What Business Owners Should Know About Patenting
By STUART WEINBERG
Thomas Edison once said, "To invent, you need a good imagination and a pile of junk." He might have added a third ingredient: a patent. Without one, inventors can't sell, license or protect their creations. Edison understood that very well: He held 1,093 patents, still a record for an American.
For many small businesses, knowing when and how to obtain patents can be confusing. So, too, can be knowing what to claim in the patent and when to sue over infringement and --when not to.
To help clarify these matters, we spoke to James McDonough, an intellectual-property attorney at Fish & Richardson P.C. who specializes in advising start-ups and small companies on intellectual-property strategy and technology commercialization. Mr. McDonough talks about the current climate for patents and looks at the perils companies face and what steps they should take to protect themselves.
WSJ: Is it more difficult to obtain patents than it was five or 10 years ago?
Mr. McDonough: It is getting harder to a certain degree. The [U.S. Patent and Trademark Office] appears to be rejecting claims at a greater rate the first time through. I think that reflects a backlash in response to some of the problems we've seen with the issuance of poor-quality patents and how they are being misused by patent trolls [a derogatory term for a company whose only business is to buy patents to collect license fees or court-awarded-infringement damages].
WSJ: What does it cost and how long does it take to secure a patent?
Mr. McDonough: It's hard to say with certainty how long it will take, but, depending on the technology that's being patented, it can take anywhere from two to five years for a patent to issue. As far as costs, expect to spend anywhere from $10,000 to as high as $30,000 for highly complex technologies. Patentability searches account for up to a thousand of that, application fees can add up to another couple thousand, and the rest is attorney fees for patentability opinions, initial patent drafting, and [Patent and Trademark Office] action responses and appeals.
WSJ: Who doesn't really need to hire an attorney? Who really should and at what point?
Mr. McDonough: The only time I would not advise an inventor to seek counsel from an attorney is if the act of patent drafting is itself a hobby to the inventor and he has no intention of selling the invention. If there is even a remote chance that the inventor will commercialize the technology, he should get an experienced attorney involved as early as possible in the process.
WSJ: Where do most companies go wrong when they're trying to get a patent?
Mr. McDonough: First, a small company may want to start patenting without thinking through its long-term [intellectual-property] management strategy. Before patenting, you should work with a skilled intellectual-property attorney to develop a plan for building your IP portfolio. A common problem we see is a portfolio that is driven purely by research. A good IP portfolio should be designed in a way that accurately covers the business objectives of the company while protecting the technologies around which the company is built and exploiting niches of the technology field that are not yet patented.
WSJ: What's another mistake companies often make?
Mr. McDonough: An inventor may want to apply for a patent at the wrong time. For instance, it may be too early if the invention is not yet developed to a point that it can be sufficiently described in the patent. It is too late if, for example, the inventor publicly used or sold the invention more than a year ago. If it is too early, an attorney might advise the inventor to spend more time researching and developing the invention before patenting, but if it is too late, the invention may no longer be protectable.
WSJ: I've heard some inventors may claim too little or too much in the patent.
Mr. McDonough: Often, an inventor's instinct is to describe his invention by describing its specific parts, which can result in inadvertently limiting the scope of the patent. As a general rule of thumb, the claims should include all possible versions of the invention, which can be accomplished by using broad, functional language in the patent. The inventor and attorney will work together to refine the scope of the patent to ensure it is as broad as possible while still being able to withstand a lawsuit.
WSJ: Is patent infringement more common than it was five or 10 years ago?
Mr. McDonough: I don't know if there's more infringement, I just think that there's more patenting going on. Also, the value of a lot of large companies nowadays is based on their IP.…So now you're seeing companies actively seeking to protect their assets.
WSJ: If a small company believes a large company is infringing on its patents, should it sue?
Mr. McDonough: That's a difficult choice for a small company. It's become a little easier lately because a lot of law firms out there will take on a plaintiff-side patent case on a contingency-fee basis if they think it's a good case. But generally it's pretty difficult to bring an infringement suit against a really large company because of the amount of resources available to large companies as compared to small companies. It is generally accepted in the industry, that a patent-infringement suit can cost $2 million to $4 million in legal fees. So, it's often not ideal for a small company to try to sue a really large company.
WSJ: What are some alternatives to suing for infringement?
Mr. McDonough: You might approach the larger company and offer a license, or attempt to establish a partnership. If a company doesn't have the means to sue now, it might choose to temporarily ignore the infringement and try to get its product to market first to generate sales. Sometimes you have no choice but to bring an infringement suit.
