Posted by Lance Koonce As a follow-up to last week’s discussion about inadvertent disclosures in intellectual property filings, here’s more in-depth information about patent filings to fill in the somewhat superficial explanation we provided previously. This from one of our patent gurus, George Rondeau. First and foremost, we neglected to explain a fundamental difference between patent and trademark applications: patent applications are not published until 18 months after they are filed (for trademarks, new applications are available online almost immediately after filing). Until a patent application is published, its content and even its very existence are held in secrecy by the U.S. Patent and Trademark Office. This means that there is a one and one-half year window where no information is revealed by the filing of a patent application. Often companies file patent applications just prior to introduction of a new product, in which case the existence of the product would be old news before the Patent Office makes any information available to the public. When a U.S. patent application is ultimately published, the entire application content and the subsequent prosecution history become viewable by the public. However, if no foreign patent applications are to be filed, an applicant can protect the sensitive information further by opting out of U.S. publication at the time of filing the application (see 35 USC 122(b)(2)(B)). If an applicant opts out, the patent application and any back-and-forth between the applicant and the Examiner remain secret until the patent issues (and stays secret forever if the patent application does not issue). Opting out of publication requires submission of a request at the time of filing the patent application, certifying that the invention disclosed in the application has not and will not be the subject of an application filed in another country or under a multi-lateral international agreement that requires publication of applications 18 months after filing. Most countries publish at 18 months. (The theory is that if you are going to have the application published in other countries then you have no reason to complain about it being published in the U.S.) In our previous post, we also discussed the possibility of an inventor assigning the patent to another party but not recording the assignment. Even if a patent assignment is not recorded, it would still be enforceable against the inventor signing it as implied. However, by not recording a patent assignment, the owner will lose the statutory protection provided against a bona fide purchaser who purchases from the inventor, and the bona fide purchaser from the inventor would take ownership. (An unrecorded assignment from the inventor is rendered void against a bona fide purchaser for value who receives a subsequent assignment or mortgage from the inventor unless the first assignment is recorded within 3 months from its date or prior to the date of the subsequent purchase or mortgage. See 35 USC 261.) Even if multiple inventors were involved but only one assigned to another company (e.g., a disgruntled employee), the assignment would give the other company an undivided ownership interest in the patent that results. Under US patent law an undivided owner does not have to account to his co-owner and can independently do what he wishes with the patent without the co-owner having any say. And, a co-owner of a patent, regardless of how small the percentage of ownership, can practice the invention patented without concern for the co-owners and can independently license it (e.g., to the infringer being sued by the first company, thereby making the infringer a licensed user protected from suit, which could undermine any enforcement or licensing under the patent). Under the USPTO procedures for publication of a patent application (see MPEP Section 37 CFR 1.215(b)), if the applicant wants the patent application publication to include assignee information, the applicant must include the assignee information on the application transmittal sheet or the application data sheet. Assignee information may not be included on the patent application publication unless this information is provided on the application transmittal sheet or application data sheet included with the application on filing. Thus, if the applicant does not put the assignee information on the application transmittal sheet or the application data sheet it will not be on the published patent application and not be searchable using the patent database. Failure to provide the assignee information on the application transmittal sheet or the application data sheet will avoid putting the information in the patent database. However, if the assignment is recorded, which can be done even if the assignee leaves off the assignee information from the application transmittal sheet and the application data sheet, the assign data will be in the assignment database which is now on-line and available as of the patent application filing date. This is a database more difficult to search and requires multiple steps to identify the subject matter of a particular assigned published patent application (at least as of today’s date, because the assignment database is not fully functional). Patents are personal property and thus — unlike trademarks — do not require quality control in order to maintain protection, so an assignment of a patent application to a holding company and then later assigning it back to the operating company when secrecy is of no concern, would safely hide the connection of the published patent application with the operating company. However, anyone considering this approach must consider whether transferring assets around like this could raise tax issues. Also, when a patent issues, if the holding company still owns the patent and it is asserted against an infringer, the right to recover lost profits would be lost since the holding company does not sell the patented product. This would limit the damage recovery to a reasonable royalty, typically a much smaller number.