WIPO - patent drafting basics

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Study Note: The study of this module will take you around 10 hours.

MODULE 1:

Introduction: Why You Might Want a

Patent

OBJECTIVES

After completing the study of this module you should be able to:

1. Describe the functions of the patent system.

2. Explain the purpose of a patent and how the patent application (document) achieves that purpose.

3. Explain the reasons why you might want a patent and why a patent may be crucial to you and your Organization;

4. Give examples of how patents could lead to successful business models and opportunities by citing examples.

5. Locate important information for business opportunities in a patent document, such as licensing opportunities, joint venture, and marketing

6. Answer self-assessment questions. The self-assessment questions in this module will help you summarize your learning in this module.

7. Seek the guidance of your tutor on any of your reading in this module.

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1. The Role of the Patent System 1.1 What can a patent do? A patent is an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem.

A patent provides protection for the invention to the owner of the patent. The protection is granted for a limited period, generally 20 years, as long as renewal fees are paid.

A patent owner has the right to decide who may - or may not - use the patented invention for the period in which the invention is protected. The patent owner may give permission to, or license, other parties to use the invention on mutually agreed terms. The owner may also sell the right to the invention to someone else, who will then become the new owner of the patent. Once a patent expires, the protection ends, and an invention enters the public domain, that is, the owner no longer holds exclusive rights to the invention, which becomes available to commercial exploitation by others. 1.2 Advantages of a Patent

The exclusive right granted by a patent may be crucial for you and your company/organization particularly if you wish to commercially exploit your invention and innovation, because the patent system enables you to have:

- Strong market position and competitive advantage as a result of the exclusive right that prevents others from commercially using the patented invention;

- Higher returns on investment benefiting from a lead time of marketing the patented product during a patent term when other competitors join the competition;

- Various options to license or assign the patent to potential manufacturers, if you do not directly commercialize it; and

- Additional value to your corporate brand and organization’s reputation.

Examples of how people have used patents to achieve these results, and others, are shown in the case studies below. 1.3 Is a Patent Right for the Particular Case? A patent can be a very effective tool to assist the marketing of an invention, but it cannot guarantee commercial successes, which of course also depends on many other factors surrounding the management of the patent and the patent itself. Before starting to draft a patent application, there are some basic questions you should consider whether a patent is what is needed for your invention to succeed. (See also Module 4: Notes and Practical Exercises)

- Is your idea new? Someone else may have had the same idea before. If they have published the idea, you cannot get a patent. The criteria for being granted a valid patent and what you can do to check whether an idea is new are discussed in Module 2.

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- Is there a market for your invention, or do you think that you can create one? It takes

time and money to apply for and enforce a patent and there is little point in doing so unless there is enough of a market to make a profit.

- Is the idea really an invention? If the improvement is a matter of appearance of a

product rather than its function, you will probably not be granted a patent. Many of the answers to these questions are only really available after your new product or service has become public knowledge. It is therefore all the more important to understand how the patent system works and why it is essential to recognize the vital advantages that filing a patent can bring to a project. In many countries this has been recognized and the opportunity to file for provisional patents, petty patents and innovation patents goes some way to circumventing the area covered by patents that already exist to solve a particular problem. All too often innovators are far too keen to tell people about their innovations. This is problematic as once an invention is disclosed the ability to protect it is lost. Notable exceptions are those countries such as the United States and Australia who offer grace periods for allowing early disclosure before filing for a patent or industrial design.

You may however be able to protect the appearance of a product using the industrial designs system. Alternatively, if you wish to compete on the basis of the quality of your products and services, trademark protection may be appropriate to avoid other people from trading on the basis of your reputation.

Depending on the legal system of a country where you do business and seek protection of

intellectual property, you may also wish to protect your idea as trade secrets under legislation against unfair competition or by case law or by contractual agreements with parties concerned. While trade secrete protection has advantages such as no registration costs and no need for disclosure, it also has disadvantages such as the risk of reverse engineering of products and the difficulty in seeking sufficient remedies in the event of leak of the secret. Thus, it needs a careful consideration as to whether an invention should be kept as secret, or be protected as a patent. Trade secrets and patents, in practical terms, do not create a dichotomy but provide for supplementary protection in many cases through the combined use. For instance, supposing that your idea concerns the manufacturing of a new product, such know-how as the best temperature and pressure for optimizing the manufacturing process are typical examples of trade secrets which are not disclosed, while key components of the product and designs of an apparatus for manufacturing the production are often protected by patents.

