The file wrapper is an electronic or paper folder that consists of all of the documentations such as diagrams; communications between the USPTO and the applicant; statements made by the applicant and records of the official actions by the USPTO; pertaining to a particular patent application.
They can be viewed electronically on Public Patent Application Information Retrieval (PAIR).
The following components of the file wrapper are useful from a commercial enterprise point of view:
o Cited prior art – This section can be used for learning about the competing art. Competing arts are ideas that may not be at all like your idea but do the identical job. It is important to study competing art for two reasons:
Most inventions are a solution to a problem, and most problems have more than one feasible solution. One needs to examine other solutions, as some may offer more advantages.
If one attempts to exploit an idea commercially, alternative solutions may be strong competition. In order to argue successfully that your solution is better than alternatives, you need to know what the alternatives are.
o Documents prepared by the examiner – Particularly in litigation cases, this can provide the documentation needed to make important court decisions.
o Statements and summaries of interviews – When licensing IP, this section can help the licensee understand the results of negotiations and can help in patent litigation studies.
o Rejection and objection documentation – Helps businesses evaluate the validity of the patent.
• The USPTO points out that file wrappers can be of value to:
o Competing inventors and business partners
o Third parties that are trying to invalidate the patent
o Patent litigation
o Research material and case studies
a. Post grant challenges – If a patent survives inter partes review and ex partes review, it is considered a higher quality patent and ensures patent validity over prior art.
b. Patent prosecution process – Numerous office actions and claim rejections, forces the applicant to refine the patents. The more refined a patent, the chances of the patent facing a post grant challenge are reduced. Hence, the more exhaustive a patent prosecution process is, the higher the quality of the patent.
c. Maintenance fee payments – Companies regularly paying maintenance costs on existing patents, only do so because see them as viable and valuable assets.
a. Scope of the licensing rights – If I am a licensee, I am looking for obtaining full use of the rights in all potential areas as well as territorial rights and as much exclusivity as possible. However, from a licensor’s point of view, I would like to retain certain fields of use, applications and product extensions to license to some other party for an additional revenue stream.
b. Royalty Rates – A reasonable royalty is defined as the amount a party is willing to pay for the right to the IP. For a licensor, the highest possible royalty is not necessarily always the most advantageous if it acts as a disadvantage to the licensee. To arrive at a fair royalty, certain rules are followed:
5% of Net Rule
Most Favored Nation License – This clause ensures a licensee that if the licensor licenses the technology to another company, the royalty rate so imposed will not be lesser than what the licensee is already paying. This is done by the licensee to protect themselves from any competitive advantage.
Answer: NPEs or patent trolls are organizations whose sole purpose is to use patents primarily to obtain license fees rather than to support the development of technology. They collect patents not for the purpose of commercializing them, but to litigate and demand licensing fees. Their business model seeks patents to pursue “freedom to litigate” rather than “freedom to operate.”
Positive – NPEs help small independent inventors to monetize their intellectual property (IP) rights against potential misuse by established companies, thereby inducing more innovation by small inventors.
Negatives – NPEs are known to raise the costs of innovation and drag the innovation process. They are the reason for recent rise in the number of law suits which is a major concern for business and policy makers. The costs of litigating invalidity or non-infringement of a patent claim against a small company in the US can bankrupt it. A recent statistic shows that patent trolls are the cause for 67 percent of all patent lawsuits (Morton and Shapiro 2014).
According to WIPO Director General Francis Gurry, “In future, it seems inevitable that technology will increasingly dictate the shape of the international architecture and its governance. The main challenge will be to understand how technology will impact the existing IP system and will result in rising demand for IP rights.”
Policy changes are the reason behind IP evolution. This change is a result of globalization and the accelerating pace of technological change. Due to the complex nature and rising presence of Artificial Intelligence and the life science industry, the current IP system will have to adapt in order to maximize its value in the future. These IP changes will cause unseen practical opportunities for cooperation such as through the establishment of multi – stakeholder platforms and other partnerships.
Additionally, enormous amounts of data is being generated due to the emergence of Big Data and IoT. This goes past the boundaries of a traditional IP system, which is forcing researchers to increasingly adopt trade secrets as an IP to protect their competitive laboratory work. This will give them significant economic opportunity. The major challenge is to ensure that all countries benefit from the rapid diffusion of these technologies and that the huge differences in technological capacity that exist are not worsened.
