MoFo Tech explores the legal, regulatory, and business issues shaping the global technology industry. The blog covers emerging technologies, policy shifts, market developments, and legal trends impacting technology companies. <h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a global law firm advising leading companies on complex legal challenges at the intersection of law, technology, and policy. Learn more about <a href="https://www.mofo.com/capabilities/technology" target="_blank">MoFo Technology</a>.

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MoFo Tech explores the legal, regulatory, and business issues shaping the global technology industry. The blog covers emerging technologies, policy shifts, market developments, and legal trends impacting technology companies.

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AI Trends For 2026 - The Federal Government’s Use and Regulation of AI

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USPTO Puts Subject Matter Eligibility Declarations in the Spotlight

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On December 4, 2025, U.S. Patent and Trademark Office (USPTO) Director John Squires issued two memoranda addressing subject matter eligibility and spotlighting an additional pathway to overcome a rejection under 35 U.S.C. § 101 by expanding the evidentiary record. The first memorandum outlines best practices for submitting a Subject Matter Eligibility Declaration (SMED) to address a subject matter eligibility rejection. The second memorandum is directed to patent examiners, reaffirming the Director’s approach in view of the recent precedential Patent Trial and Appeal Board (PTAB) decision in <a href="https://www.mofo.com/resources/insights/250930-uspto-director-signals-support-for-ai-patent-eligibility" target="_blank">Ex parte Desjardins</a> and explaining how examiners should consider the evidence presented in a SMED.The guidance reflects the Office’s <a href="/topics/uspto-internal-memo-suggests-that-patenting-ai-inventions-may-become-easier" target="_self">continued effort</a> to provide greater predictability and transparency at the USPTO, particularly for computer-related, AI-driven, and/or medical diagnostic innovations.Read the full <a href="https://www.mofo.com/resources/insights/251209-uspto-puts-subject-matter-eligibility-declarations-in-the-spotlight" target="_blank">alert</a>.

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Of Counsel

Dr. Ethan M. Weiner is of counsel in the firm’s Intellectual Property Group. His practice focuses on patent prosecution, IP due diligence, and patent portfolio management and counseling. Dr. Weiner handles a wide array of technologies, including pharmaceuticals, genomics, nanoparticle technologies, and medical devices.

Ethan M. Weiner Ph.D.

Ethan Weiner

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Anna Yuan’s practice focuses on patent prosecution, IP due diligence, post-grant proceedings, and IP litigation support. 

Anna Yuan

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Partner

Mehran Arjomand is chair of the firm's Patent Trial and Appeal Board Practice and heads the firm's technology patent practice. Mr. Arjomand began his legal career as a litigator. After five years, he 

Mehran Arjomand

Mehran Arjomand is chair of the firm's Patent Trial and Appeal Board Practice and heads the firm's technology patent practice. Mr. Arjomand began his legal career as a litigator. After five years, he joined Morrison & Foerster, where he developed a strong foundation in USPTO prosecution and procedure. With his combined litigation and prosecution experience, he is able to counsel clients on end-to-end strategies—from patent creation to patent challenges.

Associate

Marley May Macarewich

Marley Macarewich

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Just days after being sworn in on September 23, 2025, as the 60th Director of the U.S. Patent and Trademark Office (USPTO), John A. Squires convened the rarely used Appeals Review Panel (ARP) in Ex parte Desjardins. Writing for the panel, which included Acting Commissioner Valencia Martin Wallace, and Vice Chief Judge Michael W. Kim, Director Squires overturned a Patent Trial and Appeal Board (PTAB) rejection of an AI-related invention under 35 U.S.C. § 101.Director Squires found that the claims were directed to patent-eligible subject matter, emphasizing that excluding AI innovations from patent protection would endanger U.S. leadership in this critical technology.Read the <a href="https://www.mofo.com/resources/insights/250930-uspto-director-signals-support-for-ai-patent-eligibility" target="_self">full client alert</a>.

USPTO Director Signals Support for AI Patent Eligibility

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Josh Crawford’s practice focuses on domestic patent prosecution, international patent portfolio management, patent infringement and validity determinations, and IP litigation support.

Joshua A. Crawford

Joshua Crawford

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USPTO Director Signals Support for AI Patent Eligibility