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2. Case Studies

Please read the following case studies describing success stories in various countries. This part of your study is provided to cultivate your knowledge on recognizing products and

technical solutions of which you may or not be aware, and how they have come to exist through the patent system. Through leisurely reading about the product/solution, and its patent document, you will have the chance to correlate the patent information needed which lead to the successful use, creation of market, and collaboration with others, which benefit the inventor and the public. Activity 1: First, it is recommended that you read the story of each case for pure enjoyment and information on the product and how the commercial use of the product came to be serve the public.

Activity 2: In your second reading of the cases studies, the goal is to look at the companies, or inventors who were involved in the invention of the product, if there was collaboration among many or few to bring the product to the market, what technical field was critical for the product, and how it advanced the existing invention(s)

Activity 3: Please access the patent document at the recommended sites

In your third reading, you are required to associate the patent document with the product, in

particular, look at the main headings in the patent document and see how they build the invention description – from the background, which outlines the problem to be solved by the new invention, to the description and drawings showing a preferred solution to the problem and finally, in the case of a complete specification, to the claims which define the area exclusive to the patentee (the patent owner).

Objective of the Activities: The important point to take away from this section is that patents, although considered to be

“intangible” assets, are all about real products and real processes. In reading the patent document, look at its structure and the kind of information included in the different sections of the patent how the intangible idea gave way to something ‘tangible’. It is important to form a picture of HOW the invention follows from the patent document.

It is essential therefore when beginning to draft a patent to always ask the question “Show me

the money”. This may seem slightly vulgar at first but that’s what patents do – they protect products, processes that lead to markets.

Not all patents lead to such successes as described in the following cases; in fact, most patents

do not reach the commercial stage.

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Case Study 1: Burr Plug - Singapore

People suffering head injuries who need surgical repair to their damaged skulls are usually given bone harvested from another part of the body or a titanium plate. Finding replacement bone often proves difficult; a titanium implant, although more readily available, carries some risk of infection and can cost more than S$1,000.

A group of engineers and doctors from the National University of Singapore and the

National University Hospital, in collaboration with Temasek Polytechnic, has developed material made of biodegradable plastic to address this problem. The biocompatible polycaprolactone (PCL) polymer provides a base for the bone of the skull to regenerate and cover over a hole, says Swee-Hin Teoh, one of the principal team members from the NUS Department of Mechanical Engineering. A soft- and hard-tissue-compatible bioresorbable material, PCL has been approved by the US Food and Drug Administration for a number of medical and drug-delivery devices.

By constructing a three-dimensional (3D) architecture with interconnected pores, the

scientists produce a scaffold that makes possible good cell entrapment, easy flow of nutrients and waste removal, and long-term cell life.

The scaffold can be fabricated to fit the patient’s defect and be cut to size rapidly and accurately. It can also be fashioned easily for minor shape adjustment in the surgery room by the use of warm water since the PCL is a thermoplastic with a softening temperature just below 60oC. The slow degradation and assimilation of the polymer over 24 months allows good bone healing, provides adequate mechanical support, and maintains the shape of the skull without problems.

Encouraged by the success, the group set up a company called Osteopore International to market the new material. Available in Asia now, the burr plug is being sold at a price of about S$600, almost half that of a high-end titanium plate, says Dietmar Hutmacher, who is with the NUS bioengineering division.

