Uncertainty in Intellectual Property

What is uncertain, what is unknown and what can be modelled?

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We can know, for a given classification, past grant rates. This gives a rough a priori probability.

We can also know abandonment and withdrawal rates.

We cannot know how an examiner is going to approach the case.

One of the biggest unknowns is the prior art that is cited. Prefiling searches enable a general view of the level and type of art that maybe cited. However, in my experience, prefiling search art is rarely cited in subsequent search and examination reports, everyone has a different set of preferred art to cite.

Generally there will be a link between claim length and novelty / inventive step objections: shorter claims are more likely to receive objections on these grounds.

We also cannot always know how valuable a patent will be. This depends on commercial context that is constantly changing.

We cannot know the outcome of litigation.

We can, though, update our probabilities based on events. For example, comments from an examiner, opposition board, Board of Appeal, or other party to proceedings can change our knowledge. A positive opinion can increase our estimate of the probability of success and a negative opinion can decrease the same.

Professionals that appear, externally, to be able to control uncertainty will attract more business. No one likes uncertainty, especially in business. However, even a rudimentary history or background knowledge would indicate that, although it is possible to be lucky, uncertainty can never be banished or controlled. Any offer of certainty is thus false.

Making the Most of Early Patent Prosecution

Obtaining a patent is an uncertain process. It is difficult, if not impossible, to predict the prior art that may be located or the examiner you are assigned. Grant rates often vary from 5 to 50%, and it is rare for patent claims to be allowed without limitations during prosecution.  However, there are techniques to manage this uncertainty. Some of these are discussed below.

The International Patent Application

For many businesses, the US and Europe are core markets. To obtain patent protection in these markets, many patent attorneys advise filing an International patent application (also called a Patent Cooperation Treaty – PCT – application). An International patent application only needs to be converted into specific national or regional applications 30 months from an initial filing or priority date. This provides time for a product or service to develop in parallel with a pending application and leaves open the possibility of obtaining protection in states such as Japan, China, Korea and Australia.

An International patent application is searched and a written opinion is drawn up by an examiner. The written opinion resembles an examination report. For applicants from Europe, the European Patent Office prepare these documents. The European Patent Office is seen internationally as one of the tougher patent offices; I often see cases with favourable opinions from examiners in the US, Korea and China hit objections when the case is examined by the European Patent Office.

Costs

There are also costs to consider. Patenting is not cheap. Depending on length and scope, a patent application will likely cost between £5-10k (all figures are excluding taxes and at 2017 rates) to be drafted. Filing costs for an International patent application are £4-5k (most of this being official fees). Filing costs for national or regional applications at the end of the International phase will cost between £5-10k (a chunk of this being official fees and/or translation costs). Then it may cost between £5-15k to prosecute an application and pay grant fees. A good rule of thumb is £30k per country over a 3-7 year period.

A Strategy

Faced with this, a strategy I often suggest is set out below:
Patent Prosecution Workflow

Initial UK Patent Filing

First, it is worth noting that I would not attempt the patenting process unless I could budget around £10k per year over the first 3 years.

Second, it is good to take advantage of the ease and low cost of the UK Intellectual Property Office for a first filing. Official fees are only £230 for filing, search and examination (a bargain really – European Patent Office fees are 10x this). Unlike the US there is no need for assignments and declarations to be filed. You can register this first filing with the priority document access service as well, which makes supply of a certified copy of the priority document a doddle.

UK Combined Search and Examination Report

The UK Intellectual Property Office provide a combined search and examination report with 4-6 months. You can ask to accelerate this and if you have a good reason the request is often granted, shortening the time to 4-8 weeks. While a UK search is often not quite as thorough as an European search, it is quick and cheap (e.g. as compared with Europe or US). It is thus a useful way of identifying any “low-hanging” prior art that may be problematic.