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The USPTO has issued an internal memorandum that may make it easier to patent software, in particular AI-related software inventions. In recent years, the USPTO has found certain software inventions to be patent-ineligible abstract ideas.  In the new internal memorandum, the USPTO has directed patent examiners to exercise greater care before rejecting AI-related software technologies for this reason.  While the memo is styled as a “reminder” of existing policy and law, its emphases and examples send a clear indication that the Office wants to dial back aggressive eligibility rejections, particularly in AI and machine learning domains.The memo, dated August 4, 2025, came from the desk of USPTO Deputy Commissioner for Patents Charles Kim, and is titled “<a href="https://www.uspto.gov/sites/default/files/documents/memo-101-20250804.pdf" target="_blank">Reminders on evaluating subject matter eligibility of claims under 35 U.S.C. 101</a>.”  Distributed to examiners in Technology Centers 2100, 2600, and 3600—those art units covering software, computer architecture, communications, and business methods technologies—the memo offers applicant-friendly subject matter eligibility guidance that signals a welcome reprieve to applicants amidst a USPTO eligibility climate that has tightened considerably in recent years.Not all AI patent claims are a “Mental Process”The memo states that “The mental process grouping is not without limits,” and that “Examiners are reminded not to expand this grouping in a manner that encompasses claim limitations that cannot practically be performed in the human mind.”  Specifically, with respect to AI-related inventions, the memo states that “Claim limitations that encompass AI in a way that cannot be practically performed in the human mind do not fall within this grouping.”It should be noted that these statements are taken nearly verbatim from the <a href="https://www.federalregister.gov/documents/2024/07/17/2024-15377/2024-guidance-update-on-patent-subject-matter-eligibility-including-on-artificial-intelligence" target="_blank">USPTO’s 2024 Guidance Update on Patent Subject Matter Eligibility, Including on Artificial Intelligence</a>.  Still, the Office’s reemphasis of these points in this new reminder memo should be seen as a strong statement in favor of applicant-friendly limitations on unchecked malleability of the “mental process” abstract-idea grouping.Not all AI patent claims “recite” an abstract ideaThe memo reemphasizes the distinction between claims that actually “recite” an abstract idea, and may therefore be patent ineligible, from claims that merely “involve” an abstract idea, which do not trigger further eligibility analysis and should be deemed patent eligible.Specifically, the memo points to the contrast between its <a href="https://www.uspto.gov/sites/default/files/documents/101_examples_37to42_20190107.pdf" target="_blank">Eligibility Example 39</a> versus its <a href="https://www.uspto.gov/sites/default/files/documents/2024-AI-SMEUpdateExamples47-49.pdf" target="_blank">Eligibility Example 47</a>. <table><tbody><tr><td>Example 39 – claim does not recite an abstract idea</td><td>Example 47 – claim does recite an abstract idea</td></tr><tr><td>A computer-implemented method of training a neural network for facial detection comprising:collecting a set of digital facial images from a database;applying one or more transformations to each digital facial image including mirroring, rotating, smoothing, or contrast reduction to create a modified set of digital facial images;creating a first training set comprising the collected set of digital facial images, the modified set of digital facial images, and a set of digital non-facial images;training the neural network in a first stage using the first training set;set and digital non-facial images that are incorrectly detected as facial images after the first stage of training; andtraining the neural network in a second stage using the second training set.</td><td>[Claim 2] A method of using an artificial neural network (ANN) comprising:(a) receiving, at a computer, continuous training data;(b) discretizing, by the computer, the continuous training data to generate input data;(c) training, by the computer, the ANN based on the input data and a selected training algorithm to generate a trained ANN, wherein the selected training algorithm includes a backpropagation algorithm and a gradient descent algorithm;(d) detecting one or more anomalies in a data set using the trained ANN;(e) analyzing the one or more detected anomalies using the trained ANN to generate anomaly data; and(f) outputting the anomaly data from the trained ANN.</td></tr></tbody></table>The new memorandum attempts to address the tension between these two examples by distinguishing between generally reciting “training a neural network” (as in eligible Example 39) versus specifically invoking mathematical concepts used for training, such as “backpropagation” or “gradient descent” (as in ineligible claim 2 of Example 47).Practice Insight:The argument that an AI-focused patent claim does not recite an abstract idea (in other words, the “Prong One” pathway to eligibility) has historically been received frostily by examiners.  The more viable approach has generally been an argument that recited abstract ideas are practically applied (the “Prong Two” pathway).  So, the reemphasis in this memo of Prong One may revitalize a previously difficult pathway to patent eligibility for AI inventions.And, from a strategic standpoint, a revitalized Prong One pathway could open the door for broader AI claim coverage.  This is because positioning a software claim for eligibility under Prong Two can often require reciting narrower technical details in the claim, whereas a claim’s positioning for eligibility under Prong One can benefit from broader framing (as shown by Example 39). AI claims must be analyzed “as a whole” for eligibilityThe memo reemphasizes that claims should be analyzed “as a whole” for eligibility, stating that “limitations should not be evaluated in a vacuum, completely separate from the recited judicial exception,” and that “analysis should take into consideration all the claim limitations and how these limitations interact and impact each other” when evaluating whether the exception is integrated into a practical application.Practice Insight:The requirement to analyze claims as a whole has sometimes been sidestepped by examiners who state that a claim is being analyzed as a whole, but who, practically speaking, divide claims into atomic words and phrases, deeming half of the isolated words and phrases to be “abstract ideas” and deeming all remaining isolated words and phrases to be “recited at a high level of generality.”  