Social Media Patents: Protecting Social Technology and Preventing Infringement Claims
Marketing via social media has created a hotbed of opportunities to connect with customers and promote brands. Alongside those cool technical gizmos, however, are potential lawsuits for companies who use patented social media technology. Understanding the facts related to social media patents is critical to maintaining a competitive advantage with newly developed technology and to avoiding patent infringement for technology subject to third party patents.
Social media can encompass any interactive marketing among two or more people across a computer network. Defined broadly, old technologies become social when networked communication is added.
Companies would be wise to take proactive steps now to understand and protect their innovative social media technology. Examples of social media technology that may be patented include everything from a novel approach to determine privacy settings and augmented reality features to improved network connectivity and reduction of processing power to send messages via a mobile device, and virtually everything in between.
For companies using social media to engage customers, there are many compelling business reasons for patenting social media technology. Protecting your technology with a patent can increase the value of the company during acquisition or can be used as collateral for bank loans. Patents also may be used to generate revenue from licensing or royalty payments. Companies with robust patent portfolios may sell the patents for additional revenue. For example, AOL sold 800 patents to Microsoft for $1.1 billion. Further, patents may be used to prevent competitors from using patented technology and as a bargaining chip against companies that assert patent infringement claims.
Who should file a social media patent?
There is no limitation upon who may patent social media technology. In addition to social media providers liked Facebook and Twitter, other businesses may consider patenting their social media technology. Examples include: businesses that design applications for use with third party providers or for use on proprietary platforms, marketing and public relations agencies that develop such applications for clients, and software or game developers who input social functionality into their games.
In order to be patentable, an invention must be useful, new, non-obvious and completely taught. Issuance of a patent grants the inventor the right to exclude others from making, using or selling the invention. This exclusive right lasts for twenty years from the date of the application. The public policy interest in offering this limited term government sanctioned monopoly, in exchange for later public access to the invention, is to promote full disclosure of technology in order to encourage development of alternative designs.
The timing of filing a patent application is now of the essence. The most significant patent reform legislation in a generation, the America Invents Act (AIA), was signed into law on September 26, 2011 with the effective date of March 16, 2013 for many provisions. The AIA changed United States law from a first-to-invent to a first-to-file patent system. Therefore, whoever files first is the inventor. A prior publication or use of the technology, however, may preclude patent rights. The bottom line for protecting your intellectual property under the new AIA provisions: file early and often.
How to file a social media patent?
In the United States, social media patents are filed with the United States Patent Office. Companies may also file with foreign governments, but some criteria for granting a patent differ by country. In some foreign countries, one cannot have any publication or notice of the invention prior to filing the patent application. In the United States, there may be some grace given to prior publication.
After filing an application, it generally takes two years or more to obtain a patent. However, the applicant has immediate use of the “Patent Pending” designation that shows competitors there is a potential block in the road. This designation also shows that the company is innovative, which is relevant in business today given the press coverage dedicated to social media patents.
To obtain patents or defend against infringement claims, a company should understand and inventory the social media technology it is developing, in house and through vendors. The inventory should include copies of terms of service related to each social media platform as well as vendor agreements with companies who developed the accounts. Employment and vendor agreements should secure necessary rights, clarify ownership issues and include nondisclosure provisions to maintain confidentiality.
Protecting your patents.
Companies should develop a social media protection plan. A patent process strategy is necessary to identify inventors, define processes to capture invention in words, and file prior to any public disclosure. Proper agreements in place for developers should include work-for-hire and non-disclosure provisions alongside agreements to assign intellectual property rights. A plan for what to do if a third party site shuts down is advisable. A company may, based on its use and circumstances, wish to purchase certain patents. Not every relevant patent has “social media” in its title; some categories may be “networking,” “privacy” or “distribution.”
Patent licensing is an option for both patent owners and would-be infringers. An exclusive license gives the licensee the sole right to practice the claimed invention. The parties should determine the right to enforce the patent and any damage provisions in the license agreement. A non-exclusive license gives the licensee the right to practice the claimed invention, but other licensees can too, and the patent owner generally retains the right to enforce the patent and collect damages.
There is no requirement to enforce a patent, and enforcement is the obligation of the owner. An accused product or process only infringes if it operates as set forth in the patent claims. The first step in case of alleged infringement is most often a cease and desist letter or licensing letter. It informs the alleged infringer of the patent, identifies the alleged infringing product or process, demands the infringer stop use, and offers a licensing arrangement. There is no duty to respond to a letter demand to cease and desist or for licensing, but ignoring the claim raises the risk of a lawsuit.
