1. ISMT 520 Lecture #6: Protecting Technical and Business Process Innovations Dr. Theodore H. K. Clark Associate Professor and Academic Director of MSc Programs in IS Management and E-Commerce Management Department of Information & Systems Management Hong Kong University of Science & Technology and Visiting Associate Professor of Operations & Information Management (Information Economics and Strategy Group) 1998 - 2001 The Wharton School of the University of Pennsylvania

2. HKUST Business School Innovation Protection via Patents Copyright laws protect expression, and innovation in software (now) and works related to “creativity” Trademark Laws protect Brands and Identity Trade Secrets can be used to protect innovations But, you MUST keep the secret a secret Patents protect PRODUCT AND PROCESS innovations BOTH products (function) and processes are protected HOWEVER you can NOT keep the innovation a secret BECAUSE patents are published for everyone to see AND expression (design) is NOT PROTECTED, only function

3. HKUST Business School Patent Law Protections Protects FUNCTION, not expression Amazon patented its one-click function, as copyright would not have protected this function Replicating code for one-click function easy to do Lengthy application and approval process Significant legal costs may be required Patents may be required in multiple jurisdictions Patent limited to exact terms of application Be careful to limit patent claims narrowly

4. HKUST Business School 4 An Idea Can Not Be Patented … “while a scientific truth, or the mathematical expression of it, is not a patentable invention, a novel and useful structure created with the aid of knowledge of scientific truth may be.” (Mackay) “an idea of itself is not patentable” A principle … ; an original cause; a motive; these cannot be patented” (Le Roy) A new discovery of fact is not patentable.

5. HKUST Business School 5 Processes May Be Patented “That a process may be patentable, irrespective of the particular form of the instrumentalities used, can not be disputed …, it may not be at all material what instrument or machinery is used” (Cochrane) Benson case resulted in rejection by US Supreme Court of patents for algorithms Limitations on process patents in Morse Claim was too sweeping; discouraged innovation

6. HKUST Business School 6 Requirements to Obtain a Patent Novelty – restricts patents if innovation has been previously anticipated, or if publicly disclosed and patent not applied for in time Twelve months prior to time of application in USA Race to patent by “simultaneous” inventors Utility – requires that innovation be a “useful art” and more than just novelty or curiosity Inventor must identify a specific and real utility Non-obviousness – the most difficult criteria

7. HKUST Business School 7 What is Non-Obviousness? Most be non-obvious to someone skilled in related fields to satisfy this test Once used to deny almost all patent applications, but restricted in application now Does not require a brilliant act of new genius All elements can be obvious if new utility and insights are more than “sum of the parts”

8. HKUST Business School 8 Obviousness Not Case Law Based This is a fact of analysis of the business process or engineering applications involved Obviousness viewed from perspective of industry expert, but from layman review New industry or product with lots of demand can provide evidence of non-obviousness If it was so obvious, why was it not done already? Has to represent advance over prior “art”

9. HKUST Business School 9 Statutory Test of Nonobviousness (1) survey of scope and content of prior art (2) examination of differences between invention and prior art (3) determination of the level of ordinary skill in the art that might measure obviousness In light of this three stage process, the court or the patent office can then determine if the proposed innovation exhibits nonobviousness.

10. HKUST Business School 10 Survey of Prior Art Duty of candor – the inventors and applying attorney must disclose known prior art Must provide survey of prior art Must be relevant or pertinent or analogous Prior art definition must not be too narrow Definition is functional, not commercial Second stage of process is patent office review of prior art Undisclosed discoveries not viewed positively

11. HKUST Business School 11 Group Project: Due SOON!!! Group project deadline coming up very soon! Individual assignment helped prepare you for group project, as questions overlap some Bonus incentive: Turn in DRAFT of Group project before December 10, and free review No possible way it could hurt your grade Definitely might help your grade You may ask any question any time via email However, I am traveling Dec 19-21 and not online

12. HKUST Business School 12 FINAL EXAM: to “B” or not to “B” Final Exam will be take home exam, and will be similar to the individual assignment However, will not be focused on copyright law Will be case assignment from same textbook Different question, different area of law Opportunity for learning and skills demonstration Must DECIDE whether to accept “B” for free on the Final or to take the exam by next class Everyone has option to decide not to take the final exam, even if you missed “too many” classes.