The memo clearly attempts to push back against this kind of analysis.AI claims are eligible if they reflect an improvement to technologyThe memo reiterates that AI claims may be deemed eligible if they reflect an improvement to computer technology or to another area of technology. First, the memo reminds examiners to “consult the specification to determine whether the disclosed invention improves technology or a technical field.”  The memo further states that the specification “does not need to explicitly set forth the improvement,” but must at minimum “describe the invention such that the improvement would be apparent to one of ordinary skill in the art.”Second, the memo cautions examiners “not to oversimplify claim limitations” to improperly characterize a claim as merely invoking the idea of applying an abstract idea. Here, the memo contrasts the use of software technology to improve a patent-ineligible business process against the use of software to improve “technology or a technical field.”  The memo at this point provides an interesting footnote regarding the Federal Circuit’s recent decision in <a href="https://www.cafc.uscourts.gov/opinions-orders/23-2437.OPINION.4-18-2025_2500790.pdf">Recentive Analytics, Inc. v. Fox Corp.</a> (see our full summary of that decision <a href="https://mofotech.mofo.com/topics/recentive-federal-circuit-s-patent-eligibility-guideposts-for-machine-learning-inventions?_gl=1*ya3ds2*_ga*MTcyMTgzMTIyMS4xNzA2Mjk5Njkx*_ga_3HVRG7GH76*czE3NTQ3NTM1NzkkbzQkZzAkdDE3NTQ3NTM1ODAkajU5JGwwJGgw">here</a>), contrasting the patent‑ineligible Recentive claims against the patent-eligible claim 3 in USPTO Example 47.<table><tbody><tr><td>Recentive’s U.S. 11,386,367, claim 1 – does not improve technology; ineligible</td><td>USPTO Example 47, claim 3 – improves technology; eligible</td></tr><tr><td>1. A computer-implemented method of dynamically generating an event schedule, the method comprising:receiving one or more event parameters for series of live events, wherein the one or more event parameters comprise at least one of venue availability, venue locations, proposed ticket prices, performer fees, venue fees, scheduled performances by one or more performers, or any combination thereof;receiving one or more event target features associated with the series of live events, wherein the one or more event target features comprise at least one of event attendance, event profit, event revenue, event expenses, or any combination thereof;providing the one or more event parameters and the one or more event target features to a machine learning (ML) model, wherein the ML model is at least one of a neural network ML model and a support vector ML model;iteratively training the ML model to identify relationships between different event parameters and the one or more event target features using historical data corresponding to one or more previous series of live events, wherein such iterative training improves the accuracy of the ML model;receiving, from a user, one or more user-specific event parameters for a future series of live events to be held in a plurality of geographic regions;receiving, from the user, one or more user-specific event weights representing one or more prioritized event target features associated with the future series of live events;providing the one or more user-specific event parameters and the one or more user-specific event weights to the trained ML model;generating, via the trained ML model, a schedule for the future series of live events that is optimized relative to the one or more prioritized event target features;detecting a real-time change to the one or more user-specific event parameters;providing the real-time change to the trained ML model to improve the accuracy of the trained ML model; andupdating, via the trained ML model, the schedule for the future series of live events such that the schedule remains optimized relative to the one or more prioritized event target features in view of the real-time change to the one or more user-specific event parameters.</td><td>[Claim 3] A method of using an artificial neural network (ANN) to detect malicious network packets comprising:(a) training, by a computer, the ANN based on input data and a selected training algorithm to generate a trained ANN, wherein the selected training algorithm includes a backpropagation algorithm and a gradient descent algorithm;(b) detecting one or more anomalies in network traffic using the trained ANN;(c) determining at least one detected anomaly is associated with one or more malicious network packets;(d) detecting a source address associated with the one or more malicious network packets in real time;(e) dropping the one or more malicious network packets in real time; and(f) blocking future traffic from the source address.</td></tr></tbody></table>Practice Insight:Historically, examiners have sometimes given credence to the specification’s explanation of the technical advantages provided by the invention.  If this memo encourages more examiners to follow this practice, then applicants can preemptively strengthen their position against eligibility rejections by clearly explaining in the specification how their technology represents a concrete improvement to existing technology.Tie goes to the applicantFinally, the memo reminds examiners that a rejection should only be made “when it is more likely than not (i.e., more than 50%)” that the claim is ineligible, and that rejections should not be made “simply because an examiner is uncertain as to the claim’s eligibility.”While this final point of emphasis is not substantively groundbreaking, its inclusion in the memo emphasizes the applicant-friendly tone of the memo as a whole, signaling that Office leadership would like examiners to exercise caution and discretion in issuing eligibility rejections in “close call” cases, particularly in the AI technology space.Takeaways and Practice TipsThis memo is a signal that eligibility rejections, particularly for AI technology, should be expected to decrease under the new USPTO administration.  While adoption by examiners will inevitably vary, and implementation of changes will take time, this memo signals an applicant-friendly shift in a critical technology area.Applicants preparing new applications in the AI technology space should ensure, in light of this new memo, that specifications explain, robustly and at length, the technical advantages of as many different aspects of the invention as possible.  This was already best practice, but if the specification’s explanation of technical advantage is going to become more important during the examination process, then emphasis here should be redoubled.And, for applicants facing current rejections for lack of subject matter eligibility, particularly in the AI space, delaying and extending response timelines should be considered to whatever extent practicable, in order to allow time for implementation and potential further adjustments to take shape at the patent office.

