Launching a new business can be an exciting and scary endeavor. Imagine you have spent years working diligently to develop an innovative product or market solution that does not currently exist. You have devoted long nights and weekends to develop a prototype and are ready to take your idea to conception.  You may have already built a pitch deck and rehearsed your “elevator pitch” hundreds of times in hopes of securing a seed round and launching the next unicorn startup.  However, without understanding the importance of protecting your innovations with the rights patents or intellectual property your dreams of success may be short-lived.  Many new businesses and startups make brush off the idea of protecting intellectual property when they get a taste of the complexity or cost that can come from taking the right measures to secure their intellectual property. However, as often holds true as the key to running a successful business, education is the groundwork for navigating complex processes. Informing yourself of the basics of intellectual property protection can serve as the cornerstone you need to get started with the right protection for you. This article will introduce you to the basics of the often (unnecessarily) enigmatic patent process.

What Can Be Patented?

A U.S. patent can provide basic protection for the use of your intellectual property. For many businesses, patents are one moat that discourages infringement while also attracting investment.

An idea might be eligible for patent protection if it meets some simple conceptual requirements:

• It’s novel and would be non-obvious (to those of ordinary skill in the relevant art/industry)
• It’s useful, functional, or provides utility
• The idea hasn’t been on sale or disclosed in the public domain for more than a particular period of time (often one year)

To further assess whether your invention may be patent eligible, you’ll want to be able to answer “yes” to the following questions:

• Are you the inventor? While the term “inventor” has a particular legal definition, in general, an “inventor” is the one who contributed to at least one claim in your patent application. Financial contribution to the development of the idea does not necessarily make you an “inventor.”
• Are you the owner? An inventor doesn’t necessarily own his/her invention. For example, an employer might own rights to an invention if there was an agreement to assign all rights, title, and interest in an application through an agreement such as Employment Agreement or Work for Hire. Is the invention useful? The idea should have utility and advantages over existing technology.
• Do you need a patent rather than a copyright? A patent is one form of intellectual property protection designed to protect the functional or ornamental aspects of a novel process, machine, manufacture, or composition of matter. Copyrights are meant to protect the non-functional original works of authorship, such as paintings, photographs, books, poems, movies, plays, etc.
• Is your idea concrete? Abstract ideas, laws of nature, and natural phenomena cannot be patented.
• Is your ideal patented in another country? In order to be patent eligible in the U.S., your idea may not be disclosed anywhere in the world.  The disclosure of a foreign patent or non-patent literature anywhere in the world is considered prior art and may be cited against your patent application during examination. 
• Is your idea novel and non-obvious to one of ordinary skill? Make sure your idea isn’t already known or obvious to those of ordinary skill within your industry

After answering “yes” to these questions, you’re ready to explore the U.S. patent application process.

One of the most beneficial aspects of U.S. patent law is that an inventor is entitled to a patent for his/her invention after submitting a proper U.S. patent application unless the U.S. Patent and Trademark Office (USPTO) establishes a prima facie case of unpatentability. Therefore, the crux of the U.S. patent application process comes down to demonstrating to the USPTO Examiner that any rejections of your invention fail to establish a prima facie case of unpatentability. Therefore, you’ll want to maximize the chances that your U.S. patent applications pre-empt the rejections that can be made to establish a prima facie case of unpatentability. The USPTO is likely to grant a patent for those who wish to protect a novel, well-structured, and non-obvious invention — not those that fail to meet these tests.

What is a Patent Search and How do I Conduct it?

One invaluable step before proceeding with the preparation and prosecution of any application is to fist conduct a prior art or patentability search to determine if your invention is patentable in light of any prior art.  A prior art (or patentability) search helps determine if an invention meets the basic requirements for patent eligibility and identify the most relevant references that may be cited by an Examiner during the prosecution of your application. A patent search may uncover previously existing disclosures not previously discovered. In some cases, an applicant may not realize that he/she has “reinvented the wheel.” Learning about these references sooner rather than later can allow an applicant to save money but not applying for an application that is not patent-eligible. Furthermore, this revelation might motivate an applicant to modify his/her invention to incorporate the novelty required to make it patent eligible.

When conducting a prior art search what you first must understand is that term “prior art” comprises both public disclosures and non-public disclosures that pre-date a patent application’s filing date and may be cited by an Examiner against your application.

The starting point can be as basic as a simple Google search using key words. A professional patent search is a much more time-intensive exercise which involves a comprehensive search of the USPTO’s patent document databases, non-patent literature, foreign and domestic publications, and/or foreign patents, could save time and money. A link to the USPTO’s database can be found on the USPTO’s website. However, please keep in mind that portions of USPTO databases that are publicly searchable via the web are limited.

