PATENT CLAIMS, REAL OR NOT?

Meetings & Conventions: Planner's Portfolio October 2002
October 2002 PLANNER'S PORTFOLIO:

The Law & the Planner

By Jonathan T. Howe, Esq.


PATENT CLAIMS, REAL OR NOT?

Examining the legalities of a recent filing on meetings-related technologies

Recently, many industry suppliers have received letters from a Pittsburgh company, Software Management Inc., stating that they might be in violation of a patent. The letters cite a pending patent application, filed in 1998, claiming ownership of many technology tools for meetings, including methods of operating, organizing, conducting and arranging conventions and trade shows, both virtual and real. Of particular concern are SMI’s claims regarding online registration systems.

The letters have requested $1,250 or more for each event to avoid potential claims of patent infringement. Should SMI get the patent, it would essentially have a monopoly on these technologies for up to 20 years from the date of filing. SMI would be entitled to seek royalties and grant licenses to those who incorporate the patented processes in their own operations.

CAUGHT OFF GUARD
The opinions of the meetings industry at large are varied. Some have scoffed at the application and advised recipients to ignore the letters. Others have issued warnings not to risk future liabilities and have recommended paying the fee.

SMI faces several obstacles because, to be patentable, the law requires the invention to be nonobvious, novel and useful. To determine this, the Patent Office compares the invention at issue with the “prior art” in the field essentially the body of public knowledge that predates the invention. If the invention was known or used by others in the United States or was patented or described in a printed publication before the date of alleged creation by the applicant, then prior art exists, and the application will be denied. In this case, many in the industry say prior art exists against the SMI claims of novelty.

The Patent Act prohibits the issuance of a patent when the differences between the subject of the application and the prior art are such that the subject matter as a whole would have been obvious to a person having ordinary skill in the art at the time the invention was made. Though it is not clear how broadly or narrowly this standard would be defined in this case, someone with good knowledge on the technological interactions involved with Web-based events should qualify.

IMMEDIATE REACTION
Several courses of action are open to those who received the letters. First, pay up. Second, ignore it. Third what we have been recommending to clients acknowledge receipt of the letter and request further and ongoing information.

Here are two reasons not to write a check right away: Those who pay the amount invoiced have no assurance the money will be refunded if no patent is issued. If it is issued, previous payment could result in an implied agreement that SMI has granted the payer a license for future activities.

Though this issue has generated considerable buzz, by all accounts we are in the lull before the storm, and no one is sure the storm will ever hit. SMI cannot enforce its rights until a patent is granted; if it is, there will be a frenzy of activity by all those potentially affected by its claims.

If the patent is issued, planners themselves might end up owing royalties. Any time a planner uses an online registration service, he might be guilty of vicarious infringement. For example, if I buy services from company X, and incorporated into their product is something for which X does not have a license, then I also am liable. If I am a user, I am almost as responsible as the person who sold me the technology.

Planners might want to consult with their legal counsel as to what steps, if any, they should be taking.