July 2005


Is my Business Method or Process Protectable?

Historical Basis

Historically, a method or process of doing business was considered unpatentable, even if that process was otherwise useful, new and non-obvious. However, over the latter part of the 20th century, there was a slow realization that the basis for rejecting business method patent applications was because the process or method was not novel or was obvious, not because the invention was related to a process or method. In fact, with the widespread use of computers and the development of business methods involving computers, courts were forced to reexamine the question of whether a business method could be patented or, as they had been historically treated by the USPTO, were inherently unpatentable. In 1998, the federal court in the United States which hears all appeals of patent decisions ruled once and for all that business methods could be patented if they produce a “useful, tangible, and concrete result.” In the reaching that decision, the Court concluded that a system that used a computer to calculate a mutual fund share price from a complex set of parameters was not an abstract idea but rather was within the statutory subject matter which qualifies for patent protection, namely a machine–embodied by the computer–that produced a useful result–the share price.

Ruling lead to a “Patent Rush”

Because it had long been believed that business methods were not patentable, most companies had not bothered to invest the necessary time and money to apply for business-method patents. The 1998 court decision opened a floodgate of patent applications for business methods, many of which involved computer technologies and methodologies, in many cases for conducting business on the Internet. There quickly developed a widespread concern on the part of companies that they might infringe a business-method patent simply by continuing to conduct their business using well-established methods for which someone all of a sudden held patents. In response, Congress passed the First Inventor Defense Act, which adds to the federal patent statute a defense to patent infringement based on the prior commercial use of a business method.

Prior-Use Defense

Under the prior-use defense, a person or company that is sued for the infringement of a business method may escape liability for infringement by showing that it had used the patented method commercially for at least one year before the patent holder had applied for the business-method patent. Commercial use does not necessarily mean public use; use in an internal manufacturing or distribution procedure that contributes to the effectiveness of a business operation qualifies as commercial use for the purposes of the prior-use defense, as would a method that produced a product for final sale to another party. A party asserting the prior-use defense has a burden of proving the circumstances that constitute a successful defense by clear and convincing evidence. If a party asserts a prior-use defense without a reasonable basis to do so, the party may be required to pay the patent holder’s attorney’s fees.

Delay to File, Still a Barrier

If you believe you have invented a new, non-obvious method or process which qualifies for patent protection, schedule a meeting with one of our patent attorneys before your time runs out. Remember, even if you have an inventive process or method, you must file for protection quickly or risk losing your patent rights forever.


What about International Patent Protection?

A patent issued by the United States Patent and Trademark Office (USPTO) provides patent protection to an inventor only within the United States. Because each country has its own patent laws, other countries do not provide patent protection to a U.S. patentee, nor does the United States provide patent protection to a foreign patentee. Originally, if a U.S. inventor wished to obtain patent protection in other countries, he or she was required to obtain patents from each country in which patent protection was desired, which obviously entailed substantial time and expense. Eventually, however, international cooperation helped streamline the process of obtaining patents in other countries in many cases.

Paris Convention

The first international treaty applying to patents was the Paris Convention for the Protection of Industrial Property (Paris Convention), which was first signed in 1883. Countries that signed the Paris Convention (“party countries”) were required to make their patent laws available to inventors from other party countries. However, although the filing process of each party country was available to inventors from other party countries, inventors still had to go through the patent filing process to obtain patent protection. Finally, in the mid-20th century, a number of regional patent offices were established.

 

Regional Patent Offices

Regional patent offices are products of regional treaties. Although each has its own rules, the regional patent offices provide a single patent filing system for all member countries. The patent applicant chooses the member countries from which he or wishes patent protection. A patent issued by a regional office generally confers upon the patentee the same protection as would be provided under the individual laws of the party countries. The European Patent Office (EPO), founded in 1973, originally provided centralized patent processing for about 20 European countries, with former members of the Soviet Union joining in the European Patent Convention, which governs the EPO, joining later. As of 2004, the European Patent Office represented 28 countries, with several more countries expected to join. In addition, five other countries recognize patents issued by the EPO but are not members of the EPO.

 

There are several other regional patent offices, some of which are smaller organizations made up of members of the EPO. There are two regional patent offices in Africa: the African Regional Industrial Property Organization (ARIPO), and the African Intellectual Property Organization (OAPI), which each have 16 members. Applicants to ARIPO receive national patents for each of the member countries in which patent protection is sought. The OAPI provides a uniform patent law for all member countries that is applied by all courts of its member countries, and an OAPI patent application automatically seeks patent protection from all its member countries. Also in the OAPI, existing patent protections may be extended to new countries that join the OAPI.

