You may be able to obtain an exclusive, worldwide monopoly for a new, useful, and non-obvious process, item of manufacture, or biological creation (including non-natural plants). If you don't file for a patent, your competitor might, and then force you to shut your doors. Patents created GE, AT&T, Texas Instruments, and most other successful corporations.
For most modern businesses, intellectual property (or "IP") is the most valuable asset of that business. Unfortunately, it's usually completely neglected-particularly by small and medium-sized companies. There are five basic types of intellectual property protection: patents, trademarks, copyrights, trade secrets, and contractually created IP. Utility patents protect functional or structural aspects of products or services, while design patents protect ornamental designs on products. Trade secrets are any information, not publicly available, used in the course of business to give a competitive advantage, such as a customer list. Trademarks identify the source of origin of a good or a service. Copyrights protect literary, musical, and other artistic expressions.
Consider the Apple iMAC computer with distinctive colors and a tear-drop shape? Utility patent protection applies to the electronic circuitry, to the software that runs the machine, and the software programs the machine runs. Design patent protection would apply to the ornamental feature of the computer-namely, the tear-drop shaped monitor and unique color scheme. Trade secret protection applies to the manufacturing process that allows the manufacturer to produce the computer at 85% of the nearest competitor's cost, and to Apple's supplier and distributor lists. Trademark protection applies to the name of the company (Apple) and to the computer (iMAC) to identify their origin. Copyright protection would apply to the software on the hard drive, and to many screen images displayed by the computer. The license agreement you agree to when you install software creates additional intellectual property-a contract.
Eventually, you must be able to distinguish each type of intellectual property protection in order to prevent misappropriation of your intellectual property assets. After reviewing this information, you will take the first steps to recognizing the value and benefit of each type of intellectual property.
What is a Patent?*
A patent is a temporary (20 year) right granted by the United States to an inventor, to exclude others from making, using, or selling (and by case law, importing) an invention. A patent is good only in the United States unless certain steps are taken prior to the disclosure of the invention. A patent right is sometimes referred to as a legal monopoly right, since it confers a right to keep others from the invention, rather than as a "positive" right to make, use or sell an invention. There are currently about two million United States patents issued to inventors that are still active, and almost half a million pending patents. Confusion is often created because there are two types of patents issued by the United States Patent & Trademark Office (USPTO): utility patents and design patents. They protect different types of intellectual property, and provide very different rights.
A utility patent may be granted to protect a new, useful and non-obvious structure, process (including computer programs), function, or business method. Improvements to any of these types of inventions that are also non-obvious are valid subject matter for patent applications. The term of a utility patent is 20 years from the date of filing the utility application. Time Budget for a Utility Patent: It takes about a week to prepare a utility patent application, once the job is begun, and it takes about a year to hear back from the patent office once one is filed. The total time between filing and issue can be as short as a year, typically lasting two years, and may last much longer.
A design patent protects an ornamental design embodied on an article of manufacture, or the ornamental nature of the article itself. It is granted for any new, original and ornamental feature. The term of a design patent is 14 years from the date of issuance. It typically takes about a day to prepare and file a design with the USPTO, and six months to receive a response from the patent office once a design patent is filed. Time Budget for a Design Patent: It takes about a year to complete the design patent process, though longer terms may be needed for some designs.
* A prototype or working model is not needed to seek patent protection.
You cannot receive a patent for perpetual motion devices, abstract ideas, laws of nature ("discoveries"), naturally occurring substances, or printed matter.
An inventor cannot receive a United States patent for an invention publicly disclosed in writing by someone else anywhere prior to the date of the invention. If a publication is by the inventor, then the inventor has twelve months from the publication date to file the patent. Public disclosures also include any exhibit at a trade show, or printing in a publication anywhere in the world. You should always seek a patent attorney's opinion if you have any questions regarding whether your invention is patentable, and before having any presentation or discussions outside the scope of a non-disclosure agreement. ANY DISCLOSURE, BY ANYONE, ANYWHERE, PRIOR TO A U.S. FILING DESTROYS THE ABILITY TO FILE A PATENT OUTSIDE OF THE UNITED STATES.
If the invention is offered for sale or license, then the inventor has only one year to file an application for a patent. It does not matter if no sales are made, or if no licenses are signed.
If the invention is known or used by others in the United States before the date of the invention by the inventor, then the inventor is not entitled to a United States patent.
