A patent is a legal document. Like others, such as contracts, its structure and language determine its effect and therefore its value. By Keith Beresford
A patent, or more accurately a patent specification, is a legal document. Like others, such as contracts, its structure and language determine its effect and therefore its value. Given a commercially valuable invention, a patent carefully drafted to meet the requirements of both the patent law and the commercial environment in which the invention will be exploited, can be of immense value.
Incorrectly drafted it can be an expensive disaster. Some examples of expensive disasters will be described later.
WHAT DOES A PATENT DO?
In the EU, the answer is to be found in the National patent laws of the individual states. These have been harmonised to the provisions of a treaty called ?The Community Patent Convention?, which dates from 1975. In UK, Section 60 (1) of the patents act 1977 is the relevant one. It says the following commercial activities in UK infringe if carried out without the agreement of the patent owner:
(a) If the patented invention is a product, making, using, selling, offering to sell or importing the product, or keeping the product.
(b) If the patented invention is a process, using the process or offering it for use plus (and of great importance) if the patented process is for making a product, importing the direct product of the process, selling it, offering it for sale, or keeping it, even if the product of the patented process itself is not in any way novel.
The above activities are called ?direct? infringement. There are some supplementary provisions in Section 60 (2) which specifies activities that constitute ?indirect? infringement. Indirect infringement arises if someone, without the agreement of the patent owner, supplies or offers to supply (in UK) to someone in UK an item for use in putting the invention into practice in UK when the supplier knows (or it is obvious) that the item is intended for this purpose. The item does not have to be novel in and of itself. However, indirect infringement can be difficult to prove because you have to prove the mental state of the supplier.
And so a patent gives the owner the right to prevent, through legal action in the courts if necessary, competitors from performing the above activities, or to collect royalties on those activities through a licensing arrangement.
WHAT DETERMINES WHAT THE PATENTED PRODUCT OR PROCESS IS?
This is done in the patent specification. And in the case of many inventions the patent draftsman can choose whether to define the invention as a product or a process or both. For example, if the invention is some improvement in a machine for manufacturing a product, the invention can be defined in the patent specification:
(i) as the machine itself (and that becomes a product invention); or
(ii) as the process which the machine carries out in manufacturing the product (in which case the patented invention becomes a process); or
If he chooses (i) but not (ii), he would be unable to prevent (or collect royalties on) the importation of the product of the patented machine. If he chooses (ii) but not (i), he would be unable to prevent manufacture of the machine in UK for export, but of course he could prevent its commercial use in UK because the commercial use of the machine would involve performance of the patented process.
So we are beginning to see how the value of the patent is directly dependent on the interaction between the way the patent specification is drafted and the law of infringement. And we are beginning to see that without knowledge of the law of infringement it is impossible to ensure that the patent specification is drafted to achieve the full value of the invention.
A BRIEF DISCUSSION OF THE PATENT SPECIFICATION
A patent specification can be divided into three main parts:
(1) An introduction which outlines the field of the invention, the current state-of-the-art, the problem the invention aims to solve and an indication of the way in which the invention solves it.
(2) A detailed description, usually with drawings, to explain how to implement the invention. This would normally consist of a description of products or apparatus and/or processes which ?embody? the invention.
(3) One or more definitions (called ?claims?) which define, by their language, the product (or apparatus) or process which is to be protected by the patent.
The function of the introduction is obvious. The detailed description has two functions. First, it has to give enough technical information to a person of ordinary skill in the relevant field to develop, without further inventive activity, a product or process in accordance with the invention. Second, it has to ?support? or ?justify? the claims. More of this later.
The language of the ?claims? is crucial. If a claim is too broad, so that it reads on to previously known products or processes, the claim will be invalid. If it is too narrow, so that its language fails to cover important versions or variants of the invention, infringement can be easily circumvented. A very careful analysis is therefore necessary to determine the appropriate level of generality of the claim in order to maximise the scope of the patent whilst, so far as possible, avoiding invalidity through claiming over-broadly.
Because no one can know every piece of technology which predates the application date of the patent, it is usual to include a set of claims of varying scope so that if the broadest ones turn out to be ?unpatentable? the narrower ones (defining the best aspects of the invention) may still be valid and of significant commercial value.
INFRINGING AND ROYALTY GENERATING ACTIVITIES: THE ESSENTIAL INGREDIENTS
So patent infringement and royalty generating activities are activities which are:
It follows that the wise and experienced patent draftsman has at the forefront of his mind not just the technology which constitutes the invention, but also the commercial environment in which it would be exploited and the law of infringement, so that he can produce a patent specification which gives the maximum monopoly, the maximum opportunity to royalty collection and therefore maximum value. Crucially, he must produce claims which define products or processes in relation to which infringing activities can be performed and whose language is broad enough to protect all of the modifications and variations on the invention which are commercially important. For example, if the invention is an improved electrical plug and socket he should provide separate claims to the plug and the socket (assuming both are novel) because these items are traditionally sold separately: a single claim to the plug and socket combination would be of limited value.