The Patent Cooperation Treaty

The Patent Cooperation Treaty (PCT) of 1970 was created to simplify the patent application process for international patent protection.  Prior to the PCT, the primary means for obtaining international patent protection was the Paris Convention for the Protection of Industrial Property.  Under the Paris Convention, still in effect, applicants are required to submit separate filings to secure patent protection in each country where protection is sought.  However, under the PCT, with over 120 signatory countries, applicants may secure patent protection for all signatory countries simultaneously with fewer procedural steps.  On a practical level, where patent protection is only sought in only one or two countries, choosing to utilize the Paris Convention may likely be more cost effective and expeditious.

Plan Strategically for Patent Filing

If you are considering international protection for your invention, your patent application may be filed pursuant to the Patent Cooperation Treaty to faciliate patent protection in many countries around the world. If this is of interest, you should schedule a meeting with one of our PCT specialists, at your earliest convienance, to discuss different filing strategies.

Is Somone Squatting on Your Domain

While conducting business in today’s electronic age, it is common for a company to have an interest in a domain name which includes a phrase related to the company’s brand identity. However, sometimes that name has already been acquired by an individual for the sole purpose of ransoming it off to the highest bidder.

As part of the Intellectual Property and Communications Omnibus Reform Act of 1999, on November 17, 1999, Congress enacted the Anticybersquatting Consumer Protection Act (ACPA). It amends the Lanham Act by adding a new paragraph. The new section provides trademark owners with a civil remedy against cybersquatting, which is the registering of others’ trademarks as domain names and profiting from the sale of those domain names or traffic through the site.

Results of Cybersquatting

In enacting the law, Congress found that cybersquatting results in the following:

  • consumer fraud and public confusion as to the true source or sponsorship of products and services
  • impairment of electronic commerce, which is important to the economy of the United States
  • loss of substantial revenues and consumer goodwill by the trademark owner

Civil Action

The ACPA creates a civil action against a party that with a bad faith intent to profit registers, traffics in, or uses a domain name that:

  1. in the case of a mark that is distinctive at the time of registration of the domain name is identical or confusingly similar to that mark, or
  2. in the case of a famous mark that is famous at the time of registration of the domain name is identical or confusingly similar to or dilutive of that mark, or
  3. is a mark protected under certain other federal laws.

Personal Names Protected

The ACPA also prohibits the unauthorized registration of a domain name that is the same as or confusingly similar to the name of another living person, if done with intent to profit from the domain name by selling it for financial gain to such person or a third party. Under this section, which is not part of the Lanham Act, courts can order the forfeiture or cancellation or transfer of the domain name. Monetary damages are not available, but the court may award costs and attorneys’ fees to the prevailing party in appropriate cases.

Elements to Prove

The plaintiff must prove the following elements to win a case of cybersquatting:

The defendant has a bad faith intent to profit from that mark, including a defendant name which is protected as a mark and the defendant has registered, traffics in, or uses a domain name that

  • in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark;
  • in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark; or
  • is a trademark, word, or a protected name

Bad Faith Intent to Profit from a Mark

Proving bad faith on the part of a cybersquatter is the key to prevailing in a lawsuit under the ACPA. In determining if the defendant has bad faith, the court may consider the following non-exclusive factors:

  1. the trademark or other intellectual property rights of the defendant, if any, in the domain name;
  2. the extent to which the domain name consists of the legal name of the defendant or a name that is otherwise commonly used to identify the defendant;
  3. the defendant’s prior use, if any, of the domain name in connection with the bona fide offering of any goods or services;
  4. the defendant’s bona fide noncommercial or fair use of the mark in a site accessible under the domain name;
  5. the defendant’s intent to divert consumers from the mark owner’s online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site;
  6. the defendant’s offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the defendant’s prior conduct indicating a pattern of such conduct;
  7. the defendant’s provision of material and misleading false contact information when applying for the registration of the domain name, the defendant’s intentional failure to maintain accurate contact information, or the defendant’s prior conduct indicating a pattern of such conduct;
  8. the defendant’s registration or acquisition of multiple domain names which the defendant knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties; and
  9. the extent to which the mark incorporated in the defendant’s domain name registration is or is not distinctive and famous within the meaning of the Lanham Act.

The list is not exclusive, and courts may consider conduct or facts not specifically provided for in the ACPA. Remedies

The Act authorizes a court to order the forfeiture or cancellation of a domain name or the transfer of the domain name to the owner of the mark. In lieu of actual damages, the plaintiff may elect statutory damages and the court has discretion to award damages of not less than $1,000 and not more than $100,000 per domain name.

