Patents

Patents are legal grants that provide inventors exclusive rights to their inventions, allowing them to prevent others from making, using, or selling their creations without permission. In the United States, patents are typically granted for a period of 20 years, following a complex application process managed by the United States Patent and Trademark Office (USPTO). This process has evolved significantly since the first U.S. patent law was enacted in 1790, with ongoing debates about patent duration and eligibility criteria, especially in the realms of software and biotechnology.

Internationally, the patent landscape has become increasingly globalized, with various treaties and organizations, such as the World Trade Organization (WTO) and the European Patent Organization (EPO), working to harmonize patent laws across nations. The enforcement of patent rights remains a significant challenge, as litigation can be costly and time-consuming, often resulting in disputes that affect both small and large entities. The emergence of "patent trolls," or entities that acquire patents solely to litigate, has prompted calls for reform to ensure a fairer patent system. As counterfeit products continue to pose a threat to intellectual property rights, both national and international efforts are being made to combat piracy and protect the interests of patent holders.

Published in: 2021

By: Erbschloe, Michael

Subject Terms

Patents

This article examines the patent application and granting process, along with basic laws covering patents and the fees charged by the patent office. The development of patent laws in the United Sates is reviewed as well as some of the debate about various aspects of those laws. The globalization of the patent process is reviewed, and activity in international treaties and patent protection is examined. The complexities of protecting patent rights and fighting patent infringement are explained, and a brief case study of patent litigation is presented. The emergence of a patent protection service sector is also discussed.

Keywords: Counterfeit Merchandise; European Patent Organization; Intellectual Property; Patent Infringement; Patent Law; Patent Protection; United States Patent Office and Trademark Office

Patents

Overview

Among the first patents ever granted was one for the construction of a model mill in 1409 in Germany (Tulasi & Rao, 2008). A patent for an invention is the grant of a property right to the inventor that gives the holder "the right to exclude others from making, using, offering for sale, or selling" the invention in the granting country or importing the invention into the granting country ("General Information Concerning Patents," 2005).

The United States' Patent Infrastructure

In the United States, a patent is generally granted for a period of 20 years. This 20-year grant period remains among the many issues that are hotly debated about the United States patent system (Rako, 2009). Patents are published, which is a process that discloses technical information about the patented item. In general, after the patent period is up, other companies can use the patented item in their processes or even manufacturer a similar item (Fromer, 2009).

The first U.S. patent law was enacted in 1790, and the United States Patent Office first opened in 1803. The law was revised in 1952 and again in 1999 with the passage of the American Inventors Protection Act of 1999 (AIPA). In the early 2010s, Congress passed reform legislation that changed patent eligibility criteria and expanded key definitions, among other provisions (US Patent and Trademark Office, 2013a).

The United States Patent and Trademark Office (USPTO) receives over 500,000 applications every year. The USPTO is organized into examining technology centers (TC), with each specializing in specific fields of technology. Examiners review applications for patents and identify applications that claim the same invention and work to determine who was the first inventor ("General Information Concerning Patents," 2005). The USPTO issued 253,155 utility patents in 2012, up slightly from 2011. United States resident companies have long held a lead in acquiring patents from the USPTO, but that lead has become very slim (US Patent and Trademark Office, 2013b).

The United States Patent Search Room is where researchers or the general public can search through and examine U.S. patents granted since 1790. The Scientific and Technical Information Center of the Patent Office makes available to the public a wide array of scientific and technical books in various languages. There are also foreign patents available from over seventy countries for review on paper, microfilm, microfiche, and digital formats (Scientific and Technical Information Center, 2012).

The Patent Process

Historically, an item had to be a tangible physical device or a chemical process before a patent would be granted by the USPTO. In the 1980s, a series of court rulings set the stage for processes and software code to be worthy of patents. The updated law provides for the granting of a utility patent for a new and useful process, machine, or composition of matter. A design patent can be granted for original and ornamental designs of manufactured items. Patents can also be granted for discoveries or an asexual reproduction of a distinct and new variety of plant (Turner, 2009).

