capital gains on patents

Capital Gains – Intellectual Properties  

Capital Gains May Be Available For The Transfer Of Intellectual Property Rights

A capital gains tax rate for the transfer of Intellectual Property is available if the transfer of Intellectual Property rights is carefully planned.

Patent Rights are not Accorded Capital Gains Status – Unless…

26 I.R.C. 1221 – Capital Asset, in part, reads:

(a)    In General

For purposes of this subtitle, the term “capital asset” means property held by the taxpayer (whether or not connected with his trade or business), but does not include –

(3) a patent, invention, model or design (whether or not patented), a secret formula or process, a copyright, a literary, a musical/artistic composition, a letter or memorandum, or similar property, held by—

                    (A)    a taxpayer whose personal efforts created such property,

                    (B)    in the case of a letter, memorandum, or similar property, a taxpayer for whom such property was prepared or produced, or

                    (C)    a taxpayer in whose hands the basis of such property is determined, for purposes of determining gain from a sale or exchange, in whole or part by reference to the basis of such property in the hands of a taxpayer described in subparagraph (A) or (B)

Situation 1 – Patent Capital Asset

Joe was the founder of his company JoeCo. Over the years, Joe was the inventor of several Patents for the products sold by JoeCo. After 40 years in business, Joe was seeking buyers for JoeCo. AcquireCo purchased JoeCo and all assets and liabilities.

Joe can treat this transfer of Patent rights as a capital asset because the U.S. Internal Revenue code also includes 26 I.R.C. 1235. When specific facts exist, the inventor’s Patents are capital assets taxed as capital gains.

26 I.R.C. 1235 – Sale or Exchange of Patent, in part, reads:

(a)    General    A transfer (other than by gift, inheritance, or devise) of property consisting of all substantial rights to a patent, or an undivided interest therein which includes a part of all such rights, by any holder shall be considered the sale or exchange of a capital asset held for more than 1 year, regardless of whether or not payments in consideration of such transfer are—

                     (1)     payable periodically over a period generally coterminous with the transferee’s use of the patent, or

                     (2)    contingent on the productivity, use, or disposition of the property transferred.

(b)    “Holder” defined For purposes of this section, the term “holder” means—

                    (1)     any individual whose efforts created such property, or

                    (2)    any other individual who has acquired his interest in such property in exchange for consideration in money or money’s worth paid to such creator prior to actual reduction to practice of the invention covered by the patent, if such individual is neither—

                    (A)    the employer of such creator, nor

                    (B)    related to such creator (within the meaning of subsection (c)).

Situation 2 – Intellectual Property Gains

Jill was a seamstress with talent for making and selling clothing designs that generated a comfortable living for her family. Jill was a sole proprietor and over the years received two Trademark Registrations for Jill’sThings®. After 40 years, Jill sold her business to AcquiringJack, LLC with a knack for scaling small businesses. 26 I.R.C. 1221 does not prevent Jill’sThings® from being classified as capital assets. Therefore, the sale of Jill’sThings® would be treated as capital gains.

Situation 3 – Patent Capital Asset

AcquiringJack, LLC purchased all rights associated with two JoeCo Patents previously sold to a third party. AcquiringJack LLC held the JoeCo Patents for 18 months and sold the JoeCo Patents to LastMinuteCharlie, Inc. AcquiringJack, LLC’s sale of the JoeCo Patents will be treated as capital gains.

Situation 4 – No Capital Gains

Second Fiddle was an individual who was a skilled guitarist and sufficiently talented to write original music. Over the years, Second Fiddle had received Copyright Registrations for some of his musical compositions. While on a regional tour with his band, the Fiddlers, a vice president of Big Break Inc. made Second Fiddle an offer he could not turn down for his Copyright Registrations.  Second Fiddle sold his Copyright Registrations to Big Break Inc. According to 26 I.R.C. 1221, a Copyright or musical score held by the creator is not a capital asset. Second Fiddle’s sale was taxed as ordinary income.

