Bus 311 (Cal Poly Wroldsen) Final Exam

US Patent Law

- Was 1st to invent now is 1st to file (whoever files first gets the patent, not who has the idea first)

- One year grace period in US if not filed properly, but may lose some foreign rights

Design Patent

- How things look

- Lasts for 14 years

- Unique shape, appearance, configuration

Utility Patent (general)

- How things work

- Lasts 20 years

- Machines, processes, manufactured items

What does a patent protect?

- Exclusive monopoly for the life of a patent (either 14 or 20 years)

- Patents are public knowledge/public domain after the lifespan

- Not renewable or extendable

- The owner does not need to "practice" or use the invention

What is the legal test for patentable "process"?

- Acts that transform something into a different state or thing

In Section 101, what does NOT constitute a patentable "process"?

- Abstract Ideas

- Natural Phenomena

- Laws of Nature

Licensing Company

- Solely owns and licenses patents

- Non-practicing entities (NPE's) and Patent Assertion Entities (PAE's)

Patent Trolls

- A person or company that buys as many patents as possible and sues others for infringement on them

Defense network

- If any member's patent becomes owned by a PAE, then all members receive automatic licensing

Utility Patents (requirements)

- Usefulness (Section 101)

- Novel (Section 102)

- Non-obvious (Section 103)

- Exs: Amazon's one-click technology, pharmaceutical

Parker v. Folk

- Catalytic converter removes pollutants in the oil refining process which operates in a certain temperature and pressure

- Not patentable because it is an algorithm and they cannot be patented

Diamond v. Diehr

- Curing synthetic rubber to precision rubber

- Well-known equation, but invented a computer program to know when to open the press to get the perfect rubber

- Equation is not patentable but the computer program is

International Patent Cooperation Treaty (PCT)

- Used for patent filing in multiple countries

- Opens 30-month filing window

European Patent Convention

- Able to file with 38 European countries at once

Paris Convention

- Filing date in participating country = US filing date, if filed in the US within one year

America Invents Act (2013)

- All countries became first to file

- USPTO is fee-funded (no longer funded by Congress)

- Filing time and examination quality improved

- Implemented patent trial and appeal board (PTAB)

- Filing date of patent application locks priority date AND starts the 20-year period

- Filing date of provisional patent application only locks in priority date (does NOT start patent period)

--> 12 month to file full patent app or another provisional app

Ex Parte Reexamination

- Under AIA

- Review only prior art or publications

- Not a trial, several year process

- Initiated by owner or third party (anonymous)

Inter Parte Review (IPR)

- Under AIA

- Trial, 12-18 month process (PTAB)

- Challenged patent NOT presumed valid

- Initiate 9 months after grant or PGR termination

- Challenge for prior art or publications only

Post Grant Review (PGR)

- Under AIA

- Trial, 12-18 month process (PTAB)

- Challenged patent presumed NOT valid

- Initiate within 9 months after patent grant

- Broadest grounds for challenging a patent (prior art, subject matter, written description, indefiniteness, enablement)

Section 103 (non-obvious subject matter)

- Claimed invention as a whole is non-obvious to a person having ordinary skill in the art

Panduit v. Dennison

- Dennison copied Panduit's cable tie

Hindsight = at the time the inventions were made, it would NOT have been obvious to those skilled in the art

"as a whole" vs. "single element" = may use whatever combinations, so long as those combinations are DISTINCT from Pandit's patented combination

Prior Art = notion that combination claims can be declared invalid merely on finding similar elements in separate prior patents would destroy virtually all patents

Section 102 (novelty)

- "A person shall be entitled to a patent UNLESS claim was patented or made seen to the public before the effective filing date of the claimed invention"

Dunlop v. Ram

- Dunlap received patent on golf balls using surlyn

- Ram later produced golf balls using surlyn and Dunlap sued for infringement

- Defense = Butch Wagner previously made surlyn golf balls but just kept it a secret

- Non-informing public use = not patentable by others

Haas Case

- Patent issued on factory machine

- Patent was challenged by Haas used similar machine earlier, but in secret

- Haas sold product made by machine to public

- Haas' prior use DOES NOT invalidate the later patent because secret use is not a public disclosure!

- If patent is issued despite Haas' prior use, Haas can no long use the invention (unless licenses it from patent holder)

Section 102 (Novelty) Legal Test

"Secret Use" (Haas)

- not a public use, so it is patentable by others

- manufacturing process

"Non-Informing Public Use" (Dunlop)

- is a public use, so it is not patentable by others

- distributed product

Trade Secrets

Information that:

- is secret to those in the industry

- a company makes an effort to keep confidential

- provides a competitive advantage

- Ex's: customer info, marketing plans, Coca-cola recipe, formula for New York Times Best Seller List

Patents vs. Trade Secrets

Patents = public disclosure and monopoly for 20 years (or 14 years)

Trade Secrets = monopoly for as long as it remains secret

List examples of trade secret disputes:

- Amazon v. Target (logistics processes)

- Barbie v. Bratz Dolls (marketing plans)

- Waymo v. Uber (engineering technology for self-driving cars)

Trade Secret Misappropriation

Information was a "trade secret" and:

1) Acquired through improper means

2) Acquired from party (you knew or should have known) that used improper means

or,

3) A duty of confidentiality was breached

Temporary Restraining Order (TRO's)

These are issued if...

