Open Prosecution as a Strategy to Counter IPRs Filed by Defendants

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.