BUSINESS LAW SUMMARY
Ch. 11
Intellectual property is any product or result of a mental process that is given legal protection
against unauthorized use. There are four basic types: patents, copyrights, trademarks, and
trade secrets.
11.1 Patents
A patent is a government-granted right to exclude others from making, using, selling, or
importing an invention. The Patent and Trademark Office (PTO), an agency of the U.S.
Department of Commerce, is responsible for issuing patents.
The patent holder is not required to personally make use of the invention. After a specified
period, the patent expires, and the invention is dedicated to the public.
● Utility Patents
○ First comes, first serves.
○ Period of 20 years
○ To be eligible for a utility patent, the most frequently-issued type of patent, an
invention must be
■ (1) novel;
● An invention is novel if it was not anticipated—that is, not
previously known or used by others.
■ (2) useful;
● satisfy the utility requirement—that is, the invention must have
a practical or real-world benefit.
■ (3) non-obvious;
● A combination of two inventions can be non-obvious if there is
no prior art suggesting that they be combined.
■ (4) patentable as to subject matter. To be patentable as to subject
matter, the invention must be;
● (1) a process, machine, manufacture, or composition of matter
● (2) a novel, useful, and nonobvious improvement thereof.
● Design Patents
○ A design patent protects any novel, original (rather than nonobvious), and
ornamental (rather than useful) design for an article of manufacture.
○ Duration of 15 years from the date of the grant after 2015 (before 14 years).
● Plant Patents
○ Plant patents protect any distinct and new variety of plant that is asexually
reproduced (that is, not reproduced by means of seeds). The variety must not
exist naturally.
○ Period of 20 years.
1
,Statutory bar → Patent protection is unavailable in the United States if “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.”
11.2 Obtaining Patent Protection
To obtain patent protection in the United States, the inventor must file a patent application
with the PTO.
● Provisional Patent Applications
○ File provisional patent applications without formal patent claims. It allows the
inventor to utilize the term “patent pending.”
○ Has to be filed within 12 months or the invention loses its patentability.
● Non-provisional Patent Applications
○ Specifications
■ The specifications must describe the invention (as defined by the
claims) in its best mode. All descriptions must be clear, concise, and
exact.
○ Claims
■ The claims describe the elements of the invention that the patent will
protect.
○ Drawings and Declaration by the Inventor
■ The drawings must show the claimed invention. The declaration by the
inventor must state that the investor has reviewed the application and
believes he or she is the first inventor of the invention.
○ Review by Patent Examiner and Patent Issuance
■ Accepted, if the examiner and applicant agree on the precise language
of the claims, then a patent will be issued.
■ Rejected if the initial application as being precluded by prior
inventions or otherwise failing to meet the statutory requirements
○ Post-grant Review
■ A third party, such as a competitor, can petition the PTO to review the
validity of a patent after issuance in a process called a post-grant
review. Post-grant review is designed to eliminate invalid patents more
promptly than judicial review in litigation. < 9 months
■ > 9 months
● a third party may seek inter partes review, by showing “a
reasonable likelihood that” the challenger “would prevail.”
11.3 Patent Infringement and Litigation
Patent litigation is a high-stakes game for both established market participants and new
entrants, but the prohibitive cost of patent litigation can make it much more difficult for small
companies to recover damages from larger firms
2
, Types of Patent Infringement
● Direct Patent Infringement
○ It is the making, use, or sale of any patented invention within the
United States during the term of the U.S. patent.
■ However, it can be committed innocently and unintentionally.
→ It may be found under the doctrine of equivalents
● Contributory Patent Infringement
○ Contributory patent infringement occurs when one party knowingly
sells an item with one specific use that will result in the infringement
of another’s patent.
● Inducement to Infringe (Indirect Patent Infringement)
○ It is when a party actively induces another party to infringe a patent.
Defenses to Patent Infringement
● Invalidity
○ A patent is presumed to be valid, but a court may find it invalid if
■ (1) the invention was not novel, useful, or non-obvious when the patent
was issued;
■ (2) the patent covers nonstatutory (that is, non-patentable) subject
matter, such as an abstract idea, a scientific principle, or a mental pro-
cess
■ (3) a statutory bar was created by a publication or sale of the invention
prior to the filing of the patent application
■ (4) any other requirement of the patent law was not met.
○ The defendant must prove by clear and convincing evidence that the patent is
invalid. If succeeded, there is no liability for inducement of infringement
because there is no patent to infringe.
■ Accused inducers can also
● (1) ask a court to issue a declaratory judgment that the patent is
not valid
● (2) seek inter partes review at the Patent Trial and Appeal
Board, and
● (3) seek ex parte reexamination by the Patent and Trademark
Office.
● Non Infringement
○ The defense of noninfringement asserts that the allegedly infringing matter
does not fall within the claims of the issued patent.
■ The doctrine of prosecution history estoppel (sometimes called
file-wrapper estoppel) prevents a patent owner from asserting any
claim interpretation at odds with the application on file with the PTO.
