Several readers recently asked if there is a good (free) site that lists the expiration dates of pharmaceutical patents. The Generic Pharmaceutical Association (GPhA) has a chart listing Upcoming Patent Expirations for 2007-09.  One fee-based service I know of is Drug Patent Watch. 

One can also do the reviewing themselves, of course, but determining if a patent has truly expired can be a tricky business full of pitfalls.  For those who want to get look into a patent’s status, there are a number of steps to perform.

First, if the patent application was filed after June 7, 1995, the expiration date is 20 years from the date it was filed. If the application was filed by June 7, 1995 and issued before June 8, 1978, the expiration date is 17 years from issuance. But, if the application was filed by June 7, 1995 and issued after June 7, 1978, the term is the later of 17 years from issuance or 20 years from filing.

However, keep in mind that a patent term may be extended for various reasons.  Some patents have had their terms extended based on extreme delays in government approvals outside the Patent Office. This is very unusual, and applies almost always to pharmaceuticals (for example, Claritin® or Prozac®), food products (Aspartame) or medical devices or procedures, where FDA approval can sometimes eat up most of the patent term before the drug can be brought to market.

For a list of patents with term extensions, see the Patent and Trademark Office’s Extended Term List.

Some patents have less than the normal life span because their terms are limited to the terms of earlier-issued patents through the use of a terminal disclaimer, which is a result of filing two applications which claimed essentially the same invention. Terminal disclaimers will be marked on the later-issued patent. Sometimes these are flagged by an asterisk after the patent issue date, but sometimes they only appear in the text of the patent or with the related application data on the face of the patent.

Even after issuance, there are various ways a patent can expire early. For example, if the maintenance fees are not paid, the patent expires at the end of the surcharge period (4.5, 8.5 or 12.5 years after issue). However, the caveat to this is that expired patents may be revived up to 24 months after they expire, so long as the failure to pay the fee was unintentional. If the expiration date was more than two years in the past, the patent cannot be revived.

You can use the USPTO’s Patent Application Information Retrieval (PAIR) system to determine if maintenance fees have been paid.

In addition, you must determine if there has been any reexamination or voluntary disclaimer which resulted in a loss of some or all of the claim scope. This should be noted on a certificate attached to the patent image on the USPTO database, usually as the last page in the image file.  It is possible that an issued patent can be withdrawn from issue on the order of the Commissioner of Patents.

Finally, you must also check to see if the patent been declared invalid by a court.  Unfortunately, this can also be a tedious task to search through court records.

If you are genuinely concerned about a particular patent, it may be advisable to have a patent attorney (for example, one of the attorneys here at Frost Brown Todd) do a validity study and opinion on the patent. The attorney can perform a search to find prior art which might invalidate the patent, and will review the patent’s file at the USPTO to see if there is anything which might affect the validity or scope of the patent.

If you know of other sources for expired patent information, drop me a line and I will provide updated information here.

Posted July 26th, 2007 by Stephen Albainy-Jenei in Practice Tips, Pharmaceutical, Generic drugs, Due Diligence
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Conducting a thorough IP due diligence review is a critical aspect of successful tech deals - especially in the bioscience industry. The intellectual property at issue can make or break a deal. It is imperative that you know what you have (or are getting) is the real deal.

When undertaking a due diligence review during a company merger or acquisition, negotiating a license or joint venture agreement, purchasing patent other intellectual property rights, there are some basic steps to go through in order to cover the important issues of the transaction.

Some of the steps in due diligence procedures designed to flush out the needed information include:

What IP Rights?

The identification of all intellectual property rights is very useful in predicting future value of a business. The best approach, then, is to simply list (with a detailed description) all intellectual property rights. In addition to exploring the right-to-use, it is also important to determine what intellectual property assets are held by the business itself. For example, while it is not always guaranteed that a holder of a patent has the right to make, use or sell its own patented product or service, it is important to develop a position of strength for its products and services.