The global market for the new material could have a value of US$150 million, he

estimates. Inquiries are already coming in from countries in Asia, Europe, South America, and Japan. Some international venture capitalists and investors have indicated a keen interest in having a stake in Osteopore’s expansion. The researchers have filed two patents for the work. Source: Innovation: Vol.6 No.1 By Lay Leng TAN http://www.innovationmagazine.com/innovation/volumes/v4n3/features1.shtml http://v3.espacenet.com/textdoc?DB=EPODOC&IDX=WO2005048885&F=8

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The complete patent document is available by clicking on “Resources”, then “References”, then “WO 2005/048885”

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Case Study 2: Enviro Loo – South Africa

Dr Brian la Trobe was named a 2005 Tech Museum Awards laureate for inventing a dry sanitation system. La Trobe initiated the research and development of a dry sanitation system in the early 1980s.

“I developed a system of treating sewage without the use of water and chemicals,” he

said. La Trobe said “Enviro loo sanitation”, as it was called, was driven by radiant heat and wind power. It does not pollute ground water. He said waste was stabilized with the aid of the aerobic bacteria. The enviro loo had been installed both nationally (South Africa) and internationally in countries such as Nigeria, Kenya, Ghana, Uganda and the United States of America.

La Trobe, 74, was born in Grahamstown in South Africa and lived there for 25 years.

He is chairman of a company called Enviro Options. He studied chemistry at the University of Cape Town in the 1940s. “I moved to PE where I became the first industrial chemist in General Motors,” he said. He went to London where he completed an honors degree in dentistry in 1957. “I worked as a dentist in Grahamstown for 25 years,” he said. He was mayor of Grahamstown from 1984 to 1986. L Trobe conducted research on waste products while he was still a dentist. The enviro loo system was manufactured in 1993. Len Parsons, of Enviro Options, said the widespread use of the system in many countries had demonstrated that it was cost effective. “It is used in the rural areas and in low-cost houses,” he said. The “enviro loo” is a new evaporation/dehydration sanitation system with a feature of separating liquids and solids of human waste as they got into a holding tank. The waste is eventually dried and could be transferred into composting bins. The unit also relies on a wind ventilation process and does not need water or electricity. She urged the people to look after the toilet. “I do not see sewerage as a solution to the problems of toilets in settlements and in the villages. Sewerage raises water and water in the end costs money. Sewerage has a lot of problems,” Lady Kidu said. Source: The Herald Online, February 22, 2006, “Enviro Loo Creator To Receive Award By Nomahlubi Sonjica” on May 14, 2002, By Alex Rheeney (Article Courtesy Of The Port Moresby Courier Post). www.theherald.co.za/herald/2005/10/11/news/n21_11102005.htm and http://www.health.nsw.gov.au/public-health/ehb/general/wastewater/wlct/wct001.pdf and http://www.wipo.int/pctdb/images1/PCT-PAGES/2004/022004/04002283/04002283.pdf

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Case Study 3: IBTech – UNAM Water Treatment - Mexico

IB Tech was established in 1995 by a group of Mexican academics and entrepreneurs in

order to commercialize the technologies developed and patented by the National Autonomous University (UNAM) on treatment of wastewater. During its start-up phase, the company operated within the Incubator System for Technology and Science-based Companies (SIECyT) of the UNAM from which it graduated in 1997 and now operates independently outside the university campus.

IBTech orients its business activity towards the application of technologies and engineering for the control of environmental pollution, including the re-utilization of water and by-products of its treatment, with a sustainable and integrating approach. The company develops every stage required in turnkey projects of treatment plants for industrial, agricultural and municipal wastewater and has developed projects in Mexico, Chile and Argentina. The main technologies used by the enterprise are the product of a line of research that initiated in the UNAM in 1987, initially in cooperation with the Autonomous Metropolitan University (UAM) and the French agency for cooperation IRD. Nowadays, IB Tech has a technical team made up of 14 specialists (engineers, masters and PhDs in engineering).

Over the years UNAM has obtained 6 Mexican patents for the treatment of wastewater as well as a patent in the US and in Canada. The university negotiates non-exclusive licenses for the use of the technology to IB-Tech as well as other engineering-consulting firms (currently three). “From a commercial point of view” Engineer Adalberto Noyola, UNAM researcher as well as entrepreneur from IB Tech, explains “the fact of having protected the technology makes it easier to negotiate a transfer of technology from UNAM to private firms as well as providing a good argument for convincing potential clients to use the technology”. The patent*, Noyola ads, “gives a clear image of seriousness.”