A lawsuit can be initiated if someone makes, uses, sells or offers to sell a product or process that meets all limitations for at least one claim in a patent. Patent claims are filed in Federal Court. There is a deadline to respond if one is served with a Complaint. The patent owner may name the alleged infringing competitor, the social media provider (who might have a larger pocketbook and may provide some of the services) and social media users. Direct versus indirect infringement will determine the scope of those named in a lawsuit.
Patent enforcement litigation has numerous benefits. An injunction will stop the infringing conduct. The patent owner has potential for being awarded actual damages or a reasonable royalty, and damages may be trebled (tripled) if the infringement was willful. In exceptional cases, even attorney fees may be awarded.
A patent can only be enforced if it is valid. During an enforcement action, the alleged infringer may assert counterclaims, invalidity of a patent, or the court may grant a declaratory judgment. The alleged infringer can also take a more aggressive stand and file a proceeding with the Patent Office to challenge the validity of the patent. Under the AIA, there are various forms of proceedings available depending on the technology involved. A post-grant review may be requested within nine months of the issuance or reissuance of a patent, and after any current post-grant review initiated by any party is completed, the alleged infringer may request an inter partes review or an ex parte reexamination of the patent.
The danger is the potential invalidity of the patent. Furthermore, parties may be stopped in litigation from challenging patent claims on invalidity grounds that were or could have been raised in the course of an inter partes review.
There is controversy surrounding software patents as courts struggle to draw the line on what is patentable and what is not. Common invalidity issues related to social media patents are: (1) Section 101 – non-patentable subject matter; (2) Section 102 – not novel; (3) Section 103 – obvious; (4) Section 112 – inadequate written description; and (5) Section 112 – lack of enablement. Sections 102 and 103 can be used to invalidate a patent if another use or publication was first. A response requires a patent and prior art search, contacting others in the industry and experts, and secondary research online using a search engine such as Google.
Dealing with patent infringement is frustrating. Putting a plan of action in place at the outset can reduce frustration and limit the time and expense needed to enforce infringement of patents. Whether or not a company is a patent owner, there is a need to develop internal processes to prevent infringement. Most developer agreements protect the developer against liability and place that liability on the company. Companies would be wise to negotiate indemnification provisions to assess who is responsible for defending against patent infringement. At a minimum, companies should review the terms and obtain proper approvals prior to entering agreements with social media providers. Simply limiting the number of providers will assist in reducing liability.
How to respond to patent infringement claims.
In addition to protecting social media inventions, companies using social media need to be prepared to address claims against their use of patented technology. What do you do if you are served with a cease and desist letter or if you are sued?
Conduct an internal investigation. Ascertain what products are affected, if the products are internal or on a third party site, and how much money is at stake. Get the decision makers together to discuss the strengths and weaknesses of the accusations, and determine the impact on business. The company will also need to determine indemnification issues and insurance coverage. Once the investigation occurs, you have some options:
Do nothing. Often, a patentee will send out letters to thousands of companies hoping for a hit. There has been a much publicized flood of infringement claims by “non-practicing entities” or “NPEs” (sometimes called “patent trolls”) who own patents but do not produce any products. If you do not respond, the matter may end.
If you respond, get more information and time to evaluate. Demand that the patentee provide detailed information about what products are at issue, why it claims infringement, and an infringement claim chart. Get prior licensing information. It is also important to affirm that your company takes intellectual property seriously. Enter a confidentiality agreement with the patentee to ensure disclosures are maintained private and not used in litigation. Also determine if you can re-design the product to be clearly non-infringing.
Analyze whether getting an opinion of patent counsel is appropriate. Protecting your communications under attorney-client privilege, determining patent validity issues, and avoiding mistakes that might lead to discovery problems, like enacting a document hold if necessary, can avoid problems in future litigation and lead to better decision-making.
Research your adversary. Study the company history, assets, and check if the company has litigated on patents before. A newer, less funded company may be looking for a quick settlement at a lower amount, while an older, more established one may be seeking a large amount. You will also need to know if the claims have been construed or if the patents have been subject to reexamination. Contact others in the industry to ask about the company or share defense costs if others are involved. Reach out to trusted contacts at other companies or law firms to gather competitive intelligence on the company and their selected counsel. Study the quality and track record of their counsel.
Learn from prior proceedings. Does the company always settle before trial? Review the prior prosecution of the patent(s), including any reexaminations, to assess invalidity arguments and potential prosecution history estoppel. A patent that has not been challenged in court or at the Patent Office may have undiscovered vulnerabilities.
Take the patents back to the Patent Office. You can take a more assertive approach and file a proceeding with the Patent Office to challenge the validity of the patent, with caution regarding possible estoppel issues as discussed above, or institute your own lawsuit to declare that you do not infringe or the patent is invalid.
Social media patents are here and more are coming. Control your destiny: develop an internal social media plan with patents in mind, and be ready to defend against third party enforcement.