For example, if “knock-out” prior art is located you can choose to withdraw the application within the first 12 months before publication. This helps to cap your loss at the £10k or so of initial costs; it prevents you spending another £20k only to get a refusal on subsequent national or regional applications (or even to have a patent that would easily get knocked out in court). Withdrawing before publication means the content of the patent application will not become public and count against future applications you may make. This is useful if the patent application relates to a product in development; you may come up with an improvement after a year that could support a further patent application that can reuse much of the initial material.

Even if “knock out” prior art is not found, the UK combined search and examination report can help you strengthen your patent claims. For example, prior art may be cited that anticipates your main claims but an amendment is possible that renders the claims novel and inventive over the cited documents. It is definitely better to work this out over a leisurely 4 month period (e.g. iterating with the inventors who may still remember the case), rather than rush this just before priority-claiming applications need to be filed at the 12-month point. While you can never be sure that subsequent searches by other patent offices will not find other, more relevant prior art, an amendment at this stage is often going to be taking your application in the right direction and will be making favourable opinions more likely. Engineers may like to see this as a first “stress test” for the patent application.

The UK combined search and examination report may also flag other issues such as clarity or support that are best dealt with early on. For example, a term you and your inventors thought was well-known may be considered by the UK examiner to be unclear; the specification may then be amended to provide a more in-depth definition from text-books or Wikipedia.

If you do need to amend the claims at this 6-12 month stage, another advantage is that you can make sure that you maximise the scope of positions covered by your patent claims. For example, you first filing may have 20 patent claims. If a number of these claims are deemed obvious over the general knowledge or certain claims need to be added to the main independent claims, then claims may be deleted and other improved fall-back positions added.

Typically, it is good to set aside some inventor time, and a budget of £1-2k to review the UK combined search and examination report and cited art. I often see those who choose not to make this investment at this stage be subject to avoidable higher costs later on in prosecution.

International Phase

If you have a set of patent claims that are novel and inventive over the prior art cited by the UK Intellectual Property Office, the next stage is to file an International patent application within 12 months of the initial filing date.

If you are a UK company, the European Patent Office will perform another search and issue a written opinion setting out any objections. They are pretty good at issuing this within 4-6 months of filing the International patent application. The European search and written opinion provides the second “stress test” of the claims.

Often the European examiner will locate new prior art. One way to reduce this risk is to amend the background of the patent specification before filing the International patent application to make reference to the prior art located in the UK search. In 25-50% of cases, if the UK-cited prior art is relevant and reasonable, the European examiner will (understandably) take the easier option of citing it again. At the very least, referencing the UK-cited art can help you “seed” the European search towards areas you have had time to analyse.

If the European examiner does locate new prior art, then again it is recommended to repeat the same analysis that was performed for the UK combined search and examination report. Often you still have over a year before choices regarding national or regional applications need to be made. A relatively leisurely 4-8 weeks review cycle, incorporating comments from inventors or other engineers, at an attorney cost of £1-2k, can again reap cost savings later on in prosecution.

For example, if the European cited art is “knock out”, costs can be capped at around £15k (e.g. drafting, UK filing, PCT filing and review costs). It may not be possible to have the search results in time to be able to stop publication (which is why the UK search is good). This may seem a lot but it prevents additional spends of £15-20k per country (e.g. £30k < spend < £80k) only for you to receive multiple refusals 2-3 years later.

If amendment is possible, then this can be determined following a review of the prior art and a claim set prepared for national and regional applications. At this stage you may have more confidence in the claims as you know they have been through both UK and European examination. This may make it easier to justify patent applications in multiple countries to a company board or budget comittee.

If a strong position is possible following review and amendment, you may have an option to accelerate prosecution in Europe based on the amended claims. For example, you may wish to file the amended claims and comments on entry, waive the Rule 161 EPC period and file an acceleration request (https://www.epo.org/law-practice/legal-texts/html/guidelines/e/e_viii_3_3_1.htm). This may result in a notice of allowance as the first communication. This could be issued within 3 months of entry to the European regional phase (https://www.epo.org/law-practice/legal-texts/html/guidelines/e/e_vii_4_2.htm). This could be used as part of a Patent Prosecution Highway scheme in other national offices (e.g. US or China).