1) Plaintiff will suffer irreparable harm if the defendant is allowed to use info prior to trial

2) Plaintiff has a strong likelihood of success at trial

(usually a large company v. startup/former employee or large company v. large company)

ICM v. DTI

- ICM makes computer programs for banks

- Newlin/Vafa developed ICM database management programs (also signed NDAs)

- Newlin/Vafa formed DTI after leaving ICM; developed prototype program with similar "overall architecture" to ICM's

- Conclusion: ex-employees misappropriated ICM's trade secrets

Whether information is a trade secret depends on:

1) Outside - how well known?

2) Inside - how well known?

3) Protection - how well guarded?

4) Value - how valuable to business and competitors?

5) Development - how much effort/money to develop?

6) Duplication - how easy for others to duplicate or acquire?

Employees v. Independent Contractors

- Employee: social security, medicare, payroll taxes, unemployment insurance, workers comp, and benefits paid by company, uses W-2 for taxes

- IC: completely independent, no benefits, 1099 form, worker pays all costs

Consequences for misclassification

- Workers recoup benefits

- Government recoups taxes

- Company also pays audit costs

ABC Test

- CA law passed in 2019

States that a worker is an employee unless ALL of the following are true:

A) Worker is free from control and direction

B) Worker performs tasks outside the company's usual scope of business

C) Worker is engaged in an independent business/occupation in same field

- Uber, Doordash, Lyft, etc are NOT included in test (they lobbied to become exempt and are all IC's)

Invention Assignment Agreements

- Default rule for employees: company owns "work made for hire (employee's copyrights and patents belong to company automatically)

- Default rule for contractors: contractor owns work product

IC Agreement (for IP ownership rights)

1) Treat contractor's work as "work made for hire"

2) Assign (transfer) contractor's ownership rights to company

List employee contractual restrictions:

- No moonlighting

- Non-disclosure agreement (NDA)

- Non-solicitation agreement (no raid provisions)

- Non-competition agreement (non-complete)

No Moonlighting

- Company says workers are not allowed to have side job

- Higher-level employees have more restrictions

- Restrictions of exact same job, cannot restrict completely different industry job

NDA's

- Protects confidential info (product design, marketing strategy)

- Confidential info, but not necessarily trade secrets

Non-soliciation

- Cannot solicit other employees, customer, etc

- Cannot leave company and take clients with them to start a new company

Non-competition agreement

- Must be part of another agreement

- Must include consideration (you have to be getting something in exchange)

- Three components of analysis: Activity, Geography, Time

- Always prohibited in CA, OK, SD, and Washington DC (other states prohibit for lower income employees)

CA Non-Competition Exceptions

1) Sale of business

2) Partnership agreement (upon dissolution or separation)

** In both cases, not including minority owners where purpose is to avoid noncompete laws

Ulbricht Case

- Silk Road website like Ebay for drugs, money laundering, etc

- Users were anonymous and used Bitcoin

- Ulbricht argued that because Bitcoin was not classified as a currency by any government agency or country that he could not be liable for money laundering

- Judge ruled that because Bitcoin's only purpose was to purchase things and can be converted to recognized currency, Ulbricht is liable

Money Laundering Control Act

Money laundering requires:

1) a "financial transaction" in which..

2) the defendant receives

3) proceeds from an "illegal activity"

Nosal Case

- Nosal left Korn/Ferry and solicited former colleagues to start a competing executive search firm

- Nosal's colleagues accessed the confidential client database & shared info with Nosal

Computer Fraud and Abuse Act (CFAA)

Prohibits:

1) "accessing a computer without authorization" and

2) access that "exceeds authorized access"

** meaning "to access a computer with authorization and to use such access to obtain or alter info in the computer that the accessor is not entitled to obtain or alter"

Outside Hackers

- Without authorization

Inside Hackers

- Exceeds authorization

Other crimes CFAA includes:

- Accessing a computer without authorization

- Espionage by computer

- Accessing a non-public government computer

- Fraud by computer

- Damage to a computer

- Trafficking in computer passwords,

- Extortionary threats to damage computers

Disruptive Technology Strike Force

- DOJ, Dept of Commerce, FBI, and Homeland Security are all involved

- Priorities include: export and control laws, CFAA enforcement, and private sector and international partnerships