or supplying an item for which the only use is in connection with a patented invention.

•   Inducing infringement. The alleged infringer actively encourages another to make, use, or sell the invention.

4.   Assess the strength of the patent.

• Assess the validity of the patent by investigating the following:

° Domestic and foreign patents

a References in scientific journals and other relevant publications

° Knowledge of the patentee about the lack of novelty of the invention

• Assess the scope of the patent.

° Consider the scope of the claims.

a Investigate the prosecution history for any amendments.

• Check any conduct that may amount to patent misuse or may be the subject of
antitrust allegations. In particular look for:

a Tie-in provisions in any licensing agreement

° Extension of the term of the patent in licensing agreements by providing for royalty or similar payments after the patent term expires

5. To litigate or not litigate.

• Examine object of litigation.

° If it is to stop infringer from free riding on the use of the patent, an offer of a license should be the first step following the cease-and-desist letter.

° If it is to send a strong message about how you will deal with infringers, then set­tlement out of court may be an option at a later stage.

• Determine who will be sued and consider:

a The number of alleged infringers

° Relationship of infringers to each other

° Your relationship with the infringer and whether it will be j eopardized by litigation

° Any retaliatory measures (e.g., cross-claims that the alleged infringer may take)

• Estimate the costs of litigation. These include:

° Attorney's fees and disbursements

° Your expenses and time

° Disruption of business and other potential losses

• Other factors

a Estimate the maximum possible awards recoverable and compare to the costs involved.

° Consider when the damages will be paid if you win.

° Consider the extent and scope of the infringement and whether the infringer can design around your patents.

° Consider the royalty income that may be obtained if the infringer is granted a license, as well as other benefits (e.g., cross-license).