USPTO Satellite Offices

Wednesday, 12 September, 2012 06:00 Written by Dan Pierron 0 Comments

Dan Pierron

In the ever-changing world of the USPTO to comply with changes in the AIA, satellite offices are being established remote from the Alexandria headquarters. A first branch was opened July 13 in Detroit, with others to follow in Denver, Dallas, and Silicon Valley. The stated purposes are included in the enacting law, and are worth going through with a critical eye.

The first purpose is to “increase outreach activities to better connect patent filers and innovators with the Office.” The way this seems most likely to happen is with an increase in interviews, more specifically video interviews, as is indicated will be possible in the Detroit office, and hopefully will also be the case for each of the other satellite offices. Aside from that, unless the Patent Office opens up the satellite offices to in-person interviews, I cannot see how outreach will increase by that much. Mixers with examiners probably wouldn’t be social events of the season. Levity aside, reaching out to individual inventors through outreach programs at the satellite offices could be a real boon to garage-inventor types, encouraging them to start pursuing patent protection for inventions where they otherwise might not be aware or be somewhat disillusioned or discouraged from doing so.

Satellite Office – the new recruiting pools for local law firms?

The second stated purpose is to “enhance patent examiner retention.” This might be the most worthwhile of the goals of the satellite offices. Unfortunately, it might also be the most difficult to achieve. Ostensibly, it seems like the thinking is if an examiner lives near a satellite office, their satisfaction with the job will increase, hence increasing retention. However, I can easily imagine the scenario where now, an examiner can put in his time as an examiner in the technology hub of his choice, selected from any of the satellite office locations, all the meanwhile starting his search for his next position as a patent agent or attorney, depending on his education background. Time will tell which scenario plays out.

The third stated purpose is to “improve recruitment of patent examiners.” I’m not too sure how this one will play out. Will representatives from the patent office tour nearby engineering and life sciences programs at local universities, trolling for recruits? Perhaps it will be the aforementioned mixers that generates interest in employment at the satellite offices.

The fourth stated purpose is to “decrease the number of patent applications waiting for examination.” There are of course two obvious ways to reduce the backlog of applications: increase the examining core, and reduce the average pendency for applications. In announcing the opening of the Detroit office, the USPTO said 120 highly-skilled positions would be created. I don’t know how many examiners will be included in that number, but there is a good chance a significant portion of those positions will be examiners.

The fifth and final purpose is to “improve the quality of patent examination.” This seems to be a derivative benefit of the enhancing retention and improving recruitment of examiners. If in fact examiners are successfully recruited and retained as a result of the satellite offices, it stands to reason the quality of examination would go up. We’ve seen a mix of problems and solutions to attacking the backlog dilemma, with varying degree of success. However, there seems to be agreement that the satellite offices will be a net benefit to the system, with many of the questions discussed above remaining open. One thing is certain; with the increasing rate of applications being submitted, bold action must be taken to tackle the backlog of applications, before it becomes as unwieldy as some other government figures.

“Twilight Zone” of Trademark Licensing

Saturday, 08 September, 2012 11:38 Written by Bill Harding 0 Comments

By: Bill Harding

So your company would like to license its trademark to another company. Sounds simple, right?

Wrong. A legal “twilight zone” exists between 1) a licensor adequately policing the licensed use of its trademark, and 2) a franchisor providing significant assistance to or exercising control of a licensee’s business.

A trademark identifies goods to consumers by both their origin and their quality. The federal Lanham Act requires a licensor of a registered mark to control the quality and uniformity of goods and services associated with the licensed mark to ensure the mark is not used by a licensee in “such a manner as to deceive the public.” Failure of the trademark owner to exercise sufficient control may constitute abandonment of the mark and result in loss of trademark protection. A license without sufficient quality controls is termed a “naked” license.

But by taking steps to exercise sufficient control over licensee use of a mark, the licensor may accidentally fashion a trademark license that constitutes an “accidental” franchise agreement. Such a mistake may be very costly for a mark owner, as applicable franchise laws may impose unexpected registration and/or disclosure requirements on the licensor, and/or may regulate important aspects of the business relationship between the license parties, such as termination and non-renewal of the agreement. The parties to a trademark license agreement cannot avoid an accidental franchise by calling their agreement by another name or by including provision language that disclaims the existence of a franchise.

Defining “Franchise”

Although federal and state jurisdictions that regulate franchises vary in their approaches, creation of a franchise generally consists of three elements:

1) grant of use of the franchisor’s mark in association with franchisee’s business,

2) a franchise fee paid to the franchisor by the franchisee, and

3) control exerted by the franchisor over the franchisee.

If all three statutory elements are present, a franchise relationship exists regardless of the intentions of the parties.

Be careful out there, aspiring trademark licensors. Better yet, get a lawyer!

USPTO Patent Grants Hit Another Record for a Third Straight Year

Wednesday, 05 September, 2012 09:05 Written by Mark Malek 0 Comments

By: Mark R. Malek

In my morning slew of emails that I receive regarding intellectual property updates, I noticed that Dennis Crouch, author of Patently-O posted an article that he projects that the USPTO will issue more than 250,000 patents in 2012. My initial reaction was “Holy Crap,” but that made me immediately go check the backlog.

You may recall that the USPTO has provided the patent dashboard to the public which gives us a great view of the status of the patent backlog. According to the patent dashboard, we are now down to a patent application backlog of 627,367 patent applications. That is down significantly from the 900,000+ patent applications that I remember being pending with Director Kappos took over. Say what you will about the management of the patent office, but I look at the patent backlog as having been the single biggest issue with the USPTO and, somehow, Director Kappos and his team have found a way to put a significant dent in it.

