Building a Competitive Edge Building a Competitive Edge in the Handicrafts Sector:in the Handicrafts Sector:Protecting Inventions by Protecting Inventions by

Utility Models and/or Utility Models and/or Patents; Case StudiesPatents; Case Studies

Guriqbal Singh JaiyaGuriqbal Singh Jaiya

Factors Determining Success of a New/Improved Product

• The product provides functional advantages over competing or substitute products

• The retail-selling price is considered to be advantageous• The product and/or its packaging has an attractive design• The new product is properly branded, promoted and

advertised• The new product is readily available to customers in the

main retail shops• Consistent product quality• A number of after-sales services are provided

What is a Patent?

A patent is a right to exclude all others from exploiting an invention, which is a a new, nonobvious and useful…– Process (Treatment of cane; bamboo; finishing of a product;

kiln)– Machine (Looms; instruments)– Manufacture (Belt; fastening mechanism)– Composition of matter (Alloy)– Improvements (radical/incremental)

What is an invention?– Technical solution to a technical problem

(Functional versus Form/aesthetic)

What to Patent: Priorities

• What to patent– potential commercial products of a company– methods of making and using the products– systems utilizing the company’s products– parts of your product made by vendors– commercially important inventions– blocking patents to block competitors

What is a Patent?

• Patentabililty requirements:– Must be new (Worldwide)– Must have an inventive step/non-obvious– Must be capable of industrial application

• Maximum duration of a patent: 20 years (renewal fees must be paid)

• Territorial right

• Used publicly, Published, Sold or Offered for Sale

• PettyPatent/Utility Model

Prior Art

All information available prior to the date of filing of the relevant patent application against which the patentability of the invention will be determined.

• Existing relevant invention/technology• Can be your own invention/technology or of others• Secret prior art• Novelty/Nonobviousness• First to File/First to Invent (USA)

Exclusive Patent Rights

• Right to exclude others from making, using, selling or importing the claimed invention.

• Virtually no rights in unclaimed subject matter– Strategic claim drafting is important

• No automatic right to use patented invention

Patents

Patents that have changed the world:• Patent number: US 223,898. Edison’s electric

bulb.

Patents for simple low/tech products:• The inventor licensed the system for opening Coca-

Cola cans at 1/10 of a penny per can. During the period of validity of the patent the inventor obtained 148,000 UK pounds a day on royalties.

• Post-it notes: invented by chance, initially ignored by inventors but valued by the manager

ANATOMY OF A PATENT

ANATOMY OF A PATENT (cont’d)

ANATOMY OF A PATENT (cont’d)

THE PATENT APPLICATION

• SPECIFICATION

• CLAIMS

• DRAWINGS

SPECIFICATION

• A written description of the invention in clear and concise terms.

• The Specification must be enabling, that is, describe the invention in such a way as to permit one skilled in the art to make and use the invention.

• The Specification must disclose a mode/the best mode of making and using the invention. There can be no “material secrets” kept from a patent application.

SPECIFICATION (cont’d)

• Should also include reasonable alternatives to the preferred embodiments in order to avoid any inference that the invention is limited to the preferred embodiments.

CLAIMS

• Must “particularly point out” and “distinctly claim” the subject matter of the invention.

• Independent claim: A claim which does not reference any other claim.

• Dependent claim: A claim which references an independent claim or another dependent claim. Adds subject matter (limitations) to the preceding claim(s).

Claim Scope

• Independent claims define patent scope

• Dependent claims are fallbacks

– prior art

INVENTORSHIP

• In the United States, the patent application must be filed in the name of the inventor(s).

• Inventorship is purely a legal question, and is determined by an examination of who contributed creatively to what is being claimed. Inventorship cannot be dictated by politics, funding, ego, or even goodwill.

INVENTORSHIP (cont’d)

• An inventor can be anyone, and must be everyone, who contributes creatively to the conception or reduction to practice of the invention.

• Multiple inventors are referred to as JOINT INVENTORS.

Provisional Patent Applications

• Kept in secret by patent office

• Automatically abandoned in 12 months

• Do not count towards 20 year patent term

• Possibility of additions or changes when filing utility application within 12 months

• Should be reviewed by patent attorney before filing

PROVISIONAL APPLICATIONS

• Do not require claims

• Secure a filing date for a later-filed utility application if the disclosure of the provisional application is enabling for what is claimed later in the utility application

• Must be “converted” to a utility application within one year

Reasons for Patenting

• Reasons (nonexclusive) Products Processes – Prevent copying 96% 78%– Patent blocking 82 64– Prevent suits 59 47– Use in negotiations 48 37– Enhance reputation 48 34– Licensing revenue 28 23– Measure performance 6 5

Limits on Patent Effectiveness: Why Firms do not Patent

• Most important reasons for not applying– Demonstration of novelty (32%)– Information disclosure (24%)– Ease of inventing around (25%)

• Negative partial correlation between firm size and defense cost as reason not to patent suggests why larger firms report (product) patents to be more effective.

