Part 3: Patent Protection
A hiccup treatment device. A snake walking system. Carry-out food containers. Tiny umbrella for your drink. A fireplace waterfall. A wind-harnessing bicycle. What do these things have in common? These are all odd but real solutions to specific problems. More importantly, besides being a little strange, they are also among the millions of inventions that have been patented since the U.S. Patent and Trademark Office (USPTO) first started issuing patents in 1790. A patent protects an invention the way a trademark protects a brand and a copyright protects creative property. However, unlike trademarks and copyrights, which don’t need to be registered to be in effect, patents do require an application and approval to get patent protection.
That makes patents less user-friendly to the average small or mid-sized business. That’s because taking an idea from conception to patent is a long, rigorous, and expensive process. An idea that isn’t fully developed might result in patent protection that is too narrow in scope. And patenting an idea that never gets to market is a waste of good money. It can cost from $25,000 to $50,000 to get an idea patented today in the U.S. Yet the vast majority of patents are never commercialized. So when does it make sense to patent a product or process? And what protection does a patent provide?
What is a Patent?
First, let’s understand what a patent is and isn’t. Unlike a copyright, a patent is a limited duration property right relating to an invention that is either a product or process. It is granted by the United States Patent and Trademark Office in exchange for public disclosure of the invention. Unlike a trademark which points to the manufacturer’s brand, a patent actually provides protection for the product or process, not the company. Indeed, a patent grant confers “the right to exclude others from making, using, offering for sale, or selling” the patented invention in the U.S. or “importing” the invention into the U.S. What is granted is not the right to make, use, offer for sale, sell or import, but the right to exclude others from making, using, offering for sale, selling or importing the invention.
Are Patents Forever?
Unlike a trademark which can last forever and a copyright which can last in excess of 70 years, the term of a new patent is 20 years from the date on which the application for the patent was filed in the United States or, in special cases, from the date an earlier related application was filed. Historically, the U.S. Patent and Trade Office issued from as few as a few hundred up to as many as 30,000 patents each year from 1800 until 1900, even during the height of the Industrial Revolution. Then, during most of the 20th century, patents steadily increased from 30,000 to nearly 100,000 patents per year. However, in the last 30 years from 1984 to 2014, the number of patents has soared from around 102,000 in 1984 to over 492,000 in 2014, likely due to the huge number of discoveries and advances in technology, medicine, engineering, and other fields. Notwithstanding, of that multitude of patents issued, it is estimated that only about 2.1 million patents are still in force because patents expire over time as well as for other reasons, and the vast majority are never commercialized.
Even so, inventors continue to seek patent protection for a myriad of products and processes. For example, currently, the researchers at Oklahoma State University, working with an outside expert, have discovered a new steak. Given how long humans have been killing cows for meat, it’s hard to believe that there could be a new steak. The meat inventor calls it the Vegas Strip Steak, and it is inside a part of a cow that’s now commonly used for hamburger. The school is trying to patent the steak and the method of cutting it out of the carcass of the cow so it can license the process to big meat companies. While patenting a steak may sound ridiculous on its face, meat inventors have made a case for what they do and for the role patents play in their work. It will be up to the U.S. Patent and Trademark Office (USPTO) to decide if this steak is deserving of a patent.
The Patent Process
Since patents are expensive to obtain, an idea should be well developed before seeking patent protection. However, there is also such a thing as waiting too long. Under U.S. law, once an invention has been publicly disclosed (for example, by selling it, displaying it at a trade show, or publishing details in a journal), a one-year time clock starts ticking.
Once that happens, if a patent application is not filed within a year, the inventor loses the opportunity to file a patent. But there is a way to buy more time. The inventor can file a provisional patent application, which grants the inventor another year before needing to file a regular patent application. This allows the inventor more time to raise the money to pay for the patent and time to ensure that the idea is viable.
The Patent Marketplace
Even as the number of patents issued each year grows, the entire world of patents may be undergoing a big transformation with the advent of Google’s newest online experiment titled “Patent Protection Promotion.” It is Google’s own patent marketplace which launched on May 8, 2015 and just ended on May 22, 2015. Patent owners were invited to sell their patents to Google. The site was a no-frills, no-runaround, very transparent place to sell patents — so transparent that Google even put up the copy of its patent contract and removed all negotiation over patent price in the marketplace. Sellers were asked to list their price, and Google could only accept or reject it. The goal was to remove friction from the patent market and offer an alternative for inventors to use instead of patent trolls.
Patent trolls are non-practicing entities; companies that don’t make or sell anything. They just buy and hold patents. They make their money by getting licensing fees from businesses that use technologies covered by the patents they own. For many years, these “trolls” largely targeted companies that made new technologies and developed software. Google’s new experimental site looked to remove opportunists who take advantage of patented ideas. If Google’s Patent Protection Marketplace is allowed to continue, it will make it easier for inventors to sell their patents, but also runs the risk of making Google the holder of a massive number of patents for everything imaginable under the sun.
Intellectual Property Infringement: Big Problem for Small Businesses.
Despite the growing number of patents and copyrights that exist, there is also a growing problem with intellectual property infringement worldwide. The problem is particularly harmful to small and mid-sized businesses. According to U.S. government websites, while it is difficult to determine the exact scope and extent of the problem, every indication is that copyright piracy, trademark counterfeiting, and patent infringement have become significant problems. Any small business that exports its goods or services abroad or sources its products or parts overseas must take into account the potential for rampant intellectual property theft in many countries.
U.S. small businesses are at a particular disadvantage, however, because they often lack the knowledge, expertise or resources necessary to prevent the theft of their ideas and products. In fact, research by the USPTO found that only 15% of small businesses that conduct business overseas know that they need to file for separate, additional intellectual property protection abroad.
Many small and mid-sized businesses also may not have any or enough personnel and operations overseas, so they lack the “eyes and ears” needed to be vigilant globally and the theft of their intellectual property often goes undetected. In addition, smaller businesses generally don’t have the level of access or the resources, such as specialized legal counsel, that may be available to larger companies.
The result is that, according to investigations by the U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement’s Homeland Security in fiscal year 2014, there were 23,140 intellectual property rights seizures with an estimated manufacturer’s suggested retail price of $1.2 billion, the value of the goods had they been genuine.
A patent is a useful, if somewhat laborious and expensive legal tool to protect the rights to an invention. Because of the time and cost involved, it is not a process that should be undertaken lightly. But, given the increasing amount of product piracy that exists globally, patent protection may be one of the few tools available to ensure that a unique product is not stolen, replicated and sold without the inventor’s knowledge and consent. That is why, although it may be a long and winding road just to get a great idea patented, time, money and effort shouldn’t be deterrents. In the end, it is perseverance — not inspiration — that ultimately distinguishes between successful and unsuccessful inventors.
Quote of the Week
“I always recommend, if you can, to patent or protect whatever your idea is. If you can’t, you have to make your best judgment. Sometimes people don’t get anywhere because they sit on something, so afraid to reveal it. And yet, in the reverse, sometimes if you expose something too widely, you can risk losing it.”
© 2015, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.