Situation 5 – Intellectual Property Capital Gains

Philharmonic Violin was an individual who played third violin with the orchestra. Although not as musically skilled as some other violinists in the orchestra, Philharmonic Violin wrote a few concertos and was granted some Copyrights for her efforts. Philharmonic Violin assigned her Copyrights to her company, Concertos LLC. On her lucky day, Philharmonic Violin arrived early for practice and was playing some of the supporting violin portions of her concertos. Big Director, the CEO of his production company, heard the portions of Philharmonic Violin’s concertos and told Philharmonic Violin that they were perfect for the score of one of his films. On that day, Big Director wrote a check payable to Concertos LLC. Because Concertos LLC rather than Philharmonic Violin received the payment, the payment will be taxed as a capital asset.

Business Patent Law, PLLC does not provide tax counsel. The above situations are only illustrative. Changes in the facts of a taxable situation can generate different applications of Title 26 Internal Revenue Code. Advance planning for taxable situations can reduce the amount of taxes paid. For tax advice, please contact your tax advisor.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Do a Claims Check on Your Patent

Claims Checks Are Important  

Claims Checks

Doing claims checks of  your Patents are essential because they define the scope and boundaries of the Patent.

Claims are Legal Boundaries

As previously indicated in this Blog on Patent Infringement: “A deed for real property determines the real property’s boundary and what constitutes a trespass. In a similar vein, Patent claims define the intellectual property boundary of the Patent and what establishes an infringement.”

The Situation

Approximately five years ago, our company filed three Patent Applications for three separate products that our company continues to market and sell to our national and international customers.

Our attorneys and the USPTO examiners had several rounds of arguments regarding the patentability of claims of our three Patent Applications. Over this timespan, some of the as-filed claims of the three Patent Applications were amended, canceled and/or re-amended by our attorneys. Before the end of the patenting process, our attorneys also added some new claims not previously set forth in the as-filed claims. Even the examiners made some examiners’ amendments to the claims.

After all the arguments, the USPTO issued Notice of Allowances. We paid the Issue Fees and we eventually received the three granted Patents.

The claims of two of the Patent we received were perfect. However, the claims checks revealed that about half of the claims of the third Patent were incorrect.

What should we do?

Actions: When a Claims Check Reveals Errors

  • Although not recommended, a few Patent owners do not attempt to correct the incorrect claims.
  • Review the USPTO file wrapper and your files to determine where and when the claims errors occurred. If the errors were caused by the USPTO, the USPTO requires no additional fees to correct the incorrect claims. If the errors were caused by the Applicant(s), the USPTO requires the payment of a government fee to correct the errors.
  • Sometimes, other parts of a Patent contain errors that need correction.
  • Submit a Certificate of Correction (PDF) to the USPTO.

Claims can be considered the heart and soul of the Patent, so it’s essential that yours be correct.

Need More Information?

If you have a question about Claims checks, please get in touch with Business Patent Law, PLLC.

Have another topic or question you would like Business Patent Law, PLLC to address in the blog? Please send us an email!

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

If you would like to stay up-to-date with the news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Post Trademark Registration Junk Mail

Post Trademark Registration: Beware Fraud, Scam & Junk Mail

What is a Post-Trademark Registration Junk Mail Barrage?

In part, the post-Trademark Registration junk mail barrage is a type of direct mail marketing. (In the US, the estimated response rate for direct mail campaigns is 3.5% to 4.24%. Thus, direct mail can be an inexpensive way to obtain a customer and/or make a sale.) Direct mail campaigns continue to creep into postal boxes, some of which are honest and aboveboard and others that are not.

Following your Trademark Registration, your company may receive legitimate-looking “bills” or “invoices” by mail that appear to be related to your trademark registration. Those may be a scam. Here’s what you need to know:

A Trademark Registration Scenario 

Trademark Registrations are part of the Public Record.

Our marketing department initially filed three US Trademark Applications. About a year after filing the US Trademark Applications for the “Yes,” “No,” and “Maybe” Marks, our Louisville Company received three Trademark Registrations from the United States Trademark Office. Marketing and sales quickly added the ® to our labels and continued marketing and selling our products.