● Patent Misuse
○ Even if the defendant has infringed a valid patent, the defendant has a defense
if it can prove that the patent holder abused its patent rights and therefore has
3
Ch. 11
Intellectual property is any product or result of a mental process that is given legal protection
against unauthorized use. There are four basic types: patents, copyrights, trademarks, and
trade secrets.
11.1 Patents
A patent is a government-granted right to exclude others from making, using, selling, or
importing an invention. The Patent and Trademark Office (PTO), an agency of the U.S.
Department of Commerce, is responsible for issuing patents.
The patent holder is not required to personally make use of the invention. After a specified
period, the patent expires, and the invention is dedicated to the public.
● Utility Patents
○ First comes, first serves.
○ Period of 20 years
○ To be eligible for a utility patent, the most frequently-issued type of patent, an
invention must be
■ (1) novel;
● An invention is novel if it was not anticipated—that is, not
previously known or used by others.
■ (2) useful;
● satisfy the utility requirement—that is, the invention must have
a practical or real-world benefit.
■ (3) non-obvious;
● A combination of two inventions can be non-obvious if there is
no prior art suggesting that they be combined.
■ (4) patentable as to subject matter. To be patentable as to subject
matter, the invention must be;
● (1) a process, machine, manufacture, or composition of matter
● (2) a novel, useful, and nonobvious improvement thereof.
● Design Patents
○ A design patent protects any novel, original (rather than nonobvious), and
ornamental (rather than useful) design for an article of manufacture.
○ Duration of 15 years from the date of the grant after 2015 (before 14 years).
● Plant Patents
○ Plant patents protect any distinct and new variety of plant that is asexually
reproduced (that is, not reproduced by means of seeds). The variety must not
exist naturally.
○ Period of 20 years.
1
,Statutory bar → Patent protection is unavailable in the United States if “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.”
11.2 Obtaining Patent Protection
To obtain patent protection in the United States, the inventor must file a patent application
with the PTO.
● Provisional Patent Applications
○ File provisional patent applications without formal patent claims. It allows the
inventor to utilize the term “patent pending.”
○ Has to be filed within 12 months or the invention loses its patentability.
● Non-provisional Patent Applications
○ Specifications
■ The specifications must describe the invention (as defined by the
claims) in its best mode. All descriptions must be clear, concise, and
exact.
○ Claims
■ The claims describe the elements of the invention that the patent will
protect.
○ Drawings and Declaration by the Inventor
■ The drawings must show the claimed invention. The declaration by the
inventor must state that the investor has reviewed the application and
believes he or she is the first inventor of the invention.
○ Review by Patent Examiner and Patent Issuance
■ Accepted, if the examiner and applicant agree on the precise language
of the claims, then a patent will be issued.
■ Rejected if the initial application as being precluded by prior
inventions or otherwise failing to meet the statutory requirements
○ Post-grant Review
■ A third party, such as a competitor, can petition the PTO to review the
validity of a patent after issuance in a process called a post-grant
review. Post-grant review is designed to eliminate invalid patents more
promptly than judicial review in litigation. < 9 months
■ > 9 months
● a third party may seek inter partes review, by showing “a
reasonable likelihood that” the challenger “would prevail.”
11.3 Patent Infringement and Litigation
Patent litigation is a high-stakes game for both established market participants and new
entrants, but the prohibitive cost of patent litigation can make it much more difficult for small
companies to recover damages from larger firms
2
, Types of Patent Infringement
● Direct Patent Infringement
○ It is the making, use, or sale of any patented invention within the
United States during the term of the U.S. patent.
■ However, it can be committed innocently and unintentionally.
→ It may be found under the doctrine of equivalents
● Contributory Patent Infringement
○ Contributory patent infringement occurs when one party knowingly
sells an item with one specific use that will result in the infringement
of another’s patent.
● Inducement to Infringe (Indirect Patent Infringement)
○ It is when a party actively induces another party to infringe a patent.
Defenses to Patent Infringement
● Invalidity
○ A patent is presumed to be valid, but a court may find it invalid if
■ (1) the invention was not novel, useful, or non-obvious when the patent
was issued;
■ (2) the patent covers nonstatutory (that is, non-patentable) subject
matter, such as an abstract idea, a scientific principle, or a mental pro-
cess
■ (3) a statutory bar was created by a publication or sale of the invention
prior to the filing of the patent application
■ (4) any other requirement of the patent law was not met.
○ The defendant must prove by clear and convincing evidence that the patent is
invalid. If succeeded, there is no liability for inducement of infringement
because there is no patent to infringe.
■ Accused inducers can also
● (1) ask a court to issue a declaratory judgment that the patent is
not valid
● (2) seek inter partes review at the Patent Trial and Appeal
Board, and
● (3) seek ex parte reexamination by the Patent and Trademark
Office.
● Non Infringement
○ The defense of noninfringement asserts that the allegedly infringing matter
does not fall within the claims of the issued patent.
■ The doctrine of prosecution history estoppel (sometimes called
file-wrapper estoppel) prevents a patent owner from asserting any
claim interpretation at odds with the application on file with the PTO.
● Patent Misuse
○ Even if the defendant has infringed a valid patent, the defendant has a defense
if it can prove that the patent holder abused its patent rights and therefore has
3
