Innovation Misdirection

by Archer Tope

innovation-misdirectionSometimes the fact you are keeping a trade secret is well known in the marketplace. Your product may work better than competitors’ products; you may have a price advantage; or others just cannot replicate your product. Competitors may be working hard to reverse engineer or replicate your secrets.

If you want to protect your trade secrets you can use Innovation Misdirection to help keep others from implementing their ‘fast follower’ strategy – or at least slow them down. One way to throw a competitor off of the trail is to file for patent protection for a method or product that you know is suboptimal. You would be amazed at how many companies look at competitor’s patent filings to find out exactly what they are doing and then see if they can use, change, or even improve on the idea. These ‘fast followers’ do not usually want to spend a great deal of timepeople-with-key, effort, or resources in the initial development, but they are more than willing to copy what you have done.

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Oftentimes a patent filing in the wrong direction can throw a competitor off the path. You can file a patent on a process or idea you are not currently using in order to give the competitor the wrong idea. The idea can be a plausible way of implementing your product that you have found is not optimal.

I am not suggesting you waste the patent office’s time or to file frivolous patents; these filings need to be workable ideas which meet all the patent requirements. This Innovation Misdirection is especially useful for process ideas, chemical formulas, or software implementations.

Prior Use Defense

Of course, if a company decides to keep an idea as a trade secret instead of patenting it, they want to be assured that they can continue to use their idea. If the trade secret is not patented your company may run the risk of having a competitor patent the idea ahead of any patents your company files.

If someone else files a patent on your idea, this does not mean you cannot use the idea in your operation. There is a concept in patent law called “prior use defense;” however, it is not without its own set of problems.

The rules governing a “prior use defense” tend to be complicated. Among a number of other rules, this defense requires continuous use of the idea and you must demonstrate the use at least one year before the effective filing date of any overlapping patent. This can severely restrict your ability to use this defense for a trade secret. Remember that a competitor’s patent application is not published for a period of time measured in years; also, your competitors do not usually call you to tell you they are filing a non-published patent. You are taking a risk if you plan on using the prior use defense.

Also, the prior use defense is difficult to argue. To make use of this defense you will likely need to provide competitive information to the other party. Since the other party is most likely to be a competitor, you probably do not want them to have access to your sensitive information.

And, in arguing the prior use defense, you may inadvertently prove the other side’s patent infringement case. You will be arguing and providing data that you have continuously used the technology. You will be saying “yes we infringe that patent and have been doing so for quite some time.” If you do not win the prior use argument in the courts, you will likely have become the best advocate for arguing the other side’s position. If you were to argue the prior use defense, make sure you win!

The burden will be on you. You have the obligation to prove the prior use defense. In a weird twist of logic, the other side may argue that you were not using the idea. Should the case proceed past the prior use phase, the other side will likely use your arguments against you when proving infringement and royalties. They will say that you have very effectively made their case.

The prior use defense has been compared to threading a needle while jogging inside a cement mixer. To date, it does not appear anyone has successfully argued this defense in patent litigation. Due to these (and other) structural problems with the prior use defense, I am not aware of any major corporation using this defense or any expert recommending the reliance on the prior use defense as a strategy.

Defensive Disclosures

So how do you protect your secrets? invalidIf the value of patents is becoming more questionable and there is an inherent danger of keeping a trade secret, how can you keep an idea secret and not risk being able to use your idea in the future? Some companies are beginning to file defensive disclosures of novel information. The purpose of a defensive disclosure is to invalidate a patent which could limit your ability to use the invention. The problem with a defensive disclosure is if the defensive disclosure is not done correctly, you are giving away your secret sauce.

There are methods to mitigate the impact of a defensive disclosure. When looking at a defensive disclosure most companies think of a journal article, trade blog post, or other similar publication. If the idea is on a public site, which is referenced by others in your industry, it should be able to act as a defensive disclosure.