Our company’s protocol has been that the mailroom sorts the incoming mail and sends anything appearing to be an invoice to accounting for payment. Accounting was trained to look for suspicious invoices.

Within weeks of receiving our US Trademark Applications, unbeknownst to management, accounting paid several invoices that appeared to be related to United States Trademark Office business.

Those invoices appeared to be associated the US Trademark Office, but were not.

Types of Post Trademark Registration Solicitations

As a general rule, the US Trademark Office will not utilize the postal service to solicit payments from the Trademark Owner.

Under Title 15 of the United States Code, USPTO post Registration fees become due at five years, nine years, nineteen years, twenty nine years, etc. Any USPTO fee requested by a third party not associated with these dates is suspicious.

Solicitations attempting to induce the Trademark owner to pay fees may come in many ways. (Some third parties solicit the transfer of funds outside the United States, others solicit funds to roaming US postal box locations and some have apparent legitimate street addresses.)

  • Some solicitations are for actual services, albeit not those likely needed by the Trademark owner. (These are like the old yellow page ads for a regional rather than a local telephone book.)
  • Other direct mail campaigns induce the Trademark owner to actually pay for something in a country outside the United States while making the payment appear to be for something in the United States.
  • Still others encourage payment for some service in the United States, where the service is not actually needed to maintain the Trademark Registration in full force and effect.

If you have a question about the post-Trademark Registration barrage of mailed materials and junk mail, please contact Business Patent Law, PLLC., for guidance.

If you have a topic or question you would like Business Patent Law, PLLC to address in the blog, please send us an email.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

 

Notice of Abandonment for Patent

Notice of Abandonment

Approximately six months ago, our company’s patent attorney filed our response to the USPTO Office Action. The response was filed within the time period set by the USPTO. We just received a USPTO Notice of Abandonment of our Patent Application.

When receiving a Notice of Abandonment, do not panic. It is not uncommon for the USPTO to take months and sometimes more than a year to reply to an Applicant’s response. Applicants have two months from the date of the Notice of Allowance to file documents in the USPTO.

What Can You Do?

First, let’s determine your particular situation, based on the letter you received…

The Notice of Abandonment identifies the USPTO’s reasons for the abandonment

  • Pursuant to 37 C.F.R 1.135, prepare a complete response for the most recent Office Action that was issued prior to the Notice of Abandonment.
  • Pursuant to 37 C.F.R. 1.137, prepare a Petition to Revive and pay the USPTO fee.

The Reason(s) for the Notice of Abandonment cannot be readily discerned

  • When the Examiner is known, attempt to call the Examiner.
  • Most Examiners are responsive to telephone inquiries.  However, if the Examiner is not responsive to your telephone messages, attempt to call the Examiner’s supervisor.  Supervisors generally return calls.
  • If the Examiner is unknown, search the USPTO database for one or more telephone numbers that can be of assistance in identifying USPTO personnel that may be of assistance.
  • If the Notice of Abandonment is associated with a US National Stage Application, the PCT help desk may be of assistance.

Once you have the evidence required to respond to the Notice of Abandonment:

  • Pursuant to 37 C.F.R 1.135, prepare a complete response for the most recent Office Action that was issued prior to the Notice of Abandonment.
  • Pursuant to 37 C.F.R. 1.137, prepare a Petition to Revive and pay the USPTO fee.

The Code of Federal Regulations

37 C.F.R 1.135 – Abandonment for failure to reply within time period reads:

  • (a) If an applicant of a patent application fails to reply within the time period provided under § 1.134 and § 1.136, the application will become abandoned unless an Office action indicates otherwise.

  • (b) Prosecution of an application to save it from abandonment pursuant to paragraph (a) of this section must include such complete and proper reply as the condition of the application may require. The admission of, or refusal to admit, any amendment after final rejection or any amendment not responsive to the last action, or any related proceedings, will not operate to save the application from abandonment.

