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Posts from November 2010.
Posted in Trademarks

Beware trademark creep! “Trademark creep” is a catchy term for one of the dangers that stalks any trademark (or service mark) that consists of only a design (as opposed to words) or of both word(s) and design elements.

For some immutable reason, the design elements of a trademark tend to evolve over time, and “creep” refers to the situation where such change is unintentional or unnoticed or both. An image file gets flipped over by mistake and the fish in the trademark that used to swim to the viewer’s right turned around and now swims to the left; words stacked vertically to begin their trademark life one day do not fit on a brochure so they get rearranged onto a horizontal line, and everyone likes the new look; colors get mixed up, the blue circle and the red square become the red circle and the blue square. Why does this happen? 

And why does it matter? It matters because while trademark registrations can last forever, they do so only if the owner makes the required periodic maintenance filings—“continuing use” after the first five years; renewal on every tenth anniversary of registration thereafter. And each one of these filings requires submission of a specimen of use, showing the mark as it is currently in use. This “maintenance” specimen must match the mark as originally registered. If it does not match, you can lose your registration, and this is a shame (as well as an economic loss) because the value of a trademark registration increases directly with time and ongoing use of the mark. The older your mark, the more protection the law gives it.

If your current maintenance specimen and your mark as it appears in the original certificate of registration are not a perfect match, you may be okay if the current specimen and original certificate “make the same commercial impression.” And you guessed it, the sameness of commercial impression is in the eye of the (examiner) beholder.

If you do miss a perfect match but keep your registration by virtue of “same commercial impression,” then you are well advised to prepare a filing to “amend the mark in registration.” This results in an amended certificate showing the current mark, but you retain the benefit of your original filing and registration dates.

One tip if you are adopting a words-and-design mark: you should consider applying to register in addition the words-only version of the mark in standard characters because a word mark registration protects XYZ, xyz, XyZ, Xyz, etc., i.e., you do not need to worry about consistency in the format of your words-only mark.

Trademark creep is international and venerable. The writer recently had occasion to visit the porcelain factory in the city of Meissen, Germany. There he saw a large display showing how Meissen’s crossed-swords trademark had evolved over time since the mid-18th century. An entire wall was devoted to about a dozen variations and the original crossed swords were barely evident in the company’s  current mark.

In any event, the guide said she was not sure how “trademark creep” could best be translated into German. 

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617.439.2000.

 

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.

Posted in Litigation, Patents

The Supreme Court recently granted writs of certiorari to two intellectual property cases that could have a lasting impact on patent applicants, practitioners, and universities. In a case related to induced infringement, Global-Tech Appliances Inc. and Pentalpha Enters. Ltd. v. SEB SA, the Supreme Court will determine whether to overturn the ruling of the Federal Circuit that a potential infringer can have the necessary intent to commit induced infringement by acting with “deliberate indifference of a known risk.” As detailed in our March 15, 2010 issue, the Federal Circuit found Pentalpha knew of and disregarded an overt risk by copying everything but the cosmetics of the SEB deep fryer, and thus it had the necessary intent to induce infringement even though Pentalpha was not aware of the patent itself. In a case related to patent ownership stemming from the Bayh-Dole Act, Bd. of Trustees of Leland Stanford Jr. Univ. v. Roche Molecular Sys., the Supreme Court will determine the ownership rights of universities in inventions derived from federally sponsored research. Due to the lack of a proper assignment between Stanford and its faculty member, the faculty member assigned the rights in his invention to a third party company. The Federal Circuit ruled that Stanford did not have superior ownership rights over the third party company merely because the related research was federally funded. We will be keeping our eye on both of these cases and anticipate discussing the ramifications of the Supreme Court rulings in both cases on your business and practices. Stay tuned.

For Nutter’s analysis of the Federal Circuit decision in Global-Tech Appliances Inc. and Pentalpha Enters. Ltd. v. SEB SA from its March 15, 2010 issue of the IP Bulletin, click here.

To read the Federal Circuit decision in Global-Tech Appliances Inc. and Pentalpha Enters. Ltd. v. SEB SA,click here.

