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Establishing a Robust Due Diligence Process: Tips for Finding the Warts before Finalizing the Deal
Patents and Other Intellectual Property Issues:Coverage and Freedom to Operate
Paul J. BermanCovington & Burling LLP
www.cov.com
Freedom to Operate:What Does a Patent Do?
Every patent shall . . . grant to the patentee . . . the right to exclude others from
making, using, offering for sale, or selling the invention throughout the U.S. or importing the invention into the U.S., and,
if the invention is a process, . . .the right to exclude others from using, offering for
sale or selling throughout the United States, or importing into the United States, products made by that process . . . .
35 USC 154(a)
Freedom to Operate:What a Patent Doesn’t Do
A patent does not give you the affirmative right to do anything (except keep others from practicing the claimed invention)– FDA approval required for patentee to sell a
patented drug or biologic– Medical license required for inventor to practice a
patented medical procedure– Patent-holder consent required to practice
patented invention• compound v. formulation• component v. entire device
Freedom to Operate:Do We Infringe?
• Infringement Analysis: Apply the patent claims, properly construed, to the accused device or process.
• What’s the product or process to be commercialized or financed?
• What are potentially relevant patents?
Freedom to Operate:Common Warts
• Incomplete or inaccurate information about product or process to be commercialized or financed
• Unpublished patent applications• Unissued patent applications• Not enough time
Freedom to Operate:Real-World Conclusions
• Cost = amount client willing to spend• Infringement risk cannot be eliminated,
theoretically or practically
Patent Coverage: Who Owns The Patent?
What’s Wrong With This Picture?
• Brother Dominic has not assigned his rights to the company
What’s Wrong With This Picture?
• Brother Dominic has not assigned his rights to the company
• Brother Xavier has conducted some of his research at the University of Champagne
What’s Wrong With This Picture?
• Brother Dominic has not assigned his rights to the company
• Brother Xavier has conducted some of his research at the University of Champagne
• Brother Francis is a drinking buddy of the research chief at Dom Perignon
What’s Wrong With This Picture?
• Brother Dominic has not assigned his rights to the company
• Brother Xavier has conducted some of his research at the University of Champagne
• Brother Francis is a drinking buddy of the research chief at Dom Perignon
• Brother John was just hired from Perrier, where he was Chief of Carbonation Research
What’s Wrong With This Picture?
• Brother Dominic has not assigned his rights to the company
• Brother Xavier has conducted some of his research at the University of Champagne
• Brother Francis is a drinking buddy of the research chief at Dom Perignon
• Brother John was just hired from Perrier, where he was Director of Carbonation Studies
• All of the above
Berman’s Law
Upstream ownership problems will kill you. Dead.– The U.S. Patent and Trademark Office will record
anything. Review the underlying documents.– Foreign law/foreign inventorship issues– Universities– Collaborations– Other personal property problems
Patent Coverage:What Does a Patent Cover?
Every patent shall . . . grant to the patentee . . . the right to exclude others from
making, using, offering for sale, or selling the invention throughout the U.S. or
importing the invention into the U.S., and, if the invention is a process, . . .the right to exclude others from using, offering for sale or
selling throughout the United States, or importing into the United States, products made by that process . . . .
The invention = the claimed invention.The invention = the claimed invention.
Patent Coverage:What Does My Patent Cover?
• Apply the patent claims, properly construed, to the device or process to be commercialized or financed.
Patent Coverage:Importance
• Hatch-Waxman 30-month stay of FDA approval of generic versions (21 USC 355)
• Injunctions against copiers (35 USC 283)• Damages from copiers (35 USC 284)
Patent Coverage:Limitation on Damages
• Patent marking requirement (35 USC 287)Patentees may give notice . . . by fixing . . . the word “patent” or
the abbreviation “pat.”, together with the number of the patent . . . . In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. . . .
• Penalties for false marking (35 USC 292)– Whoever marks upon, or affixes to, or uses in advertising in
connection with any unpatented article, the word “patent” or any word or number importing that the same is patented for the purpose of deceiving the public . . . shall be fined not more than $500 for each such offense.
Patent Due Diligence Priorities
• First: Freedom to Operate• Second: Patent Coverage• Third: Patent Validity/Enforceability
Establishing a Robust Due Diligence Process: Tips for Finding the Warts before Finalizing the Deal
Patents and Other Intellectual Property Issues:Coverage and Freedom to Operate
Paul J. BermanCovington & Burling LLP
www.cov.com