  • (c) When reply by the applicant is a bona fide attempt to advance the application to final action, and is substantially a complete reply to the non-final Office action, but consideration of some matter or compliance with some requirement has been inadvertently omitted, applicant may be given a new time period for reply under § 1.134 to supply the omission.

37 C.F.R 1.137 Revival of abandoned application, or terminated or limited reexamination prosecution.

In part, 37 C.F.R 1.137 reads:

(a) Revival on the basis of unintentional delay. If the delay in reply by applicant or patent owner was unintentional, a petition may be filed pursuant to this section to revive an abandoned application or a reexamination prosecution terminated under §1.550(d) or §1.957(b) or limited under §1.957(c).

(b) Petition requirements. A grantable petition pursuant to this section must be accompanied by:

  • The reply required to the outstanding Office action or notice, unless previously filed;

  • The petition fee as set forth in §1.17(m);

  • Any terminal (and fee as set forth in §1.20(d) required pursuant to paragraph (d) of this section; and

  • A statement that the entire delay in filing the required reply from the due date for the reply until the filing of a grantable petition pursuant to this section was unintentional. The Director may require additional information where there is a question whether the delay was unintentional.

Navigating the requirements of protecting your intellectual property can be challenging. If you need assistance, please contact Business Patent Law, PLLC.  We provide intellectual property and business counsel for businesses and companies. If you would like to stay up-to-date with the news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Legal licenses and licensing agreements

Licenses: What You Need to Know

Licenses Defined

We can define licenses as, “an owner giving permission to a legal entity or a real person to make, produce, or use an owner’s tangible and/or intangible property.” Almost anything can be the subject of a License. It is best to have a written document for any License agreement.

Types of Licenses

There are exclusive and nonexclusive Licenses.

When the owner grants an exclusive License, it means that the owner will not grant another License to a third party.

Whether an exclusive or a nonexclusive License is granted can impact the bargaining power of the Licensor or the bargaining power of the Licensee. For example, a multinational franchisor may not grant exclusive Licenses while a start-up may be happy to grant an exclusive License.

What to Include in a License Agreement

  • As long as it is legal, a License may contain any type of clause or section related to the owner’s tangible and/or intangible property as well as the duties of each party
  • Definitions regarding the meanings of specific words used in the License
  • Grant of permission to make, produce, or use an owner’s tangible and/or intangible property
  • Specific description(s) of the licensed tangible and/or intangible property
  • Description of each geographic territory covered by the License and the term of the License
  • Obligations to commercialize the licensed tangible and/or intangible property and milestones payments
  • License fees and running royalties
  • Licensee’s progress reports, records and audits
  • Banks and currency used for payments and timing of payments
  • Ownership of jointly created tangible and/or intangible property related to the licensed tangible and/or intangible property
  • Confidentiality and trade secrets
  • Licensee’s guarantees to comply with governmental regulations in all jurisdictions where Licensee is using or selling the licensed tangible and/or intangible property
  • Dispute resolution
  • Termination and wrap-ups
  • Continuing obligations after termination

The above are just some sections and clauses that can be included in Licenses.

License Agreements can be complicated contracts. If your company needs assistance to prepare its Licenses or your company needs help to determine if it is advantageous to execute a License, please contact Business Patent Law, PLLC.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

The Copyright Bundle (17 U.S.C. §106) of Exclusive Rights includes: The right to reproduce the copyrighted work in copies or phonorecords The right to prepare derivative works based upon the copyrighted work The right to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending In the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly In the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly In the case of sound recording, to perform the copyrighted work publicly by means of a digital audio transmission

Copyright Bundle

Sometimes people in the musical or performing arts make reference to a Copyright Bundle.  Copyright Registrations can enhance the “litigation teeth” associated with a Copyright Bundle.

What is a Copyright Bundle?

The Copyright Bundle (17 U.S.C. §106) of Exclusive Rights includes:

  • The right to reproduce the copyrighted work in copies or phonorecords
  • The right to prepare derivative works based upon the copyrighted work
  • The right to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending
  • In the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly
  • In the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly
  • In the case of sound recording, to perform the copyrighted work publicly by means of a digital audio transmission

Our Situation: Will our Copyright Bundle help us?