SUPPORTING CLAIMS BY THE DESCRIPTION
Also, he must produce a detailed description which supports or justifies his claims. For example, if the improvement in the plugs and sockets applies both to the two and the three pin varieties, the detailed description will need to explain how to implement the invention in both thereby to justify claims which cover both.
Expressed facetiously, a detailed description of how to make cream cheese will not support a claim to a process of making an apple pie. And by analogy, a detailed description of an improved three pin plug will not necessarily support a claim broad enough to cover the same improvement in a two pin plug.
With this background, we can now look at some disastrous examples of patents that went wrong.
THE WINDSURFER PROBLEM
A windsurfer is made up of two main components: the surfboard which is provided with a universal joint or part of one and the rig (mast, control bar and sail) which connects to the surfboard by the universal joint.
In UK, the patent only contained claims to the combination of surfboard and rig (and this was at a time when indirect infringement did not exist in UK). In Germany the patent only contained claims to the rig.
The Windsurfer Company licensed people both to make the complete device and to make replacement surfboards because the surfboards apparently frequently break. They collected large amounts of royalties on the replacement surfboards until at some point somebody complained to the EU authorities that this was an anti-competitive trade practice because the boards by themselves were not patented. The complaint was upheld. The Windsurfer Company were fined by the EU and had to drop their royalty claim on replacement surfboards.
An expensive disaster because of the mismatch between the way the patent was drafted on the one hand and the law of infringement and the commercial environment on the other hand.
THE RDS RADIO PROBLEM
In the RDS radio system, a coded signal transmitted when the station is about to broadcast a traffic report causes car radios to switch to that station even if tuned to a different one. The transmitters are novel because they have to produce the signal. The receivers are novel because they have to respond to it. Obviously, massively more receivers would be sold than transmitters.
But the German patent only claimed ?A transmission system comprising ??. When the German owner sued someone for importing and selling RDS receivers, the German court rejected the case because the patent did not contain a claim directed to the receiver.
An expensive disaster. Simply because no claims to the receiver were included in the patent specification.
THE CD PROBLEM
Making CDs involves producing a ?master? (like a mould) and then stamping out multitudes of CDs from the master. Pioneer, the large Japanese company, had a patent for an improvement in the way the master was produced. It contained only a claim to a method of producing the master. It could have but did not include a further claim to a method of making CDs from a master made by the improved method. Someone began importing CDs which had been made, in a country where there was no patent, from masters made by the improved method.
Pioneer sued for infringement and argued that the CD was the direct product (see above discussion of infringement) of the patented process of making the master. The judge (and the Court of Appeal) disagreed. They held that the CDs were the indirect product of the patented process and struck the case out. Another expensive disaster.
THE MODELLING SOFTWARE PROBLEM
Haliburton, the large US oil equipment company, had two patents for designing oil drilling bits by computer. They were both revoked by the court because the detailed description of the implementation of the inventions did not meet the requirements of the patent law. The description appeared in fact to be made up of notes made by the inventors themselves. The judge said: ?As a description of how an undoubtedly complex model works, this is useless?.
Not only did Haliburton fail in their infringement action and thereby lose markets and damages (and their patents) but they had to pay the defendant?s legal costs which undoubtedly were extremely large. Investment, at the beginning, in a properly drafted patent specification would have avoided this expensive disaster.
AVOIDING EXPENSIVE DISASTERS
The above are a few examples of patents whose value was significantly less than it could and should have been. Or in some cases zero. In order to avoid this kind of problem the first step is to carry out a rigorous analysis of the invention as a piece of technology, and determine how the technology can be commercialised, in particular what novel products could be made and sold (and what processes could be performed) based upon that technology. Basically ?how will money be made out of this invention? And then ?what claims are needed in the patent in order to protect these moneymaking activities??
This analysis exercise is not easy. It involves forward and lateral thinking, technical knowledge, commercial knowledge and legal knowledge. It is best done by interaction and face-to-face discussion between the inventors, the business people who will be responsible for exploitation of the technology and a patent attorney, all of whom will make their contributions to this exercise. Following this, the patent attorney will be able to prepare a patent specification containing claims to each important novel process and/or novel product in which the technology would be implemented, and the required detailed description and introduction.
As noted at the beginning, a patent specification is a legal document even though its contents are technical. It cannot be drafted effectively by anyone not trained in patent law and with the requisite technical knowledge and understanding the invention. In general, inventors cannot hope to adequately draft even the detailed description because this has to meet the legal requirement of providing support for the claims, and it is almost impossible to draft adequate claims without the requisite legal knowledge and training. Special care is necessary in preparation of the description because errors and omissions cannot normally be rectified later.
Hence, investment at the outset in the above described analysis and a professionally drafted fully detailed specification is what is needed. It will not only avoid expensive disasters but will actually be cheaper in the long run because properly drafted specifications are easier to prosecute through the patent offices of the world and to litigate in the courts if that should become necessary.
For more information, contact:
Beresford & Co
Tel: +44 (0)20 7831 2290
Added the 17 September 2008 in category Innovation UK Vol4-1