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The Hard Truth about Patents

Patents are essential to the commercialization of most inventions. Yet many inventors are armed with misinformation about the patenting process, the scope of their intellectual property rights, and the costs involved in getting a patent.

Let’s clear the air and blow the stink off lingering misconceptions about patents. Here goes:

Not All Patents Are Created Equal

When a merger occurs between two behemoth companies, Wall Street pin-stripes often will say that the one company will combine its portfolio of 4,000 patents with the other company’s 3,000 patents to have the largest patent portfolio in the market.

The implication is that the company will dominate the market because it has so many patents.

While that may be important for certain industries, in many high-tech areas and certainly the pharmaceutical industry, a single patent alone can dominate a market.

Pfizer, for example, earned more than $11 billion in 2009 on its cholesterol pill Lipitor patent. One patent may be worth more than thousands of other patents combined.

No Such Thing as a Provisional Patent

The provisional patent application process became available for inventors in 1995 and has created confusion ever since.

Many inventors think this is a cheaper route to get a patent. In fact, it’s common to hear novices explain they have a “provisional patent.”

However, what they actually have is a provisional patent application. The provisional patent application or PPA differs from a non-provisional application in that it is never examined by a U.S. Patent and Trademark Office examiner and has less formal requirements than a non-provisional application.

Moreover, a provisional patent application never actually becomes a patent and offers no enforceable rights protecting an invention unless the inventor officially files a non-provisional application.

So, what does a PPA do? It serves as a placeholder of sorts and allows inventors to use the phrase “patent pending,” which may be helpful in licensing negotiations and other business situations.

Time, Effort and Money

Few inventors succeed in getting a patent on their own, especially one with adequate claims to fully protect their inventions.

Typically a patent attorney or patent agent is needed to draft the application and prosecute the back-and-forth with the USPTO examiner to get a quality patent issued.

The drafting process usually takes several weeks. Attorneys or agents review the drafts with the inventor to make sure the detailed description of the invention is accurate and complete.

USPTO examiners almost always dispute the application in what’s called an Office Action. To qualify for patentability, an invention must:

Fall into one of the following categories – processes, machines, manufactured objects, compositions of matter, or new uses for any of the previous categories but be “useful”, “novel – it cannot have been done before”, must “not be obvious to ordinary practitioners of the art to which the invention pertains.”

The average time it takes for a First Office Action: 24.5 months.

The patent attorney or agent is then obligated to counter the examiner’s opposition.

Often there are several Office Actions and a telephone interview with the USPTO examiner. Requests for continued examinations are common, as are appeals.

All of these can greatly add to the cost of obtaining a patent.

Once a USPTO examiner allows the claims of a patent, inventors must pay an issue fee as well as maintenance fees at set intervals of 3.5, 7.5, and 11.5 years from the date the patent issues.

Average costs according to the American Intellectual Property Law Association (varying based on complexity and including USPTO small entity fees):

Draft and file U.S. non-provisional application: $7,500 to $12,500

Respond to each Office Action: $1,850 to $3,200

Issue fee and final review: $1,200

Maintenance fees (small entities): $490 (3.5 years),

$1,240 (7.5 years),

$2,055 (11.5 years)

We’ll do the math for you. It can cost $14,335 to $20,685 to obtain a patent.

Moreover, it takes on average 34 months or nearly three years to have your patent granted or denied. That timeframe is down from this time last year, but still longer than the 27.6 months in 2004.

(USPTO Director David Kappos told Inventors Digest in 2009 that he wants to get the average First Office Action to 10 months and final disposition for patents to 20 months.)

But wait, there’s more! In addition to the cost for getting a U.S. patent, there are costs for obtaining patent rights in other countries. Some of the costs can be delayed by filing a single application for 142 member countries under the Patent Cooperation Treaty or PCT international application.

The PCT international application must be nationalized in each country that rights are sought, which requires local patent counsel, filing fees, prosecution of the application with the national patent office, issue fees and annuities.

Worldwide patent coverage for a single invention can cost hundreds of thousands of dollars over the life of the patent rights.

Claims Matter

The filed patent application contains a set of claims drafted to particularly point out and distinctly claim or define the invention.

Claims are what matter most because they are what defines the rights that the owner of the patent possesses and are what a competitor would infringe.

Claim language is governed by many rules and does not resemble natural language. So understanding the claim scope, which is the breadth of the claim for how much or what aspects of the invention is protected, can be difficult to understand.

Further complicating matters: Claims are usually the subject of negotiation between patent attorneys and USPTO examiners. The initial claim scope may be so broad to include some prior art or existing invention that the USPTO examiner discovers.

During the prosecution of the application, Office Actions require the claim scope to be narrowed to avoid covering that prior art. Patent attorneys, meanwhile, fight to keep the claims as broad as possible.

In any case, the final issued claims often differ from those in the original application.

Patentability Opinions Are Slippery

Inventors often want to know if their idea is patentable at the outset. It’s a reasonable expectation. Why spend all that time and money on something that may not pass the patent litmus test?

Yet the answer isn’t always so black-and-white. As with most things in life, patents are subject to various shades of gray, if not the entire rainbow color palette.

Complex inventions or those with multiple embodiments have a better chance of patentability because the claims can be narrowed to just the novel nuances.

While technically eligible for a patent, claims protecting just one specific embodiment or nuance of an invention may not be enough protection to keep the competition from designing around the patent and developing an even better, more commercially successful product.

Sure, an invention may be eligible for a patent. But the real question is whether that patent’s claims are robust enough to adequately protect the invention in the cut-throat commercial world.

And then inventors must throw this into the mix: Potential financial conflict-of-interest.

Patent attorneys may be experts in what can and can’t be patented. However, not all possess expertise when it comes to evaluating the commercial potential of an invention. Some patent attorneys may be more interested in obtaining a patent – and the fees and billable hours that work offers – rather than seeing an invention succeed in the marketplace.

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