The procurement of a set of intellectual property rights may not guarantee immunity from a competitor’s pressure but a business which is active in procurement of rights is often much more aware of other’s rights. It also may be able to bargain (i.e., cross-license) with a competitor over certain rights to avoid a costly settlement or to be blocked in the marketplace all together.

Prioritize Your Rights

Not all intellectual property rights may be of significant value to a business. Therefore, it is necessary to review all aspects of the company and assign priorities to the rights according to their value. The more important the rights are to the future vitality of a business, the more due diligence that will be necessary. Mature products and services often are the most important source of the current financial state of a business. However, a changing market demands that much more due diligence be performed in order to understand any future product changes or improvements that are being implemented or planned.

While some businesses may choose to compete in the market without obtaining patents or aggressively protecting trademark rights, a competitor in a market may be working toward reducing the competitive advantage of a business by securing substantial patents, trademarks or other intellectual property rights. It is quite common for at least one player in a multi-firm market to follow such a strategy in an attempt to force competitors to either take licenses or stop making or using the proprietary technology. Such tactics are frequently successful in securing a superior competitive position.

Can You Use It?

It is one thing to own IP rights; it is another thing to be able to conduct a business without infringing third party IP rights. Thus, the fact that a company has a patent for a product does not give it the right to make the product. The unfettered right to use, make or sell certain technology, or to use trademarks or material subject to copyrights, is often crucial to the health of any business. If a competitor holds patents, trademarks, copyrights or other related rights that dominate a successful product or service of a business, the profitability of a business, and even the ability to survive, may be at stake.

In addition, if patent, trademark, and trade secret rights, for example, have been licensed in from another company, it will be important to look to the license agreement to determine whether the scope of the license is sufficient in relation to the company’s business activities. One should not stop at the license agreement, however, because it is also possible that the licensor company obtained additional IP, such as patents, not in the license agreement, that may affect freedom to operate.

Thus it is often important to conduct independent IP searches in areas of relevance to the company’s business to identify third party patents, trademarks, or copyrights that may be of importance. Additionally, it is important to scrutinize any demand letters, litigation history, and other relationships with competitors to identify potential third party IP risks. Preferably, a company will periodically monitor the intellectual property rights held by competitors.

Check Under the Hood

Title to recordable IP rights (e.g., patents, trademarks and copyrights) should be verified by doing the appropriate searches. Any licenses, assignments, government rights, and liens (secured or unsecured) also should be verified by searches. In addition, any new intellectual property interests arising from an investment, acquisition or sale should be recorded in appropriate state and federal offices. Ownership interests in foreign countries require separate title searches, as well as separate assignments or other legal instruments for perfecting rights in those foreign countries.

For intellectual property rights not identifiable as an issued patent, a registered trademark or a registered copyright, detailed listings and explanations also should be provided. Such rights may include trade secrets, know-how, common law trade names, trade dress (unique appearance), trademarks and unregistered copyrights. For each of these, the inventors, authors and uses of the rights should be identified and the dates of first use recorded. In some businesses, these rights can be at the heart of a business and never should be ignored. Often, the dates of creation of first use are critical in protecting and preserving the rights. For example, dates and evidence of use of common law trademarks are important to preserve superior rights over a later user.

Posted November 27th, 2006 by Stephen Albainy-Jenei in Trade Secrets, Due Diligence
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Unlike patent rights, copyright rights spring automatically upon being written (fixed in tangible form) without registration. The general rule is that copyrights are owned by the individual who created the work or copyrightable subject matter. The author of a creative work (including a software application) owns the entire copyright in that work. Ordinarily, the person who created the work is the author. For purposes of the issues addressed here, the only exceptions to the general rule of an author owning the copyright in the creative work are (1) joint authorship, and (2) works made for hire.