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Jon Bockman is the head of the firm’s Technology Patent Practice. In this capacity, he leads the firm’s prominent group of patent practitioners with degrees in electrical engineering, mechanical engineering, computer science, computer engineering, chemical engineering, biomedical engineering and physics. 

Jonathan Bockman

USPTO Internal Memo Suggests that Patenting AI Inventions May Become Easier

Based on recent, dramatic advances in its predictive and generative capabilities, artificial intelligence (AI) is poised to revolutionize a variety of fields, including business, finance, manufacturing, information technology, and healthcare, with the potential to transform the global economy.1,2 AI is also increasingly being utilized to tackle challenging problems in the life sciences.3 Examples include the use of machine-learning (ML) models for prediction of 3D protein structures and protein-protein interactions based on input amino acid sequences, optimization of genetically engineered protein sequences for improved expression in host cells, in silico drug design, design of metabolic pathways to synthesize a drug based on a specified precursor, detection of subtle changes in cellular and/or tissue morphology in digital pathology images, and analysis of medical record data.Read the full <a href="https://lifesciences.mofo.com/topics/patent-eligibility-considerations-prosecution-strategies-for-ai-based-life-sciences-patent-applications" target="_blank">blog post</a>.

Patent-Eligibility Considerations & Prosecution Strategies for AI-Based Life Sciences Patent Applications

Patent-Eligibility Considerations & Prosecution Strategies for AI-Based Life Sciences Patent Applications

