Re: prior art and non-disclosure

Subject: Re: Re: prior art and non-disclosure

Comments:
: : : : Consider this scenario: : : Pretend that there is no Mexico-US co-mingling of cultures. Taco Bell etc. is not in existence. : : : : I, on my own, go to China and eat egg rolls. I come back to the US and I play with the food and independenly invent the burrito, and apply get a provisional patent application. I begin courting McDonald's for a license deal. : : Of course, I have McD sign a non-disclosure agreement. The non-disclosure agreement says I am the one who showed them the burrito and in so many words, own the rights to it (but not really, since it is not patented yet.) A strong non-disclosure agreement would read something like, "I am the one who showed McD the burrito. Before I came along, McD knew nothing about this. Therefore, if McD enters the burrito business, it must be under my license." : <i>What you don't set out are the terms of the license itself. Is it exclusive? Non-exclusive? In a license, you would retain some rights. Which rights are those? If you retain no rights (only money), it's an assignment and McD is the owner of the patent (application?) outright.</i> : : Now, many books suggest having the licensee (McD) pay for the patent lawyers and fees. This makes good sense to me, since I don't have an extra $10,000 right now. These same books also recommend getting the license agreement to say that the licensee (McD) must pay to sue others for infringement. The logic behind this is again, the inventors lack of funds for legal fees. : <i>Not really. First, as I understand it, it's rare for a licensee to pay for the prosecution costs of a patent application. As I said above, a licensor reserves some rights and therefore retains ownership and control of the prosecution. On the other hand, the royalties you collect should more than cover my fees. ;-)</i> : <i>As for enforcement, the agreements I've seen require that the licensor enforce the patent(s) against any infringers and the licensee agrees to notify the licensor of any known infringements. The reason is that the licensee is in the business of practicing the invention and is more likely to know of infringers. The licensor has retained some rights and may even have other licensees -- therefore the licensor has the stronger incentive to maintain the patent right and to enforce it.</i> : <i>What you may have read is that the licensee, particularly an exclusive licensee, has the right to enforce the patent(s) if the licensor fails to do so upon notice of infringement by another. With an exclusive license, the licensee expects to not have any competition for the licensed technology and they've paid for that freedom from direct competition. Allowing them to sue in place of the licensor helps them protect that expectation.</i> : <i>In the provisions that I've seen along those lines, the party enforcing the patent(s) (the licensee or the licensor) pays their own legal fees. That may be what you've read about the licensee paying for legal fees -- in litigation, not in prosecution. The reasoning here is more what you assumed above, it's not fair to have McD litigate on your nickel. However, they may want a credit against any royalties they're paying you.</i> : : I just read another loong article, that said manufacturers typically cease royalties when infringement is discovered. This makes sense, because if the patent is weak, everyone could infringe it, making it almost worthless. : : Question 1: : : The above two points are in conflict. Would a licensee be motivated to write a weak patent, and then cry infringement, and then cease royalties? : <i>See my comment above. McD would only control prosecution of the patent application if they buy it outright.</i> : : Suppose I get McD to sign a license agreement and they agree to pay for patent fees. I start getting rich. : : In the future, someone goes to Mexico, and it is discovered that there is prior art on my burrito, and Burger King begins selling burritos. : : Question 2: : : Would a non-disclosure really prevent McD from getting into the burrito business? Forever? : <i>No. NDAs are a way of protecting tradesecrets. Independent discovery is a defense to tradesecret infringement. All the NDAs I've seen (and I believe they MUST be this way) have 3 exceptions to the covenant not to disclose/use the information. They may use the confidential information if: (i) McD already knew the information before you told them, (ii) McD gets the same information from someone not obligated to you to keep it secret, and (iii) the information becomes publicly available through no fault of McD.</i> : <i>Relying on tradesecret in lieu of patents is a bit risky since (i) they're pretty much mutually exclusive and (ii) there's a pretty clear preference in U.S. law for patents.</i> : : Does anyone have any direct expereince with these issues. : <i>Some....</i> : <i>I hope that helps.</i> : <i>Regards.</i>

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