For your convenience, I have repoduced some of my blog articles below. These articles are provided only for general information and not to provide legal advice. These articles were written at different times and the laws could have changed since I wrote these articles. For example, the America Invents Act made major changes to U.S. patent law. If you need legal advice, feel free to contact me, but please do not rely on information in the articles below or elsewhere on this website.
Doing patent applications for a flat fee makes a lot of sense. In setting the fee, the practitioner looks initially at the complexity of the invention. Another variable, is the number of embodiments. The number of embodiments is a delicate area because in general, as a practitioner, you want to encourage an inventor to disclose a reasonable range of embodiments. All of the above means that the practitioner must conduct at least a partial interview before being able to quote a flat rate. The practitioner also needs to provide some legal advice about the desirability of having a reasonable number of embodiments, and not limiting the disclosure to a single embodiment.
A flat fee automatically takes the practitioner's efficiency, experience and skill into consideration. The practitioner should set the fee within the range that the practitioner believes would typically be charged by other practitioners of similar experience and skill for drafting a patent application of similar complexity. If a practitioner is inefficient and takes more than the usual number of hours for such an application, then the practitioner must absorb the hardship of working more hours for less money. On the other hand, if the practitioner is more efficient that the average patent attorney, then I can see no reason why the practitioner should not receive that benefit.
What the flat fee does is it allows a fee to be set taking into consideration a range of considerations, including all of the considerations required by USPTO and state bar ethics rules regarding avoiding excessive fees. Not all of those considerations are discussed here. I have discussed the ones I feel are most pertinent.
A flat fee benefits the client by providing predictability to the cost of the preparation of a patent application. I think a lot of the complaints about fees in the legal profession stem from cases where billing by the hour leads to unexpectedly large fees.
There may be case where a flat fee is not practicable. If the complexity of the application and the scope of the invention are not clear, then it may not be practicable to set a flat fee. But, those are probably the exceptions.
USPTO Manual on Patent Examining Procedure (MPEP) Section 2143 describes exemplary rationales for supporting an obviousness rejection. In stating these exemplary rationales, the MPEP relies, in part, on the U.S. Supreme Court's decision in KSR International Co. v. Teleflex Inc., 550 US 398 (2007).
In Crocs Inc. v. I.T.C., 598 F.3d 1294 (Fed. Cir., February 24, 2010), the Federal Circuit reverses an International Trade Commission (ITC) finding that a patent on footwear is obvious. The claimed invention is a shoe (e.g., a clog) held onto a person's foot by a foam strap riveted to a foam base of the shoe. Id. at 1308. The strap wraps behind and supports the achilles tendon. Friction between the foam strap and the base holds the foam strap in place even when the foam strap is not in contact with the achilles tendon. Id. at 1309. The points of novelty include using a strap made of inelastic foam and using the friction between the foam strap and the base to hold the foam strap in place. Id. at 1308 - 1310.
The ITC relied on two prior art references: 1) an Aqua Clog -- a base without a strap; and 2) Aguerre, teaching a sandal with a flexible strap. Although the Crocs opinion does not refer to the MPEP, it is instructive to note which of the MPEP's rationales would support the ITC's obviousness rejection and how the Federal Circuit's opinion would refute hypothetical rejections based on these MPEP rationales.
Three MPEP's rationales that could have been used by the ITC are that the claimed invention: 1) Combines prior art elements according to known methods to yield predictable results; 2) Substitutes one known element for another to obtain predictable results; and 3) Is obvious based on some teaching, suggestion, or motivation in the prior art that would have led one of ordinary skill in the art to modify a prior art reference. MPEP Section 1243, Rationales A, B, and G. The Court's findings in Crocs would refute obviousness rejections under any of the above MPEP rationales.
The first rationale under the MPEP would be that the claimed invention is just a combination of prior art elements according to known methods to yield predictable results. MPEP 2143A. Under this rationale, the prior art must include "each element claimed." Id. This rationale first fails because the ITC's prior art combination did not include the claimed foam strap. Crocs at 1308. This rationale also fails because the use of the foam strap "yields more than predictable results; thus it is non-obvious." Id. at 1309 citing KSR, 550 U.S. at 417.
The second rationale under the MPEP would be that the claimed invention is just a simple substitution of one known element for another to obtain predictable results. MPEP 2143B. This rationale first fails because one skilled in the art would not have considered a foam strap to be a reasonable substitution for the elastic strap of Aguerre. "Rather, the prior art showed that foam was an unsuitable material for shoe straps." Id. at 1308 - 09. The MPEP rationale also fails because using the foam strap instead of Aguerre's elastic strap yields more than predictable results. An elastic strap is always in contact with the achilles tendon pushing the foot forward into the shoe. The foam strap is not in continuous contact and "facilitates a loose anatomical fit that makes the claimed invention more comfortable than prior art products." Crocs at 1309.
The third rationale under the MPEP would be that the some teaching, suggestion, or motivation in the prior art would have motivated one skilled in the art to modify a prior art reference. MPEP 2143G. But the Federal Circuit found that, "The record shows that the prior art would actually discourage and teach away from the use of foam straps." Crocs, at 1308.
