Open Prosecution as a Strategy to Counter IPRs Filed by Defendants

By Alec Schibanoff
November 2, 2017

We recommend that all of our clients – corporations, small businesses, universities and independent inventors – adopt an Open Prosecution strategy for all of the patent applications that are currently in prosecution.

Let’s start with a tour through New England. Once a center of manufacturing, virtually all of the factories in New England were closed years ago, and the manufacturing was moved South or out of the country. What became of all those large – mostly brick – factories? They are factory outlet stores, office buildings, apartment houses, nursing or retirement homes, or warehouses. I know of one that is a car dealership.

My point is that an asset such as a factory can be acquired by a business, and then modified to the exact needs of that business. In fact, a business can buy a factory, convert it to a retail store, decide it needs a larger retail location, and turn the factory-turned-store into a warehouse.

Patents, however, are not an asset class with that type of flexibility and adaptability. When a patent is sold – or licensed for that matter – the acquirer gets exactly the Claims that are in the patent. The acquirer or licensee does not get to modify the patent to the needs of its business. Part of the challenge in patent brokerage is finding a buyer that needs exactly the Claims that are in the patent. Wouldn’t it be great if a company could buy a patent, and then add Claims to adapt that patent to its exact needs, just as it can adapt a building to its exact needs?

Wait a minute. Wait just a minute. Maybe there is a way to do exactly that. We call it Open Prosecution. We recommend to all of our clients – independent inventors, small and large businesses, universities and other institutions – to always file for a Continuation for each and every patent application they have in prosecution before the patent is issued.

Filing for a Continuation is almost exactly like buying flood insurance:

  • When you need it, you are really glad you have it.
  • If you do not have and you need it, you wonder why you did not buy it.
  • If you have it and never need it, it is not that expensive.

Let’s look at four scenarios in which a Continuation is either something you are really glad you have or really disappointed you do not have.

Operating Companies

When an operating company files for a patent on its newest innovation with plans to introduce a new product or product line based on its newly patented technology, the real world always looks slightly different than the concept the mad scientists in R&D came up with and filed for a patent for. As an actual product is developed from a new concept, additional features, capabilities, methodologies, approaches and good-old bells and whistles are almost always incorporated into the actual product that goes to market. So not all of the features in a new product are covered by the original patent on which the product was based. An operating company that filed for a Continuation has a unique and valuable opportunity. It can add additional Claims covering all the new technology added to the actual product – or its second or third generation products – and file for a new patent so that all critical aspects of the product are patent protected. And the new patent derived from the Continuation shares the same Priority Date as the original patent so it has comprehensive patent protection for its new product!

Sellers of Patents

When a company decides to sell a non-core patent – as more and more businesses are doing – or an independent inventors decides to sell a patent, offering both a granted patent AND an Open Continuation adds significant value and market appeal to the portfolio. The Open Continuation enables the acquirer of that patent flexibility and adaptability that a patent alone does not offer. The acquirer can add Claims that create a new patent with all the Claims of the original patent plus any additional Claims that give the invention covered by the original patent a wider scope that addresses the specific technologies and application needs of the acquirer.

Patent Licensing

When licensing a patent, the same concepts apply. As the licensor works with the licensee, it is very likely that added technology and methodologies will be included in the actual product or product line developed from the base patent. An Open Continuation gives the licensor the ability to add Claims to cover a new and improved patent – and create a new patent that shares the same Priority Date as the base patent – and license it to the licensee.

Patent Assertion

One of the most valuable benefits of Open Prosecution is when a patentee is forced to enforce a patent. While no business, university or independent inventor applies for a patent with the expectation of ending up in U.S. District Court as the plaintiff in a patent infringement lawsuit, the true value of any patent is the ability to enforce the patent against infringers, so that outcome has to be considered. One of the most common strategies of accused infringers is to attack the validity of the patent-at-suit, and that comes in the form of an IPR (inter partes review) before the PTAB (Patent Trial and Appeal Board).