The defensive disclosure places the idea in the public domain and acts as prior art for anyone wishing to file a patent on the same idea. The intent of a defensive disclosure is to establish the idea as prior art for any future patents, thus protecting your ability to use the invention. The patent rules state in order for a publication to be considered prior art, it must meet certain criteria:

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Prior Art Publication Requirement

“…document has been disseminated or otherwise made available to the extent that persons interested and ordinarily skilled in the subject matter or art, exercising reasonable diligence, can locate it.”    – Emphasis added 2128[R-11.2013]

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This requirement typically means you cannot hide the publication from your competitors and still be considered prior art. This means your idea will be out in the public domain and is likely to be seen by your competitors. Since it is a disclosure and not a patent, your ‘fast follower’ competitor is free to use the idea. They will likely not even send you a Christmas card saying – thanks for making our job easier.

So how do you protect the idea and still keep it a trade secret?

pro-tip-cropedA different method of defensive disclosure is to file a patent which includes a complete write-up of the idea and a Frankenstein claim.

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Frankenstein Claim

A patent claim which contains multiple ideas or enough detail to make the claim extremely narrow and thus reducing the chance of a rejection by the patent office. Frankenstein claims are used in defensive disclosures to ensure a quick, economic, and painless grant of the patent.

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frankenstine-claimBy using the patent system for a defensive disclosure, you fall under the patent rules. These can be much more favorable to the disclosing entity than merely publicizing the idea.

If you use the patent system for a defensive disclosure, you can use a provisional patent application which you can convert into a non-provisional filing. This typically delays the publication of the idea by several years. In most cases you will have one year to convert a provisional application to a non-provisional, and approximately 18 months for non-provisional to be published. The downside is there is a slight cost for filing the patent and a defensive disclosure will place the idea into the public domain. This technique allows you to very economically file a public disclosure that is hidden from view for several years. Also, if you change your mind and want to pursue full patent protection, you still have that option while the patent is under examination.

The Choice

Should you file a patent with the associated costs or should you publish the idea in a trade journal or similar publication? If your idea is novel and useful in the market when published in a trade journal or similar publication, it will likely be picked up by your competitors. This is especially true today where articles are cross-linked or republished across the Internet. Also, remember the obligation of disseminating the information is on you. If your concern is to use this public announcement as a method to invalidate future patents, you need to make sure the information is disseminated so reasonable diligence will find the information in order for the disclosure to be considered prior art by the patent office or the courts.

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While the reasonable diligence publication requirement is your responsibility for published documents such as trade journals, this is not true for patents. The obligation to search for relevant patents is on the patentee. If a patent filing is overlooked in the original examination, it can still be used to invalidate the patent in the future.

Even if a patent acting as prior art has not been published by the patent office when another patent is filed, it still can be used as prior art to invalidate a patent at a future date. This is different from the way prior art in a public document is treated. The current rules seem to favor using a patent for a defensive disclosure. While this is not the original intent of the patent process, it can be used in this manner to protect your right to continue using your idea.

pro-tip-cropedOthers have suggested a granted patent is not required and only a published patent is needed to establish prior art. This is true under today’s rules, however, if you show a lack of diligence in obtaining a granted patent, the opposing side in any litigation is likely to argue the patent filing was really just a public disclosure and should not be protected by the patent system or rules. The litigant could argue the patent was not published for some period of time so one using reasonable diligence would not have been able to find the prior art.

Progressing a patent from the filing through the grant will likely take this argument away from your adversary. A narrowly focused patent claim on a novel idea should be fairly easy to obtain with very little extra work or expense.

Also, a patent grant can be used to show value to the inventor. It is likely worth the additional effort and cost associated with progressing the application to a grant.

Hiding in Plain View

hiding-in-plin-sightWith the above strategy your patent filing will become public record at some point. So how can you offer some level of protection for your idea even when it becomes public record. You can ‘hide in plain view.’

According to the patent office, 500,000 to 750,000 patents are filed each year. Unless your business segment is very narrow with very little innovation, the sheer volume of patents filed make it unlikely your competitor reviews all the patents filed in your market segment. This means a patent used for a defensive disclosure is less likely to get the attention of a competitor – even when it is published. It may get lost in the normal flow of patents.