Other statutory and case law bars exist. Consult a patent attorney about statutory bars before filing a patent application.
A host of factors should be considered before rushing to file a patent. Do you have the time, money, and energy needed not only to protect your invention, but to push it to market? Is the invention marketable? Is the invention producible at a price that allows for effective marketing? The Invention Factory does not provide marketability advice, or provide "invention submissions." We do, however, for a consulting fee, frequently assist inventors with locating prototype engineers, sources of financing, and invention evaluations, upon the request of the inventor.
A patent allows the patent's owner to prevent others from making, using, or selling an invention throughout the United States. A patent is one of the few assets that can increase in value over time. A patent may also increase the value of your business because it is considered a valuable asset by banks, financial markets, venture capitalists, and potential purchasers of your business.
In just one week in 2001 the following headlines could be seen to cross the Reuters News Service: StemCells Wins Two New Patents, Shares Jump [100%] (6/7/01), HP to Pay Pitney $400 Million in Patent Suit (6/4/01), Girl, 9, Starts College Courses (5/31/01) [describes the patents Ms. Saladna's received and created a multi-million dollar company around], and TiVo Secures Key Patents, Stock Soars (5/25/01), just to name a few. In addition, Patented technology made Hyperchip the Hot Start-up of the Year (6/5/01). Check out some of our success stories, listed below.
Why do companies receive so much value for a patent? First, they can literally prevent competition with their invention, if that's what they choose to do. You can do it too! Alternatively, you may decide that you'd rather receive licensing royalties. Maybe you want the best of both worlds? You can then produce your product with legal monopoly profits, and still receive royalties-people may literally pay you for the right to compete with you. That's POWER!
There are many ways to financially benefit from a patent's asset character. Your patent may be sold outright. You may also license your patent to one or more parties for a percentage of the sale price. You may also create a business and take the invention anywhere from product promotion all the way to manufacturing and distribution. A patent is also inheritable.
What might happen to your business if you decide to not file a patent to protect an invention? If you think trade secret laws will protect you, think again. What if a hacker breaks into your system and publishes your trade secrets on the Internet? It may surprise you to know that they are no longer secrets, and are then free for the world to use. If an employee leaves and publicly discloses your trade secrets, they become free to the world. What if a marketing person accidentally places a copy of a trade secret in a folder at a trade show? You've just learned another way trade secrets can be lost. Yes, that employee and hacker broke the law. Yes, you can sue, but how much money will you recover? Probably very little.
Do you use Email? If the guy who invented it received just a .01 CENT royalty on each email, he would make over $100 MILLION A DAY. He didn't patent the idea because he believed in "open source" (read "free") software. How nice. Have a quartz watch? Thirty years ago the Swiss made 80% of the world's watches, and they kept time more accurately than any other watch in the world. Then the Swiss invented quartz movement which is much cheaper and more accurate than Swiss springs. The Swiss inventors decided not to patent it-it just didn't fit their business model. Then Texas Instruments, Timex, and a few other companies decided that, well, it DID fit their business model. Today, the Swiss have only about 5% of the world's watch market.
Deciding not to pursue patents can cost much more than a lost opportunity. It can cost you money. One "last minute" filer showed up on a Monday with an offer in hand to buy his business for thirty million dollars. He had told the buyer that his technology was patent and otherwise protected. It wasn't. That Friday, he sold his company for under three million dollars. This guys lost $27 million dollars in value in a week. Why? Well, ask yourself what's worth more: 1) a company with an invention that can be reverse engineered, copied, and legally reproduced for a few thousand dollars, or 2) the same company with the same technology that is protected by patents so that even if the technology is reproduced, or even independently created, it can lock any competitor out of the market for twenty years?
What if someone else patents the invention? They can literally shut you down, or make you pay them for the right to compete with them. Shortly after an invention audit, where lots of patentable inventions were identified, a company X decided not to patent their technology (like the guy who invented email). They decided to rely on trade secret protection instead. About eighteen months later I received a fax from him-a cease and desist letter from a competitor who had just received a patent on virtually identical technology. Company X was forced to shut its doors, rather than face an expensive and up-hill legal battle. What was amazing was that the competitor's patent was filed six weeks after that audit meeting. If Company X had pursued protection immediately, they could still be in business today, and probably with one less competitor, to boot.