Cost Savings

This process represents an additional spend of up to £4k in attorney time. However, this easily pays for itself:
  • It can avoid spending up to £40k+ on patent applications worldwide that are unlikely to be granted.
  • It can avoid long and protracted European Patent prosecution. 
  • It often simply represents front-loading of costs that would be occurred in normal prosecution.
  • It allows leisurely review while the case may still be fresh in inventors minds (with touch points at 6 and 18 months following the filing process). This can also promote inventor engagement with the patent process.
  • The possibility of Patent Prosecution Highways could avoid long and protracted prosecution In multiple countries.
  • If you do obtain a patent it is likely to be stronger and hence of more value.

Why is it hard to patent software?

Obtaining a strong, enforceable patent that protects your software invention is often difficult. Here I will touch on some approaches to stack the odds in your favour.
Software

Why is it difficult to patent software?

There are a number of hurdles that must be overcome to obtain a patent for a software invention. These include:
  • Being new: at least one aspect of your invention must differ from other solutions available to the public. This includes solutions described in other patent applications, blog posts, manuals, online documentation and white papers.
  • Being inventive: not only must your invention have a differing feature, that differing feature needs to be non-obvious. If the differing feature is common knowledge, e.g. is a common feature described in text books or on Wikipedia, and it is straightforward to use it in the context of the other known features, then your invention will be deemed obvious. Likewise if the differing feature is described in another document, and it would be obvious to combine this other document with the pre-existing solution providing the other features, then your inventive will be said to lack an inventive step.
  • Being patentable: your software invention must meet requirements set by law for patentable subject matter. Each jurisdiction has slightly different rules. Normally, statute sets some very broad categories of excluded subject matter. Individual cases and hearings then provide a body of case law that says which areas are allowable and which areas are not. For example, in Europe you need to show that the differing feature provides a ‘technical’ effect, which is often an engineering improvement.

Patenting software also taxes patent attorneys and patent examiners. With mechanical products, you can often see and feel the invention. Similarly, pharmaceutical inventions may be defined through sets of well-defined chemical formulae. Software is harder to visualise – there may be multiple technology layers in an implementation stack and many non-essential interoperating parts. This can often lead to poor patent specifications and misunderstandings.

Also if a patent claim is too specific then it will be easy for a software developer to work around. Most inventions will need to transcend a particular programming language or technology to cover ports to different platforms and to future-proof a patent’s value. However, if a patent claim is too broad, it is often deemed too abstract to be patentable and may also run afoul of clarity provisions.

What do these difficulties mean in practice?

In practice these difficulties often lead to:
  • Low grant rates;
  • Validity challenges;
  • High prosecution spend; or
  • Patent avoidance.

These factors often interact to form a vicious cycle of mutual distrust: too many poor quality patent specifications are filed, leading to cynicism from patent examiners and the public, which leads to knee-jerk rejections and lobbying, which in turn undermines confidence in the system from businesses.

What can we do?

The first thing software companies can do is to find the right patent attorney or attorney firm. There are a few attorneys who deal with software day-in-day-out. These need to be sought out. Look for an attorney with experience of working for a large software company, e.g. Microsoft, IBM, Hewlett-Packard, Oracle, SAS, Amazon, Google. The European Patent Office allows you to search by representative to see example applicants.

The second thing software companies can do is to set high standards for their patent specifications. The recent change in practice in the US will hopefully catalyse this. Technical or engineering features should be defined in detail; any high-level marketing terms or IT jargon should be jettisoned. A strong technical problem should be eluded to, and there should be a good set of tiered fall-back positions, each with their own defined engineering advantages.

The third thing software companies can do is to keep on top of the case law in different jurisdictions. Your patent attorney may offer to help you with this. At a simple level, a one page table can show what kind of inventions have been allowed and what kind of inventions have been refused. For example, UK hearing officers often find that database management improvements are not allowed, whereas European examiners find these are technical.