As part of the licensing deal the UNAM also includes three software products for the design of reactors that are protected by copyright. The case of technologies for the treatment of industrial wastewater developed by UNAM and commercially marketed by companies such as IB Tech can be considered a successful case of university-industry link and of the transfer of technology and commercialization of university R&D results by a private enterprise. http://v3.espacenet.com/textdoc?DB=EPODOC&IDX=US6210578&F=0

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The complete patent document is available by clicking on “Resources”, then “References”, then “US 6,210,578”

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Case Study 4: Hoodia Plant – South Africa

The San have used the bitter flesh of the Hoodia plant (Hoodia gordonia) for centuries to block feelings of hunger and give them energy when hunting or on long trips across their inhospitable land. This practice was brought to the attention of the South African Council for Scientific and Industrial Research (CSIR), based in Pretoria, which began to take an interest in the properties of the Hoodia. The innovative environment in which the CSIR functions allows it to carry out much important research and development. The work resulted in this case in the discovery of certain properties of the Hoodia and their potential as an appetite-suppressant and anti-obesity drug. The market potential of such a new drug is considerable, particularly as it is derived from a natural product and, seemingly, does not have the side effects of many such treatments. Thus the CSIR was able to license its patented technology to Phytopharm, a UK-based company, for the necessary investment needed to further test, develop and commercialize this new IP asset. The CSIR filed an international patent application through the Patent Cooperation Treaty (PCT) (WO98/46243, filed on April 15, 1998, covering more than 100 countries) on the basis of its national application (national application number 97/3201, filed on April 15, 1997).

Importantly – although after a controversial start involving some legal negotiation – the role of San ancient knowledge and innovative activity in the initial discovery and development of the properties of the Hoodia was recognized, explicitly acknowledged by the CSIR, and set out in a memorandum of understanding (MoU) between the CSIR and the San. The MoU was followed by a benefit-sharing agreement, providing for the San to obtain 8 percent of all milestone payments received from the licensee by CSIR as well as 6 percent of any royalties CSIR receives on sales of the final product. Reports estimate that the milestone payments will amount to some US$ 1 to US$ 1.5 million, while royalty payments could bring additional millions to the economically poor San.

The development of this Hoodia-derived product has had several important consequences for the San. It has resulted in the 100,000-strong San population organizing and setting up the San Hoodia Benefit Sharing Trust, which will ensure that the monies received are used for “the general development and training of the San community”. Immediate plans include buying land, building clinics and investing in education and development projects.

At a workshop on benefit-sharing held last year (2002) “it was decided that the relationship between the CSIR and the San should involve not only monetary ‘sharing’ but also the sharing of knowledge.” Thus the San are now involved in sharing their expert knowledge and ability to identify and pinpoint the properties of the flora of their arid land with the CSIR.

The lawyer representing the San in the Hoodia case, Roger Chennells, says the ground-breaking, benefit-sharing agreement “represents enormous potential for future bio-prospecting successes based on the San’s extensive knowledge of the traditional uses of indigenous plants of the area. We are optimistic that this case will serve as a sound foundation for future collaboration, not only for the San but also for other holders of traditional knowledge” (see http://www.csir.co.za ).

Thus, the San have been key participants in an agreement that has been called a turning point for indigenous people fighting to protect their role in the development of potentially

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economically valuable products. Other benefits include possible San involvement in the commercial cultivation of Hoodia – if a botanical “crop” is required for future production of the potential drug.

