Thursday, December 11, 2014


            The tidal wave of online usage of social networks has spilled over into collaborative business networks.  Social networks such as Facebook are being used to create and market new ideas and innovations using social networking webpages.  Collaborative innovation networks have sprung up as online communities of like-minded people who choose to work together on innovation projects.  The speedup in investor expectation for startups to get to market using online development and product marketing tools has also given rise to online startup funding networks known as crowdsourcing.  For example, Kickstarter allows users to post project funding proposals on its website to vie for online (crowd) funding.  But what happens to patent (i.e., invention) rights in collaborative online inventing?  A brief outline of some of the perils and pitfalls of this phenomenon and recommendations for protecting patent rights follows.

Where a collaboration group has involved diverse users who may later disagree how they will exploit the result and share profits flowing from it, conflicting claims of ownership can arise.  This can lead to full-blown disputes and/or litigation that can tie up the innovation creators in destructive legal wrangling for years. 
In crowdsourcing, the typical terms of use, such as Kickstarter‘s for example, provide no guidance how to contract for “rewards” or “promised benefits” with online funders.  An inartfully drafted promise of benefits for crowdsourced funds can lead to funders later claiming a share of ownership or ongoing benefits (royalties) from invention rights.
As is already well-known to established companies undertaking joint research projects, it is important to define in writing in advance a collaboration group’s mission, membership and at least a general framework for ownership and apportionment of rights and benefits.  This can avoid or at least mitigate conflicting claims of ownership later.

Erroneous myths and misconceptions persist when it comes to invention rights, and specifically patenting, in collaborative inventing.  Many of those not familiar with the patent process still believe that they can mail a stamped and sealed invention disclosure to themselves to establish proof of their date of invention.  However, the U.S. Patent Laws were reformed by the America Invents Act (AIA) of September 2011, with full effect from March 2013, from the former “first-to-invent” system to a “first-to-file” system like the rest of world.  Under the “first-to-file” system now in effect in the U.S., patent rights belong to the inventor(s) who first files a patent application containing a complete enabling disclosure how to put the invention into practice.  It does not matter that an inventor has been working on their invention idea for years, or even for one day, before someone else files their patent application.  The first party to file will win!  It is important that a patent application be prepared and filed as soon as the invention has been completed with details of its best implementation.
Another common misconception is that a quick provisional application can be filed to establish an official invention date and buy one year of time for a formal patent application to be filed.  But this is true only if the provisional application contains an enabling disclosure of what will later be claimed as the invention sought to be patented.  All too often an amateur inventor will self-file a provisional application with marketing verbiage stating their “idea” or “wish list” for their invention but leave out crucial details of proposed implementation.  Later on during Patent Office examination, they may be dismayed to have the patent examiner cite disclosures of the same or similar idea by others earlier, and learn that their provisional filing date cannot be relied on as a date of invention because enabling details of implementation that might be patented were not disclosed in the provisional.
Collaboration networks often hold live events that connect online where an invention idea may be worked on publicly by a collaboration group.  Such public events published online may constitute a publication of what the group has worked on, which would cause an immediate loss of patent rights due to publication by others occurring before a patent application has been filed.  The U.S. Patent Office imposes a requirement for disclosure of all material prior art known to an applicant for patent, including their own prior publication, otherwise any issuing patent may be attacked later for invalidity.  The collaborative group members must disclose their prior publication to the Patent Office, which will have the effect of restricting them to patenting only a significant technical improvement over what the group publicly disclosed.

People not familiar with the reformed U.S. patent system may also believe in error that their own prior public activities (public disclosure, use, sale, or publication) cannot be cited as prior art against their own patenting if they are within the one-year U.S. “grace period” for inventor publications prior to filing.  But the “grace period” only applies to prior publication by the inventor(s) themselves.  It does not apply to prior public disclosures by other parties who may participate in development of the invention, such as marketing consultants, manufacturers and component suppliers, startup agencies that publish invention pitch descriptions, grant funding agencies that publicly post RFP descriptions and project submissions, etc.  Even a crowdsourcing project proposal by a related business entity can be deemed a prior public disclosure by another party.  Such prior public disclosures by other parties have immediate effect as prior art against patenting. 
Patent-killing prior art can also include prior public use or sale of the invention in foreign countries, or prior filing of a foreign patent application anywhere in the world.  Foreign filing dates are typically 18 months earlier than their date of publication, which makes it even more imperative that a U.S. patent application be filed as soon as an invention is completed.  In one recent U.S. patent court decision, a foreign publication by an off-shore manufacturer of an invention product for its U.S. owner was held to be qualifying prior art against the owner's patenting in the U.S.
(1)  Define in advance the collaboration group’s mission, membership, and rights and benefits in any invention(s) developed. 
(2)  File a U.S. patent application as soon an invention has been completed, taking care to explain full enabling details of its best implementation at that time.  Take care to name as inventors all those making a substantial contribution to the conception and implementation of what is claimed as the new or improved subject matter (each named inventor must review and sign the application).
(3)  If the collaboration group intentionally or inadvertently made the invention subject matter public more than one year before filing its patent application, it must disclose that information to the U.S. Patent Office, and take care to claim only significant technical improvements over what was publicly disclosed.
(4)  Be aware of what your competitors or even your own business partners or suppliers may publish in the U.S. and/or globally.  There is no grace period for third party publications, so you must file your U.S. patent application as soon as possible before any such public disclosures are made.
(5)  Be aware of the risk that collaboration networks are public forums whose online publications can kill later-filed patent rights, so manage your participation and online disclosures accordingly.

Leighton K. Chong
IP & Patent Attorney
December 2014