To read the Federal Circuit decision in Bd. of Trustees of Leland Stanford Jr. Univ. v. Roche Molecular Sys.,click here.

Posted in Litigation, Patents

In recent weeks, the Court of Appeals for the Federal Circuit (Federal Circuit) decided a number of noteworthy patent cases. The cases that follow touch on a variety of issues, including claim construction, patentable subject matter, prior inventorship, standing, and industry standard compliance as evidence of infringement.

Implicit Redefinition of Claim Terms and Patentability of Printed Matter
– AstraZeneca LP v. Apotex, Inc. (November 1, 2010)

In AstraZeneca LP v. Apotex, Inc. the Federal Circuit reaffirmed that claim terms can be implicitly redefined in the specification, for example where the term is used throughout the specification in a manner consistent with only a single meaning.

The defendant, Apotex, filed an Abbreviated New Drug Application (ANDA) seeking FDA approval to manufacture and sell a generic version of Pulmicort®, a budesonide inhalation suspension developed and patented by AstraZeneca for treating asthma. AstraZeneca then filed a declaratory judgment action and moved to enjoin Apotex from distributing the generic.

Apotex challenged the validity of the asserted claims, which included both method of use claims and kit claims. The method claims recited administering a “budesonide composition” once daily. Apotex argued that the claimed “budesonide composition” should be construed to include budesonide encased in a liposome shell, once-daily administration of which was taught by a prior art patent. The court disagreed, finding that the patentee had implicitly defined “budesonide composition” in the specification to mean only compositions in which budesonide was dispersed in a solvent. The court noted that “the specification may reveal a special definition given to a claim term by the patentee that differs from the meaning it would otherwise possess” and that “the specification need not reveal such a definition explicitly.” Rather, “a claim term may be clearly redefined without an explicit statement of redefinition,” for example “when a patentee uses a claim term throughout the entire patent specification in a manner consistent with only a single meaning.” As a result, the recited “budesonide composition” differed from the prior art liposome-encased budesonide, and the validity of the method claims was affirmed.

Although the finding of implicit redefinition was helpful to the patentee in AstraZeneca, the case is an important reminder that care should be taken when drafting patent applications to avoid unintentionally redefining a claim term to have a narrower scope than intended.

The AstraZeneca court also addressed the issue of whether a kit claim directed to a known pharmaceutical in combination with a printed label indicating a new use of the pharmaceutical could give rise to a patentable invention.

The asserted kit claims recited the budesonide composition and a label indicating once-daily administration by nebulization. Apotex argued that the kit claims were invalid because the composition was known in the prior art, and because a printed label is of no patentable consequence. The court agreed, holding that printed matter is generally outside the scope of 35 U.S.C. §101, unless there is a functional relationship between the printed matter and its substrate. Here, the court found that “the instructions in no way function with the drug to create a new, unobvious product” and therefore the kit claims were invalid. The court also found the parties’ disagreement as to whether the “substrate” was the drug or the label to be immaterial, because under either interpretation the printed matter did no more than “explain how to use the known drug.”

Accordingly, patent applicants should not rely solely on printed matter in distinguishing their invention, and should instead recite other patentable features in the claims. Additionally, patentees who are considering asserting claims that recite printed matter should review the other features of the claim carefully to ensure that those features alone would withstand a validity attack.

Definition of “Prior Inventor” Under 35 U.S.C. §102(g) – Solvay S.A.
v. Honeywell International, Inc. (October 13, 2010)

The Federal Circuit in Solvay S.A. v. Honeywell International, Inc. held that a “prior inventor” under §102(g) must conceive of the invention and reduce it to practice in the United States. This clarification of the statute should be useful to those assessing whether a particular activity constitutes invalidating prior art.

The plaintiff, Solvay, sued Honeywell for infringement of its patent directed to methods for making HFC-245fa, an insulation agent commonly used in refrigeration and heat storage systems. Solvay appealed after the district court ruled that some of its asserted claims were invalid under 35 U.S.C. §102(g)(2).