Knowing what qualifies as prior art is a core requirement of patent practitioners—whether in life sciences, in the technology sectors or in post-grant proceedings.  It is important to keep abreast of changes to the rules, especially if the Federal Circuit weighs in. On March 24, 2025, the Federal Circuit issued a precedential decision in In Re Riggs, Case No: 22-1945 (Fed. Cir. Mar. 24, 2025) clarifying the standard for determining whether a published patent application can be considered prior art as of its provisional filing date. Although this case was decided under pre-AIA law, the standard elucidated by the Federal Circuit reinforces the importance of drafting detailed provisional applications and knowing the requirements for establishing prior art under both pre-AIA and AIA law.Pre-AIA 35 U.S.C. § 102(e) and AIA 35 U.S.C. § 102(a)(2) deal with what many in the field refer to as “submarining prior art.” Even when armed with a bullet-proof prosecution strategy, “submarining prior art” can still take patent applicants and inventors by surprise. “Submarining prior art” is based on the principle that a patent application remains “secret” for typically 18 months from its filing date, until the USPTO publishes the patent application or the corresponding patent. During this period of “secrecy,” a competing inventor is unaware of the existence of the unpublished, pending patent application (hence the term, “submarining prior art”). As such, the inventor may prepare and file a patent application directed to what he or she believes is a patentable invention but that happens to cover the same or similar technology as that disclosed in the earlier-filed, as-yet-unpublished patent application. Only after the earlier-filed patent application publishes (like a submarine surfacing from underwater) does it become prior art as of its filing date. As one could imagine, this is potentially problematic for the competing inventor; the earlier-filed, now-published patent application might be prior art to the inventor’s later-filed patent application. In Re Riggs addresses when a patent or patent application qualifies as prior art under this type of situation.The Riggs patent application—U.S. Patent Application No. 11/005,678 (hereafter, “the ’678 application”)—had a priority date of July 28, 2000. During prosecution, the Examiner rejected the ’678 application under pre-AIA § 102(e) as anticipated by a patent publication, Lettich et al. (hereafter, “Lettich”). Lettich was filed on April 26, 2001 and claimed priority to a provisional application filed on April 27, 2000. In order to qualify as prior art under § 102(e), Lettich needed to be entitled to its April 27, 2000 priority date, which pre-dated the ’678 application’s July 28, 2000 priority date. Riggs addressed whether Lettich is entitled to the April 27, 2000 filing date of its provisional application for the purposes of qualifying as prior art to the ’678 application under § 102(e).The Examiner and the Patent Trial and Appeal Board (PTAB) relied on Dynamic Drinkware[1], Amgen[2], and MPEP § 2136.03 in determining whether Lettich qualifies as prior art under § 102(e). Specifically, they considered whether Lettich’s provisional application provided written description support for at least one claim in Lettich. Without any such written description support in the provisional, Lettich’s priority date for the purposes of 35 U.S.C. § 102(e) would be the April 26, 2001 non-provisional filing date, which would be insufficient to render Lettich prior art to the ‘678 application. The PTAB found that Lettich satisfied the aforementioned written description test identifying support in the provisional application for each limitation of claim 1 in Lettich. The PTAB concluded on this basis that Lettich was available as prior art under 35 U.S.C. § 102(e).The Federal Circuit agreed with the PTAB “that a prior art patent or published application cannot be accorded the benefit of its provisional application’s filing date absent a showing that the provisional application provides support for a claim of the patent or published application”[3] However, the Federal Circuit held that this finding alone is insufficient to determine whether a patent or published application qualifies as prior art under § 102(e).[4] As a second step of the analysis, “the provisional application must also provide written description support for the specific portions of the patent specification identified and relied on in the prior art rejection.”[5] The Federal Circuit noted that neither Dynamic Drinkware nor Amgen addressed the problem at issue here, as the appellants in those cases failed to satisfy the initial requirement that the provisional provide support for at least one claim. As such, there was no need in those cases to address the subsequent question of whether the specific text in the patent document relied on by the Examiner in the rejection also had written description support in the provisional application.The Federal Circuit clarified that even if a provisional application provides written description support for at least one claim of the patent document cited in a rejection, the provisional application must also provide written description support for the specific portions of the specification identified and relied on by the Examiner in the rejection. As the Federal Circuit reasoned, “[i]t makes no sense to suggest that if a single claim is supported by the provisional application, then everything in the later filed application gets the benefit of the provisional date whether supported or not.”[6] The Federal Circuit vacated and remanded the PTAB’s decision because the PTAB did not address the second step of the analysis.The Riggs decision aligns with MPEP § 2136.03 (III). It explains that two elements must be satisfied in order for a published patent application or patent to have the benefit of its provisional filing date under § 102(e):<blockquote>[A]t least one of the claims in the reference patent, patent application publication, or international application publication is supported by the written description of the provisional application in compliance with pre-AIA 35 U.S.C. 112, first paragraph, or 35 U.S.C. 112(a) . . . [and] . . . [t]he provisional application must also describe, in compliance with pre-AIA 35 U.S.C. 112, first paragraph, or 35 U.S.C. 112(a), the subject matter relied upon in the reference patent or publication to make the rejection.[7]</blockquote>When it comes to AIA law, the MPEP, like that for pre-AIA law, requires that a provisional application to which a reference patent document claims a right of priority “describe[] the subject matter” relied upon in the reference patent document in a prior art rejection.[8] Although Riggs is applicable only to pre-AIA law, given the related guidance in the MPEP regarding the treatment of prior art under pre-AIA 35 U.S.C. § 102(e) and AIA 35 U.S.C. § 102(a)(2), as well as the Federal Circuit’s stated rationale in its decision, one may reasonably expect that a similar outcome may apply in the AIA context too.What does all of this mean for patent practitioners going forward?As the Federal Circuit emphasized, “it is best to treat a published provisional application—like a published non-provisional application or patent—as prior art for all that it teaches as of its filing date.”[9] Taking this into account, patent practitioners should draft provisional applications with as complete a disclosure as possible.  A cursory provisional application may be necessary when circumstances do not permit a more fulsome drafting process. However, filing a fully fleshed-out provisional application will have benefits not only in ensuring entitlement to an earlier priority date for the eventual non-provisional filing, but also in ensuring entitlement to the earliest priority date for the purposes of qualifying as prior art against later patent applicants.  Although In Re Riggs has not made it any easier to predict “submarining prior art,” it has provided additional means for patent applicants and patent owners in post-grant proceedings to challenge the availability of a patent or patent publication as prior art as of its provisional filing date. Indeed, while “submarining prior art” may still bring an element of surprise, patent practitioners now have more tools in their arsenal when confronting such art during prosecution and post-grant proceedings. [1] Dynamic Drinkware, LLC v. National Graphics, Inc., 800 F.3d 1375 (Fed. Cir. 2015).[2] Amgen Inc. v. Sanofi, 872 F.3d 1367 (Fed. Cir. 2017).[3] In Re Riggs, Case No: 22-1945, 12 (Fed. Cir. Mar. 24, 2025).[4] Id.[5] Id.[6] Id.[7] MPEP § 2136.03, supra, note 3.[8] MPEP § 2154.01(b).[9] In Re Riggs, supra, at 13.

Dr. Lisa Silverman’s practice focuses on patent portfolio management and strategic patent counseling in the areas of life sciences, pharmaceuticals, and chemistry. 

Lisa N. Silverman Ph.D.

Lisa Silverman

Marisa B. Sanders Ph.D.