Filing a provisional or utility patent immediately after an invention is identified is BY FAR the best thing you can do to protect your rights to an invention. If you fail to file a patent before a competitor, you'll be forced into an "interference proceeding" or a court battle-both are expensive and offer no guarantee of success. However, next to actually filing a patent application or a carefully prepared provisional document, detailed record keeping is the most important thing you can do to protect your invention since you'll use the documentation in court or the interference proceeding. Proper record keeping is important because it is evidence of the date the inventor came up with the invention (i.e., the date of invention). DO NOT MAIL YOURSELF THE INVENTION (AKA: POOR MAN'S PATENT). Mailing yourself a sealed letter with your invention documents enclosed does NOT get you a patent, or even prove your invention's conception date-DO NOT DO THIS, EVER, PERIOD. All inventors should maintain a bound notebook for recording inventions. Ask us about our suggested engineering notebooks.
Entries in the bound notebook should contain a clear and complete explanation of the manner and process of making and using the invention. All computations, sketches, diagrams and test results should be entered into the notebook at the same time. Notebook entries should also describe all testing performed, the particular type of equipment used, and the results of the testing, both good and bad. Additionally, all persons involved in the work, and their specific role, should be identified in the notebook entries. Every entry in the bound notebook should be signed and dated by the participants, indicating the particular project with which the entry is associated. If possible, the entry should be signed and dated by one (or preferably two) witnesses who understand the invention.
The Disclosure Document Program (DDP) is a service provided by the USPTO that accepts and preserves invention papers for two years as evidence of the date of conception of an invention. The DDP is not a patent application. Please see the enclosed paper that highlights some problems with the DDS before even thinking of using it. For example, the DDP information can become part of the public record-this means your trade secrets also become public, and are secrets no-more. The filing of DDS papers is one of the most common ways invention submission companies commit inventor fraud and cheat inventors out of money.
Though not a required part of the patent process, sometimes the first step in the patenting process is to have a professional patentability search completed by an independent patent searcher. The Invention Factory typically hires independent patent searchers who can visit the USPTO to perform manual and database United States patent searches. However, no one can ever guarantee to find all prior-art, and that the more thorough the search, the more it and the related opinion will cost. Think of it this way: a search can let you know when you can not get a patent, but can never be 100% relied on to let you know if you can get a patent.
After the independent patent search is completed, we compare the relevant located patents to your invention. A knock-out opinion is an objective opinion about your chance of receiving patent protection based on US Patents. The patentability opinion, along with copies of the relevant patents, is sent to you. If US and international databases and other sources are searched (for example, technical papers), then opinion is called a "novelty" search
Sometimes, an inventor wishes to know if their invention may infringe an existing patent, or if a product or service being offered by another infringes their patent. This type of opinion examines, element by element, the claims of a patent to the device in question, and may require the review the patent file at the Patent Office.
A patent application typically includes an abstract, a specification that describes the invention), at least one "claim," a Declaration, a filing fee, and usually at least one drawing. However, filing an application does not entitle an inventor to a patent. The patent pass an examination and approval process known as "patent prosecution."
Claims are legally the most important part of the patent application. They define the invention, and determine the scope of coverage of the patent. Experienced patent draftsmen are uniquely qualified to help an inventor receive the most preferable patent coverage for an invention. Adequate patent coverage increase the chance that potential infringers will be prevented from making, using or selling your invention. Individual inventors without representation often unnecessarily give-in to patent office demands to narrow the scope of the claims in a patent, which can greatly reduce the value of a patent.
After filing the patent application with the USPTO, a paper called an Office Action is received from the USPTO (typically within eight to fourteen months, though some software application can take up to two years to be examined). The USPTO will almost always reject some or all of the claims. Usually the USPTO Examiner will state that he believes it would have been obvious to create your invention in view of the prior art (typically other patents located by the Examiner).
After receipt of an Office Action, it is then necessary to argue that your invention is patentable based upon the differences between the invention and the art cited by the Examiner. Legal arguments based on case law, as well as structural differences, may be used to refute the Examiner's position. A telephone interview with the Examiner may also be requested.
Sometimes, if an examiner does not allow some patentable subject matter, additional action may be needed. This may take the form of an appeal to the USPTO appeals board. Sometimes, other procedural tools are used, such as the filing of another patent application called a "continuation application."Patent Flyer