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[MedusaRider]

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[khazzah]

and don't really have money to afford a lawyer,

I'll answer some of your basic questions. But if you won't hire a lawyer, your options for fighting back are (practically speaking) limited.

I want to discuss the validity of a software related patent that my competitor was recently awarded.

First things first. Was the competitor actually granted an issued patent? Or perhaps you're looking instead at a patent publication? If it's only a patent publication, then your concern is premature.

Tonight I noticed that my competitor filed a patent for same technique in december 2004, however, instead of referencing the Internet draft they've basically said something along the lines of "a method and apparatus for *********** with peer to peer data transfer". I studied the patent and it quite literally is the same technique as mentioned in the internet draft, however, they are using it to accomplish their own application's function
...
But in this case they've gotten a patent for that technique for their own particular usage scenario.

You say you've studied the patent. But did the claims are what define what a patent covers -- not the title, not the abstract, and not the description. So unless you studied the claims in some detail, you can't really know what the patent covers. So it's possible the patent is much more limited thank you think.

or did they trick the patent examiner by not telling him/her about the internet draft published a year earlier than their patent application? how would such a patent hold in court if its challenged?

You're on the right track in thinking that if there is relevant information that the examiner didn't know about, this can affect the validity of the patent.

However, just because you don't see the internet draft mentioned in the patent application doesn't mean the Examiner didn't know about it.

The appropriate way to let an Examiner know about a relevant reference is an "information disclosure statement," not the body of the patent application itself. So unless you've looked at the file history, you don't know if the patent application disclosed the internet draft or not. Even if the applicant didn't disclose the internet draft, it's possible the Examiner found it on its own. Unless you've looked at the file history, you don't know this either. 

If the claims of the patent really are anticipated or made obvious by the internet draft, then this is a basis for finding those claims invalid. This can be done through a procedure called a "reexamination."  Or as a defense to a patent infringement lawsuit.

As a separate issue, intentionally withholding a "material" reference from the examiner is grounds for a charge of "inequitable conduct". This can be used as a defense to a patent infringement lawsuit. But it has no place in reexamination. Note that it's often hard to prove "intent".

[Monkey1]

Newer patents and patent applications (e.g., the one you mention) may have electronic file history on the public PAIR (http://portal.uspto.gov/external/portal/pair).  You can go there to learn more about what have been filed/communicted with the USPTO.

[Isaac]

The lawyer also said that the patent looks the same as Bilski case and can be successfully challanged in court. You guys think, she is right? (from all the info I've given you)

Based on your description, the subject matter of the patent seems nothing like Bilski's.

btw, I also noticed that last year (a day before their patent was approved) my competitor filed another patent which basically is pretty much the same as their current patent. Even the title is the same and all claims at a quick galance look the same too. I don't see why they need to do this?

The competitor filed an application for a patent.

The claims are the important thing.   The title is of little consequence and can be changed easily.   Check to see if the applicant has filed a claim amendment with the new application.

[MYK]

What does PTA mean? their application says PTA 36 months?

Patent Term Adjustment.  Because the USPTO took so long to examine the application, they get an extra 36 months.

According to his lawyer, my competitor's patent is based on - methods of doing business, and that wouldn't even stand in European courts. The lawyer also said that the patent looks the same as Bilski case and can be successfully challanged in court. You guys think, she is right? (from all the info I've given you)

I agree with Isaac;  based on what you've posted, this really has nothing to do with Bilksi.  Also be warned that unless that attorney's analysis was done in the last three weeks, it is outdated -- the U.S. Supreme Court issued its own decision on June 28, which largely overruled the CAFC Bilski decision.

btw, I also noticed that last year (a day before their patent was approved) my competitor filed another patent which basically is pretty much the same as their current patent. Even the title is the same and all claims at a quick galance look the same too. I don't see why they need to do this?

One reason would be to keep a live application in process so that if they are sued, or if they sue someone else, they can adjust the claims to fit the specific facts of the lawsuit more closely.  For example (taken from a real case), (0) IF (1) an application involves a plastic-coated strap, and (2) the application discloses several possible ways to coat the strap, but (3) the claims that were allowed say that the plastic is extruded onto the strap, and (4) the competitor uses powder-coating to coat the strap, (5) THEN the claims in the live application can be modified to try to eliminate the "extruded" limitation.

