Categories of United States Patents

There are three classes of patentable subject matter.  Recently, courts have recognized patentable subject matter in microorganisms, software, and business methods, each of which fall within one of the following three categories of patents:

1. Utility Patents.  These patents cover any new and useful process, machine, article of manufacture, or composition of matter or any new and useful improvement thereon.  The vast majority of patents are utility patents.  Examples of utility patents include electrical circuits, the single click Internet customer purchasing method, automobile parts, food additives, toothbrushes, prosthetic devices, new bacteria, DNA strands, and the like.  A utility patent’s term is 20 years, beginning on the filing date.

2.  Design Patents.  These patents cover new and ornamental designs of article of manufacture.  These inventions include the non-functional aspects of an article of manufacture that sets the invention apart from all other articles of manufacture.  Design patents are more akin to trademarks because they protect the new “look” of a product and generally have a very narrow scope of protection.  Examples of design patented items include wrought iron fencing and the shape of a telephone, a show, or a chair.  The term of a design patent in the United States is 14 years from the date of issuance by the PTO.

3.  Plant Patents.  Plant patents cover asexually reproduced plants, meaning that the plant through means other than seeds is able to propagate itself by budding, grafting, or the rooting of cuttings so that the child plant will have the exact characteristics of the parent plants.  Examples of plant patents include new and distinct varieties of spores, hybrids, and other new plants. A plant patent’s term is 20 years, beginning on the filing date.

A Note about business patents:  Recently, the court has expanded patentable subject matter for business patents, allowing business methodologies having nothing to do with software to be patented.  

Patent Marking
A.        Patent Pending Notice. Once an inventor has filed a U.S. patent application, the inventor may mark his or her products embodying the invention with the phrases “Patent Pending” or “Patent Applied For.”  Some inventors use the patent application number in combination with such phrases.  However, the patent pending notice has no legal effect, rather the notice simply warns would-be infringers that the invention may become patented at some time in the future.  The notice does not give the inventor the right to stop infringers from making using or selling the invention or products embodying the invention. However, in many cases the inventor may license the invention which is the subject of the pending patent or may begin selling the products embodying the invention as soon as the patent application is filed.  U.S. law prohibits the use of the “patent pending” notice on products unless a patent application has actually been filed and is currently pending on the claimed invention.  Under the Patent Act, an inventor fraudulently representing an invention as being the subject of a patent application may be fined $500 for every offense.

            B.        Patent Notice.  The availability of damages for patent infringement, whether for lost profits or a royalty, is contingent upon giving constructive notice of the patent through marking patented articles or by giving actual notice of the infringement. Actual notice means written notice of infringement given by the patent owner to the alleged infringer.  Patentees and persons making, offering for sale or selling a patented article may give notice to the public that the same is patented, either by fixing thereon or upon a label fixed to product or its packaging the word “patent” or the abbreviation “pat.” together with the patent number.  An example of a patent registration marking is as follows:

Pat. #5,145,643

The failure to mark patented items can affect the inventor’s right to recover damages unless the patent owner can prove that the infringer was notified of the infringement and continued to infringe.  Even if the patented item is completely concealed or contained within another unpatented device, the duty to mark the patented invention remains.  Also, retroactive damages based upon constructive notice are not available unless the patent owner’s patent marking program has been “substantially consistent and continuous.” 

Patent Licensing

  Patent licenses can be extremely complex documents because they are supremely flexible.  When negotiating a patent license the best practice is to negotiate a term sheet or a letter of intent prior to drafting the patent license agreement.  A term sheet allows the parties to agree to the major terms which will govern the license before drafting begins.  Term sheets enable the parties to come to a meeting of the minds and focus on the essential deal terms. Term sheets enable the deal to close faster because less time is spent haggling over language and in drafting. If the parties do not have an agreement on the essential terms, this will quickly become apparent to the parties negotiating a term sheet who may then choose to compromise or walk away, without having spent vast sums on legal fees to draft a complex agreement which does not reflect the intentions of the parties.
        When counseling a client who wishes to license a patent, it is important to discuss including all of the inventors in the license to avoid later conflict over patent rights.  The Ethicon case, illustrates the problems that may arise if creation of the initial patent license is not inclusive of all inventors who made contributions to the patented work.  In Ethicon, the court held that a license issued to a joint inventor in a patent was valid because the joint inventor was a joint owner of the patent and thus should have been named in the initial patent license.

               In addition to considering all inventors in patent licenses, it is also important to contemplate all rights that should be included in the license.  One should especially make sure to always license both the patent and the know-how associated with the patent.
Including the know-how associated with the patent in the license is important to avoid later patent misuse by a licensee.  However, a patent holder may need to reduce the royalty rate earned if (a) the patent does not issue; (b) the patent is never sought and consequently the patent license becomes a know-how license; or (c) the patent becomes invalidated, cancelled, or otherwise made unenforceable.  Patent misuse is discussed further below. 
            During licensing negotiations it is important to remember that just because an invention is patented does not mean that the invention may not infringe a prior issued patent.  A patent license only gives the licensee the rights that the licensor has to give;  licensee rights do not include, for example, rights that may infringe upon a prior-issued patent  Since a patent does not give the patent owner the right to make, use, sell, offer for sale, or import their invention, the patent owner can only grant the right to exclude others from doing so to its licensees.  The patent license merely permits the licensee to exercise the patent owner’s rights free from the threat of infringement by the patent owner.

1 - 35 U.S.C. §292.
2 - Id. §287(a).
3 - Amsted Indus., Inc. v. Buckeye Steel Castings, Co., 24 F.3d 178, 185 (Fed. Cir. 1994).
4 - 35 U.S.C. §287.
5 - In Maxwell v. J. Baker Inc. 86 F.3d 1098 (Fed. Cir. 1996), the Court held that a patent marking program whereby 95% of all products manufactured by the inventor were marked constituted constructive notice because “substantially all” of the products were routinely and continuously marked.  In many cases when a lower percentage of products are marked, courts have held that the marking program was less than “substantially consistent and continuous.”  In such cases, the courts held that there was no constructive notice.  In such cases the right to recover damages prior to actual notice was lost.