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.

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.

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.

Options when your design patent application is rejected

Design Patent Application Rejection: Now What?

Design Patent Applications have a single claim. Design Patents are for ornamentation. Utility Patent Applications generally have more than a single claim that concern the invention’s structure, function or both.

The Situation

Our company received an Office Action for our Lexington branch’s Design Patent Application A from the USPTO. The Examiner argued that the claim of our Lexington Design Patent Application was obvious in view of a Louisville competitor’s Design Patent B. The Examiner rejected our claim.

We think the Examiner is in error. How can we argue against the Examiner’s rejection of our claim?

The Statutory Law

35 United States Code (U.S.C.) Section 103 reads:

A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.

Challenging Design Patent Rejections

Possible avenues of argument to rebut a rejection for a Design Patent Application include:

1.) Design Patent B is not analogous art

With respect to non-analogous art, In re Glavas, 230 F.2d 447, 450 109 USPQ 50, 52 (CCPA 1956) provides guidance.  The Glavas court indicated:

The question in design cases is not whether the references sought to be combined are in analogous arts in the mechanical sense, but whether they are so related that the appearance of certain ornamental features in one would suggest the application of those features to the other.

Thus, if the problem is merely one of giving an attractive appearance to a surface, it is immaterial whether the surface in question is that of wall paper, an oven door, or a piece of crockery. . . .

On the other hand, when the proposed combination of references involves material modifications of the basic form of one article in view of another, the nature of the article involved is a definite factor in determining whether the proposed change involves [patentable] invention.

Therefore, where the differences between the claimed design and the prior art are limited to the application of ornamentation to the surface of an article, any prior art reference which discloses substantially the same surface ornamentation would be considered analogous art. Where the differences are in the shape or form of the article, the nature of the articles involved must also be considered.

2.) The Examiner failed to consider the design as a whole

Among other things, the USPTO Manual of Patent of Examining Procedure indicates that before Design Patent A can be obvious, it must be compared with something in existence. Thus it can be argued that the Examiner failed to make a prima facie case of obviousness if he/she failed to consider the design as a whole.

As a whole, a design must be compared with something in existence, and not something brought into existence by selecting and combining features from prior art references. See In re Jennings, 182 F.2d 207, 86 USPQ 68 (CCPA 1950). The “something in existence” referred to in Jennings has been defined as “…a reference… the design characteristics of which are basically the same as the claimed design….” See In re Rosen, 673 F.2d 388, 391, 213 USPQ 347, 350 (CCPA 1982) (the primary reference did “…not give the same visual impression…” as the design claimed but had a “…different overall appearance and aesthetic appeal…”.) Hence, it is clear that “design characteristics” means overall visual appearance. This definition of “design characteristics” is reinforced in the decision of In re Harvey, 12 F.3d 1061, 1063, 29 USPQ2d 1206, 1208 (Fed. Cir. 1993), and is supported by the earlier decisions of In re Yardley, 493 F.2d 1389, 181 USPQ 331, 334 (CCPA 1974) and In re Leslie, 547 F.2d 116, 192 USPQ 427, 431 (CCPA 1977). Specifically, in the Yardley decision, it was stated that “[t]he basic consideration in determining the patentability of designs over prior art is similarity of appearance.” 493 F.2d at 1392-93, 181 USPQ at 334. Therefore, in order to support a holding of obviousness, a primary reference must be more than a design concept; it must have an appearance substantially the same as the claimed design. See In re Harvey, 12 F.3d 1061, 29 USPQ2d 1206 (Fed. Cir. 1993). Absent such a reference, no holding of obviousness under 35 U.S.C. 103 can be made, whether based on a single reference alone or in view of modifications suggested by secondary prior art.

When a claim is rejected under 35 U.S.C. 103 as being unpatentable over prior art, features of the design which are functional and/or hidden during end use may not be relied upon to support patentability. “[A] design claim to be patentable must also be ornamental; and functional features or forms cannot be relied upon to support its patentability.”

3.) Design Patent B taught in a divergent direction from Design Patent Application A

What does it mean to be “taught away” or “taught in a divergent direction” in relation to a patent application?

A prima facie case of obviousness can be rebutted if the applicant…can show that the art in any material respect ‘taught away’ from the claimed invention…A reference may be said to teach away when a person of ordinary skill, upon reading the reference…would be led in a direction divergent from the path that was taken by the applicant.

— In re Haruna, 249 F.3d 1327, 58USPQ2d 1517 (Fed. Cir. 2001)

As you can see, patent law can be confusing. If you need help to secure yours, call us. Business Patent Law, PLLC assists companies and individuals with the procurement and management of their Intellectual Property portfolios.