Thus, all of the MPEP rationales that could have been used to support the ITC's obviousness rejection fail under the Court's findings in Crocs. Thus, Crocs is instructive about the types of arguments and evidence that can be used to overcome an obviousness rejection under the MPEP.
When drafting patent claims, even minor differences in wording can be important. In 2006, I attended a seminar given by Steve Shear of Silicon Valley Seminars, http://www.patentseminars.com, called "Patents and Patent Claim Drafting." One of the points taught was that the use of "coupled to" was risky. That was because reciting that element A is "coupled to" element B might be read as requiring that element A be directly connected to element B. It is safer to recite that element A is "coupled with" element B, since that more clearly recites that element A may be indirectly connected with element B.
In Bradford Co. v. Conteyor North America, Inc., 2010 U.S. App. LEXIS 8869 (Fed. Cir. April 29, 2010) the Federal Circuit construed the claim terms "coupled to." The U.S. District Court had granted summary judgment of noninfringement to defendant Conteyer NA relying on its claim construction that "coupled to" required a direct connection between two recited claim elements. The relevant independent claims recited a "dunnage structure" that was "coupled to" a "frame" or "side structure." Id. *5-6. The Federal Circuit reversed the district court's claim construction, holding that the claim terms allow "an indirect coupling of the dunnage to the frame." Id. *19. But this opinion should not be read as holding that "coupled to" will always be read to allow an indirect connection. On the contrary, there were specific circumstances in this case that caused the Federal Circuit to construe "coupled to" as allowing an indirect connection.
The Federal Circuit began its analysis by citing Phillips v. AWH Corp., 415 F.3d 1303, 1314 (Fed. Cir. 2005) (en banc) for the proposition that the starting point for construing claims is the language of the claims themselves. But it was not the language of the contested independent claims that carried the day. Instead, it was the language of a dependent claim and the doctrine of claim differentiation. The Court noted that, "Dependent claim 10 of the '096 patent recites a dunnage structure that is coupled to rails which in turn are coupled to the side structures." Id. Because dependent claim 10 recited one example of indirect attachment, under the doctrine of claim differentiation, the independent claims were "presumed to be broader to allow for other types of indirect attachments. Id. *20 citing Comark Commc'ns, Inc. v. Harris Corp., 156 F.3d 1182, 1186 (Fed. Cir. 1998). The doctrine of claim differentiation creates a presumption that different claims have different scope. Id.
While the presumption created by claim differentiation "is not a conclusive basis for construing claims," in this case there was nothing in either the specification or the prosecution history to overcome the presumption. Id. On the contrary, the specification provided examples of indirect connection, both in the figures and in the written description. In holding that "coupled to" allows for an indirect connection, the Federal Circuit noted "the clear disclosure in the patent ***." Id. Thus, even in light of this opinion, it is still wiser to use the claim terms "coupled with" rather than "coupled to" if coverage for indirect connection of claim elements is desired.
In Rolls-Royce, PLC v. United Technologies Corp., 2010 U.S. App. LEXIS 9201 (Fed. Cir. May 5, 2010) the Federal Circuit prefaces a discussion of obviousness with this language: "To preclude hindsight in this analysis, this court flexibly seeks evidence from before the time of the invention in the form of some teaching, suggestion, or even mere motivation (conceivably found within the knowledge of an ordinarily skilled artisan) to make the variation or combination." Id. *27-28 (Bold added). There is nothing in this quote stating that the motivation may come from a design need or market pressure. Instead, the Federal Circuit only specifically refers to motivation arising from the "knowledge of an ordinarily skilled artisan."
The Federal Circuit's language does not strictly track the language used by the U.S. Supreme Court in KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 417, 421, 127 S. Ct. 1727, 167 L. Ed. 2d 705 (2007) when it addressed whether an invention was obvious to try and therefore obvious. KSR stated that, "When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp." Id. (Bold added). Thus, in KSR, motivation could come from design needs and market pressures.
A version of a flexible TSM test is seen in this quote where the Federal Circuit addresses an argument that the invention would have been an easily predictable and achievable variation: "For all of these reasons, the record contained no evidence that would have suggested to or motivated an ordinarily skilled artisan to sweep the fan blade forward in the outer region. Thus, the record supports the district court's conclusion that this variation would not have been obvious." Rolls-Royce at *29 (Bold added). This language could be used to argue against a rejection of an application based on lack of suggestion or motivation. So these pre-KSR arguments are still available under this decision, as long as one uses the terms suggestion and motivation in a flexible way.
But, in discussing "obvious to try", the Federal Circuit did swing back into greater consistency with KSR by acknowledging that motivation could include design needs and market pressures. "A particular course or selection is not obvious to try unless some design need or market pressure or other motivation would suggest to one of ordinary skill in the art to pursue the claimed course or selection." Id. at *31.