The San and the CSIR, as well as development organizations and the drug companies, seem satisfied with the agreement:

The Hoodia example shows how an indigenous knowledge asset can be developed and commercialized in the interests of national wealth creation. It also underscores the role of IP rights – in this case, patents – in the benefit-sharing process. It is this development of an economically exploitable asset that allows the creation of an income stream to be distributed among beneficiaries such as the San. Source WIPO Magazine November-December 2003 http://v3.espacenet.com/textdoc?DB=EPODOC&IDX=WO9846243&F=0

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Case Study 5: UV Lightwater Treatment - India With disease spreading in the wake of the Asian tsunami, survivors desperately need access to safe drinking water. In some ravaged communities in Sri Lanka and the Southern Indian state of Tamil Nadu, emergency relief is arriving in the shape of an innovative water disinfection unit, the UV Waterworks (UVW). This robust device kills bacteria, viruses and parasites in water from any source, using nothing more than ultraviolet (UV) light from an unshielded fluorescent lamp powered by a 40-watt power source (for example a car battery). Treating approximately 15 liters a minute, each unit can deliver safe drinking water for a village of 2,000 for under US$2 per person per year, including amortized capital costs.

The brains behind the UVW is Indian-born physicist Ashok Gadgil, who began searching for a way to purify water cheaply in developing countries after an outbreak of “Bengal cholera” in 1993 killed some 10,000 people within months. He has won numerous awards for the UVW since developing the original technology in 1996, most recently the 2004 Health Award from the Tech Museum of Innovation.

Dr. Gadgil said “I was looking to see how one can inexpensively disinfect drinking water for poor communities in the developing countries. The ability of UV light to kill bacteria and viruses has been known for almost a century. I just determined how best to use that ability to design a disinfector that is both robust in performance, and efficient in operation.”

In response to a question as to how he decided to file an international application via the Patent Cooperation Treaty (PCT), he said “I initially considered just putting up my design on the Internet for all to freely copy. University of California/Laurence Berkeley National Lab (LBNL) Technology Transfer Department (licensing and patent officers) persuaded me of the advantages of patenting. Patenting would protect against badly manufactured copies with corner-cutting fabrication that would not then function as well as the genuine article. To tell you the truth, I was not aware of the PCT filing approach. It was LBNL’s patent attorneys who educated me about the advantages of the PCT route when they identified that the primary application of the invention would be abroad. This was an enormous help to WHI, when they licensed the invention from LBNL. http://v3.espacenet.com/textdoc?DB=EPODOC&IDX=WO9805367&F=0

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Case Study 6: A New Drug Developed From Native Plants - Nigeria

Sickle cell disease is a painful hereditary disorder that strikes particularly hard in Nigeria, where an estimated 100,000 children are born with it every year. Nigerian scientists at the National Institute for Pharmaceutical Research and Development (NIPRD), working with a traditional medicine practitioner, have developed and patented a new treatment which is said to be a breakthrough in dealing with the disease. Sickle cell disease is also prevalent among the African-American population of the United States of America, affecting an estimated 1,000 newborns every year. An exclusive license for commercial production of the drug (developed from native plants) in Nigeria and for global marketing has been negotiated with US-based Xechem International, Inc. The government has been quoted as stating that this was done to ensure mass production of a drug that will bring relief to thousands of Nigerians and other sufferers around the world. The disease affects life expectancy and its symptoms include extreme pain, severe infections, and organ damage, including kidney failure and heart attacks. Observers have noted that the agreement between NIPRD and Xechem, which ensures that the country keeps a stake in the further development and global use of its traditional medicines, could be a model for other countries. The agreement with the foreign commercial development company took place after efforts to find a local company willing to take on the task failed.

Charles Wambebe, who led the NIPRD during the development phase of the drug, said that greater recognition was needed in developing countries of the value of research and of the fact that investment in research does not necessarily produce immediate returns. Ramesh Pandey, head of Xechem, urged developing countries to “look at your strengths” and likened the biodiversity of Nigeria and many other developing countries to gold, particularly in the light of increasing global interest in, and demand for, herbal-based products. Pandey’s company will not only undertake the commercialization of Nicosan® (Xecham’s name for the non-toxic, phyto-pharmaceutical product originally developed under the name of Niprisan®), but will also take the drug through the US Food and Drug Administration approval process. http://v3.espacenet.com/textdoc?DB=EPODOC&IDX=US5800819&F=0

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The complete patent document is available by clicking on “Resources”, then “References”, then “US 5,800,819”