Without first conducting a prior art search or due diligence your ability to patent your invention may be compromised as there may be a identical or similar art that would prevent a Notice of Allowance from being granted in your patent application.

Differentiating Formal and Informal Patent Searches

When inventors undertake a simple patent search by themselves, they often use Google or another search engine to conduct a broad, text-based search. A Google search may provide a large list of results that include advertisements and unrelated references. While it is true that sifting through the results to identify relevant references might be difficult for the untrained, it can also be a very beneficial exercise in understanding the level of detail and novelty required to the meet the “best mode” and “enablement” requirements of a patent application.

If the informal search yields no results, a formal patent search is recommended. A formal patent search determines the appropriate class and subclass combinations for the invention, resulting in more succinct search. A professionally targeted text-based search employing the appropriate classes and subclasses can yield extremely relevant search results.

As a result, a formal patent search provides more reliable information and a better understand of the “patent landscape.” Inventors can make informed decisions about whether to file a patent application or invest their time, effort, and money in pursuing patent protection or another form of intellectual property protection. Does this mean that a formal patent search ensures a patent can be granted on the invention? No. A formal search is not definitive or by no means ensures that your application will be granted at the USPTO or that an Examiner may find another relevant reference that is not included in your Prior Art Search Report.

Defining the Limitations of a Formal Patent Search

The reality of patent prosecution is that it’s not an exact science and even if a formal patent search indicates there are no relevant prior art references, the USPTO examiner that is assigned may still reject your application by combining several references or determining that your invention is not patent-eligible subject matter.

Another benefit of a patent search is that it provides invaluable insight to the when drafting your claim and understand the scope or breath of the claims in light of the prior art. While narrow claims are more likely to be granted during prosecution by the USPTO Examiner, such patent claims are may be easier to design around.

Conversely, broad patent claims are more difficult to design around and are arguably provide the broadest protection.  In some cases, they can be costly as they may necessitate significant argument in prosecution, including back-and-forth interactions with USPTO Examiners. This means an increased investment of time and resources, which translates into higher expenses for the applicant.

Differentiating Between a Patent Search and Infringement Opinion

When the idea of a patent search comes up, inventors may want to address infringement concerns about another undisclosed patent with their attorney. But patent searches and infringement opinions possess different qualities.

A patent search hopes to inform the possibility that a patent application might be granted by the USPTO. An infringement opinion, on the other hand, informs of the possibility of infringement. Would making, using, or selling an invention in, or imported into the United States, infringe upon patent claims owned by others? Remember: Infringement and patentability are two separate concerns.

Furthermore, infringement opinions tend to be more costly than patent or prior art searches because they take more time to perform and require greater expertise. An infringement opinion/ search might typically include:

• Inspecting a wide range of patent references
• Checking patent terms to determine if they are still active
• Reviewing the scope of claim limitations
• Comparing patent claims with an invention or product
• Reviewing a patent’s prosecution history

Choose the Type of Protection

An inventor who understands the patent process has a significant edge in securing their innovation. For this reason, it’s best to learn as much as possible about the patent application process, the different types of patents, and how the rights patents may provide a strategic advantage over your competitors and “barrier to entry”.

When evaluating which form of intellectual property or patents are the right fit for your business, inventors should evaluate the different types of protection available and what can provide a strategic advantage to them as they continue to scale their business.

Below are various types of U.S. patents.

A non-provisional patent application often nicknamed “the regular” utility application, if granted, provides 20 years of patent protection from the filing date of your application.  Your non-provisional application requires a title, background, summary of the invention, detailed description, and at least one claim to meet the legal filing requirements.  Most non-provisional patent applications will include 3 independent claims and 20 claims total although the applicant may purchase addition independent and dependent claims by paying the appropriate fees at the time of electronically filing their application though the EFS-Web. The fees for a non-provisional patent application range between $7,000 to $25,000 depending on various factors including the complexity of the invention, prosecution history, and the size of the firm or entity status as defined by the USPTO.  You should consider retaining a fixed-fee patent firm to help manage and anticipate your patent prosecution fees and to preemptively alleviate the anxiety caused by billable hours or unknown costs. Approximately 90% of all USPTO patent documents that have been granted in recent years have been utility patents.

Provisional Patents

A provisional patent application provides a 12-month window before filing a non-provisional patent application and provides a means to establish an early filing date for your later filed non-provisional patent application.  For companies in the early stages of development this 12-month pendency time can provide valuable time to develop and finalize your application while being “patent pending.”  A provisional patent application provides lower costs than a non-provisional patent application with fees ranging between $3,500 to $5,000 with an experienced patent attorney.