Our Louisville, Kentucky musical group has a Copyright Registration for the musical score and lyrics of our signature song.

When in Lexington, Kentucky, we stopped at one of Lexington’s music spots to enjoy the local music.  Although one of the Lexington groups made some changes to the lyrics of our signature song, they did not miss a beat of our copyrighted score.

The group did not have permission to use our signature song and the Lexington musical spot charged admission for us to enter the premises.

General Observations

Based on the above scenario, unless the Lexington group and Lexington music spot could prove a fair use defense, the Louisville group has a valid claim for Copyright infringement.

If you have questions about your Copyrights, please contact Business Patent Law, PLLC.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

foreign patent protection

How Much Does a Foreign Patent Cost?

Contemplating Patent Protection in Foreign Jurisdictions

During management’s last meeting, it was clear that our international sales have tripled over the last few years. Some of us expressed concern about potential “knock-offs” in other countries. Some of our suppliers are in Asia and the Pacific. We talked to other friendly companies about the costs of foreign Patents. The information provided by our friendly contacts about costs varied. Their common denominator was conjunctive – but the foreign Patent costs!

Should Our Company File Foreign Patent Applications?

It depends. As a general rule, Business Patent Law advises clients:  If a foreign Patent will not make money for the Company or prevent the Company from losing money, there is no business reason for filing one.

Patent rights create a limited monopoly in the foreign jurisdiction granting the Patent.

General Observations on the Costs of Foreign Patents.

  • Applications that can be filed in the English language tend to cost the least
  • Applications that must be transliterated from English into a non-Roman alphabet language tend to be the cost the most
  • Applications that can be translated into a foreign language using the Roman alphabet tend to cost somewhere between an English language Application and a transliterated language foreign Patent Application
  • Usually, the Parent Patent Application is a United States Patent Application prepared by Business Patent Law. When Business Patent Law’s foreign associates opt to utilize most of Business Patent Law’s United States Parent Patent Application, costs to our clients tend to be less than when foreign associates do not use BPL’s Parent Patent Application

Rankings of Costs of Procuring and Maintaining Foreign Patents in Select Foreign Jurisdictions*

  1. European Patent Office                                            14-17 x USPTO costs
  2. Japan Patent Office                                                   2.5-3 x USPTO costs
  3. Korean Intellectual Property Office                       2-3 x USPTO costs
  4. China National Intellectual Property Admin.      2-2.5 x USPTO costs
  5. Mexican Patent Office                                              1.5-2 x USPTO costs
  6. Brazilian National Institute of Industrial Prop.  1-2 x USPTO costs
  7. Australian Patent Office                                           1.0-2 x USPTO costs
  8. Russian Patent Office                                                1.0-1.5 x USPTO costs
  9. Philippines Patent Office                                          1.0-1.5 x USPTO costs
  10. Canadian Intellectual Property Office                   1.0-1.5 x USPTO costs
  11. Indian Patent Office                                                   1.o-1.5 x USPTO costs

* Estimates are based on Business Patent Law’s experience, and due to other countries’ Patent Office and foreign associates activities, fees can be outside of the above estimated ranges. Ranges are based on everything proceeding smoothly in the other Patent Offices.

If we can assist your Company with developing a foreign strategy, please contact Business Patent Law, PLLC.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Office Action Made Final Patent Law

Office Action Made Final

What is an “Office Action Made Final” from the Patent Office?

Our Company received an Office Action Made Final from the Examiner, what does it mean and what do we do now?

In the Office Action Made Final, some of the Patent claims were allowed and some the Patent claims were rejected.

How Can We Respond to an Office Action Made Final?