Also, remember if you file a provisional application before a non-provisional application, it is unlikely the idea behind the patent will be published for 2.5 years from the date the defensive disclosure is filed. This defensive disclosure should still act as prior art for any competitor’s patent even if they are not aware of the patent filing until it is published.

pro-tip-cropedIf you are a market leader in your segment, your competitors may be watching your patent filings. This can allow your competitors to find the idea shortly after the defensive disclosure patent is published. To combat this patent stalking by competitors, you can use another assignee company for these defensive disclosures. The name does not need to be similar to your company name. This will help you to hide your defensive patents in plain view. This Tip is used by some large companies to hide their patent filings in plain site.

Hiding in plain site may hide your disclosure from ‘patent stalker’, but does it really hide your patent from a competitor researching prior art for a patent on a similar idea? Some have argued there are two types of patent searches companies typically perform. The first is a search to stay current on prior art filed by competitors, and the second is a search for prior art before a patent is filed. While hiding in plain view strategy can deal with the first type of search, the prior art search is likely to find your patent filing used for disclosure.

While your competitor may find your defensive disclosure patent when performing a prior art search before they file a patent, if you have done the filing correctly, they may not truly appreciate the value of your patent when they see it.

I have performed numerous searches and have paid for many more to be done prior to patent filings. Typically these searches are done by individuals oriented towards a goal – structure a patent filing. If the business or technical people in the organization are involved in this process, it is usually in summary basis. Everyone on the team search / patent team is usually focused on the goal of getting their patent filed and many times will not appreciate the business impact of the prior art uncovered.

If your competitor finds your defensive disclosure patent during a patent prior art search, they are likely to dismiss the importance due to the Frankenstein Claim. To many patent professionals, this style of claim will tend to look amateurish and is likely to be quickly dismissed and forgotten. Keep in mind, if your competitor finds your defensive disclosure patent when doing a prior art search for their own patent, your defensive disclosure patent is working as intended!

The dilemma you will likely face is – “if the idea is important enough to protect, why is it not important enough for an actual patent?” The problem with intellectual property is the concepts are often long term in nature and you usually do not know the real value of an idea for several years. If you file a defensive disclosure using a patent with a Frankenstein Claim, you have gained approximately three years to see how the technology develops. When the patent comes up for examination you can add or change claims or, if you are still uncertain, you can take the Frankenstein Claim patent grant and file a second Frankenstein Claim for a continuation patent. Remember the goals of this technique are to keep the costs manageable and use the current processes to delay / hide the disclosure while ensuring you retain the right to use the technology you developed.

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Note – I am not an IP attorney or Patent Agent. The Tips and Tricks listed here have been accumulated from my personal experience working with my own ideas or the ideas of others who I have assisted. These strategies are not legal advice and you should consult with your patent professional(s) before implementing any of the ideas outlined. Also, there are many other strategies to delay the publication of a patent, such as using Patent Cooperation Treaty (PCT) to file your initial patent application. The costs vary widely. See your patent professional to discuss your specific goals.

Pro Tips and Tricks - Book Jacketinnovator-innoculationFor more Pro Tips and Tricks on how to treat trade secrets, to jump start your innovation , or to turbocharge your patent program – read “Pro Tips and Tricks for Innovation and Patents” now available on Amazon.

Uncover the Innovation Immune System lurking in your company and learn strategies for curing it.

 Many images use or incorporate material with permission from www.presentermedia.com

About the Author

My name is Archer Tope – this is a pseudonym or Nom de Plume if you prefer. The reason for the use of this subterfuge is to protect my true identity while I continue to work in the innovation and intellectual property field. I have been involved in or around innovation for at least 20 years. I decided to write this book because I found some individuals and entities tend to view innovation as more of a hobby instead of a true vocation. This has always bothered me because there is a method to implement an effective innovation program – and it works.

I have over 70 domestic US and international patents to my name. Many of my patents have been sold or used to develop products and companies which were sold to others. I have been involved with startups which have had public exits, got caught in stock market crashes, acted as an expert witness in a patent litigation, sold patent portfolios, helped structure new innovation programs, negotiated innumerable contracts, run development teams, and sued a Fortune 50 company for patent infringement. My view of the innovation landscape may be broad, however, I have also dealt in the details.

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