The claimed invention was conceived and first reduced to practice in Russia by the Russian Scientific Center for Applied Chemistry (RSCAC). Pursuant to a research agreement, RSCAC reported its invention to Honeywell and provided detailed instructions for carrying out the inventive method. Honeywell subsequently began practicing the invention in the United States before the priority date of the asserted patent.  Based on these undisputed facts, the district court found that Honeywell was a “prior inventor” under §102(g)(2) and therefore held the asserted claims to be invalid.

On appeal, the Federal Circuit reversed. The court held that §102(g)(2) requires the prior invention to be made in the United States, and that “invention” requires both conception and reduction to practice. Here, conception occurred in Russia by RSCAC, an entity entirely separate and distinct from Honeywell. Honeywell’s United States activity, which merely involved following the detailed instructions of RSCAC, did not amount to conception in the United States. Accordingly, Honeywell was not a “prior inventor” under the statute, and the district court’s invalidity ruling was in error.

Standing for Subsequent Paragraph IV ANDA Filers – Teva
Pharmaceuticals USA, Inc. v. Eisai Co., Ltd. (October 6, 2010)

In Teva Pharmaceuticals USA, Inc. v. Eisai Co., Ltd., the Federal Circuit held that a subsequent Paragraph IV Abbreviated New Drug Application (ANDA) filer had standing to initiate a suit that could trigger the exclusivity period of the first-filer. Generic drug manufacturers who find themselves second in line for ANDA approval should consider whether their situation mirrors that in Teva, and thus whether initiating a suit to trigger a first-filer’s exclusivity period would be worthwhile.

By way of background, a manufacturer seeking to market a generic version of a previously-approved drug must file and receive approval of an ANDA and must submit a certification with respect to any patents on the drug that are listed in the FDA’s Orange Book. The first manufacturer to file a “Paragraph IV Certification” is entitled to 180 days of generic marketing exclusivity. Until the first-filer’s exclusivity period has run, the FDA may not approve ANDA applications by other manufacturers who have filed Paragraph IV certifications for the same patent. The exclusivity period begins when the first-filer commences marketing activity of the drug, or upon entry of a court judgment finding the patent invalid or not infringed, whichever happens first.

In the instant case, the Federal Circuit was asked to decide whether a subsequent Paragraph IV filer has Article III standing to seek declaratory judgment of invalidity or non-infringement and thereby trigger the first-filer’s exclusivity period. Here, the subsequent filer (Teva) sued the patent holder (Eisai) in an effort to start the 180 day window afforded to the first-filer (Ranbaxy Laboratories). The district court dismissed the case for lack of standing.

On appeal, the Federal Circuit held that a generic drug company’s injury (i.e., exclusion from the market) is fairly traceable to the patent holder’s actions because “but-for” the patent holder’s decision to list a patent in the Orange Book, FDA approval of the generic drug company’s ANDA would not have been independently delayed by that patent. The court went on to state that “when an Orange Book listing creates an ‘independent barrier’ to entering the marketplace that cannot be overcome without a court judgment that the listed patent is invalid or not infringed—as for Paragraph IV filers—the company manufacturing the generic drug has been deprived of an economic opportunity to compete.” The court thus found that Teva had Article III standing for a declaratory judgment suit because such a suit redresses this alleged injury by eliminating the potential for the corresponding listed patent to exclude the generic drug from the market.

Industry Standard Compliance as Evidence of Infringement –
Fujitsu Limited v. Netgear Inc. (September 20, 2010)

The Federal Circuit in Fujitsu Limited v. Netgear Inc. held that an accused product’s compliance with an industry standard covered by an asserted claim can be evidence of infringement. The court’s holding should help dramatically reduce the time and cost required to litigate cases involving standards-compliant accused products.

The plaintiffs, Fujitsu, Phillips, and LG, sued Netgear for infringement of their respective patents directed to wireless communication technologies. Each of the patents related to at least one of two popular wireless standards: the “IEEE 802.11 Standard” and the “WMM Specification.” The plaintiffs are part of a licensing pool that purports to include patents that any manufacturer of 802.11 and WMM compliant products must license.