Marisa Sanders

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Supreme Court Restricts the Extraterritorial Reach of U.S. Patent Law for Exported Goods

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Federal Circuit Clarifies Requirements for Prior Art Under Pre-AIA 35 U.S.C. § 102(e)

Discovering and developing new drugs is extremely expensive. Bringing a new drug to market can cost over $1 billion and may take many years. To improve the efficiency of drug discovery and development, approaches in artificial intelligence (AI) are proving particularly useful. As AI tools become ever more powerful, they are being used to identify new biological targets for treating disease, predict drug efficacy and toxicity, discover novel compounds using structure and ligand-based drug design, screen datasets for drug repurposing, and more.Read the full <a href="https://lifesciences.mofo.com/topics/250304-navigating-inventorship" target="_blank">blog post</a>.

Navigating Inventorship in the Era of AI-Assisted Drug Discovery

Caressa Tsai Ph.D.

Caressa Tsai

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Dr. Meghan Poon counsels clients on patent preparation and prosecution, portfolio strategy, and IP due diligence in the areas of biotechnology and biologics. She has significant experience in diverse technologies including antibodies, cell therapies, gene therapies, diagnostics, and gene-edited plants. 

Meghan McLean Poon Ph.D.

Dr. Meghan Poon counsels clients on patent preparation and prosecution, portfolio strategy, and IP due diligence in the areas of biotechnology and biologics. She has significant experience in diverse technologies including antibodies, cell therapies, gene therapies, diagnostics, and gene-edited plants.

Meghan Poon

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Navigating Inventorship in the Era of AI-Assisted Drug Discovery

Japan: Privacy Updates on Handling Personal Information in the “Digital Market”

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A core strategic question facing life sciences companies developing novel AI-implemented methods is whether to file for patent protection or to keep the methods as trade secret.One successful approach is to develop a hybrid strategy for patents and trade secrets based on current and future company goals, following the considerations outlined in this blog post.Read the <a href="https://lifesciences.mofo.com/topics/patents-and-trade-secrets-in-ai-and-life-sciences" target="_blank">full blog post</a>.

Briana’s practice focuses on patent preparation, prosecution, and counseling in the areas of biotechnology, pharmaceuticals, and artificial intelligence.

Briana Erin Mittleman Ph.D.

