What you need to know about getting a patent

Obtaining a patent can be one of the best business moves you can make, a waste of time and money, or be both but still an endeavor worth undertaking for personal reasons. I’m writing from the perspective of an engineer in which I have the experience of being granted several patents in the United States and Europe, and the perspective of a CTO in which I often consider our company’s IP strategy and return on investment (ROI). An additional perspective I write from is through my memories as a child in which I was told tales about my great-grandfather who was granted a patent long before I was born, such that I understand the great sentimental value of a patent. I cannot speak as a patent attorney nor offer legal advice.

What is first important to recognize, is that only about 5% of patented innovations make any money

If you follow through with the years of work, significant expenses, and highs-and-lows that come with the process of seeking a patent and do have a patent granted, no one is going to show up on your doorstep offering jobs, riches, and wealth. Additionally, once you have your patent granted, what isn’t well known is significant maintenance fees are waiting for you, and over time these fees increase in price. If patents are granted in multiple countries, there are maintenance fees that must be paid to each country until the patent expires (or the fees are not paid and the patent is revoked). So, the question is why do you want to get a patent? First, it is useful to define exactly what a patent is.

What exactly is a patent

A patent is a right granted to an inventor that permits the inventor to exclude others from making, selling, or using the invention for a period of time. What is granted in exchange for this privilege is the requirement to share the details of the patented invention. This offers a benefit to society as scientific and technical openness is viewed as a means of helping society and our scientific community’s progress. Once the patent has expired, the invention will be free for anyone to use, copy, and build-upon.

It is up to the inventor to enforce the patent

This means that the inventor must be made aware that their patent is being infringed upon, and to have the financial means of challenging the alleged party that is pirating their invention in a court of law. Alternatively, another approach is to negotiate with the infringing party. However, neither challenging the infringing party in court nor negotiating with a party that is already infringing is likely to be an easy nor pleasant task for the inventor.

A patent is not valid world wide

A patent is only valid in the country or jurisdiction of the patent office in which it is granted. There is a patent office in the United States, Europe, Japan, China, etc. Almost every country has its own patent law, and a person desiring a patent in a particular country must file an application for a patent in that country, which each country often has unique rules and procedures. A patent as filed in the United States will not necessarily be approved as is in Europe.

As a patent is only valid in the jurisdiction where it was granted, it will only be able to exclude others from making or selling a product based on the invention in that jurisdiction. For example, if a patent is granted in the United States it will only protect products manufactured and sold within the United States. It may not even protect against products designed in the United States and then sold elsewhere. In today’s global world, the importance of patent coverage in multiple jurisdictions needs to be considered carefully.

Benefits of being granted a patent

While only about 5% of granted patents make any money, there is a reason there are nearly 600,000 patents filed each year in the United States alone, which is only about 20% of the total number of patents filed around the world. There is the personal satisfaction of receiving a patent, but in particular, the patent allows 20 years of exclusivity for a utility patent and 15 years for a design patent. If there is a chance the innovation might take off, the patent expenses will be a drop in the bucket as compared to the potential upside of having exclusivity on a break-through product.

Another opportunity is being able to license, transfer, or sell the patent. Inventors who do not have the means or interest in making a product may be able to find a separate company that is interested in doing so. In this case, the inventor holding the patent will negotiate a licensing fee. Typical royalty rates (licensing fees) are based on the wholesale cost of the item being sold, which is 2% at the low end, and up to 15% at the high end.

An additional benefit of patents is intellectual property. Just as the ownership of physical ‘property’ is considered valuable, the ownership of intellectual property is considered valuable (and debatably regardless of the value of the patent itself). A company’s ownership of intellectual property can result in a very significant increase in the valuation of a company when a company is bought or sold. This is true as it is often difficult to put a value on a patent in particular when the innovation is at an early stage.

What is patentable?

Any person who “invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent.” While algorithms cannot specifically be patented, the steps an algorithm carries out is patentable. The key requirements are:

• “Useful,” or having a useful purpose.
• “Novel,” being not known, described in any printed form, or on sale or public use in the United States more than one year prior to the U.S. patent application. In Europe and most countries, it cannot ever have been on sale or public.
• “Nonobvious,” being different from what has been used or described before.