After claim construction, the plaintiffs moved for summary judgment of infringement, arguing that by simply complying with the standard, Netgear necessarily infringed the asserted claims. The district court denied the motion, holding that the plaintiffs must show evidence of infringement for each accused product.

On appeal, the Federal Circuit held that a district court may rely on an industry standard in analyzing infringement. If the district court construes the claims and finds that the reach of the claim includes any device that practices a standard, then this can be sufficient for a finding of infringement. The court reasoned that, while claims should be compared to an accused product, if the accused product operates in accordance with a standard, then comparing the claims to that standard is the same as comparing the claims to the accused product. In addition, the court found that public policy favored such an approach, as it would be a waste of judicial resources to separately analyze every accused product when it is undisputed that the accused products practice the standard. The court recognized that an accused infringer is of course free to either prove that the claims do not cover all implementations of the standard, or to prove that its product does not practice the standard.

The court further noted that, in some cases, the standard may not provide the level of specificity required to establish that practicing the standard would always result in infringement. Likewise, when the relevant section of the standard is optional, then standards compliance alone would not establish that that accused product implements the optional section. Because the instant case involved one of these exceptions, the district court’s denial of summary judgment was affirmed.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617.439.2000.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.


 

The USPTO recently announced that it will be cooperating with New York Law School to expand its Peer-to-Patent review program. The Peer-to-Patent program seeks to improve the quality of issued patents by providing an opportunity for volunteer experts in the applicable field to review new applications, suggest prior art, and provide comments on points of novelty in view of the art. The review process occurs online using social media software that allows and encourages discussion among the volunteers. Once the review process is complete, Peer-to-Patent applications are moved to the head of an examiner’s queue, along with the ten highest rated prior art submissions from the Peer-to-Patent volunteers. The written comments and discussion provided by the volunteers during the review process are not sent to the examiner, but he or she is able to read the comments on the Peer-to-Patent website during examination of the application. The expanded program will accept an additional 1000 new applications for peer review and will include additional art units.

Additional information about the Peer-to-Patent program can be found at the following link.

The United States Patent and Trademark Office (USPTO) recently adopted a new procedure for measuring the quality of patent examination. At the heart of the new procedure is a composite, seven-feature quality metric aimed to reveal quality issues during examination and to identify their sources so that effective quality procedures may be identified and encouraged. The new seven-feature composite quality metric is composed of old metrics from previous USPTO quality procedures and new metrics formulated based upon surveys, internal review, and data related to quality measurement purposes (the data was previously collected, but had never really been used). Knowledge of these metrics will allow practitioners to better manage the expectations of their clients, and may also help practitioners take actions to help expedite the prosecution process to allowance.

Two metrics carried over from the old metrics to the new metrics are the Final Disposition Compliance Rate and the In-Progress Compliance Rate. These rates are random samplings of “clear errors” identified during the examination process of an application. For example, a clear error by an examiner in the allowance of a claim is an unreasonable failure to make a rejection of the claim for one or more reasons provided in the patent laws. Likewise, a clear error by an examiner in making a rejection or objection in a final rejection is the making of an unreasonable rejection or objection. However, if an action preferred by the examiner’s Supervisory Patent Examiner differs from the action taken by the examiner, it is considered a difference of opinion and not a clear error as long as the action taken by the examiner is reasonable. The USPTO’s Office of Patent Quality Assurance (OPQA) is responsible for making these determinations of reasonableness.

Two new metrics that are now being introduced use multi-factor reviews. These two metrics are the First Action on the Merits (FAOM) Search Review and the Complete FAOM review. These metrics attempt to apply a multiple factor scoring process to measure a degree of compliance to best practices of the USPTO. For the Complete FAOM review, each omitted rejection, and the reasonableness and clarity of the rejections made, are reviewed on a per-claim basis. The Complete FAOM review further includes a set of per-action attributes, such as the clarity of the interview record, that addresses the overall quality of the examination.