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Case Study 7: R&D Makes Business Sense - FK Biotec - Brazil

In 1999, FK Biotecnologia S.A. became the first Brazilian biotechnology firm to receive venture capital for the development of its innovative technologies. Since then, the company has grown at a steady pace and is considered a pioneering example of a successful biotech start-up in Brazil. Patent protection and patent information have been important elements of FK biotec’s business strategy. FK biotec was established in CIENTEC, a technology incubator in Southern Brazil, and focuses on research, development, production and distribution of immunodiagnostics kits. In May 2001, the company received authorization from the Health Ministry to begin the commercialization of its immunodiagnostics kits, and its product line currently comprises over 70 items. Fernando Kreutz, Medical Doctor with a Ph.D. in Biotechnology and founder of FK biotec, estimates that the Brazilian market for immunodiagnostics currently amounts to US$1 billion and depends almost exclusively on foreign imports or licensed foreign technology. This represents a great opportunity for future expansion. But FK biotec’s most important technological development has been in the field of vaccines for cancer. The company is currently developing “an experimental vaccine composed of cancer cells, that work as medical treatment as they are capable of stimulating the immunological system to fight against cancer”, says Kreutz. The technique is similar to the one used in many countries for the development of vaccines against melanomas and was developed in cooperation with local hospitals and universities. While the treatment is still at an experimental stage and Kreutz believes it will be some time before it may be commercialized, it has already been the object of an international patent application via the Patent Cooperation Treaty (PCT).

Kreutz believes his company’s know-how, ability to develop new technology and its patent application have played a crucial role in motivating investors, government funds and venture capitalists, such as the Companhia Riograndense de Participaçoes (CRP) and an unnamed Canadian venture capital investor, in investing in FK biotec. To a large extent, it is a high-risk enterprise. The treatment must still undergo clinical trials before it can be commercialized, but the promising results obtained in the laboratory and the exclusive rights granted by a patent are the basis for investing in the development of the new vaccine.

Fernando Kreutz is also an avid user of patent databases. “I am very surprised with the

amount of knowledge I am getting from patent documents” he points out. “Knowing the legislation and regulations has been a differential for my company. Access to the information has been my biggest problem, but with the Internet things have become easier.” FK biotec relies significantly on patent information for identifying new technologies, niche markets and potential licensors from which to acquire leading technologies.

Aware of the low use of patent information by some of his colleagues in other firms or

research institutions, Fernando Kreutz points out that there is a knowledge gap that has to be filled: researchers do not use patent information because they do not know how much they can gain from it.

For a technology-based company such as FK biotec, intellectual property may represent

one of their most valuable assets. FK biotec has also invested in registering its trademarks

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FK-Biotecnologia ® and Bioprospecta ® and considers them a small but important investment, crucial for the development of the company’s marketing strategy.

http://v3.espacenet.com/textdoc?DB=EPODOC&IDX=WO0177301&F=0


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Case Study 8: Huawei Technologies in China

Nokia and Huawei Technologies (the latter is a leading Chinese vendor for communications equipment and network solutions) signed an agreement on cross-licensing of WCDMA (the most efficient technology for integrated mobile voice and data networks) related patents covering the manufacturing and sales of WCDMA infrastructure equipment globally. The agreement ensures both companies to access each other’s state of the art IPR’s under the WCDMA standard at a very competitive royalty rate. The signing of the agreement demonstrates Nokia’s commitment to partnering with local vendors in promoting WCDMA technology in China through lowering the threshold of technology transfer. It is also an important milestone for Chinese vendors to enter into international cross-license practices and the global WCDMA market. WCDMA has been adopted as the 3G technology standard by the majority of the world’s mobile operators.

Source: www.nokia.com.cn http://v3.espacenet.com/textdoc?DB=EPODOC&IDX=WO0056093&F=0

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Before progressing to Module 2, you are expected to complete the Self-Assessment Questions (SAQs) which follow. These SAQs are provided in order for you to assess your understanding of the module preceding the questions. It also allows you to summarize and meet the objectives of the module that were set out at the beginning of the module.

WIPO - patent drafting basics

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