In responding to the Office Action Made Final, some of the options for your business are:

  • Cancel the rejected claims and have your Patent Issue on the allowed claims
  • Cancel the rejected claims; have your Patent issue on the allowed claims; and file a Continuation-Type Application directed to the previously rejected claims before the Patent is granted
  • If circumstances permit, cancel the rejected claims; have your Patent issue on the allowed claims; and file a Divisional Application
  • File a Request for Continued Examination
  • Initiate an Appeal directed toward the rejected claims
  • Allow the Application to go abandoned

Another Option: The Pilot Program

37 Code of Federal Regulations (C.F.R.) §1.116 provides for the filing of a Request for Consideration under the After Final Consideration Pilot Program.

If the required conditions of 37 C.F.R. §1.116 are met, it provides a potentially less expensive route for responding to an Office Action Made Final than the above options.  Some of the conditions for using the Pilot Program are:

  • There must be an Office Action Made Final
  • Applicant must amend at least one independent claim that narrows the scope of the claim
  • A USPTO Certification and Request for Consideration under the After Final Consideration Pilot Program 2.0 Form must be filed with Applicant’s Response
  • Applicant’s Response must be filed using EFS-Web
  • There is no USPTO fee to request consideration under AFCP 2.0, but any other USPTO fee that is due must be paid at the time of the request consideration under AFCP 2.0
  • Applicant must to participate in any interview requested by the Examiner

The Law – 37 Code of Federal Regulations 

37 C.F.R. 1.116 reads:

Amendments and affidavits or other evidence after final action and prior to appeal.

 

(a) An amendment after final action must comply with §1.114 or this section.

 

(b) After a final rejection or other final action (§ 1.113) in an application or in an ex parte reexamination filed under § 1.510, or an action closing prosecution (§ 1.949) in an inter partes reexamination filed under § 1.913, but before or on the same date of filing an appeal (§ 41.31 or § 41.31 of this title):

 

(1) An amendment may be made canceling claims or complying with any requirement of form expressly set forth in a previous Office action;

 

(2) An amendment presenting rejected claims in better form for consideration on appeal may be admitted; or

 

(3) An amendment touching the merits of the application or patent under reexamination may be admitted upon a showing of good and sufficient reasons why the amendment is necessary and was not earlier presented.

 

(c) The admission of, or refusal to admit, any amendment after a final rejection, a final action, an action closing prosecution, or any related proceedings will not operate to relieve the application or reexamination proceeding from its condition as subject to appeal or to save the application from abandonment under § 1.135, or the reexamination prosecution from termination under § 1.550(d) or § 1.957(b) or limitation of further prosecution under § 1.957(c).

(d)

 

(1) Notwithstanding the provisions of paragraph (b) of this section, no amendment other than canceling claims, where such cancellation does not affect the scope of any other pending claim in the proceeding, can be made in an inter partes reexamination proceeding after the right of appeal notice under § 1.953 except as provided in § 1.981 or as permitted by § 41.77(b)(1) of this title.

 

(2) Notwithstanding the provisions of paragraph (b) of this section, an amendment made after a final rejection or other final action (§ 1.113) in an ex parte reexamination filed under § 1.510, or an action closing prosecution (§ 1.949) in an inter partes reexamination filed under § 1.913 may not cancel claims where such cancellation affects the scope of any other pending claim in the reexamination proceeding except as provided in § 1.981 or as permitted by § 41.77(b)(1) of this title.

 

(e) An affidavit or other evidence submitted after a final rejection or other final action (§ 1.113) in an application or in an ex parte reexamination filed under § 1.510, or an action closing prosecution (§ 1.949) in an inter partes reexamination filed under § 1.913 but before or on the same date of filing an appeal (§ 41.31 or § 41.61 of this title), may be admitted upon a showing of good and sufficient reasons why the affidavit or other evidence is necessary and was not earlier presented.

 

(f) Notwithstanding the provisions of paragraph (e) of this section, no affidavit or other evidence can be made in an inter partes reexamination proceeding after the right of appeal notice under § 1.953 except as provided in § 1.981 or as permitted by § 41.77(b)(1) of this title.

 

(g) After decision on appeal, amendments, affidavits and other evidence can only be made as provided in §§ 1.198 and 1.981, or to carry into effect a recommendation under § 41.50 (c) of this title.