A third new metric being introduced is the Quality Index Report (QIR). The QIR is produced from statistical data collected by the USPTO Patent Application Locating and Monitoring (PALM) database. The QIR is by itself an algorithmic composite of five measurements collected on a per-disposal basis: (1) the number of actions; (2) the number RCEs; (3) the number of re-openings after a final action; (4) the number of first non-final actions; and (5) the number of restrictions after a first action. All of these statistics are collected for every application filed with the USPTO and are statically examined in aggregate to detect outlier examination processes that may, or may not, indicate quality issues. Each of these five metrics, including the QIR, are compiled by the OPQA with sampling sizes designed to reveal Examination Corps-level or technology discipline-level quality estimates. Only aggregate data, however, will be publicly disseminated.

Finally, the last two new metrics are generated from an internal survey and an external survey performed by an independent survey designer/conductor. The external survey aims to measure the perceived quality of the patent process of applicants and practitioners, and the internal survey aims to measure the perceptions of the examination corps.

The seven metrics are combined into a composite quality metric—a single score. The composite quality metric will be publicly disseminated monthly and conveniently visualized via a graphical dashboard widget. Publication, however, is not set to begin until the end of the 2011 fiscal year, which is on September 30, 2011. The first year’s score will be used as a base score, which will be used to set a Stretch Goal for the reminder of the five-year strategic planning period, to allow a relative comparison with subsequent scores.

We will monitor these new metrics once they become publicly available to bring you practical tips for improving your practice in light of this new information. We anticipate that knowledge of these metrics will allow practitioners to better manage the expectations of their clients, and may also help practitioners take actions to help expedite the prosecution process to allowance.

To see a detailed listing of the metrics, the surveys, and their composite weighting, please click here.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617.439.2000.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.

 

In our January 22, 2010 issue, we reported on the USPTO’s new Green Technology Pilot Program, which allows an applicant to petition for his or her application to be examined more quickly if the application pertains to the development of a renewable energy source or energy conservation, or the reduction of green house gas emissions. On November 10, 2010, the USPTO announced that the program is being extended through December 31, 2011. Further, the requirement that an application have a filing date earlier than December 8, 2009, has been removed. The application can now have any filing date, and in fact, a petition can be filed simultaneously with a new patent application. Since the pilot program began in December 2009, a total of 790 petitions have been granted and already 94 patents have been issued. The average time between the approval of a petition and the first action on the merits is a mere 49 days! There is no fee required for participating in the program, but the USPTO is maintaining a cap of 3000 grantable petitions. Applicants should review their portfolios and determine if any applications awaiting a first Office Action, or any future filings, are ripe for this expedited process.

For more details on the extension of the Green Technology Pilot Program, click here.

For additional information on the Green Technology Pilot Program, click here.

The United States Patent and Trademark Office (USPTO) recently published updated guidelines for the evaluation of obviousness—the 2010 KSR Guidelines Update (2010 Update)—in light of Federal Circuit decisions issued since the Supreme Court’s 2007 landmark decision in KSR Int’l Co. v. Teleflex Inc. Unlike the 2007 KSR Guidelines, which substantially increased the examiners’ arsenal by supplementing the prior teaching-suggestion-motivation (TSM) test with six additional rationales for rejecting claims as obvious, the 2010 Update provides a more balanced picture of the obviousness inquiry that will assist both practitioners and examiners in arguing obviousness. More particularly, the 2010 Update provides a number of examples from actual cases—cases that found claims obvious and cases that found claims nonobvious—that examiners and practitioners can use to help support their positions. In announcing the updated guidelines, USPTO Director David Kappos stated, “[n]ow that a body of post-KSR case law is available to guide office personnel and practitioners as to the boundaries between obviousness and nonobviousness, this update can be used to compare and contrast situations in which claimed subject matter was found to have been obvious with those cases in which it was determined not to have been obvious.” Although arguing nonobviousness remains more challenging than under the previous TSM test, the 2010 Update provides practitioners new tools to wield in navigating the post-KSR obviousness landscape.

