Patents are big business. Kodak sold its portfolio of patents for $525 million. Nortel sold a portfolio of its patents for $4.5 Billion. Valuation of startups and early-stage companies is heavily influenced by its patent and intellectual property portfolios. This article is a short guide to help you understand U.S. utility patents and the patent procurement process so you can start strategizing to build your own portfolio.
A utility patent Protects new machines, processes, systems, and manufactured items, and allows its owner to stop competitors from making, using,or selling the subject matter disclosed in the patent.
“A patent, or invention, is any assemblage of technologies or ideas that you can put together that nobody put together that way before. That's how the patent office defines it. That's an invention.”
– Dean Kamen, Inventor of the Segway
Technically a utility patent is a property right granted by the government to an inventor "to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States" for a limited time in exchange for public disclosure of the invention when the patent is granted.
Article I of the Constitution authorized Congress to “Promote the progress of science and useful arts.” Congress created the Patent Act, the basis for patent rights.
A utility patent gives its owner a monopoly over the subject matter of the patent for 20 years from filing! Monopoly’s are the cheat code for capitalism because the monopolist can avoid competition. Competition tends to drive price down, but the monopolist can side-step this by-product of capitalism. The upshot is that you can give competitors permission to use your invention via a paid license.
File first with a Provisional Patent
The United States, like the other major Patent Offices, is a first inventor to file jurisdiction. The provisional patent is a mechanism to preserve an early filing date for your invention.
A provisional patent is a low-cost mechanism to secure a filing date for a later non-provisional patent. Since the United States is a first-to-file jurisdiction, it is critical to secure the earliest filing date possible for your patent. Under US Patent law, a subsequently-filed non-provisional patent can claim the filing date of the provisional patent as long as the provisional patent disclosure supports the claims of in the non-provisional patent disclosure. Provisional patents are not examined so they do not need to be organized in the form of a non-provisional patent. However, a patent attorney will probably conform to the non-provisional patent style conventions to make it easier to write the non-provisional application later.
A provisional application is pending until its expiry on the anniversary of the filing date. Between the provisional filing date and the anniversary you need to a) decide whether you want to file the non-provisional; and b) prepare and file a non-provisional application claiming the benefit of the provisional application.
The budget for a provisional patent can range from $4700 - $5000. The USPTO’s basic filing fee range is $75 - $300 depending on whether you qualify for a discount based on you and/or your business’s gross income. The remaining budget is for attorney’s fees (based on prevailing market rates in the DC metropolitan area).
Utility patent process
Our phased approach to utility patent procurement is as follows:
Due Diligence – Patent novelty search, analysis and opinion. Not every applicant is going to get a patent because there are legal requirements and a corps of patent examiners tasked with ensuring your application passes muster. Part of the legal inquiry depends on what related technologies are in the public domain already. The point of the patent search is to learn what’s out there and how your invention is unique.
Application – Once we have an idea of the patent landscape, we can prepare a patent application that discloses your invention and why you should be granted a utility patent. All patent applications require a written disclosure, including drawings, and a filing fee. The USPTO has a corps of examiners working for them, and it’s only fair that you have a patent attorney on your side!
Prosecution – About 17 months after filing your patent application, an examiner will issue a written opinion discussing whether your application meets the legal requirements for a patent, and if not, what you can do to cure the substantive defects. (Note - first office action pendency statistics available here). Even though most first office actions are rejections, the USPTO is not out to reject your application. Instead conceptualize this phase as a negotiation of the proper scope of your patent.
Allowance/ Grant. When you’ve satisfied the legal and formal requirements for a utility patent, you will receive a notice of allowance, which means you are a few formalities (including a fee) away from getting a patent certificate!
Post-Grant – this is the part where you have to actually stop others from making, using, or selling your invention. Since you invested in getting a patent, you have a robust toolkit at your disposal and we can help you choose the right tool for the right situation. There are also maintenance fees due at years 3.5, 7.5, and 11.5 and we can help you keep track of these deadlines.
According to a recent survey of attorneys, median fees to prepare and file a nonprovisional patent of normal complexity is around $10,000. The government’s total filing fees for normal/small/micro-entities is $1820/$910/$455.
Should you apply for a patent?
You should strongly consider applying for whatever non-provisional patent protection you can get, whether design, utility, or both! Not every patent application will be granted. Before we file any applications, we will help you determine i) is your invention is eligible for a patent at all; and ii) does your invention either solve a new problem or solve a known problem in a new way.
We help inventors and businesses protect their inventions with patents to maximize competitive advantage and stop competitors from using your ideas without your permission. Tinch Law can help you determine what intellectual property protection is right for your ideas, build a portfolio of assets and leverage your intellectual property to grow your business