Joint authorship happens when several people work together to create a single work. Under this scenario, a joint work may be created under the Copyright Act. The Copyright Act defines a joint work as “a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole.” Under this definition, both authors must intend that their contributions be combined, and this intention must exist at the time the contribution is created. It is not necessary, however, that the contributions be of equal effort or value nor is it necessary that the joint authors work in the same physical area or at the same time.

The second exception to the general copyright rule that the author owns the copyright is that of a work made for hire. In a work made for hire situation, the author of the work is no longer the individual who created the work. Instead, the author is considered to be the entity that hired the actual creator of the work (such as a corporation for whom the author works as an employee).

The U.S. “work made for hire doctrine” provides two exceptions. The first is that works created by an employee within the scope or his or her employment are considered works of authorship of and owned by the employer. The second is that the copyright in works created by independent contractors and other non-employees (and employees outside the scope of their employment) can be owned by the commissioning party only if two conditions are satisfied: the independent contractor signs the appropriate instrument, and the work itself fits within one of enumerated categories in the Copyright Act.
This becomes a crucial issue because a work is considered a work made for hire, you are the author and owner of the work. If the work is not a work made for hire, you have no copyright ownership in the work. Your ability to use the work would therefore depend on the specific terms of the agreement with the contractor, or upon the concept of an implied license to use the work. If you are forced to rely on an implied license, you may find you only have limited rights to alter, update, copy, transform, or use the work for which you paid.

The results reached by copyright law and the U.S. Supreme Court may run counter-intuitive to what you think. You hired the contractor, you told the contractor what to build, you managed the project with the contractor, and you paid the contractor the agreed-upon price for the application. If that was done without a written agreement, you have an implied license to use the application (the details of that implied license being in question) and no more. The contractor has the ability to resell the application and keep all the money, reuse the application on a project for your biggest competitor, and otherwise take the benefit of the code written while performing this application development work and reuse that to the consultant’s sole benefit.

Where the works made for hire doctrine does not apply to the application at hand, a specific transfer of ownership must be in the consulting contract. The attached sample contract transfers ownership from the consultant to you. The language used is not can be varied but it is important, however, that the transfer of ownership be explicit and in writing.

Accordingly, it is possible that the copyright in software created by an independent contractor is not owned by the hiring company even if an instrument has been executed because the work may not fit within one of the statutory categories. In such case, the hiring company must acquire rights by written assignment.

Even though copyrights arise automatically, as a general rule, the copyright in U.S. works must be registered with the U.S. Copyright Office before bring suit can be brought against an infringer. Works registered within five years of first publication are entitled to the benefit of certain presumptions that can be beneficial in litigation as well as settlement. In addition, only if the work is registered within three months of first publication is eligibility preserved to recover attorneys’ fees and statutory damages in the event that the copyright owner prevails in the litigation. Due diligence should ascertain the date and fact of registration.

If the technology involves software, copyrights may come back to bite you in two important ways. First, if the program is developed by company employees and/or consultants, are agreements in place to ensure the software is a “work made for hire” that the company owns, or alternatively that has been properly assigned to the company? Second, have steps been taken to ensure that the software does not incorporate copyrighted works of others, for example, by incorporation of open source works which are in fact not in the public domain and are owned by another party? Whether the company has full ownership rights to its copyrights would be a key factor in determining the value of its IP portfolio and thus its attractiveness as an investment.

It is common practice for programmers to use readily available source code that can be downloaded and incorporated into the software they are developing. Using open source software (OSS) in this manner can be very efficient. Unfortunately, there are many misconceptions about OSS and the legal uses of OSS are not always well understood. It’s important to know that OSS is not generally not “public domain” software that is free for the taking. Most OSS provides for some limitations on use, most typically the ability to incorporate it into other application, to modify it and to redistribute it. Often, OSS will incorporate a general public license that does not permit the OSS code to be incorporated into a proprietary product. Depending upon the terms of the original license, if the OSS code is incorporated into a company’s software product, the company may need to provide the same rights of use to anyone who receives a copy of the software that the OSS vendor gave the company under the general public license. In effect, a general public license can cause the OSS code can turn proprietary software into open source software or will require a re-write to remove the OSS.