Items for which patents can be granted must be new, with no prior art or use in place. There are also restrictions on items that have appeared in foreign publications within the prior year of applying for the patent. Prior art is a broad term and can include many different items. This includes existing patents and patent applications. It could also include technical articles, material supplied by an applicant, abstracts, or even product literature (Davidson, 2009).

Individuals or companies wishing to obtain a patent must go through an applications process. Preparing an application is a complex process that requires in-depth knowledge of patent law and rules and Patent Office practice and procedures. Registered patent attorneys or patent agents provide application services for those who do not want to go through the process on their own. These agents are often well trained in the application process and possess technical knowledge of engineering or other sciences.

The USPTO charges fees for every aspect of the application process. There are three levels of fees, the standard fee; the small entity fee, which provides up to a 50-percent discount on the standard fee for small companies; and the micro entity fee, which provides up to a 75-percent discount on the standard fee for small entities that meet certain additional income and filing criteria. At the standard fee level, the basic filing fee for a utility item is $280 and for a design item or a plant item is $180, effective January 2014. If the application is lengthy, there is an additional fee of $400 for every 50 sheets of the application that that exceeds 100 sheets. Patent search fees range from $120 to $600, and examination fees range from $460 to $720.

The maintenance fees for patents, which must be paid periodically, are rather costly. At 3.5 years into the life of the patent, a holder must pay a $1,600 fee; at 7.5 years, $3,600; and at 11.5 years, $7,400. There are numerous other fees that applicants or patent holders must pay during the process which in the end can add up to thousands, if not tens of thousands, of dollars ("Revised Fee Schedule," 2013).

One interesting note in the history of patents in the United States was the fact that President Abraham Lincoln was granted a patent in on March 10, 1849. The patent was for a device for buoying vessels over shoals. Lincoln's invention made use of inflatable air chambers that could be attached to sides of a vessel. When the chambers were filled with air, it made it easier to move the vessel. Lincoln was certainly interested in science and inventions and in 1863 signed legislation into law that created the National Academy of Sciences (Emerson, 2009).

Applications

Globalizing the Patent Application & Granting Process

Prior to 1960, the number of patents granted grew at a very slow rate, and the vast majority of patent activity took place in the United States, Germany, the United Kingdom, and France. After 1960, patent activity started to increase at a more rapid rate, and starting in about 1980, patent offices in major industrial countries started experiencing about a 3-percent annual increase in patent activity. The patent offices of the United States, the European Patent Office, Republic of Korea, and China have had a consistent growth in filings. Combined, these and other offices located around the world had nearly two million patent applications pending in 2010 (World Intellectual Property Organization, 2012).

The Role of the WTO

The World Trade Organization (WTO) has provided a leadership position and a forum for the expansion and stabilization of patent activity around the world. The WTO's Trade-Related Aspects of Intellectual Property Rights (TRIPS) Council is a leading international forum for these discussions and negotiations ("Intellectual Property: Protection and Enforcement," 2009). Some of the major international activities have included the Paris Convention for the Protection of Industrial Property (PCPIP), the Patent Law Treaty (PLT), the Patent Cooperation Treaty (PCT), and the Strasbourg Agreement Concerning the International Patent Classification (IPC) (Kukrus & Kartus, 2007).

Many economists, industrialists, and patent attorneys see the Patent Law Treaty (PLT), the Patent Cooperation Treaty (PCT), and the Substantive Patent Law Treaty (SPLT) as three necessary elements in achieving a consistent worldwide system of patent administration. The PLT states an array of formal requirements for a patent application, examination, and granting procedures to be followed by patent offices. The PCT provides a basis for examination of an international patent application, while the SPLT outlines basic substantive patent laws that were not addressed in the Paris Convention or the TRIPS Agreement (Kukrus & Kartus, 2007).

The European Patent Organisation

The European Patent Organisation (EPO) is the primary intergovernmental organization with the European Union (EU) that set standards for the patent process. As a result of the European Patent Convention (EPC), the EPO was in established 1977. The EPO has thirty-eight member countries, including all of the EU members as well as other countries in Europe that have not yet become members. The Patent Academy, a unique feature of the EPO, provides extensive training for patent professionals, judges, public servants, business managers, academics, and students (European Patent Office, 2009). In Europe, 62,112 patents were granted in 2011, out of 244,437 recorded patent filings (European Patent Office, 2012).