However, if the inventor does not submit a non-provisional patent application patent within one year term of the provisional patent, they will forfeit the benefit of the provisional filing date. Public disclosures made in reliance on that provisional patent application will be considered public disclosures by the USPTO and may be cited as a 35 U.S.C §102(a) bar against any later filed applications.

Design Patents

A design patent is granted for new, non-obvious ornamental designs that are embodied in, or applied to, a manufactured object or product. It allows the patent owner to prevent others from making, using, selling, or profiting from the design.

Design patents awarded for applications filed on or after May 13, 2015, may be valid for fifteen years from the date of issuance. Meanwhile, design patents awarded for applications that have been filed before May 13, 2015, may be valid for fourteen years from the date of issuance. Maintenance fees are not required for this type of patent. Design patents for are advantageous as compared to non-provisional utility patents for a number of reasons including a faster prosecution time, higher allowance rates, and lower costs without follow on maintenance fees or expenses.

Plant Patents

A plant patent is granted for a novel and distinctive asexually reproduced plant, including cultivated sports, mutations, hybrids, and freshly discovered seedlings, that is neither a tuber propagated plant or a plant discovered in an uncultivated condition.

The plant patent allows its owner to prohibit anyone from asexually reproducing the plant as well as creating, using, or selling the plant for up to twenty years from the date of patent application submission. This type of patent does not require maintenance fees.

Why Do You Need a Patent?

Inventors, entrepreneurs, and businesses of all sizes may be concerned that their ideas can be stolen or reproduced by competitors. When someone advertises a new idea or concept for a product, others can quickly follow suit or copy the product. This can discourage disclosure of trade secrets that can be used as new building blocks for innovation.

As a result, the United States patent system was created to encourage disclosure of some would-be trade secrets that can be used for advancement and broader innovation around the country and the world. In exchange for this, the United States patent system was designed to provide a temporary “monopoly” to the owner of the idea.

That is why everyone who invents a product, whether it is a gadget or a novel technology, should consider filing a patent application.

For a business, patents can be incredibly important. A patent registration can prevent others from using the innovation in the United States, while also allowing the inventor to capitalize.

You can also gain a better understanding of how your business or company can specifically benefits from a patent by discussing with your patent attorney these relevant questions:

• What are your plans for the patent after you obtain it?
• Are you planning to license the rights so you can earn royalties passively?
• Will you market the patented product yourself?
• Will you start developing and selling the idea to demonstrate market demand so you can eventually attract and acquire a licensing partner?

Let’s go through some of the most important advantages of a patent:

Patents Can Help You Generate Higher Profit

If used appropriately, a patent can create additional profit, whether through licensing, sale, or market dominance. Let’s take licensing and direct to market premium pricing as examples of how patents can increase your profit.

How does your company generate higher profit through licensing? A licensed patent grants the licensee the right to manufacture, use, or sell the invention in exchange for fees or royalties. This works well if the patent owner lacks the resources to create or market the invention him/herself or does not want to be a direct vendor.

Many prosperous corporations in the United States thrive by licensing their technology and product lines to other companies.

Now what about direct to market premium pricing?

Being the first to market carries significant weight. And thanks to a patent, yours may be the only product available to your target demographic. This gives your organization the ability to establish the market price for a technology or a gadget. Companies that are the first to market are often seen or recognized as experts and innovators in their fields, resulting in brand credibility, loyalty, and consumers willing to pay a premium.

Patents Can Boost Your Business Valuation

Today, intangible assets such as intellectual property can sometimes account for as much as 90% of the value of a Fortune 500 corporation. Patents, trademarks, copyright, and trade secrets are examples of intellectual property (IP). Intellectual property is a key and significant component of a company’s assets. Meanwhile, patents are sometimes the most crucial of those components, particularly in the high technology industry or consumer area.

It’s also worth mentioning that a strong IP portfolio can be essential for acquiring venture financing, providing leverage in commercial transactions, increasing the value of the business in any mergers and acquisitions.

Additionally, patent portfolio purchase and sale can be lucrative, often involving multi-million dollar transactions. For example, Microsoft purchased 800 patents from AOL for over $1 billion in 2012[1]. Intel has also purchased multiple patents from different companies for hundreds of millions of dollars and IBM continues to generate billions of dollars annually through patent licensing opportunities[2].

Patents Help You Get Ahead of the Competition

Patents establish barrier to entry and act as a defensive “moat” around your patented innovation, preventing others from selling similar products in direct competition. This can allow small businesses and startups to not only compete but strive against much larger competitors.