Software copyright due diligence is made more difficult due to recent cases holding that certain aspects of a computer program may not be protected as copyrightable authorship. These aspects include elements of the program which are already in the public domain; elements of the program which are dictated by “efficiency” and elements of the program which are dictated by “external factors.” As a result, copyright registrations should need to be handled differently, and as a result of that, copyright due diligence must be conducted in light of these new developments.

The copyright in a work can be divided and can be assigned in whole or in part by the copyright owner. Therefore, it is important to verify that the party granting specific rights has the rights to grant the acquiring company.

Sample Copyright Assignment Form 

Posted October 30th, 2006 by Stephen Albainy-Jenei in Due Diligence
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Assets acquired in today’s private equity and venture deals, mergers and acquisitions, strategic alliances and joint ventures are increasingly intellectual property assets such as patents, copyrights and Internet domain names. Because of the value of these assets, intellectual property due diligence has become an important part of the legal work required for these transactions. Such intellectual property assets consist of (1) “content,” which includes text, visual images (both moving and still), sounds, database information, logos, characters and the like, (2) “technology,” which includes biological chemical compositions and methods, electrical and mechanical devices and software and business methods, and (3) combination hardware and software devices.

Due diligence includes a review of not just the listed intangible assets of a company but also the scope of protection, any defects or clouds on the title, and issues surrounding the use of the claimed asstes. If after the deal a party does not own or have an adequate license to the intellectual property acquired in the transaction, then the acquiring company may face liability for infringement when it uses or sells products or services with the assets it acquired. Therefore, one must carefully consider patent, copyright, trademark and domain name due diligence.

In evaluating patent rights, it is important to note that just because a product or process is patented does not mean it cannot infringe another patent owned by a third party. In fact, patented technologies can and often do infringe other patents. For example, a first company can own a patent on a basic material or component sued to make a device or composition that is patented by a second company. In such a case, the second company cannot sell its product unless it first obtains a license from the first company.

A patent does not grant the patent owner the right to the exclusive right to practice his invention, it grants him the right to exclude others from making, using or selling the patented subject matter. As a result, due diligence should investigate whether licenses from third parties are required for the acquiring company or its customers to use the target company’s technology.
The target company’s patent ownership should be verified by review of U.S. and foreign Patent Office records. Often government records will not reflect assignments shown in corporate documents, and this also needs to be investigated. Patents have a limited term, and the target company must be sure that sufficient useful time remains on the patents to be acquired. Patents rights can lapse if period required fees to keep the patent in force have not been paid.

If any allegations of infringement have been made against the target company’s patent in the past, or if for another reason the acquired company retained patent counsel to issue an opinion letter on the validity of the third party’s patent and/or its infringement, those opinion letters should be obtained and reviewed. Any qualifications in the opinions should be carefully analyzed. Moreover, depending on their date and scope, the opinion letters may need to be updated.

If there are any past or pending infringement suits, relevant litigation documents should be reviewed. If the target party is a defendant, then the likelihood of a judgment of infringement should be assessed as well as the scope of a potential damage award and the impact of any temporary or permanent injunction. Treble damages and attorneys’ fees can be awarded in instances of willful infringement, and these issues must also be evaluated. If the target party is a plaintiff, then there is the risk that its patent may be held invalid in the litigation. Accordingly, the impact of the loss of exclusivity and the loss of the revenue from patent royalties must also be assessed.

The importance of intellectual property assets in venture capital deals, private equity investments and mergers and acquisitions, and especially in deals involving high-technology, place great importance on the time allocated to and the quality of the intellectual property due diligence that should be conducted in such transactions.

Posted September 25th, 2006 by Stephen Albainy-Jenei in Due Diligence
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