Get a patent, sell the product.
Not so fast, say attorneys who regularly see inventors tripped up by the process of
protecting their intellectual property.
Whether entrepreneurs are at a startup, an academic institution or an established firm, knowing how and when to navigate the process is an essential aspect of monetization.
Patent attorney Kelly Hollowell launched Greenspoon Marder’s intellectual property practice in October. The firm last month expanded that practice into San Diego.
Bill Hunter is a principal with the San Diego office of Fish & Richardson.
In separate conversations about the potential pitfalls that can befall those pursuing the patent process, each said inventors are at risk when they first start talking publicly about their invention, an action which kicks off the United States’ one-year grace period during which a patent application for that invention may still be filed.
Avoid the Footrace
After the grace period,” “it’s just a footrace to the patent office,” Hollowell said.
Hunter said this timeline is more likely to catch startups unaware.
But the issue becomes even more complex if the invention is slated to be sold internationally, as many countries have no grace period.
The best way to avoid possible complications? Get a patent application filed before talking about the invention publicly.
“That protects you here and internationally,” Hunter said.
“If you’ve not taken appropriate steps upfront, those doors are closed to you,” said Hollowell, of international sales opportunities. “You really want to do your filing before you let your investors start talking about it.”
Another point of confusion can be when investors conflate getting a patent with having a marketable product when it comes to investors and consumers alike.
“Some people without much experience have this sense of, if I get this patent it means it’s going to work and I’ll have a business,” Hunter said.
All getting a patent means is that someone else is excluded for a time from doing what the claim says, Hunter said.
“While having a patent is important for getting investors interested, the core issue is going to be what’s the potential market for the innovation,” he said. “The flip side is if you have a great invention without a patent, investors may be scared off. What’s to stop someone else from doing the same thing?”
Patent Cooperation Treaty
Inventors who want to protect their patent outside of the United States should consider filing a Patent Cooperation Treaty patent application — but don’t mistake that application for the patent itself, the attorneys said.
The application can reserve patent rights in other countries, but only for 30 months from the application’s date.
Once that is filed, Hollowell said one way to help determine whether an invention will be patentable in other countries is to fast-track a review through the U.S. Patent and Trademark Office, which — albeit more costly than the traditional track — can give an inventor an idea of whether the invention is likely to succeed elsewhere, too.
“You’ll still have to jump through the hoops (in other countries), but you’re likely to get it,” she said. “If you find out it’s not patentable, you don’t have to blow a lot of money in other countries.”
Protecting a Revenue Stream
Another potentially sticky spot: not taking provisional patent applications seriously.
This shortcut can backfire if the information contained isn’t high quality, Hunter said.
“I’ve seen applications that are essentially worthless,” he said, written without expert advice — a temptation since provisional applications aren’t examined, making them cheaper to file.
Still, filing a provisional application can provide investors with some wiggle room if the market for their invention is not likely to mature until toward the end of the term of the patent, he said.
“If your invention is worth millions in the last year of the term, that could be very valuable to the company,” he said. “I remind people: The only value of a patent is to protect a revenue stream.”
IP Asset Awareness
Inventors may balk at the cost of filing a patent, but Hunter said the price has to be weighed against the potential price of not doing so.
“The key issue in my mind is, what is the potential long-term value of this invention?” he said. “If it’s millions, trying to save $5,000 is not a good idea, not a wise business strategy.”
Patent portfolios can hold significant value for a company: “There is increased awareness that you have more than bricks and mortar to your business; almost everybody has some IP assets and they are starting to leverage them,” Hollowell said. “I think in the last two decades, businesses have become more acutely aware of their IP assets and are recognizing the value of not only hard IP protections from patents but also softer protections through trademarks and copyrights.”
Don’t forget the duty inventors have to the patent office: candor.
Hunter said inventors who get a patent but don’t appropriately represent who was behind the invention or what similar inventions existed at the time can end up invalidating that legal protection.
“Make sure the examiner has all the information,” he said.
It’s a patent seeker’s responsibility to ensure they live up to this standard, officially known as the “duty of candor.