With a strategic patent portfolio, your business can have a customized approach to protecting its most important and lucrative assets.

Patents Can Attract More Investors

The bottom line is you look more attractive, and it is significantly easier to secure capital investment funding, whether from venture capital or angel investors, if you have a patent or a pending patent that prevents competitors from entering the space. Potential investors will have “peace of mind” know you have taken the proper steps to protecting your innovation and application for a patent application.   

Patents Can Create Disproportionate Value

Is it worthwhile to invest in obtaining a patent? The cost of a patent application may vary greatly depending on the technology and complexity. Yet, no matter how much you pay for your patent application, the return can be much higher through future licensing or acquisition opportunities.

How Hard is it to Get a Patent?

According to the 2020 USPTO statistics over 52% of all patent applications were eventually granted by the USPTO[3].  While only 11% of utility nonprovisional patent applications are granted without receiving at least one “first official action” or office action rejection, the number of issued patents through prosecution remains at its highest rate in decades.

How Do You Gain “Patent-Pending” Status?

The quickest way to gain “patent-pending” is to file a provisional patent application (PPA) with the USPTO. Filing the application entails carefully describing and explaining your idea or invention and paying a fee ranging from $65 to $260, depending on company size. You immediately gain “patent-pending” status after filing the application.

The objective of the simple approach can be to allow innovators to demonstrate their work to investors.

At the time of writing, there is a provisional application fee of $65 if you are a micro-business or $130 if you are a small entity. Larger businesses must pay $260. Provisional patent applications require less labor and are less expensive than non-provisional patent applications.

How Long Does it Take to Get a Patent?

The USPTO has recently published its most updated patent pendency data which indicated on average that a first office action pendency period is 17.7 months[4].  What this means for an inventor is they should expect their application to remain pending for 25 -20 months from the date of filing before receiving their first office action. Please keep in mind this is the average pendency time for all applications.  Historically, based on the complexity and technologies involved some inventions may remain pending up to 30 months. 

How can I speed up the patent process?

            For those startups and inventors interested in fast-tracking their application, the USPTO offers a Prioritized Patent Examination program which allows up to 15,000 applications per year to be filed under Track One Prioritized Examination.  There are a number of advantages afforded by this special status, including moving your patent application forward in the examination queue and receiving a final disposition on the merits of your application within twelve months without having to perform a pre-examination search.

            Any applicant may “request” Track One Prioritized Examination at the time of filing the application or at the time of filing a Request for Continued Examination, along with the “Prioritized Examination Request” form PTO/AIA/424 and filing fees which range between $1,000-$3,000 depending on entity status. Though it’s one of most overlooked programs offered by the USPTO, its highly recommended for companies looking to accelerate their prosecution time.

How Can a Patent Attorney Help?

These are three steps in patent application that your attorney can help you with:

Step 1: Patent Search

This step, which can typically take anywhere from one week to six months, involves searching for similar patents to what you’re planning to apply for. This will help you determine whether your idea or invention is patentable subject matter and whether there is prior art that may prevent the registration of your application.

Step 2: Patent Application Draft

If your patent search yields no conflicting results, you may be ready to file a patent application.

This can typically take 2 to 4 weeks for a patent attorney or agent, depending on the volume of work, patent type, available disclosure received from the inventors. If you file it yourself, it will depend on how quickly you can draft your application. A complete application should contain a description, drawings, claims, USPTO filing fees, and filing documents. Once filed, you will receive your electronic filing receipt and be considered “patent pending.” 

How Much Does a Patent Cost?

On average, a patent application can vary in cost anywhere from $150 for a DIY provisional patent application to anywhere between $5,000 to $15,000 for a non-provisional patent application using an experienced patent attorney. Your cost will vary based on the complexity of the technology involved.

Speak with an Experienced Patent Attorney

The Rapacke Law Group features comprehensive legal resources that help you navigate your way through patent applications. If you need further assistance, we can guarantee that our legal team will be with you every step of the way.

If you need advice or information regarding a patent, an idea or applying for a patent, get in touch with a patent attorney from Rapacke Law Group. Schedule a free consultation today.

[1] https://techcrunch.com/2012/04/09/aol-sells-800-patents-for-1-billion-to-microsoft-memo-to-staff/

[2] https://info.ipvisioninc.com/blog/penny-wise-and-pound-foolish-part-one-why-ibm-ramped-up-their-patent-applications

[3] https://www.uspto.gov/web/offices/ac/ido/oeip/taf/us_stat.htm

[4] https://www.uspto.gov/dashboard/patents/pendency.html

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