Briana Mittleman

Patents and Trade Secrets in AI and Life Sciences

IntroductionSpurred by both planetary and economic needs, the industry commonly referred to as “cleantech”—short for “clean technology”—has been on the rise. Current estimates predict clean energy technologies could dominate oil and gas by as early as 2030 (<a href="https://www.statista.com/statistics/1409852/global-cleantech-market-size-country-region/#:~:text=The%20global%20market%20size%20for,billion%20U.S.%20dollars%20per%20year." target="_blank" dir="ltr">Global cleantech market size by country 2030 | Statista</a>). <a href="https://www.mckinsey.com/industries/public-sector/our-insights/the-inflation-reduction-act-heres-whats-in-it" target="_blank">The Inflation Reduction Act of 2022</a> provided for up to 400 billion dollars in clean energy infrastructure and subsidies. And clean energy is just one aspect of clean technology. Other examples include recycling waste products that would otherwise fill landfills, carbon sequestration, and low-carbon footprint industrial solutions.Established companies and new startups alike seek to navigate and contribute to this expanding market. Like most expanding markets, success in this industry is closely tied to the strength of the company’s intellectual property (IP) and the terms of its licensing programs. We present here the top 10 IP and commercial contract issues in licensing cleantech innovations.1. CHOOSE THE RIGHT IP PROTECTION TO MAXIMIZE THE VALUE OF YOUR IPIn this rapidly changing industry, cleantech companies need to understand the various options available to protect their innovations and how to strategically devise an appropriate IP strategy that aligns with their research and business needs.  Depending on the nature of the technology, one must consider whether the technology is best protected using patents, trade secrets, or a combination of the two.  Patent protection is for a limited duration—typically about 20 years—and is in exchange for the substantial disclosure of the technology to the public.  In contrast, trade secret protection is potentially perpetual in term and generally only ceases when the technology no longer derives economic value from not being generally known or is no longer subject to reasonable efforts to maintain its secrecy.  One has to consider whether the technology can be easily reversed engineered and whether the company can take appropriate measures to keep aspects of the technology a trade secret. Strategic use of both forms of IP and careful navigation of the requirements of each can provide a cleantech company with both valuable assets and a competitive edge.2. STRATEGICALLY PROTECT INNOVATIVE ASPECTS OF YOUR IPPatent protection may be suitable to protect various aspects of cleantech innovations. For example, let’s say a company invented a new material for capturing carbon dioxide from the atmosphere. Such a technology can be patented from various angles, including the composition of the new material itself, the process of producing the new material, and the ways in which the material may be used.  A claim covering the composition of the new material can block others from making (including by using any process), using, selling, importing, or offering for sale the new material.  In contrast, a claim covering the new process of producing the new material only prevents others from performing the steps of the claimed process. In other words, if a competitor figures out an alternative method to produce the material, the manufacturing process claim may not block that competitor’s process.  As such, it is important in a robust patent portfolio to think about the different types of coverage that can create an exclusivity fence around the technology.3. EVALUATE EXPEDITED EXAMINATION OF PATENT APPLICATIONS DIRECTED TO MITIGATING CLIMATE CHANGECleantech companies filing patents containing at least one product or process claim directed to mitigating climate change by reducing, removing, preventing, and/or monitoring greenhouse gas emissions may consider submitting a petition under the <a href="https://www.uspto.gov/patents/laws/patent-related-notices/climate-change-mitigation-pilot-program" target="_blank">Climate Change Mitigation Pilot Program (CCMPP)</a>, which expedites the issuance of a first Office Action or allowance. The CCMPP is of limited duration—applicants can submit a free petition until the earlier of June 7, 2027, or the date upon which 4,000 petitions for the CCMPP program have been accepted by the United States Patent & Trademark Office (USPTO). As of October 3, 2023, the USPTO has granted 422 applications out of 572 filed applications for examination under the CCMPP. As with any accelerated filings, it will be important for the applicant to develop a strategic claim set to pursue so as to set up the case for success.4. CONSIDER TERMS AND CONDITIONS ASSOCIATED WITH GOVERNMENT FUNDINGGovernment funding has played a key role in accelerating the innovation of clean technologies. The Bayh-Dole Act allocates rights, including patent rights, for inventions developed with federal funding under contracts, grants, and other government funding agreements. Contractors and grant recipients can generally take title to any such inventions, subject to certain terms and conditions. One notable term and condition is that non-exclusive licensees must substantially manufacture any products embodying the subject invention or produced through the use of the subject invention in the United States. A new <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2023/07/28/executive-order-on-federal-research-and-development-in-support-of-domestic-manufacturing-and-united-states-jobs/" target="_blank">Executive Order</a> suggests that application of the U.S. manufacturing requirement could also be extended to non-exclusive licensees, particularly with respect to inventions related to “<a href="https://www.whitehouse.gov/wp-content/uploads/2022/02/02-2022-Critical-and-Emerging-Technologies-List-Update.pdf" target="_blank">critical and emerging technologies</a>,” which has been defined by the Biden administration to include various renewable energy generation and storage technologies.5. MINIMIZE RISK AND STRENGTHEN YOUR IP BY PERFORMING FREEDOM-TO-OPERATE (FTO) SEARCHESPatent rights give the patent holder the ability to preclude others from operating within the scope of that patent. In other words, patents afford an exclusion right. They do not guarantee that the patent holder can actually practice the patent or commercialize the claimed invention. Another party may have patent rights that block another from practicing or commercializing its own invention. At the appropriate time, cleantech companies may want to assess their FTO risk, whether by monitoring key competitor’s IP and/or performing FTO searches at key stages of the innovation cycle. If a potential FTO risk is identified, the company should devise a strategy to address such risk. This may involve establishing a non-infringement position, an invalidity position, licensing considerations, and other offensive strategies based on the company’s own patent portfolio.6. TAILOR THE SCOPE OF THE LICENSE GRANTIP rights can be the lifeblood of a cleantech startup, and both licensors and licensees must carefully consider the scope of any license grant. The licensor will want to ensure it provides what the licensee needs, but nothing more. Anything beyond the intended use may be considered an unnecessary encumbrance on the licensor’s IP, which is often its most valuable asset.Licensees will want to make sure they have full freedom to use the licensed technology as intended. Otherwise, their activities may accidently infringe the very IP rights they are licensing.Both licensors and licensees alike should carefully consider the variables at issue in nearly every license grant: (1) the specific IP rights that are granted (such as whether the license is under all of the licensor’s patents or a specific portfolio), (2) the field of use, (3) whether the grant is exclusive (even as to licensor) or non-exclusive, (4) the territory, (5) the duration and termination conditions, (6) whether the license is royalty-free, fully paid-up, or royalty-bearing, and (7) whether the licensee has the right to grant sublicenses to affiliates or third parties. If the licensee does have the right to grant sublicenses, both parties should carefully consider under what conditions sublicenses may be granted and for what activities.7.  