There are other reasons, such as trying to get additional patents issued, claiming different things -- perhaps they were forced to restrict their original application because the examiner felt they were trying to claim multiple different inventions, or they have a different method disclosed in the same application on which they want to get a separate patent.  But the keep-it-alive case seems to best fit the situation you describe (since a divisional application would more likely have been filed much earlier), so I would argue that it is the most likely reason.

[khazzah]

so what do you think about the patent in general? Since the internet draft was published back in october 2003 and many applications are based on top of the techniques specified in that draft. Would this patent be easy to challange in court for obviousness and lack of novelty?

Easy to challenge? It depends. On a lot of things which take a lot of time to analyze.

Even if it was "easy" to challenge, you'd still need to hire an attorney.

[khazzah]

my competitor's patent is based on - methods of doing business, and that wouldn't even stand in European courts.

Patents confer national rights. A US patent isn't enforceable in Europe. Period.

[khazzah]

PS. how would this effect my efforts to seek investors? 

Who knows. I'd say the answer largely depends on how much your investors know about patent law. Also whether they know about the competitor's patent.

[JimIvey]

Seems like I'm late to the party and you've gotten pretty much all your answers already. 

Here's a quick run-down of what you ought to look for in the claims.  They're the numbered sentence fragments at the end of the patent.  They begin with something like "What is claimed is:" and then each numbered sentence fragment defines exactly what the patent entitles the owner to exclude others from making, using, selling, and importing.

All elements recited in a claim must be present in an accused device/method to infringe the claim.  So, think of the relationship between the elements of a claim as an AND gate.

Each claim can be infringed individually.  So, think of the relationships between the various claims as an OR gate.

So, read each claim, carefully and word-for-word, to see if any of the claims contain language that you do not intend to implement in your system(s).  If you find that language that does not apply to your systems, it's likely you won't infringe that claim.

Assuming you've represented everything accurately (not always a given when hearing from people who aren't well-versed in patents), any claim that recites no more than establishing a pinhole in a firewall for peer-to-peer communications is probably invalid (and shouldn't have been granted). 

My guess is that all claims recite more than just that.  If so, the claims must still recite something non-obvious (think "non-trivial" in software parlance) of what pre-dated the application. 

So, you might have a problem if it looks like you infringe at least one claim that isn't apparently invalid.

That's probably a 80%-90% answer.  There are more specific tests for infringement and for what qualifies as "prior art" to effectively pre-date the application. 

PS. how would this effect my efforts to seek investors? 

Who knows. I'd say the answer largely depends on how much your investors know about patent law. Also whether they know about the competitor's patent.

Out here in the Silicon Valley, investors are increasingly patent-savvy.  Many are becoming aware of the limitations of provisional applications and are more commonly dismissing them relative to real patent applications. 

You should expect questions about the patent and other potential problems and have a good answer.  A good answer would be to have an experienced software patent attorney look over the patent and give you a properly qualified green light.

Regards.

[Monkey1]

PS. how would this effect my efforts to seek investors? 

Who knows. I'd say the answer largely depends on how much your investors know about patent law. Also whether they know about the competitor's patent.

Also, state or federal requirements to disclose your knowledge of this matter/patent to your investors may apply.

[khazzah]

Also, last night I compared their approved patent with the one they filed a day before they got approval of the patent. They are same claim for claim, so it seems that they probably have filed this patent just to have a live application in the loop. Is this sort of stuff legal?

Absolutely it's legal to file another application which includes exactly the same claims. But the law of "double patenting" prohibits actually getting more than one patent with the same claims.

It is not uncommon to file a second application with the same claims, and then at a later time either modify the existing claims or simply add new ones.

[JimIvey]

Also, last night I compared their approved patent with the one they filed a day before they got approval of the patent. They are same claim for claim, so it seems that they probably have filed this patent just to have a live application in the loop. Is this sort of stuff legal?

The timing suggests to me that it's a continuation application, or some sort of spin-off application such as a divisional, CIP (continuation in part).  They probably filed with the same claims because they were against the deadline and they'll probably amend the claims in the not-too-distant future.