If the law excerpt above seems confusing, we can help. We can assist your Company to understand what the notice you received says and what your options are under the law. Together we can develop a Response to the Office Action Made Final, for your best outcome.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Patent Law

Notice of Allowance – Patents

The Question

Our Company received a Notice of Allowance on our Nonprovisional Patent Application. What are our next steps?

Consider: If the invention claimed by the Nonprovisional Patent Application is a “core” technology or a money maker for your company, it is wise to keep an Application pending.

More information you need: 35 United States Code 151 gives the Applicant a maximum of three months from the date of mailing of the Notice of Allowance for the Applicant to pay the Issue Fee. (Note: If the Issue Fee is not paid, the Patent Application will be abandoned.)

Tech Sufficiently Different

If the newer technology is sufficiently different from the structures of the pending Nonprovisional Patent Application, a Provisional Patent Application can be filed. (Inventions can consist of biological, chemical, electrical or mechanical structures or combinations thereof.)

Tech Sufficiently Similar

If your newer technology is sufficiently similar (or incorporates many of the structures of the pending Nonprovisional Patent Application) and certain conditions are met, a Continuation-Type Application (claiming priority to your pending Nonprovisional Patent Application) can be filed with the United States Patent and Trademark Office.

The Law

35 U.S.C. 151, in part, reads:

(a)     In General.—

If it appears that an applicant is entitled to a patent under the law, a written notice of allowance of the application shall be given or mailed to the applicant. The notice shall specify a sum, constituting the issue fee and any required publication fee, which shall be paid within 3 months thereafter.

There are Two Continuation-Type Applications (in USA)

  • A Continuation Application – this claims priority to the pending Nonprovisional Application, utilizes the Specification of the Nonprovisional Patent Application, and includes new claims.
  • A Continuation-in-Part Application – claims priority to the pending Nonprovisional Application, adds “new matter” (structures) to the Specification of the Nonprovisional Patent Application, and includes new claims.

Child Patents Used to Broaden a Parent Patent

Seasoned Applicants frequently file a Child Patent Application claiming priority to the Parent Application. If you opt to use this procedure, make sure you file the Child Patent Application before the Patent flowing from the Parent Application is granted. If the Patent is granted before the Child Patent Application is filed, Patent Examiners may be able to use the Parent Patent to prevent the Child Patent Application from succeeding.

The Law

35 U.S.C. 102, in part, reads:

“(a)Novelty; Prior Art.—A person shall be entitled to a patent unless—

(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention…”

Terminal Disclaimers and Your Patent Application

Use of Continuation-Type Patent Applications may require that any future Patent granted be limited by a Terminal Disclaimer. As a general rule, a Terminal Disclaimer causes the term of the Children Patents to expire on the same day as the Parent Patent.

The Law

35 U.S.C. 120 reads:

“An application for patent for an invention disclosed in the manner provided by section 112(a) (other than the requirement to disclose the best mode) in an application previously filed in the United States, or as provided by section 363 or 385, which names an inventor or joint inventor in the previously filed application shall have the same effect, as to such invention, as though filed on the date of the prior application, if filed before the patenting or abandonment of or termination of proceedings on the first application or on an application similarly entitled to the benefit of the filing date of the first application and if it contains or is amended to contain a specific reference to the earlier filed application. No application shall be entitled to the benefit of an earlier filed application under this section unless an amendment containing the specific reference to the earlier filed application is submitted at such time during the pendency of the application as required by the Director. The Director may consider the failure to submit such an amendment within that time period as a waiver of any benefit under this section. The Director may establish procedures, including the requirement for payment of the fee specified in section 41(a)(7), to accept an unintentionally delayed submission of an amendment under this section.”

Don’t Delay Your Response to a Notice of Allowance!

You should not delay initiating your company’s strategy, since a Notice of Allowance requires your action, as an applicant.