Patents in China & India

As we entered the age of globalization of world trade and expanded manufacturing capacity in numerous countries, patent holders have been concerned about protecting their intellectual property. Many eyes have been on China to see if the communist state would adopt patent laws that are consistent with other industrialized nations. China's patent law was first established in the mid-1980s and was revised again in 1992 and 2000. These actions brought China's law more into the mainstream, but to meet the full requirements set by TRIPS, many feel that China still has work to do on patent laws (Gao, 2008; Bera, 2009). In 2011, China granted 112,347 patents to residents and 59,766 patents to nonresidents (World Intellectual Property Organization, 2013).

In contrast to China and the United States, patent laws in India were first established in 1856 while India was still under British colonial rule. Patent laws in India were revised several times during the century that followed and remained in effect after independence. In 1970, independent India reviewed and revised patent laws (Shrikrushna, 2009). The number of patents granted in India remains relatively small: 1,208 patents to residents in 2010 and 776 in 2011 compared to 5,930 going to nonresident filers in 2010 and 4,392 in 2011 (World Intellectual Property Organization, 2013).

Issue

Enforcing Patent Rights

One of the most complex issues regarding the protection of a grantee's rights is how to enforce those rights. The effectiveness of patent protection goes beyond the mere existence of patent laws and rests largely on the ability of a nation or a patent holder to enforce the rights in patent law. The TRIPS Agreement has provisions on enforcement. Even though members to the agreement are required to maintain domestic procedures and remedies to enable grantees to enforce their rights, the process can be cumbersome and varies from country to country (Zoghbi, 2007).

In many countries, a great number of patent infringement cases end up going through the court system, and "few countries have established a court for dealing specifically with intellectual property violations" (Zoghbi, 2007). Notably, a patent litigation case can be very expensive. The cost and duration of a case varies based on complexity of the patent and the scope of the claim, but it can easily lasts two years or more (Margiano, 2009) and costs can range between $650,000 to $5 million, depending on the amount of money is at risk (Kerstetter, 2012). If successful in the litigation, patent holders can benefit from several remedies including an injunction, damages, or an award of the profits made from the violation. Although additional compensation can be won as damages, this is not commonly the case (Zoghbi, 2007).

Litigation: The Blackboard Case

Patent infringement cases are ongoing in the United States federal courts. One very complex case in the United States was between Blackboard (developer of course-management software used at many colleges and universities) and Desire2-Learn, Inc. (D2L). In 2006, Blackboard was granted a patent for its course-management system and soon afterward sued D2L, a competitor, for patent infringement. Central to D2L's defense was its argument that several of Blackboard's individual patent claims were not valid and challenged Blackboard's claims based on prior art, or the prior existence of e-learning technologies (Young, 2008).

The infringement case went to federal court in the town of Lufkin, Texas, a small town in the Eastern District of Texas, where more patent lawsuits were filed in 2007 than were filed in the federal courts covering New York, San Francisco, or Silicon Valley (Pike, 2009).

While the outcome of the case was still not known, D2L took and interesting step by asking the USPTO to reexamine Blackboard's patent claims. D2L provided a strong argument, at least strong enough to get a reexamination. D2L asserted that Blackboard's 1999 patent application did not accurately make claims that the technology was novel or nonobvious.

In 2008, the federal court jury in Texas found that Blackboard's patents were valid and found D2L guilty of infringement. The award handed out by the jury was $3.1 million in damages and compensation for Blackboard. The jury also told D2L not to sell software with infringed elements. D2L appealed the court's decision and jury award. In the meantime, it revised its software to remove the content covered by the Blackboard patent which the court upheld (Mangan, 2008).

In an interesting twist of fate, about a month after the jury found in favor of Blackboard, the USPTO issued a preliminary ruling that rejected all 44 of Blackboard's patent claims, thus invalidating the patent. Blackboard went to court asking for the USPTO to terminate the reexamination. When the USPTO rejected Blackboard's request in November 2008, Blackboard filed a separate lawsuit against the USPTO asking a court to order a halt to the reexamination (Young, 2008). The following December, the case essentially ended in a draw when the two parties settled and agreed to license one another’s technology (Young, 2009).