In Rem Action

If the owner of a domain name cannot be found , the trademark owner may bring an “in rem” action against a domain name in the judicial district in which the authority that registered or assigned the domain name is located. The remedies in an in rem action for cybersquatting are limited to a court order for the forfeiture of the domain name.

Contact Us

If you believe someone is cybersquatting your domain name, contact one of our knowledgable attorney’s to discuss protecting your proprietary brand identity.


Secrets of Your Business are Protectable

Trade secrets are information that companies keep secret to give them an advantage over their competitors. Patents and Copyrights must be disclosed to be protected while Trade Secrets are protectable because they are not disclosed. While one of the most familiar examples of a trade secret is the formula for Coca-Cola, trade secret also protects customer identities and preferences, vendors, product pricing, marketing strategies, company finances, manufacturing processes and other competitively valuable information. However, to qualify for protection, it is important to adequately safeguard trade secrets. In order for a trade secret litigant to secure court assistance in any jurisdiction so that its rights may be enforced, there is a fundamental requirement that the litigant must prove that the company exercised reasonable safeguards to protect secrecy.

Benefits from a Program to Safeguard Trade Secrets

Aside from enhancing a presentation in court, significant benefits may be gained from a thoughtfully conceived and implemented program to safeguard against the disclosure of trade secrets. Programs to safeguard trade secrets should heighten employee awareness of a company’s interest in protecting certain information, which may discourage or thwart attempted misappropriation. An institutionalized program may also discourage new employees from introducing unwanted trade secrets from a former employer.

Placing Employees on Notice

Although it is not necessary to use written agreements to prevent use or disclosure of an enterprise’s trade secrets by its employees, because employees are under an implied duty not to use or disclose trade secrets of the employer, it is elemental that one of the best opportunities to acquaint employees with an enterprise’s claim to trade secrets is through the hiring and employment agreement process. There are many ways to approach the hiring process including using employment agreements to restrict unauthorized use and disclosure. A company should have a well-developed set of rules and guidelines designed to negate disclosure of its trade secrets.

Principal Contractual Techniques

A wide variety of contracting techniques can be used to protect an enterprise’s trade secrets. The most common are contractual provisions whereby the employee promises not to use or disclose the trade secrets of the enterprise.

There are two ways to treat the issue. One is a simple agreement by which the employee recognizes that, as a consequence of his or her employment, he or she will have access to the employer’s trade secrets, that they are valuable and provide to the employer a competitive edge, and that the employee will not use or disclose the trade secrets of the employer either during or after employment. Such a provision is typically in an agreement that also addresses assignment of inventions and other matters. Another and more comprehensive approach imposes restrictions on post-employment competitive activity for a reasonable period of time, within a reasonable territory and a defined scope of activity.

Safeguarding Trade Secrets with New Hires

A prospective new hire could be asked whether or not the employee is subject to restrictions, such as a restrictive covenant with the former employer, on entering into the activity being offered. The prospective new hire could also be asked whether or not the proposed activity with a new employer places a former employer’s trade secrets in jeopardy.

Safeguarding Trade Secrets with Prospective Employee Bound to Former Employer

Restrictive covenants may be used with employees to protect the company’s legitimate interests, a principal one being an interest in protecting its trade secrets. Many times an individual that one wishes to hire is so bound.

Required Notice of Subsequent Place of Employment

One technique to keep in mind in any form of agreement is a requirement that, when the employee leaves, he or she will be required to advise the first employer of the identity of the next employer, that employer’s address and telephone number, and the proposed activity that the employee will be involved in. Where it is a condition of employment, it should be routinely mentioned to the employee at the time of employment and at the termination interview.

Means of Identifying Trade Secrets

A way of putting employees on notice of trade secret matter is to have a routinized, periodic system in place to do so. Supervisors can be charged with the task of periodically identifying aspects of the company’s information that are regarded as of great competitive value. Additionally, articles may be placed in company internal publications stating the importance of confidentiality and the competitive edge that the company’s trade secrets afford to it.

Securing Documented Information

In addition to the precautions of limiting employee access on a need-to-know basis, locking doors to individual offices where trade secrets are maintained, using locked file cabinets or storage rooms for confidential material, and providing appropriate treatment of trade secrets are also means of securing trade secrets.