  • Issue Fee must be paid within three month of the Notice of Allowance – There are no time extensions
  • Grant of Patent can be delayed as much as 4 months from date of Notice of Allowance
  • It can be quite time-consuming for your Attorney to prepare the Continuation-Type Application or the Provisional Patent Application, so don’t delay
  • Assembling the required inventor’s declarations and assignments can also be time-consuming (even more so when when inventors in different time zones and multiple jurisdictions are involved
  • Preparing the required USPTO documents that accompany the Continuation-Type Application can be tedious
  • A Continuation-Type strategy can often be used for several years before it is no longer cost-effective for the Company

Questions? We Can Help!

If your company is developing a post Notice of Allowance strategy, we can help. Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies. If you need assistance, please contact us.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

The Law and Contracts in Lexington Kentucky

Questions About Contracts

Contracts Can Seem Contradictory

It’s pretty easy to understand why contracts are often confusing. After all, contracts can include clauses that allow opposing sides to make contrary assertions about the meaning of one or more of the clauses in the contract.

When a contract comes under fire, and the amount in controversy increases, so do opposing counsels’ arguments about such things as the meanings of “a,” “the” and the placement of colons, commas, semicolons and other punctuation.

Politicians and lawmakers (most of whom are lawyers) have argued over the meaning of the word “is.” In a civil trial, both sides have plausible arguments, and the jury decides who is more believable.

With this real-world reality in mind, most companies strive to provide their sales force with the best “boiler plate” contracts. However, those can pose their own challenges.

Boiler Plate Contracts

Although, our company’s “Boiler Plate” contracts have served us well – we now have a new situation…

The New Situation

Our Company’s Region 1 representative executed a contract with a new Lexington, Kentucky company for 1 MM Gizmos. We ordered 1 MM Gizmos from our supplier F.O.B. origin. The new company is refusing to pay an upfront deposit as required by our “boiler plate” contract. In addition, this new company indicated it considered all “boiler plate” contracts “null and void.”

We have an agreement signed by the new company and our Region 1 representative. We gave the Region 1 representative the authority to execute the “boiler plate” contracts for our company. Our attorneys inform us the agreement is “solid.” Our Region 1 representative tells us that he and the other signatory were in the signatory’s office on the premises of the new customer when they both signed the contract.

Is the Contract Enforceable?

For there to be a valid contract, each signatory must have the authority to bind their respective companies to the agreement. Whether the agent of a company has the authority to bind the company is factually dependent.

Corporations

  • As a general rule, the President, CEO or COO has the designated explicit authority to bind the corporation to a contract. If the customer’s signatory was a President, CEO or COO, then the contract is likely valid.
  • Agents such as the CFO and Vice Presidents can be granted actual authority to bind the corporation to a contract. If the customer’s signatory was one of these agents, the contract is likely valid.
  • Agents such as the chief of marketing or chief of engineering may have either actual authority or implicit authority to bind the corporation to a contract. If the customer’s signatory did not have actual authority, but a pattern of behaviors can prove that the customer’s agent had a history of executing contracts for the customer, the contract would likely be held valid at trial.
  • A midlevel marking manager would not likely have explicit or implicit authority to bind the corporation to a contract and the contract with the customer would be invalid.

Limited Liability Companies, Professional Limited Liability Companies, Limited Liability Partnerships

  • As a general rule, the designated Manager or Managing Member has the explicit authority to bind the limited liability company to a contract. If the customer’s signatory was the Manager or Managing Member, then the contract is likely valid.
  • Agents can be granted actual authority to bind the limited liability company to a contract. If the customer’s signatory was one of these designated agents, the contract is likely valid.
  • It is possible to prove an agent’s implicit pattern of behaviors that the customer’s signatory had a history of executing contracts for the customer. With such proof, the contract would likely be held valid at trial.

General Partnerships

  • General partners are jointly and severally liable. Each general partner can bind the partnership to a contract.
  • Agents can be granted actual authority to bind the general partnership to a contract. If the customer’s signatory was one of these designated agents, the contract is likely valid.

Do you have questions about contracts? We can help. Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.