Undoubtedly, there have been a number of changes over the past few years under his leadership. For the most part, I believe they have been good ones. The questions remains, however, as to whether or not the Patent Office is equipped to handle the many changes coming down the pike with the America Invents Act. A great article about one of the biggest issues facing the USPTO, i.e., the underfunding of the USPTO, can be found here. Although the America Invents Act moves funding of the USPTO a step in the right direction, it is not all the way there yet.

Watch Your Assets …

Tuesday, 04 September, 2012 11:29 Written by Bill Harding 0 Comments

Business assets have value. Understanding the value of assets on hand is important to starting a business, to conducting a business, and to dissolving a business. Ironically, many business leaders who are diligent about routinely tracking the value of hard assets, like a truck or a building, have no similar discipline in place to measure and monitor the value of the business’s intellectual assets.

Why To Value?

Many business eventualities may bring about a need to estimate the value of a company’s intellectual assets. The following are just a few examples of common business questions that may imply a need to perform a valuation on a company’s intellectual assets :

- Is now the time to sell a particular asset (or even the entire business) while its value is high?

- Is our company earning a reasonable royalty (or charging an optimal price) for an asset given current market realities?

- How much is a fair settlement amount in exchange for dropping a lawsuit for infringement of an asset?

- Should we build a new intellectual asset that the company needs, or instead seek to buy such an asset from another?

- Is now the right time to drive our current intellectual asset to end of life by introducing the next generation replacement?

- May the company leverage an intellectual asset by using it as security to borrow needed funds?

- What are the tax implications of a given transaction involving an intellectual asset, or of the fluctuation in the value of the asset over the past year?

- Is the company in compliance with all regulatory requirements that apply to a certain transaction involving an intellectual asset?

How To Value?

Several valuation models are commonly used to estimate the value of intellectual assets, whether in a business context or in a court of law (e.g., damages calculation). Furthermore, more than one model may be applicable in a given set of circumstances. The following are some of the most commonly used valuation models:

Market Approach – the fair market value of an asset is ascertained by researching the real-world marketplace for transactions involving sales, listings, and offers to purchase or license comparable assets

Cost Approach – value is based on the cost to obtain an asset of equal value, taking into account one or more of reproduction cost (building an exact replica of the asset), replacement cost (recreating the functionality of an asset), and cost avoidance

Income Approach – value is calculated from expected returns attributable to an asset, based on the present value of expected income to be earned (e.g., license royalties)

Who Can Value?

Valuation is more an exercise in accounting and/or finance than it is of law. Traditionally the purview of accounting professionals like Certified Public Accountants (CPAs), the field has more recently spawned certification programs specifically for valuation practitioners. Recommendation: When valuing intellectual assets, seek the help of a specially-trained and experienced professional. In almost all valuation scenarios, the stakes are too high to get it wrong.

And the Verdict Is In – Apple v. Samsung

Wednesday, 29 August, 2012 08:00 Written by Dan Pierron 0 Comments

With a mighty crescendo, the jury has returned a verdict in the Apple v. Samsung suit. And the verdict is… guilty! Well, at least lots and lots of infringement, and even more damages. At first, it was $1,051,855,000 in damages. However, that later became $1,049,343,540. But hey, what’s $2.5 million between, well, enemies? However, this difference in damages might belie a more troubling and uncomfortable possibility about this verdict, that it was based on something other than the law.

An excellent summary of the goings-on after the verdict is available at Groklaw. To start, there is the small matter of the $2.5 million. It turns out that the jury made a slight mistake in awarding Apple damages for some Samsung device that the jury decided did not infringe Apple’s patents. It appears the connection between infringement and the awarding of damages wasn’t fully formed in the minds of the jurors.

This is where the sausage is made

As unsettling as that is, it’s merely the first in a chain of apparent missteps by the jury. As reported by Groklaw, the jury foreman stated “the jurors had reached a decision without needing the [jury] instructions.” Given the complexities of patent law, it is unfathomable that a lay jury can arrive at a logical, legally maintainable decision without reading the damn instructions. On top of this, there’s the fact that the jury returned their verdict in three days. Three days to carefully analyze each allegedly infringement of each device against each claim. Given the amounts in controversy, in addition to simply performing their sworn duties, three days seems grossly inadequate for every count to be given its due consideration.

Comments from another juror seems to support the contention that the jury failed in its task. A CNET interview with juror Manuel Ilagan quotes Ilagan as saying “After we debated that first patent — what was prior art –because we had a hard time believing there was no prior art. In fact we skipped that one, so we could go on faster. It was bogging us down.” When jurors skip analyzing prior art to determine the validity of a claim, they unequivocally shirk their responsibilities. The audacity to simply omit this analysis because it is difficult to perform makes me irate and does little to bolster the concept of jurors as suitable triers of fact in difficult patent cases.

In my last post I discussed a variety of theories that are commonly used in calculating damages. I have to apologize, for I omitted a crucial one, where the jury makes it up. If not making it up, the jury in this case certainly used something other than actual economic damages suffered by Apple in awarding damages. Again quoting the jury foreman, “we wanted to make sure the message we sent was not just a slap on the wrist. We wanted to make sure it was sufficiently high to be painful, but not unreasonable.” Never mind that damages awarded by the jury are not punitive, but compensatory. Of course, had the jurors bothered to read the instructions, this is something they likely would have been informed of.

A growing chorus of experts and journalists anticipate some degree of reversal of this verdict, and I am in agreement. The multitude of errors committed by this jury, and the serious consequences, monetary and otherwise, are too severe to go ignored an unaddressed. Let’s hope the courts can sort out this mess.

Posts Tagged ‘zies widerman and malek’

USPTO Satellite Offices

“Twilight Zone” of Trademark Licensing

USPTO Patent Grants Hit Another Record for a Third Straight Year

Watch Your Assets …

And the Verdict Is In – Apple v. Samsung

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