Copyright, e-Commerce and the DMCA

The Digital Millennium Copyright Act of 1998 (DMCA) was developed in part for the purpose of formulating national policies relating to protecting some emerging computer technologies in order to optimize the United States’ competitiveness in world markets and enhance the growth of the American economy in general.

International Electronic Marketplace

 

Because technology had vastly changed the methods in which copyrightable works could be disseminated and distributed since the latest version of federal copyright law was enacted in 1976 and would continue to change those methods, one of the major concerns of the IITF was that, without adequate protection of intellectual property in the international electronic marketplace, American creators of copyrightable works would be unwilling to enter that marketplace for fear of having their works pirated. Therefore, the IITF assisted in formulating policies that would allow creators of education, information and entertainment products to benefit fully from entry into the international electronic marketplace without risk of loss of their rights to their works.

Recommendation to Include Telecommunication Transmission of Copies Within Distribution

A subgroup of the IITF studied existing copyright laws and made several recommendations for amendments to accommodate technological advances, both already developed and yet to come. One of the recommendations was to include telecommunication transmission of copies within the distribution of copies of copyrighted work that is reserved to the copyright holder. The subgroup contended that this recommendation did not create a new right but merely recognized that a copy of digital work could be created by transmission through a computer network as easily as a copy of a printed work could be created by use of a photocopier or printing press.

Recommendation that Publication Include Distribution to Public by Electronic Means

The task force subgroup also recommended that the definition of publication be changed, noting that the legislative history of the existing copyright statute made it clear that publication did not take place when a material object did not change hands. In keeping with the expanded definition of copying to include transmission via computer network, the subgroup contended that whether a work had been published should depend on whether it had been distributed to the public, including by electronic means.

Recommendation to Make it Illegal to Defeat Electronic Copy-Prevention Scheme

Perhaps the most well-known and controversial recommendation of the subgroup was to provide technological protection in addition to legal protection to creators of copyrighted work by making it illegal to defeat an electronic copy-prevention scheme created by a copyright holder whether by use of hardware, a software program or other device, or to sell such devices. This recommendation was based on the recognition that no matter what technological steps creators took to protect their works within an environment in which it was exceedingly easy to copy and distribute materials, technologies would be quickly developed to circumvent those protections. Critics of this recommendation, which would be in fact incorporated into the DMCA, pointed out that not all uses of copyrighted work infringed copyrights and that indefeasible copy-protection schemes would prevent fair use and other legitimate uses of such materials.

In anticipation of this criticism, the subgroup observed that copyright holders were not required to facilitate unauthorized access to copyrighted materials. The subgroup reasoned that, if they were so required, copyright holders would be unable to charge a fee for distribution of copyrighted works or restrict their distribution at all. In addition, a circumvention device primarily intended and used for legitimate purposes such as fair use or to distribute materials in the public domain or that were otherwise ineligible for copyright would not be illegal under the recommended amendments.

DMCA Enacted in 1998

In 1996, the United States participated in a conference of the World Intellectual Property Organization (WIPO), which produced new multilateral treaties addressing the protection of copyrighted material in the international electronic marketplace. Legislation implementing the treaties was proposed the following year, and the end-product of that legislation, along with legislation proposed by the IITF, was the DMCA, enacted in 1998.

The DMCA is divided into the following five titles:

  1. Title I implements the treaties that came out of the 1996 WIPO conference. Included in this title are the provisions recommended by the IITF that protect copy-protection schemes. Under the DMCA, it is illegal to sell devices that are primarily designed or produced to circumvent copy-protection measures and that have little or no other use. As for the act of circumvention itself, it is illegal to defeat a copy-protection scheme that prevents unauthorized access to copyrighted material; however, defeating a copy-protection scheme that prevents unauthorized copying for the purposes of fair use or other legitimate use of copyrighted materials is not illegal. Certain exemptions to these proscriptions are also provided in Title I. Other provisions in Title I shore up the integrity of copyright management information systems in order to ensure access to accurate copyright information.
  2. Title II of the DMCA limits the liability of Internet service providers (ISP) for copyright infringement when conducting activities involving transitory communications, system caching, storage of information on systems or networks at the direction of ISP users, and information location tools.
  3. Title III provides exemptions for making temporary copies of copyrighted material when maintaining or repairing computers.
  4. Title IV provides several exceptions to the exclusive rights of copyright holders necessary to accommodate legitimate uses by libraries and for other purposes as well as uses made possible by computer networks, for example, the streaming of music and other copyrighted works over the Internet. It also solicits recommendations from the Register of Copyrights as to what exemptions might be appropriate for computer-based long-distance learning.
  5. Title V protects certain vessel hull designs.

 

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