Now, had the patentee filed for a Continuation, it could file for an additional patent with new Claims but the same Priority Date as the original patent, and add it to the lawsuit. And, of course, before that second patent is issued, the patentee files for yet another Continuation. The plaintiff in a patent infringement lawsuit can use an Open Prosecution model to continue to introduce new patents as a counter-strategy to the IPRs filed by the defendant. More than a few patent infringement lawsuits ended in favorable settlements once the defendant realized it had a formidable opponents with additional patents up its prosecution sleeve.

Indeed, this Open Prosecution strategy has become an even more robust and powerful strategy in recent years thanks to Track One prioritization, which can frequently result in a patent being issued in as little as six months.

Very Minor Downside

What if you filed for a Continuation, but never used it? It expires, and you are out a few hundred dollars. The Open Prosecution model is the ultimate low-risk/high-reward strategy.

Bottom Line: A patent with an Open Continuation benefits practicing entities, sellers and licensors of patents, and those forced to assert their patents against infringers. For sellers and licensors of patents, a patent with an Open Continuation is much more valuable than a stand-alone granted patent. In fact, there are two assets that add considerable value and marketability to a patent: An Open Continuation and a…

We’ll leave that second asset for another article.

The Author

Alec Schibanoff

Alec Schibanoff is Vice President of IPOfferings LLC, a leading patent broker and IP consulting services firm. IPOfferings represents both sellers and buyers of patents and other IP, provides patent valuation and IP consulting services, publishes a monthly e-letter, IP Marketplace, and publishes the Patent Value Quotient, an annual report on patent selling prices. Alec can be reached at alec@IPOfferings.com.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 10 Comments comments. Join the discussion.

  1. A reader November 2, 2017 8:38 am

    The author incorrectly equates RCEs with continuations. An RCE continues examination of a pending patent application (after a ‘final rejection’). A continuation is a new application that relies on the priority date(s) of a previously filed application.

  2. PRINTSCRN November 2, 2017 9:55 am

    “We recommend to all of our clients – independent inventors, small and large businesses, universities and other institutions – to always file for a Continuation for each and every patent application they have in prosecution before the patent is issued. The actual legal terminology is an RCE (Request for Continued Examination), and the filing fee is just a few hundred dollars. There are also Continuations-in-Part and Divisionals, but let’s focus on RCEs for this article.”

    Great for the law firms, since it also ensures that clients keep paying to prosecute continuations indefinitely that they dont want. “I cant guarantee I did a good job on this allowed patent, so I recommend you keep paying me indefinitely to keep it alive, so that if I didnt do a good job then I can fix it later.”

  3. a reader 2 November 2, 2017 10:04 am

    “What if you filed for a Continuation, but never used it? It expires, and you are out a few hundred dollars. The Open Prosecution model is the ultimate low-risk/high-reward strategy.”

    This completely downplays the cost — you cant just file for a CON and let it sit on the shelf indefinitely, until 10 years later when there is litigation and an IPR is filed against the original patent. You have to actively prosecute a CON (respond to office actions, file RCE’s, etc.). To keep an application alive over a 5+ year period, you are talking about tens of thousands of dollars, not a few hundred dollars. May be worth it just to file an appeal after first final rejection instead of trying to keep prosecute, so that app sits on the shelf for a few years and can be re-opened when desired.

  4. Gene Quinn November 2, 2017 11:54 am

    a reader 2-

    The strategy of filing a continuation and allowing it to sit there and remain pending through various procedural mechanisms is done all the time. Yes, there is a cost, but if the innovation is valuable this strategy is extremely common. At least common when valuable innovations are held by large corporations. In this market it is increasingly necessary for small entities to do the same with their valuable patents. The prosecution costs are minimal if the innovation is really valuable.

  5. a reader 2 November 2, 2017 1:33 pm

    Gene, I agree it can be a good strategy for certain entities or certain patents. Just saying the article is at least an order of magnitude, and maybe two orders of magnitude, off on cost. This is not a strategy that costs “a few hundred dollars” per patent family.