The Strategy Targeting Organized Piracy (STOP!) Initiative

In 2004, the United States government launched the Strategy Targeting Organized Piracy (STOP!) initiative. The interagency program involves the Department of Homeland Security (DHS), the Department of Justice (DOJ), the Department of Commerce, the State Department, the Food and Drug Administration, and the Office of the U.S. Trade Representative. The STOP! initiative came with a full range of outreach functions including a hotline to report infringements and piracy (1-866-999-HALT) and a website (www.stopfakes.gov) that provides an online reporting form. The website also provides a set of toolkits to help businesses protect their intellectual property, many directed at some of the most severe violating countries, including China ("Bush Administration Strategy," 2007).

Since its inception, the STOP! program has held numerous conferences, worked to forge relationships with trading partners of the United States, and supported efforts across government agencies to coordinate activities. Canada, Mexico, Japan, India, and the EU have been key to many international actions. Some of these actions have been in conjunction with ongoing efforts of the United Nations (UN), Organization of Economic Coordination and Development (OECD), and the WTO's TRIPS Council ("Bush Administration Strategy," 2007).

Seizure of Counterfeit Goods & Materials

Another method of enforcing patent rights and halting infringement is through seizures made by law enforcement agencies of counterfeit items, often called “pirated” merchandise. The most active government agency in the United States is Customs and Border Protection (CBP), which is part of the Department of Homeland Security. CBP helps to enforce laws against intellectual property rights (IPR) violations by inspecting cargoes and merchandise being transported by visitors and seizing pirated items.

In fiscal year 2012, the domestic value of IPR seizures was $1.26 billion, a considerable increase from $1.11 billion in fiscal year 2011. The country shipping the most infringing products in fiscal year 2012 was China, which accounted for 72 percent of the total domestic value seized that year.

In fiscal year 2012, there were 22,848 IPR seizures executed by CBP. Handbags and wallets were the most frequently seized items and accounted for 40 percent of the total domestic value infringing products in fiscal year 2012. But many other patented items were also seized, including $186.9 million in jewelry and watches, $133 million in clothing and accessories, and $104.4 million in consumer electronics (U.S. Customs and Border Protection, 2013).

In the EU, customs officers seized 90,473 cases of counterfeit goods at the EU borders in 2012. As with the United States, the largest source of IPR product violations was China, which accounted for 64.5 percent of the total counterfeit goods seized and 77 percent of the total value seized in 2012. Nonathletic footwear accounted for 19.56 percent of the cases seized in the EU, followed by clothing at 16.59 percent and accessories at 10.66 percent (European Union, 2013).

In the mid-2000s, counterfeit medicine was one of the fastest growing IPR products being seized in the EU. In 2006, there were over 2.7 million pharmaceutical items seized. India and the United Arab Emirates were the leading sources for counterfeited medicines, accounting for over 30 percent of seized pharmaceutical products (Hill, 2007). In 2012, the EU seized 712,220 IPR medical products, including pharmaceuticals, at a total valuation of €8.15 million, and China, India, and Hong Kong were their leading sources (European Union, 2013).

The Patent Protection Service Industry

Considering the value that a patent can add to a corporation's product line or the wealth that a successful product can bring an individual, it is not surprising that patent protection has also become a lucrative enterprise in itself. Numerous law firms offer services to help obtain and protect patent rights. Such services can be obtained for patent holders as well as for those who are accused of patent infringement. These services can be very expensive, and they cannot necessarily guarantee that you will receive a patent or that your patent will be protected.

There are also firms that specialize in investigating patent infringement and collecting information to support litigation. These firms are often staffed with people that have considerable expertise in various industries. An individual with computer software or networking expertise, for example, is more qualified to investigate claims or violations in this industry. Meanwhile, those individuals with considerable product knowledge in the apparel or footwear industry are best qualified to assist in those types of infringements investigations.