The current and traditional IP system is incapable of handling the cross disciplinary technologies touch on IP, ethics, privacy, security, biosafety. Thus according to Francis Gurry, “A whole new world is developing and we can expect a very different ball game.”
Inter Partes review allows a person, other than the patent owner, to file a petition asking the USPTO to review the validity of a patent granted by the USPTO. Additionally, neither can systems or products be used as prior art in an IPR.
It was introduced in September 16, 2012 with the introduction of the America Invents Act (AIA).
In todays IPR era, maintaining patent protection can be expensive as the competitor can seek to invalidate the patent before one enforces it. Hence, to strengthen the patent strategy against IPRs, a company should:
a. Focus on building broad patent portoflios: Under the IPR, a small patent portfolio can easily be challenged. Hence, IPR forces the owner to have multiple patents as small patents can be easily washed out in one or two IPRs.
Focus on including meaningful claims and accounting for prior art in the diverse portfolios: IPR petitions are restricted to a page limit of 60. Having a broad and narrow claims, makes it difficult for the competitor to wash you out as it will require multiple petitions to challenge all claims. Additonally, by providing substantive arguments in the production history for references, one maybe able to diffuse IPR challenges early on.
Patent vs Trade Secret
Patent protection is more secure than trade secrets because patent protects the rights regardless of what anyone subsequently develops.
Trade secrets, can be reverse engineered and copied whereas patents grant the right to exclude third parties making or using an invention for a limited time period.
If publicly disclosed, the trade secret can be lost overnight, even if the disclosure was unintentional. In contrast, patents are protected through enablement or public disclosure.
To monetize a patent, a licensor can license the patent to a number of potential licensees whereas a trade secret can only be shared through non-disclosure agreements which typically cannot be licensed.
ii. Coca Cola, is a soda company, that holds registered trademark in its logo and distinctive shape of the Coke bottle. This helps Coca Cola prevent competitors from passing off their goods and services as Coca Cola’s and to be compensated for any damage Coca Cola may suffer as a result of this unfair competition. In addition, Coca Cola holds a patent over the method/process of making “barrier coated plastic containers” and it also holds a patent on “Coffee cola beverage composition” and on “Beverage preservatives”. Furthermore, formula for making Coca-Cola is a trade secret. It would be all but useless to the company if it were known to its competitors. IP types to pursue and strength – The combined use of IP will help maximize the strength of the smart windshields. For instance, the University can protect the “Automobile windshield with Integrated AR technology” using a patent; the source code, digital voice technology of the underlying software using copyright and if the technology has a logo, it can be protected using a trademark. This will strengthen their strategies towards protecting their invention and thus serve as an adequate incentive for engaging in innovation activities.
ii. Market analysis : a. Geographically, the global smart glass in automotive market is segmented into seven regions, namely North America, Latin America, Western Europe, Eastern Europe, Asia Pacific, Japan, Middle East and Africa.
Due to presence of automobile giants such as Maruti Suzuki India Limited, Hero MotoCorp Ltd and other companies, Western Europe (Germany) is the leading manufacturer of smart glasses, followed by Asia Pacific being the second major contributor in the global smart glass in automotive market. This trend is followed by North America with companies such as General Motors Company, The Ford Motor Company having a significant contribution and making it a considerable market in the global smart glass in automotive market.
Toyota has also managed to Patents Smart Windshield Technology.
b. Glass used in making Apple Inc.’s iPhone, are being used by Corning Inc. to make windshields because of their promising durability and thinness of the glass that helps the image projected onto the windshield appear sharper.
Automakers such as BMW AG, Hyundai Motor Co. and Toyota Motor Corp. already offer basic heads-up displays near the windshield in some models that show information such as the vehicle’s speed.
iii. Market sector(s) to target – Target markets would be Luxury Car Lovers (Tesla, BMW, Mercedes, Jaguar), Frequent travelers, Bikers, Taxi Services, Millennials and Boomers.
iv. Marketing Strategies:
On average, people spend about two hours a day in their vehicles. Marketers need to work towards location-enabled, personalized marketing that can happen in real time.