If you or your enterprise need legal assistance procuring/managing/enforcing your Patent Applications, Patents, Copyrights or Trademarks/Service Marks, please contact Business Patent Law, PLLC. We provide intellectual property and business counsel for individuals and businesses.

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 application possibilities

Patent Application Possibilities

Depending on your company’s intellectual property strategy, there are many Patent Application possibilities.

The Question

Our R&D engineers recently invented improvements for our Company’s Product One.  We have sold Product One for more than a year. The US Patent for Product One was granted six months ago. Can the Company file a US Patent Application for Product Two that includes two structures not part of Product One?

The Answer

It depends on the situation and 35 United States Code 120.

Examples and Possibilities

Patent Application Possibilities  – First Example

  • Our Company filed a US Provisional Patent Application disclosing Product One on June 20, 2019.
  • Our Company filed a US Nonprovisional Patent Application disclosing and claiming Product One on June 15, 2020.
  • The USPTO granted our US Patent for Product One on February 9, 2021.

In August 2021, your Company can file a Patent Application for Product Two in the USPTO. However, the USPTO will be able to use the US Patent for Product One to argue against the patentability of Product Two. Unless there are novel and nonobvious structural differences between Product Two and Product One, the USPTO will not grant a Patent for Product Two.

Patent Application Possibilities – Second Example

  • Our Company filed a US Provisional Patent Application disclosing Product One on June 20, 2019.
  • Our Company filed a US Nonprovisional Patent Application disclosing and claiming Product One on June 15, 2020.
  • In August 2021, the US Nonprovisional Patent Application for Product One is still pending in the USPTO.

Because the Product One US Nonprovisional Patent Application is still pending, your Company can file a US Continuation-in-Part Nonprovisional Application for Product Two, claiming priority to pending US Nonprovisional Patent Application for Product One. The USPTO cannot effectively use the structures of the Product One Patent Application to reject identical structures in the Product Two Patent Application.

Patent Application Possibilities – Third Example

  • Our Company filed a US Provisional Patent Application disclosing Product One on June 20, 2019.
  • Our Company filed a Patent Cooperation Treaty Patent (PCT) Application disclosing and claiming Product One on June 15, 2020.
  • Our Company filed a US National Stage Nonprovisional Application claiming priority to PCT Application for Product One on August 15, 2020.
  • The USPTO granted our US National Stage Patent for Product One on April 13, 2021.

Pursuant to Title 35 of United States Code and Patent Cooperation Treaty, your Company has until December 2021, to file a US Continuation-in-Part Nonprovisional Application for Product Two claiming priority to PCT Application for Product One.

The USPTO cannot effectively use the structures of the PCT Application for Product One or the April 13, 2021 US Patent for Product One to reject identical structures in the Product Two Patent Application.

35 United States Code 120 Benefit of earlier filing date in the United States

 35 U.S.C. 120, in part, 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.

For those companies that have a profitable (or potentially profitable) product that is patentable, it is wise to keep a Patent Application pending.  The marketplace decides whether the first generation, the second generation or a subsequent generation product is the most profitable.

Need Help With Securing Your Product Patent?

Business Patent Law, PLLC assists companies and individuals with the procurement and management of their Intellectual Property portfolios. If your enterprise needs legal assistance procuring/managing/enforcing your Patent Applications, Patents, Copyrights or Trademarks/Service Marks, please contact Business Patent Law, PLLC.

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.

Pet Product Patents

Pet Care Patents In The United States

Pet Care Patents

Pet lovers are often the inventors of pet care products and many seek pet care patents for their inventions. In addition to improving the lives of pets, these inventors hope to make a profit from their inventions. How popular are these inventions? According to the United States Patent and Trademark Office database, there are more than 2000 Patents having the word “dog” in the title of the Patent.

Potential Market for Pet Care Patents

People love their pets, whether they are dogs, cats or another type of animal. As a result, the pet care industry is big business! In the United States in 2020, it is estimated that over $100 billion US dollars were spent in the pet industry.

Three Fun Pet Care Patents

Below are three examples of pet care product patents for your review. One is for automated petting, one is for automated watering and the last is a tool to help with the dog-walking chore. These products were selected at random from the thousands of patents that have been issued for pet care products in the United States.

1.) A scratching and petting device for pets

2) A pet watering device

3) A device to assist pet walking

USPTO Utility Patent Basics

Like any other type of utility Patents, the pet care inventor must comply with the following sections of the Title 35 of the United States Code (U.S.C.):

35 U.S.C. 101 – Patentable Subject Matter

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title.