That's all perfectly legal.  Any patent issuing from this most recent application would expire at the same time as the recently issued patent and there's the prohibition against double patenting already mentioned.

anyone else? what should I do now...since I can't afford a lawyer?

If your primary worry is being sued, I'd say that there's a rational basis for not worrying about it.  Generally speaking, you probably won't catch the attention of the competitor until you start to make substantial money.  Even then, most likely they'll write you a cease and desist letter.  Then, it's free to cease and desist.  No worries.

Of course, they can sue you for infringement you've already done, but that typically costs more than a million dollars to litigate.  And, if you fight back, they might lose their patent forever.  So, it's really not fiscally rational to litigate against you unless you've made enough money to justify the expense and risk.  And, if you've made that much money, you'll be able to mount a defense at that time.

Now, to the extent your concern is your ability to raise venture capital in the shadow of this patent, I'd suggest trying to raise money and see what happens.  You might have to first raise a little bit of money to get a professional to look your situation over and give you guidance.  Note that this sort of early startup strategy is not what I do for a living.  This is just one lay person's perspective.

Regards.

[MYK]

OP, I should point out that you've put so much detail in this thread that it could probably be found fairly easily if someone were, say, trawling the web in preparation for a lawsuit, and used, for example, as a way of showing that you were fully aware of the patent, seemed to feel it was a threat to your "similar" product, intended to rely on that October 2003 publication to show that the USPTO is a bunch of incompetent boobs and that the patent is blatantly invalid and your evil competitor must have defrauded the USPTO and all that, and proceeded anyway.

This is sort of known as a "bad thing" in litigation circles.  More on that in a minute or two.

One more thing, I know of another major company based in Germany, that also uses the same technology and sells its software worldwide (including US) and as far as I know they haven't gotten into any ligitation with the patent owner yet.

Didn't you start this out with a comment that the competitor's patent was "recently" issued?  You do realize that they may be holding back for any number of reasons, including but not limited to investigating their target, allowing damages to build, and/or simply needing time to type up the complaint?

so what do you think about the patent in general? Since the internet draft was published back in october 2003 and many applications are based on top of the techniques specified in that draft. Would this patent be easy to challange in court for obviousness and lack of novelty?

I can't comment about the patent in question because I haven't read it.  However, generally speaking, one pathway for a challenge would be for you to request reexamination at the USPTO, supplying the October 2003 paper and anything else relevant that you could find.  You could, of course, wait for the other side to take some action first (ranging from mailing you a C&D letter to filing suit against you for infringement), but that would likely be more expensive for you (since reexam would then be just a PART of what you'd have to pay for) and would carry more risk.

So, let me be the devil's advocate -- sorry, I mean your evil competitor's advocate -- here.  Well, ok, not really.  Let me just raise some doubts.

[MYK]

I'll start off by reiterating what's in my signature:  "Disclaimer: not only am I not a lawyer, I'm not your lawyer.  Therefore, this does not constitute legal advice."  Read it, learn it, love it, live it.

Now, I'm going to go out on a limb here, but, given your repeated insistence that this technique is well-known and widely used, the basis for all sorts of major software, MIT published it, yadda yadda yadda, I find it somewhat difficult to imagine that an examiner would completely miss the paper and/or the fact that it was published in October 2003, totally overlook the technique being used all over the place since then, decide that the technique in the application had never before been contemplated in the history of mankind, tell the patentee that they're geniuses on par with Newton, Einstein, Lemelson, and Hannibal Lecter, and issue them a patent on a silver platter.  Examiners may not be "omniscient and clairvoyant" (to borrow a phrase), but they're not total blithering idiots either.  In other words, I'm betting that the October 2003 publication has been considered already.  I strongly suggest that you read the entire prosecution history, which you've apparently already located in PAIR, and make sure that the October 2003 paper was not already considered by the examiner and already overcome by your competitor's brilliant arguments, otherwise you may be sticking your neck out over the chopping block while handing your competitor a nice sharp axe.

So, precisely because of your assertion that everyone on the planet knows about this technique, I'm guessing that the October 2003 pub isn't a slam-dunk rejection, and that you're probably going to have to argue that publication in combination with something more.  Might be doable, but you're going to have to find that "something more" somewhere in public, dated back then so that it "anticipates" (i.e., "comes before") their filing.  And even assuming you do, your competitor can still argue that they came up with the idea before that, and they can use their own documentation during reexamination to do what's called "swearing back" or "antedating the reference" (see the USPTO's Manual of Patent Examining Procedure (MPEP) Section 715 for starters).