For instance, the companies can first launch it in city taxis as a large number of people commute via local transport. This way, when the driver is driving and is low on fuel, the digital technology should show options of gas stations nearby which offer a free cup of coffee/tea, a gas station nearby where there is least amount of queue time, or a gas station nearby which has a small departmental store.
This will help spread awareness about the technology.
Furthermore, launching advertisements that focus on personalization by user preference will help reach their target quicker. For instance, if I am visiting New York as a tourist and I am a vegetarian. The technology should show me options of only vegetarian restaurants nearby, with its ratings and reviews.
a. License the technology at the current early stage: Obtaining a utility patent at an early stage will help exclude the unauthorized use of the patented subject matter. Furthermore, out-licensing the technology at this early stage to a bigger agency who is a prospective competitor can propel the research and development (R&D).
Successful execution of out?licensing programs have been proven to provide several benefits such as additional revenue generation, cost and resource effectiveness, and mitigation of R&D related risks. It can also help make ties with an ally.
Recently, Bristol Myers Squibb out-licensed its drug – Apixaban – to Pfizer. This was done because the Phase 3 clinical trial was going to cost them millions of dollars. This decision was a result of financial constrained for BMS. This decision was a result of monetary constraints as well as the desire to share the risk in a harsh competitive environment.
b. Selling the company with all its IP assets: If the company is ready to sell along with its IP assets, they need to ensure that the intellectual property assets are structured so as to get maximum fee on return. The effective solution for a seller involves presentation of:
Intellectual capital register, business documentation and IP registration or codification.
Documents showcasing pre-money valuations and post-money valuations.
c. Seek a new round of financing: Considering there are 3 series of funding by venture capitalists, it is very crucial to figure out what stage of the series the start-up is in. According to the information provided, the company is still in its developmental phase or Series A phase. Venture capital firms that are involved in Series A funding include Sequoia, Benchmark, Greylock, Accel.
After series A, the firm moves on to series B of funding wherein investors help start-ups take the developmental phase to the subsequent stage by expanding market reach. The main focus here is to build a winning product, acquire sales, advertising, tech, business development support, and other people, which will cost the firm around $7 million to $10 million.
Finally in Series C, the main agenda of the investors is to put capital into the successful business in an effort to receive more than double that amount back.
Hence, each funding stage poses a risk which should be evaluated while making a decision.
d. File for bankruptcy: To file for bankruptcy, it is necessary to figure out whether it is a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. Chapter 7 Bankruptcy, requires most assets to be liquidated in order to pay at least some debt. In Chapter 13 Bankruptcy, there is no liquidation of assets because current income is restructured to pay off debts and a payment plan is created.
Steps to file for Bankruptcy
All financial information is assembled – debts, incomes, assets and property, months household living expenses.
Credit Counseling – It is mandatory to undergo credit counseling for atleast 6 months prior to filing for bankruptcy.
341 meeting – It is also known as Creditor’s meeting wherein the trustee makes sure the debtor is aware of consequences of declaring bankruptcy.
Automatic Stay – After filing for bankruptcy, the automatic stay prevents creditors from starting legal proceedings due to debt, claim your property, or try by any means to take money or property to satisfy unpaid debt.
Post meeting – After creditors have reviewed the payment plan, they can either submit a formal objection or do nothing. If they choose to submit an objection, they have 60 to 90 days to do so from the time of the meeting. If there are no objections, your bankruptcy petition will move forward after the objection period has expired.
In Chapter 7 bankruptcy, the next step is liquidation of your assets.
In Chapter 13 bankruptcy, if there are no objections to your payment plan, it will generally be approved by the judge at a confirmation hearing which must be held within 45 days of the creditors’ meeting.
6. Post Bankruptcy Credit Counseling – For Chapter 7 bankruptcies, this must take place within 45 days of the creditors meeting whereas for Chapter 13 bankruptcies, this must happen before the day you make your last payment.
The best available option for the start-up right now would be to build quality and level of legal protection of IP assets to at least a minimum or base level of best practice. This should ideally be done for at least 6 to 12 months before a sale. Hence, the best practice would be to out-license the technology to their competitor and build the value of their technology. This will help cash flow-in and also help promote their technology in the market. If still the company feels that the technology must be assigned, they can sell the technology after building on their IP which will help them sell the technology at a higher price.