Making Your Intangibles, Tangible. Part 4: Patents
by Peter Smith
December 16, 2014
in Articles, Business Transactions & Services, Flat Fees, intangible, Intellectual property, patent, Social Enterprise & Nonprofit, Startup & Formation
By Ken Strocsher
In this four-part series we’re discussing how to increase the value of your company by better quantifying and protecting your company’s intangible intellectual property. Of the areas covered in this series, patents are arguably the most complex to understand and most challenging to obtain. That being said, patents can serve as the bedrock upon which small companies are founded and provide the traction they need to build their business. A patent permits a company the exclusive monopoly to use, make, and sell their inventions.
This blog post provides, at a high-level, some of the considerations involved when trying to determine how to protect your intellectual property, and, if it is a patentable idea, some of the costs involved in pursuing a patent registration.
What is a Patent?
In the U.S., there are three types of patents: (1) a utility patent, which covers the functional aspects of products and processes; (2) a design patent, which covers the ornamental design of a useful object; and (3) a plant patent, which covers a new variety of living plant. Utility patents are by far the most sought after, followed by design patents. The third type, a plant patent, is hyper-technical and involves biochemistry that is beyond the scope of this blog. Each patent type confers the right to exclude others from making, using, offering for sale, or selling the invention in the U.S. Patents also allow the patent holder to prevent others from importing the invention into the U.S. without prior authorization.
Before worrying about patent enforcement, it is important to not only understand what type of patent you can obtain, but also what you can actually patent. Patentable subject matter includes machines, methods, compounds, or other manufactures, but does not include ideas or natural laws. For instance, if you discovered a way to produce light with a filament wire, you could patent an incandescent light bulb, but you would be barred from trying to patent electricity. Electricity by itself is a naturally occurring phenomenon; however, channeling electricity into a glass bulb to emit light is a useful mechanism. In contrast, if you invented a more efficient or greener method of generating electricity you might be able to obtain a patent on the method, but again, not on the electricity itself.
Another way to think of patentable subject matter is to consider the enumerated restrictions of the Patent Act. The Patent Act says that in order for something to be eligible for patenting it must be novel, nonobvious, and have some utility. Let’s breakdown each of these requirements:
- Something is considered “novel” if it is new and therefore not already known to the public. Because a patent grants a legally enforceable monopoly over the invention, we want to encourage inventors to invent something new if we are going to allow them to exclusively use and exploit that invention.
- The second requirement also deals with encouraging new and original discoveries. To be “nonobvious,” an invention must be original and, well, not obvious! The measure of obviousness is a subjective one, and it hinges on whether or not the invention would be obvious to the hypothetical person skilled in the relevant technical field. Again, in order to encourage innovation, we want to grant patents for inventions that are unique and solve a long felt but unmet need.
- The last requirement, “utility,” requires that an invention have some useful function. If you recall our early blog post about Copyrights, you will notice this requirement is the opposite of what is required for something to be copyrightable.
Before deciding to invest in the patent application process, which will be a substantial commitment of time and money, it is important to understand the various restrictions related to each of these requirements. In all likelihood, you will want to contact a patent lawyer early on in this process to advise you to any possible obstacles or restrictions that might prevent you from patenting your invention.
How do I get a patent?
So, your invention is novel, it’s nonobvious, and it’s useful. Now what? It’s time to start the long process of filing your application.
As of March 16, 2013, the U.S. has transitioned to a “first to file” system, similar to most other patent-granting countries. Under the America Invents Act (AIA), a patent is granted to the first person or entity to file an application with the United States Patent and Trademark Office (USPTO), much like the priority given to trademark registrants, discussed here. So, keep in mind that once you have your invention ready for patenting, do not wait to file your application!
The process of applying for and obtaining a patent can be broken down into two steps. The first is the preparation of the patent application itself. The patent application has two elements: a “specification,” which is generally a lengthy and detailed description of the invention, and “claims,” which are enumerated paragraphs that precisely define the metes and bounds of the invention. Claim construction is statutorily complex and interpreted by decades of Federal case law; accordingly, it is usually recommended that an inventor seek expert advice in preparation of the patent application.
The second step, “prosecution,” is initiated by filing the application in the USPTO. In due course, and it can be many months up to a couple years depending on the technology area, a patent examiner will review the application and either allow or reject the claims as written. The applicant will have an opportunity to respond, typically through their patent attorney, to present arguments countering an examiner’s grounds for rejection and/or to edit the claims into a form acceptable to the examiner. If successful, then the patent is issued. If not successful, there are mechanisms to appeal an examiner’s final decision.
Although an inventor may legally file an application on their own, because of the legally complex nature of patent application requirements and the prosecution process, it is highly recommended that an inventor use the services of a patent agent or patent attorney. Patent agents and attorneys, are required to have a technical qualification, such as a degree in engineering or physics or chemistry and to be admitted to practice before the USPTO by having passed the patent bar.
What about cost?
At the time of filing, you will be required to pay a non-refundable filing fee whether or not a patent is ever granted. The current basic filing fee for a utility patent and design patent is $400 and $200, respectively. In addition to that fee, you will be required to pay patent search fees, examination fees, and other miscellaneous fees depending on the complexity of the application. This link will take you to the USPTO’s fees chart. Altogether, the process for applying for and prosecuting a patent may cost anywhere from $5,000 to $15,000+ when including attorneys’ fees. If a patent is successfully prosecuted and granted, the USPTO will issue a patent certificate for the claimed invention in the applicant’s name that lasts for 20 years from the date of filing the application. In some circumstances, additional time may be added to the life of the patent depending on if there were unreasonable delays in prosecution due.
Maintenance costs and enforcement are also important to consider when developing your patent strategy, but such considerations are beyond the scope of this blog.
The overall costs of obtaining and enforcing a patent can be substantial. Using a professional to budget and guide you through the process is highly advisable, but imagine for a moment what the result could provide to your company. A patent is the exclusive right to utilize a certain invention; it could take your intangible invention and make it into a powerful and valuable asset. Because patents provide a time limited monopoly to use and exploit an invention, it is important to consider investing in this process. The costs may seem daunting, but remember, when you can make your intangibles, tangible, the payoff can be immeasurable.
The article provided above is for general information purposes only and should not be relied on as specific legal advice. This article does not form an attorney-client relationship. If you have any questions about this article, please feel free to contact Ken Strocsher at Ken@apexlg.com.
July 14, 2020