CONSIDER WHETHER THE LICENSEE NEEDS ACCESS TO KNOW-HOW OR TECHNOLOGY AND TAILOR CONFIDENTIALITY APPROPRIATELYA license provides the grant of authority for a licensee to conduct activities that would otherwise be an infringement or misappropriation of the licensor’s intellectual property rights, but it does not necessarily enable the licensee to act. A licensee may need, in addition to the legal right to act, possession of the know-how or technology to properly exercise the license as intended. This is especially true in the cleantech space where much of the technology may be protected by trade secrets rather than by patents.Both licensors and licensees will want to ensure the scope of any tech transfer is tailored appropriately. The licensor may be incentivized to provide some technology to ensure the licensee’s success, but it should be careful that it does not give away too much information that can be competitively sensitive. The licensee will want access to technology needed to proceed with the license, but it may be better off without getting more than that. If a licensor later accuses the licensee of misappropriating trade secrets, the licensee’s best defense may be that it never had access to the technology to begin with. Thus, both parties should consider carefully what is needed and how to keep track of it.Nearly every commercial agreement in the cleantech space involves sharing non-public information, and appropriate confidentiality terms are a must. Each party should ensure that at least the three core provisions are present: (1) maintain in confidence, (2) non-disclosure to third parties, and (3) non-use except for permitted purposes. Depending on the nature of the technology, the licensor may need to provide highly confidential technical information. Additional administrative and technical safeguards may be appropriate in those circumstances, as well as a confidentiality duration lasting for as long as the information is not publicly known.8. CAREFULLY NEGOTIATE OWNERSHIP OF AND RIGHT TO USE TECHNICAL IMPROVEMENTSUse of an existing technology in a new setting, or the ability to tinker around with a technology, carries with it the possibility of new innovations. By default in the United States, ownership of patentable inventions rests with the inventor unless the agreement assigns ownership otherwise.Parties negotiating a commercial agreement have a plethora of options. The licensor could require the licensee to assign all new improvements to the licensor, which would then be licensed back to the licensee. Another option would be for the licensee to grant a license back to the licensor for any new IP, which the licensor could then sublicense to its other licensees. Yet another option could be a “community license,” where a licensee can “opt in” to sharing its improvement technology with the licensor in exchange for access to the licensor’s and to other licensees’ improvements.Depending on the duration of the license, an evergreen obligation to share improvements may not be appropriate. The parties should carefully consider whether there should be a time limit for sharing improvements.9. ALIGN RISK ALLOCATION WITH THE TECHNOLOGY AND ITS USECleantech is a relatively new field, and so are the bulk of the specific technologies. When licensing technology in this space, both parties should carefully allocate risks regarding (1) the ability of the technology to perform as intended, and (2) third-party liabilities arising from certain uses of the technology, such IP infringement. The parties can accomplish this with carefully tailored representations regarding the licensed technology and an indemnity for third-party claims caused by certain negotiated triggers.  But beware: not all risk allocations mechanisms are the same. Representations and warranties carry with them the additional risk of termination for breach and financial damages for breach of contract. Indemnities typically do not.Some parties may choose to apply a waiver of consequential and indirect damages and an aggregate liability cap as a method to avoid risk. But having this apply across the agreement to all kinds of breaches can be a trap for the unwary. Some breaches by their nature may only have nominal direct damages, but the real recovery would be in the form of consequential or indirect damages, such as breaches of confidentiality or improper use of trade secrets. Companies should take care to carve these out from the waiver and potentially from the liability cap.10. TAILOR TERMINATION TO THE SPECIFIC DEALA common construct in commercial agreements is to allow the licensee to terminate for its own convenience and to allow each party to terminate for the other’s material breach. But this may not be appropriate in all circumstances. In some deals where the licensee would suffer massive harm if the agreement terminates, even termination for material breach may be too low of a threshold. It may be more appropriate to have a narrower class of termination rights that are particularly nefarious or cause irreparable harm to the licensor, such as willful misappropriation of the licensor’s material trade secrets.In other deals, the licensor may need broader termination rights. Regulations rarely keep up with science and technology, and the clean technology space is no exception.  As export regulations continue to evolve, companies in this space can hedge risk by building flexibility into their commercial agreements. If, for example, new regulations materially alter the main commercial benefit of the agreement, the licensor may want to be able to terminate the contract or at least renegotiate the financial terms.In either case, parties should carefully structure the post-termination obligations. Some licensors may require the licensee’s assistance in transitioning use of the technology back to the licensor or to a new licensee. Where regulatory approvals are involved, the licensee may need to transfer government authorizations to a new party. Similarly, the licensee may need a reasonable period of time to wind down operations and to sell of any existing inventory of product that it would not be able to sell once the rights in the agreement terminate.

Top 10 Considerations in Licensing Cleantech Innovations

Matt Ferry is a partner in the San Diego office and a member of the firm’s Technology Transactions Group.
Matt’s practice focuses on strategic transactions involving intellectual property (IP), techno

Matthew Ferry

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Anita Choi has decades of experience providing strategic advice to companies and investors in the Life Sciences and Food + Agriculture industries. She has helped start-up companies build IP portfolios around their core technologies, and counseled them on issues related to patents versus trade secrets.

Anita Choi

Anita Choi’s practice focuses on patent prosecution, portfolio management, IP due diligence, and IP litigation support. Her clients range from early-stage start-up enterprises to established domestic and international companies. She is well-versed in building and managing worldwide patent portfolios across many sectors and technologies, including small-molecule pharmaceuticals, medical devices, diagnostics, industrial chemicals and advanced materials, food and agtech.

Emily’s practice focuses on patent preparation, prosecution, and counseling.

Emily Jane Roberts Ph.D.

Emily Roberts

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Top 10 Considerations in Licensing Cleantech Innovations

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Spurred by both planetary and economic needs, the industry commonly referred to as “cleantech”—short for “clean technology”—has been on the rise.