Disclosures in the Competitive Landscape
The patent race is on!!
Innovation has become a primary driving force in industry worldwide. Companies have been racing to develop their IP portfolios by scrambling to gather the most extensive patent coverage they can afford. New companies need to make their mark early, or they risk getting left behind, whereas established companies need to maintain and build upon their current IP portfolios if they want to remain competitive. This is reflected in the overwhelming 187,017 patents granted in the US patent office in 2003, an astounding 70% increase over 1993 (see chart below), and the USPTO expects these records to be broken each year. The trend in patent applications predicts that the escalation in patenting will continue. Applications in the year 2003 hit 366,043, a 94% increase over 1993.
Everyone agrees that patents are one of the cornerstones of free enterprise, but experts are beginning to raise concerns that the patent explosion is opening up opportunity for some very costly and serious problems down the road. Fortunately, new solutions based on the strategic use of technical disclosures are arising to combat those problems.
Overburdened examiners
The patent land grab is putting an extraordinary burden on the world patent offices, which try valiantly to absorb this explosive growth, yet are overwhelmed by sheer numbers. As a result, overly broad, and arguably bad patents are being issued every day, due in large part to the fact that examiners simply don't have the time to locate and review all the potential prior art before issuing a patent. Therefore, many of these patents would not hold up against an invalidity challenge in the courts. Indeed, thousands of patents are being contested, putting a heavy burden on the federal courts. In a perfect world, patents would never be issued on inventions previously placed in the public domain. Bad patents do issue, however, because examiners are simply unable to spend the time required to locate all relevant prior art in a given case. In fact, it is unlikely that innovation published to any number of disparate publications will ever be seen by examiners, much less be used to prevent the issuance of bad patents.
IP.com's introduction of a centralized database of published prior art, and IP.com's cooperation with the world patent offices to provide them with direct data feeds and/or web access, tremendously increases the chances that a particular piece of prior art will be found by examiners when needed.
Well-placed technical disclosures, therefore, are valuable on two points: first, to support examiners in preventing overly broad patents from issuing; and second, in cases where overly broad patents do issue, to be available and admissible years later at trial to form the basis for an invalidity defense in a patent case. When balanced against cost, it is far more important to prevent overly broad patents from issuing in the first place than to deal with postgrant consequences, such as litigation, millions of dollars in legal fees, lost time-to-market from adverse injunction rulings, downstream (post launch) product/service redesign, and loss of freedom to practice innovation.
Having an invalid patent get issued (to you) is worse than the application being rejected outright because it gives the holder of the patent a false sense of security. Invalid patents can cause the holder to make strategic and costly decisions that could later become fatal when the patent is overturned, and at great legal expense.
Aggressive patenting tactics
The frantic patent race is worsened by an aggressive tactic called picket fencing. To understand this ploy, suppose you have patented an invention that is key in a particular market space. A competitor who wants a piece of the market can surround your patent with a series of his own patents, each of which excludes you from some extension of your patented technology - whether that be an incremental improvement, a new use, or a necessary step in the process of bringing your technology to market. In so doing, he forces you into a cross-licensing agreement and reduces your market share.
One way to combat the picket fence would be to aggressively patent everything around all of your patents, but this would require you to acquire many patents of dubious value. A far superior approach is to engage in your own picket fence defensive disclosure tactic, in which technical disclosures are written by you for innovations, new uses, and developments required to bring the technology to market or to expand the market. The disclosures obstruct competitive patenting. Since your patent is the "core" or enabler of the defensively published ideas, you effectively protect your patent and extend its protective scope as the technology, its development, and your products mature. Thus, not only do you defend your patent, but you also protect your freedom to practice, your market, and ultimately, your bottom line.
High priced security
The mad dash to the patent office has put an extraordinary burden not only on the patent offices, but also on corporations that have to bear the compounding expenses. The cost involved in processing even a single patent is exorbitant. To acquire and maintain worldwide patent protection costs on the order of $250,000 over the lifetime of a single patent. Considering that most corporate giants are patenting hundreds, even thousands of innovations each year, patent budgeting can become outrageous.
However, the high price for remaining competitive in the high-stakes IP game can be controlled through skillful IP and prior art management. Roger L. May, general counsel, president and CEO of Ford Global Technologies Inc., has affirmed that position in a recent review in Corporate Legal Times where he stated, "There is no difference between being a good intellectual capital officer and being a good businessman."
So how can you succeed in the frantic IP world of the new millennium? Certainly, continued innovation is required - indeed your survival depends on it. The question is never whether to innovate, but what should be done with your innovation to optimize the business result.