35 U.S.C. 102 – Novelty

In part, 35 U.S.C. 102 reads: 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; or  (2) The claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.

35 U.S.C. 103 – Non Obvious Subject Matter

A patent for a claimed may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.

35 U.S.C. 112 – Specification

In part, 35 U.S.C. 112 reads:

a) In General

The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.

(b) Conclusion

The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor or a joint inventor regards as the invention.

We hope you enjoyed reading about the pet product patents! If your enterprise needs legal assistance procuring/managing/enforcing your pet product Patent Applications, Patents, Copyrights or Trademarks/Service Marks, please contact Business Patent Law, PLLC.

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 affects your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

USPTO Notice to Correct Application Papers -Patent Law

Notice to Correct Application Papers

What is a Notice to Correct Application Papers?

The notice means United States Patent and Trademark Office (USPTO) has found an issue with the  filing (the way the paperwork looks, or what’s included in, or a clarification is needed your application) and is asking you to correct them and resubmit. Your time in which to do so is limited, if you want to retain the original filing date (and we know you want to keep that earliest date!)

A Notice to Correct Application Papers can be issued anytime during the pendency of a Nonprovisional Patent Application, but it will usually be sent shortly after your Patent Application is filed.

Your Filing May Be Considered “Informal”

Section 506 of the USPTO Manual of Patent Examining Procedure reads:

“III. INFORMAL APPLICATIONS

An application is informal if it is typed on both sides of the paper, or is not permanent, legible, or reproducible. If such informalities are timely corrected, the application is given the filing date on which the original informal papers were filed.

OPAP accords a filing date, as of the date indicated by the “Office Date” stamp (see MPEP 505), to application papers which include a specification containing a description and at least one claim (nonprovisional applications filed under 37 C.F.R. 1.53(b) prior to March 18, 2013 and design applications), and a drawing, if necessary under 35 U.S.C. 113 (first sentence) and 37 C.F.R. 1.53(b), but are informal because they do not comply with the rules or notices. In such applications, OPAP will send a Notice (e.g., Notice to File Corrected Application Papers) requiring correction of the informality. Failure to correct the informality within the specified time results in abandonment of the application.”

Case Study: The Situation

  • Our company’s Dallas R&D department filed a US Provisional Patent Application for one the company’s electromechanical gadgets. Before the expiration of the Provisional Patent Application, our company filed a US Nonprovisional Patent Application claiming the benefit of the US Provisional Application. Our in-house patent attorney located at our principal office in Houston had previously used this strategy to procure several US Patents.
  • Among other things, the Nonprovisional Patent Application included: an Abstract, Claims, a Specification and black and white line Drawings.
  • After filing the Nonprovisional Application, the USPTO generated a Notice to File Missing Parts because one of the inventor’s Declarations was missing from the as-filed Application. After receiving the Notice to File Missing Parts, our in-house counsel timely supplied the missing inventor’s Declaration to the USPTO.
  • Over the subsequent three and one-half years, our in-house counsel argued back and forth with the Patent Examiner, and eventually, the Examiner issued a Notice of Allowance for our electromechanical gadget Nonprovisional Patent Application.
  • More than a month after receiving the Notice of Allowance, the Examiner issued a Notice to File Corrected Application Papers.

Our Company’s Notice to Correct Application Papers

The Notice, in part, read:

“Notice of Allowance Mailed

This application has been accorded an Allowance Date and is being prepared for issuance. The application, however, is incomplete for the reasons below.

Applicant is given two (2) months from the mail date of this Notice within which to respond. This time period for reply is extendable under 37 CFR 1.126(a) for only two additional MONTHS.

The informalities requiring correction are indicated in the attachment(s). If the informality pertains to the abstract, specification (including claims) or drawings, the informality must be corrected with an amendment in compliance with 37 CFR 1.121…

Figure numbers are missing or duplicated. FIGS 21-24.”

Notice to Correct Application Papers: Our Next Steps

Since our company had never received a Notice to Correct Application Papers, we looked to a law firm to manage this matter for us. Amended Drawings were filed and the Patent issued in due course.

Do You Need Help From a Lawyer Specializing in Patent Law?

If you have received a Notice to Correct Application Papers, or have other questions or concerns about filing and protecting your intellectual property, we are here for you. General or in-house counsel is great for many of the legal questions or tasks your company may need, but questions about working with the Patent and Trademark Office and responding to their notices, may require someone with more specialized experience.

Protect Your Valuable Intellectual Property

If your enterprise needs legal assistance procuring/managing/enforcing your Patent Applications, Patents of Trademarks/Service Marks, please contact Business Patent Law, PLLC.

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.