Patent Trolling

As software and software-related business practices have increasingly become patent protected, there has been a rise in litigation regarding these patents. While some is undoubtedly legitimate, many cases have been brought by patent assertion entities, often dubbed “patent trolls,” which merely buy patents from various businesses or individuals and then file suit against a number of companies or individuals they believe to be in violation of those patents (Savitz, Marino & Nguyen, 2013). In response to the rapidly rising number of (and costs of) such patent litigation, the America Invents Act (2011) was passed. Under its provisions, patents would be granted on a first-to-file, not first-to-invent, basis; the definition of prior art was revised to include oral disclosures; and filers gained an extended grace period in which they could make disclosures and negotiate with other parties such as investors prior to filing (US Patent and Trademark Office, 2013a).

After law’s passage, the total number of people and businesses named in patent infringement cases did drop. However, patent trolls filed more lawsuits, as they began to individually target their suits instead of filing mass claims. They particularly pursued banking institutions as well as small technology startups, which were then forced to settle, defend themselves in court, or negotiate a licensure fee (Adams, 2013; Savitz, Marino & Nguyen, 2013). In 2013, the Obama administration recommended additional reforms to patent law that would change the payment structure in patent litigation (Adams, 2013). Congressional representatives led by Peter DeFazio sought to make it more difficult for patent holders who are not the inventor(s), the inventor’s or patent’s assignee, or an academic institution, or cannot demonstrate investment in the patent, to sue based on infringement ("H.R. 845," n.d).

Conclusion

As the industrial revolution spread around the world, so did the concept of patents and the process of granting patents. Over the last 150 years or so, these processes have evolved and laws have been revised several times. However, many people still find the patent application and granting process to be less than perfect. The backlog of patent applications in many patent offices around the world is very large, and the process of application review is considered cumbersome and incomplete. Some patents, in fact, have been overturned upon reexamination.

Since World War II, numerous international organizations have been established to address issues of global concern—patents are among those issues of concern. In addition to organizations, there is a long list of treaties that have been negotiated and signed by industrial and developing countries. These treaties address the patent process as well as how to prevent patent infringement.

As industrialization spread around the world so did the ability to produce large quantities of items that infringe on patents and the cross-border flow of counterfeit items has become a huge economic issue. Billions of dollars of counterfeit products are being moved around the world. Governments in North America and Europe have stepped up their efforts to prevent the import of counterfeit items and have started programs to monitor movement and to seize illegal items.

Terms & Concepts

Counterfeit Items: A manufactured item that is not produced by the legitimate patent holder but is made to look like the original item and is sold in a manner that suggests it is an original; includes the presence of brand names, trademarks, or other identifying characteristics.

Design Patent: A patent granted for the design of an item (how it looks or what it is made of); includes the presence of brand names, trademarks, or other identifying characteristics.

Patent Infringement: The unauthorized or illegal use of processes or designs for which a patent has been granted to another party, including the production and sale of counterfeit items.

Prior Art: The previous use or production of an item or process that is included in a new patent application. Prior art can be demonstrated through a wide variety of media.

Utility Patent: A patent granted for a process or method used to manufacture an item or deliver a service.

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Young, J.(2008). Blackboard sues patent office in dispute over course software. Chronicle of Higher Education,55 , A9. Retrieved April 5, 2009, from EBSCO Online Database Academic Search Complete. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=35756693&site=ehost-live

Young, J.(2009, December 15). Blackboard settles longstanding patent fight with rival Desire2Learn. Chronicle of Higher Education. Retrieved November 25, 2013, from: http://chronicle.com/blogs/wiredcampus/blackboardsettleslongstandingpatentfightwithrivaldesire2learn/9229

Zoghbi, V. (2007). Patent enforcement in commonwealth countries: A comparative analysis. Commonwealth Law Bulletin, 33, 65–74. Retrieved April 5, 2009, from EBSCO Online Database Academic Search Complete. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=26099609&site=ehost-live

Patents

On this Page

Subject Terms

Patents

Patents

Overview

The United States' Patent Infrastructure

The Patent Process

Applications

Globalizing the Patent Application & Granting Process

The Role of the WTO

The European Patent Organisation

Patents in China & India

Issue

Enforcing Patent Rights

Litigation: The Blackboard Case

The Strategy Targeting Organized Piracy (STOP!) Initiative

Seizure of Counterfeit Goods & Materials

The Patent Protection Service Industry

Patent Trolling

Conclusion

Terms & Concepts

Bibliography

Suggested Reading