Thus, the Rolls-Royce opinion ultimately steers back to greater consistency with KSR. Nonetheless, the first quotation, taken literally, is a more "flexible" version of the overruled Teaching, Suggestion, Motivation test. And strictly speaking, the KSR did not repudiate a more flexible TSM test: "We note the Court of Appeals has since elaborated a broader conception of the TSM test than was applied in the instant matter." KSR, 550 U.S. at 421-422. But this flexible TSM test was not before the Court in KSR.
MPEP 2141 (III) acknowledges that a flexible TSM test may be used to make obviousness rejections and includes a flexible TSM in a list of possible bases for rejecting a claim as obvious. But in Rolls-Royce, the Federal Circuit uses, in part, a flexible TSM test to reject a finding of obviousness. Time will tell how far the Federal Circuit will go in putting some teeth into a more flexible version of the TSM test.
Employers routinely require certain highly-qualified employees to sign pre-invention agreements. These employees include engineers and other highly qualified employees who are hired to do research and development. These agreements typically require the employee to assign inventions and discoveries, regardless of whether the invention was conceived or developed on the employer's premises or during working hours.
Some states have passed legislation to protect these employees from pre-invention assignment agreements that may overreach. In Washington, RCW 49.44.140 provides that pre-invention assignment agreements do not apply to inventions developed by the employee on the employee's own time and which do not make use of employer resources or trade secrets. There is an exception for inventions that relate either to the employer's business or to the employer's actual or anticipated research and development.
There is also an exception for inventions resulting from any work by the employee for the employer. The employer is required to give notice of the statute's provisions to the employee. This notice may be provided in the assignment agreement. No separate document giving notice is required. Waterjet Tech., Inc. v. Flow Int'l Corp., 140 Wn.2d 313, 320 - 21, 996 P.2d 598, 601 (2000).
Statutes like RCW 49.44.140 raise the issue of the respective roles of federal law and state law in determining whether an invention is assigned to an employer under a pre-invention assignment agreement. SiRF Technology Inc. v. International Trade Commission, 2010 U.S. App. LEXIS 7423 (Fed. Cir., April 12, 2010), discusses those respective roles.
In SiRF, the Federal Circuit reviewed a decision by the International Trade Commission which held, in part, that the patent owners, collectively referred to as "Global Locate", had standing to assert that a patent was infringed. That issue turned on whether Global Locate was the sole owner of the patent, or whether a non-party, Magellan Corporation, was a co-owner. This was pivotal because "Absent the voluntary joinder of all co-owners of a patent, a co-owner acting alone will lack standing." Id. *13 (citation omitted). The issue of whether Magellan was a co-owner turned on whether one of the inventors, Abraham, had assigned his interest in the patent to Magellan.
At the time of the invention, Abraham was an employee of Magellan. He was subject to an assignment agreement providing that Abraham assigned, "all inventions . . . which are related to or useful in the business of the Employer . . . and which were . . . conceived . . . during the period of the Employee's employment." Id. *14. The standing issue turned on whether this agreement assigned the patent to Magellan.
The Federal Circuit held that the first issue was one of federal law: Whether the agreement provides for automatic assignment. Id. *15. The Court held that because the agreement uses the words "Employee assigns", the agreement expressly grants patent rights to the employer "with no further action needed on the part of the employee." Id. Therefore, the agreement provides for automatic assignment.
The Federal Circuit held that the second question was one of state law: Whether the invention is "related to or useful in the business of the Employer." Id. *15 California provided the governing state law. Although California Labor Code Section 2870 renders certain pre-invention assignment agreements unenforceable, there was no assertion that this statute invalidated any assignment to Magellan. Id. *18 n. 6. The California law of contracts therefore governed.
Under California law, the agreement was ambiguous and extrinsic evidence was admissible to interpret the agreement. The extrinsic evidence showed that Abraham left his employment with Magellan, became an employee of Global Locate, and assigned the patent to Global Locate. Id. *20 -23. Global Locate then recorded the assignment with the Patent Office. Id. *18. However, the assignment to Magellan was earlier in time and ordinarily would have controlled over a later assignment to Global Locate.
But the Federal Circuit held as a matter of federal law that the recordation of Global Locate's assignment "creates a presumption of validity as to the assignment and places the burden . . . on one challenging the assignment." Id. *18. Thus, those challenging Global Locate's standing had to prove that the patent had been previously assigned to Magellan.
The extrinsic evidence further showed that Magellan never asserted an interest in the patent, even when it sued Global Locate and Abraham for trade secret misappropriation. Id. *20 - 23. Magellan did not regard itself as an owner of the patent. Id. *24. The Federal Circuit therefore affirmed the International Trade Commission's ruling that Global Locate had standing to assert the patent.
In SiRF Technology, the Federal Circuit alternatively applied federal and state law to hold that substantial evidence supported Global Locate's standing to assert the patent. The state law issue was the extent to which the invention related to the employer's business or research and development. That is the very issue that the Washington Legislature apparently addressed when it adopted RCW 49.44.140. Although the opinion did not expressly address the issue, the opinion suggests that state statutes like RCW 49.44.140 will be enforced by federal courts and not regarded as preempted. That is because RCW 49.44.140 focuses on the relationship between the employer's business and the invention -- an issue governed by state law.