Next, I'd like to point out that they still have a continuation application in process, and I'd like to reiterate that one of the uses for this is to more precisely tailor patent claims while suing someone.

Returning briefly to your having put so much detail into your posts in this thread, it would be remiss of me not to mention the topic of "willful infringement", which a judge can use to increase the damage award to a plaintiff by up to a factor of three (known as "treble damages" in the vernacular).  "Sure, I knew about their patent, but it's invalid because I said so!" is not generally a defense to willful infringement.  "But there was an October 2003 publication from MIT!" likewise isn't really all that great of a defense (although it may be "a" defense, a little, sort of -- a jury might buy it, you never know, worth a shot, can't hurt, might be very amusing) if the USPTO already considered that publication during prosecution -- have you read the full history yet (it's available on PAIR, you know) to see if it was?

Now, consider that an infringement lawsuit can be filed at any time.  Sure, right now, you're in your apartment typing in your code, and nobody knows about it.  So, what happens when you've spent six months finishing your first product, getting your investors lined up, have your website all set for sales, and finally go live and (gulp!) advertise your product for sale?  Do you think your competitor won't notice?  Won't care?  Will give you five years to make gobs of money before deciding to test out that patent in court?  Will never try to sue because the patent might be invalid on the basis of an October 2003 publication from MIT so you're free to do whatever you want?

Well, maybe.  Maybe not.  You won't know until you check your mail.  Every single morning.

Now, the situation isn't necessarily that bad.  You may be entirely in the clear, not a worry in the world, all just a misunderstanding.  But you aren't going to find that out by posting general comments/questions along the lines of "someone published something that was EXACTLY THE SAME in 2003 so their patent must be invalid, right?" on web forums.  Not even on web forums inhabited by the greatest minds in intellectual property law.  No, the way you find that out is by going to a patent attorney's office, forking over a huge steaming wad of cash sufficient for a downpayment on a nice new car, and asking for an opinion letter.

[MYK]

anyone else? what should I do now...since I can't afford a lawyer?

If your primary worry is being sued, I'd say that there's a rational basis for not worrying about it.  Generally speaking, you probably won't catch the attention of the competitor until you start to make substantial money.  Even then, most likely they'll write you a cease and desist letter.  Then, it's free to cease and desist.  No worries.

Of course, they can sue you for infringement you've already done, but that typically costs more than a million dollars to litigate.  And, if you fight back, they might lose their patent forever.  So, it's really not fiscally rational to litigate against you unless you've made enough money to justify the expense and risk.  And, if you've made that much money, you'll be able to mount a defense at that time.

At the risk of having my avatar changed to a picture of Chicken Little, I must respectfully disagree.  It doesn't matter if he can't afford to pay out a million in damages when he can't afford to pay a few thousand for a proper legal opinion.  (I also have to wonder if he's spent the few hundred to set up a corporate entity to limit his personal liability.)  From what I'm reading so far, all the other side has to do is file suit and he's going to have to fold.  Litigation isn't always about making a net profit from the lawsuit itself;  sometimes it's about making a net profit over the remaining 16 years of patent term, or more realistically, in the next five years that the technology is still relevant.

Also, ceasing and desisting isn't free, especially when you've gotten investors to put money into your hands because you've got a product to sell.  If he didn't disclose the patent risks when he talked them into handing over their money, then they've probably got a case against him.  If he did disclose the patent risks, then they probably never gave him the money in the first place.  But let's say he did and they gave him money anyway.  No more product means unhappy investors, and unhappy investors means ecstatic corporate/securities lawyers, and ecstatic corporate/securities lawyers means joyful Porsche dealerships.  Now, I'm not really seeing much of a downside with that myself, but others may.

I'd go on about the cheery bankruptcy attorneys and their new Yugos, but I'd get flagged for "piling on".

All this for not wanting to pay a pleasant patent attorney (Honda/Toyota) for an opinion letter.  Sheesh.

(Disclaimer:  don't mind me, I get silly when I haven't had any sleep for a few days.)