Though the Supreme Court’s decision in KSR demanded a more flexible approach to the obviousness inquiry than the previous TSM test, the 2010 Update impels examiners to provide an explicit, reasoned analysis as to why the invention would have been obvious to a person of ordinary skill in the art at the time of the invention. According to the 2010 Update, “[t]his requirement for explanation remains even in situations in which Office personnel may properly rely on intangible realities such as common sense and ordinary ingenuity.” For example, in the now frequently cited standard for rejecting claims as obvious for combining prior art elements according to known methods to yield predictable results, the guidelines urge examiners to identify a reason why it would have been obvious to combine the known elements, especially when the combination requires a greater expenditure of time, effort, or resources than the teachings of the prior art:

Even though the components are known, the combining step is technically
feasible, and the result is predictable, the claimed invention may nevertheless be
nonobvious when the combining step involves such additional effort that no one of
ordinary skill would have undertaken it without a recognized reason to do so.

Indeed, the 2010 Update cites the Federal Circuit’s affirmation of the district court’s determination of nonobviousness in In re Omeprazole Patent Litigation to support the requirement that an examiner must present a recognized reason to make the proposed combination in the face of additional effort. In In re Omeprazole Patent Litigation, despite the findings that subcoatings for enteric drugs were known and there was no evidence of undue technical hurdles or a lack of a reasonable expectation of success, the Federal Circuit stated:

[T]he formulation was nevertheless not obvious because flaws in the prior art
formulation that had prompted the modification had not been recognized. Thus
there would have been no reason to modify the initial formulation, even though
the modification could have been done.  Moreover, a person of skill in the art
likely would have chosen a different modification even if he or she had recognized
the problem.

Further, the 2010 Update provides that “merely pointing to the presence of all claim elements in the prior art is not a complete statement of a rejection for obviousness.” Rather, the examiner must also demonstrate that the results flowing from the combination would have been predictable to a person of ordinary skill in the art. In DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., the Federal Circuit noted that the “predictable result” discussed in KSR refers not only to the expectation that prior art elements are capable of being physically combined, but also that the combination would have worked for its intended purpose. In this case, the plaintiff successfully overcame the rationale that the combination of references leads to a predictable result because the alleged reason to combine the references ran contrary to the teachings of the prior art such that the person of ordinary skill in the art would have been deterred from the proposed combination. Thus, though patent practitioners have been forced to modify their analysis in light of KSR, DePuy Spine makes clear that the patent bar can still rely on familiar nonobviousness arguments (e.g., teaching away) to overcome § 103 rejections.

The 2010 Update additionally addresses the emergence in the wake of the KSR decision of the oft maligned “obvious to try” rationale. Though the guidelines attempt to assuage the fears of practitioners, the contours of this standard remain hazy, especially in technology areas outside of the chemical arts. Nonetheless, the cited post-KSR decisions indicate that an “obvious to try” rationale is only appropriate when there is a recognized problem or need, there are a finite number of identified, predictable solutions to the recognized problem or need, and one of ordinary skill in the art could have pursued these known potential solutions with a reasonable expectation of success. Indeed, the 2010 Update provides that “[c]ourts appear to be applying the KSR requirement for ‘a finite number of identified predictable solutions’ in a manner that places particular emphasis on predictability and the reasonable expectations of those of ordinary skill in the art.”

We anticipate that the growing body of post-KSR case law will continue to shift the contours of the obviousness analysis. We will continue to stay abreast of developments regarding the obviousness inquiry and will keep our readers well-informed of new developments.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617.439.2000.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.

Posted in Patents

The World Intellectual Property Organization (WIPO) recently published its second annual World Intellectual Property Indicators report, providing an in-depth look at worldwide trends in intellectual property (IP) activity. Though the report principally focuses on the impact of the 2008 worldwide economic crisis on research and development (R&D) investment, innovation, and the acquisition of IP rights, the report also captures preliminary data from 2009 and 2010. During the examined period, most major economies have emerged from recession, while many middle-income economies have returned to their rapid, pre-crisis growth levels, and it is expected that continued economic recovery will soon prompt a rebound in overall IP activity. Indeed, some preliminary data indicates this may already be happening, though a lingering impact may be seen on patent filings through 2011. The post-crisis innovation landscape will invariably look different than before, as the center of gravity of the world economy shifts and new innovation centers continue to emerge, particularly in Asia and middle-income countries. Notably, the continued growth of IP activity in China throughout the worldwide economic downturn indicates that China is becoming a major player in the intellectual property market.