Distinguish Between “Complex” and “Discrete” Product Industries

• Complex product industries: Where a product protected by numerous (e.g., hundreds) patents (e.g., computers, communications equipment), that is, more patents read on a product.

• Discrete product industries: Where a product protected by relatively few patents (e.g., drugs, chemicals)

Distinction Implies Different Uses of Patents by Industry Type

• Complex product industries: Patents used to block rival use of complements to– Assure inclusion or “player” status in cross-

licensing negotiations in order to gain access to rivals’ technologies

– Gain freedom to operate and design freedom via “mutually assured destruction”

• Discrete product industries: Patents used to block substitutes by creating patent “fences;” not to compel cross-licensing.

Defensive Patent Strategy

• Large portfolio of patents of various scope– Protect products from copying– Cause competitor to design around– Reduce risk of patent infringement suit by

competitors - mutually assured destruction– Cross licensing - market entry

• Medium to large size companies• High cost

Offensive Patent Strategy

• Small portfolio of pioneering patents– Market leadership & advantage– Licensing– Deal & merger leverage

• Small to medium size companies

• Reasonable cost

• Market monitoring

Strategies for Acquisition of Patents

• What to patent?– Patent on every invention or only on high value inventions

– Gillette Mach 3 (one product, 35 patents)

– Patent mining

Strategies for Acquisition of patents

• When to patent?– Delay in filing a patent application may lead

to losing the patent to a competitor

– Grace Period

– First-to-file/invent system

– Annual maintenance fees often increase with time

Strategies for Acquisition of Patents

• Where to patent?– Where will the product be commercialized?

– What are the costs involved in patenting abroad?

– What are the main markets for the product?

– Where are the main competitors based?

– Advantages of the PCT (provides more time)

Strategies for Acquisition of Patents

• Who owns the patent?– Company, entrepreneur or employee?– What happens for subcontracted work?

Strategies for Patent Exploitation

• Case study of own exploitation of a patent– Case: Mandy Haberman– Invention of a non-spill drinking vessel– Application for patents and industrial designs– Registered mark: Anywayup®– Difficulties in accessing the main retail stores and

supermarkets – Search for a partner– Creation of a new company to commercialize the

product– Infringement and litigation

Strategies for Patent Exploitation

• Case study of a combined patent exploitation strategy: own exploitation and licensing

– Case: Pliva - Pfizer

– New antibiotic

– Patent application in Croatia and abroad

– Patent search by Pfizer leads to the discovery of the Pliva patent

– Pliva licenses Pfizer to produce the antibiotic in the US as well as in some other countries while Pliva maintains the exclusive right to commercialize it in Central and Eastern Europe

Strategies for Patent Exploitation

• Case study of a non-exclusive licensing strategy:– Case: Bishop Engineering

– Enterprise specialized in power steering technology

– Over 300 patents since WWII

– Earns 1 Australian dollar per unit made

– Over 5 million dollars a year on royalties

THE OTHER SIDE OF THE COIN

Patents: The other side of the Coin

• Patent 1. “deed securing to a person an exclusive right granted for an invention”

2. “open, evident, manifest”; “open to public perusal” < Latin patens

(Collins Dictionary)

Patent Information

• All patents are published (generally 18 months after the application is filed) and are in the public domain

• A patent is an exchange between the inventor and society

Using Patent Information

Did you know?

• The entire set of patent documents worldwide includes approximately 40 million items.

• Every year approximately 1 million patent applications are published.

• About two-thirds of the technical information revealed in patents is never published elsewhere.

Using Patent Information

Did you know?

• Most of the inventions are disclosed to the public for the first time when the patent is being published. (e.g. jet engine invented by Wittle in 1936).

• The information contained in the patent documents is NOT SECRET!

Using Patent Information

• “Patent information” is the technical and legal information contained in patent documents that are published periodically by patent offices.

• A patent document includes the full description of how a patented invention works and the claims which determine the scope of protection as well as details on who patented the invention, when it was patented and reference to relevant literature.

Patent information

Technological relevance

Legal relevance

Relevance of patent documents

Commercial relevance

Using patent information

Legal relevance:

• Avoid possible infringement problems• Assess patentability of your own inventions

• Oppose grant of patents wherever they conflict with your own patent

Using patent information

Technological relevance:

• Keep abreast with latest technologies in your field of expertise

• Avoid unnecessary expenses in researching what is already known – In Europe, more than US$ 30 mill. per year is waisted in

unnecessary research - 30% of the total investment in R&D

• Identify and evaluate technology for technology transfer

• Get ideas for further innovation

• Identify alternative technologies

Using patent information

Commercial Relevance

• Locate business partners• Locate suppliers and materials

• Monitor activities of real and potential competitors

• Identify niche markets