Initial and maintenance fees

So, what are the costs of a patent? It depends on the size of the organization. The following fees do not include the cost of a patent attorney, which is likely to add more than $10,000 to the cost of the patent. As can be seen, the cost of a patent over the life of the patent is very significant. In the case of a utility patent, several of the fees as per the USPTO include:

After being granted a patent, there are maintenance costs:

What to expect during the filing process

According to the USPTO, the average time it takes to get a patent is 25 months. While it might seem that the inventor submits a patent and 25 months later there is a yes or no response, that is not the case. There are multiple steps along the way, in which there are many months between each step. I can personally say the process is very stressful and disruptive due to the inability to predict when the examiner will send their response and just what the response consists of. Murphy’s Law makes it clear you’ll need to respond to the examiner at the worst possible time.

After submitting the patent (without prioritized examination):

• There is typically up to 12 months until the First Office Action is sent from the examiner to the inventor.
• The inventor has 6 months to respond to the office action, although should a response be issued within 3 months it will reduce the fees.
• Upon receiving a response from the inventor, the examiner has 6 months to respond to the inventor.
• This response from the examiner to the inventor is the Final Office Action, which the inventor is allowed 6 months to respond to.
• If the examiner accepts the application and believes it meets the requirements, a Notice of Allowance will be provided, and your patent will be granted.
• Following the exchange of the Final Office Actions and its response, if the examiner has not yet approved the application, there is an option to file a Request for Continued Examination (RCE), for a rather hefty fee.
• If even after an RCE there hasn’t been an agreement, there is still the option for Patent Appeal. While the fee to appeal isn’t significant, the cost to file a Patent Appeal Brief through a patent attorney is significant, often approaching $10,000. Beyond this, many additional fees can be expected as the process continues.

What to expect in an Office Action

What is important to recognize, is patent examiners have an unbelievably hard job. They are expected to read a specification and claims for a brand-new invention and then find and understand prior art. In some cases, in which English may not be their first language, they are expected to compare and contrast the nuances between the prior art and your invention to determine if your invention is useful, novel, and non-obvious.

Office actions are documents written by a patent examiner, in which the examiner cites prior art, and gives reasons why your claims are rejected or technical formalities need to be corrected within the body of the patent. I have found that even when my patents cover completely new material, the prior art is still cited against my claims. I can say from the perspective of an inventor, that when I believe my invention is truly new, novel, and non-obvious, reading through the Office Action can be gut-wrenching. There will be line-after-line of statements such as: “With regards to claim 1, prior art described by Johnson [paragraph 7 lines 6:10] discloses…” and then cites my claim 1. Only when looking into the prior art by Johnson (a fictitious name I made up), do I find the prior art by Johnson has little to do with my patent and often nothing to do with my claims (from my perspective).

Recognizing and considering the very difficult job the examiner has, I generally find it best to try to schedule an interview with the patent examiner. Before the interview, I try to issue a politely worded response (which is “legalized” by my patent attorney) to explain the difference between my invention versus the prior art, or why I believe my invention is non-obvious. Beyond just a document, to help support an interview, I have made explanatory animations I have shared with the examiner and even created websites I can use to share content if needed.

My belief is the examiner wants to help and helping them understand and share my perspective is the best way forward. While it is intimidating to be on the phone with an examiner (even when my patent attorney facilitates), I have found that the examiners greatly enjoy speaking with inventors. Establishing a cordial relationship can go a long way towards reaching a mutual arrangement to see the patent granted.

Other options for protecting your invention

After reading this, it might certainly be worth reconsidering the value of a patent versus the difficulty of the process, expense, and low expectation for a good ROI. Given this, it might be worth reconsidering the following options to protect your investment. That said, after considering the following options, there is a reason more than 600,000 patents are filed in the United States every year.

• Publishing is one option that has several benefits. It makes your invention public such that a competitor cannot patent it and exclude others. As part of publishing, enough can be revealed to prevent others from patenting it, but not all the ‘guts’ need to be revealed.
• Trade-secrets, or simply not revealing your invention to the world. This, of course, has the down-side that someone else could patent the invention, and there is no means of licensing, or selling your invention.
• Rapid innovation is often considered the best option. Investing in a patent takes years, significant time, and financial investments, and reveals the details of your innovation to the world. If someone chooses to infringe on your patent, the inventor is responsible for stopping the pirate from infringing. Often it might be sensible to spend the time and resources to continue to innovate and build a brand around the generation of new products.

Overview

The overview is the patent process is time consuming, expensive, and it needs to be considered that a granted patent has many limitations that may not be anticipated. Take your time and consider the business case that being granted a patent will offer you. If you think through your options and document your assumptions, you will be satisfied with the outcome regardless of the path you go down.