Investment in Innovation

Overall, R&D expenditures in 2009 decreased slightly over the previous year. Because the expenditures fell at a lower rate than revenues, however, the report indicates that firms are again increasing the intensity of their R&D.

Venture capital (VC) investments showed significant decline from 2008 to 2009. Though VC investment in the U.S. totaled only about $13 billion (down 55% from 2008), the report notes that this decline is small compared to the great shifts of the VC boom and bust at the beginning of the century. Promisingly, preliminary 2010 data shows signs of improvement, with recent evidence pointing toward a focus on later-stage, lower-risk investing.

Patents and Utility Models

Due in large part to the lengthy process of moving innovation out of the development pipeline and into patent offices, patent activity tends to be a lagging indicator of both an economic downturn and the subsequent recovery. At the outset of the financial crisis in 2008, worldwide patent filings increased over the previous year, though at a slower rate. In 2009, however, the number of filed patent applications actually dropped below the levels of the previous year for the first time since 2002. Indeed, the Patent Cooperation Treaty (PCT) system experienced its first drop in patent applications (almost 5% over the previous year) for the first time since its inception. Preliminary 2010 data is encouraging though, as it points to renewed growth in worldwide patent filings.

WIPO data additionally indicates significant regional variation in patent filings. Generally, the recent overall decline in national filings was driven by a decrease in non-resident filings, thus suggesting a greater short-term focus on a firm’s home markets. Notably, the United States was one of several exceptions to this trend, instead seeing a drop in resident filings and an increase in non-resident filings. Further, despite the overall worldwide decrease in patent filings, filings in the Chinese patent office continued their strong growth with a roughly 18% increase in 2009. Additionally, PCT applications arising out of China and Korea outpaced the growth of their domestic applications in 2009.

In contrast to patents, the worldwide utility model system continued its decade-long trend of increased filings year-after-year. Because utility models are primarily used by residents to protect inventions at their national patent offices, utility model filings may have been bolstered during the economic downturn by firms’ short-term focus on their home markets. Again, the growth of utility model filings in China far outpaced the overall worldwide growth.

Trademarks

Because businesses are typically cautious about introducing new products during uncertain economic times, trademark activity tends to be a leading indicator of declining economic health. Indeed, trademark activity began slowing in 2006, with worldwide filings decreasing in 2008 over the previous year. Despite the continuing decrease in filings in most national offices in 2009, trademark activity in China grew substantially with filings up nearly 21% over 2008. Chinese registrations were up nearly 57% during the same period. Though the flurry of activity in China skews the worldwide data, the WIPO Director General stated that preliminary data for 2010 indicates a return to 2008 levels with a projected 11% increase in trademark filings.

Industrial Designs

Industrial design applications in 2008 also demonstrated significant regional variation. Overall, worldwide industrial design applications increased for the 15th consecutive year, though the 5.7% increase was lower than the increase of subsequent years and is largely attributed to increased activity in China. Indeed, the number of industrial design applications filed in China in 2008 was four times higher than that filed at the second busiest office.

Conclusion

The 2010 World Intellectual Property Indicators report indicates that activity in the IP realm is on the road to recovery throughout much of the world; in China, no recovery was necessary as the trends indicate a continued growth over the past few years. We anticipate many of our clients are restoring their R&D budgets to continue to spur innovation. IP owners should give strong consideration to protecting their rights globally, and in particular in China, where it is clear that IP is finding an increasing importance.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617.439.2000.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.

Maximizing the protection and value of intellectual property assets is often the cornerstone of a business's success and even survival. In this blog, Nutter's Intellectual Property attorneys provide news updates and practical tips in patent portfolio development, IP litigation, trademarks, copyrights, trade secrets and licensing.

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