  6. Gene Quinn November 2, 2017 2:36 pm

    a reader 2-

    I see your point. I suppose it is probably more correct to say a few thousand dollars, assuming you have a good solid omnibus patent disclosure that has solid priority dates. Still, this is a strategy that seems to be causing IPR challengers some amount of discomfort. So until there is some kind of REAL relief from the one-sided procedures at the PTAB this is a tactic that needs to be considered whenever it can be exploited.

  7. Kevin Rieffel November 2, 2017 3:00 pm

    A fine, well-known strategy but be cautioned that this is not inexpensive and the examining corps is under pressure to deter continuation practice by accelerating first NFOAs in order to push the applicants to pay for multiple EoTs and/or RCEs.

  8. Lost In Norway November 6, 2017 2:24 am

    I work almost exclusively with patents from 1 to 3 inventors. A very common problem is that the invention that they file at the “mad scientist” stage is very different from the product that they bring to market 1-2 years later. No matter how well I write the specification, there is no way that I am going to cover all of the ways that they are going to stretch the patent. This is usually because they don’t actually know where the product is going to end up when development actually stops.

    The article gives me the impression that I can just slap new claims and new features in that were not in the original spec and retain the priority date. The first time I introduce a new claim, you had better bet that the examiner is going to look over my app VERY closely. New matter is new matter.

    This advice might be great for a big company that has a very good idea of where their product is going. But I would be hesitant to keep prosecution open for a small inventor without good reason.

  9. Anon November 6, 2017 8:33 am

    Lost in Norway,

    I think that there is a difference between the situation that applies to you (as you describe it) and your “impression.”

    I do not think that anyone is actually advocating “ just slap new claims and new features in that were not in the original spec and retain the priority date

    That being said, and yes, new matte is indeed new matter (and rightfully should be rejected under examination), I do not see any reason for hesitancy in keeping prosecution open (for the items of NON new matter).

    Further, keeping prosecution open also permits you to file Continuations in Part.

    Lastly, I think that you operates under a bit of fallacy as to the difference in big versus small companies as to “where their product is going” versus the benefits of a portfolio of patents.

    As discussed here: http://www.ipwatchdog.com/2017/10/30/ptab-patent-trolls-bad-patents-wakeup-aia-apologists

    The notion of patents as protecting innovation is NOT limited to actual new products developed. If your aim as a practitioner is to protect your client’s innovation efforts, you should realize that those innovation efforts are MORE THAN merely the eventual products themselves.

  10. Lost In Norway November 7, 2017 3:56 am

    Anon

    I am not debating the advantages of keeping prosecution open. It is clear that there are good things with this. You linked to one of them in your post. The closest I have done to using this filing a broad spec with limited claims for a “quick” grant and then going back with a continuation for more coverage. Not exactly what is discussed here, but at least a 2nd cousin ?. Continuations in part have been useful if the customer comes with something that is beyond the original application as filed. But as you said, “new matter is new matter”.

    The author compares keeping prosecution open to having flood insurance. For me this conjures the image of a small trifling sum of money that pays of huge when a flood comes. Well, at least the flood insurance for my home doesn’t cost me much; maybe because I don’t live in a flood zone. I hope that we are both in agreement that keeping prosecution open is expensive. The small inventors in my experience do not have a lot of extra money lying around. They have to prioritize their money and all of the IP protection in the world is not going to get a widget built and onto the market. I also try to make them understand that the best product in the world is dead meat without solid patent protection for both the product they have now and where they are possibly going to go. (side note: mad scientists often end up well outside of where anyone thought they were going to go).

    It is difficult balance in my world. Those that I talk to that work for large companies have much more latitude in keeping prosecution open. I give my clients every inch of protection that I have the skills and imagination to give. I can stress how important it is for them to keep me updated as their invention changes. I can stress how important it is that they get protection as far and wide as they think that they might need. But if they don’t have the money to intentionally keep prosecution open, then they don’t have the money. Perhaps that is a fallacy of mine.

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