Overview of Patents
As an introduction to the patent system, it may be beneficial to begin with what a patent actually is, and is not. Contrary to common belief, a patent is not a
positive right to do something, such as the right to make an invention. Rather, a patent is a negative right that allows the patent holder to prevent others from
making, using or selling an invention claimed in the patent (there is an enumerated section in the patent application that contains the claims, which define the
enforceable scope of the patent). In essence, the government is willing to trade disclosure of new and useful inventions to the general public in exchange for a
limited monopoly on the invention (for a term of no more than 20 years from the date of invention and no less than 17 after grant, excluding delays in the process
by Applicants). As such, for valuable inventions, a patent can be very powerful (a few patent infringement lawsuits have awarded plaintiffs over $1 billion).
Patent fees charged by the United States Patent and Trademark Office (USPTO), the government agency that examines and grants patents, will generally amount to
thousands of dollars over the course of the process of obtaining a patent (called patent prosecution). Most of these fees are halved for small entities.
For a the USPTO fee schedule, click Here,
While Applicants will not incur most of the fees listed therein, the cost of initial filing to larger Applicants will exceed $1,000, and can be considerably higher if
the number of claims in the application is high. Further, the cost does not include attorney's fees. Once filed, the patent application will await examination by the
USPTO. The time period before examination begins generally ranges from 2-5 years, depending on the technology and the number of other applications that have been
filed for that technology, before an Examiner issues an Office Action. Much more rarely, the Examiner may issue a first Action Notice of Allowance indicating that
the application is allowed and will be granted once an issue fee and publication fee of approximately $1,800 are paid. Once the Examiner issues the Office Action,
Applicants must respond to the Office Action within 6 months. After Applicants files a response to the Office Action, the Examiner may issue another Office Action or
allow the case. While there are other intricacies to the process, prosecution generally continues in this fashion and may last for years depending on the invention,
the Examiner, and the nature of the rejections and objections in the Office Action. A tutorial covering the details of the patent prosecution process will be included
later, but is outside of the scope of the present overview.
If Applicants choose to prosecute a patent application on his or her own, and manage to get the application allowed, attorney's fees can be saved. The cost to a
solo applicant will probably be somewhere between $2,000-3,000. However, patent prosecution is quite complex and the patent will likely suffer from severe, if not
fatal, legal defects that limit the scope of the invention or preclude enforceability of the patent entirely. If an attorney is involved in the preparation and
prosecution of a patent application, the overall attorney's fees for attaining a patent will likely fall somewhere between $10,000 and $30,000 throughout the
lifecycle of application drafting and patent prosecution depending on the cost structure and size of the firm that is used, the skill of the Examiner and the
inventiveness and nature of the claimed invention.
Further, if a patent is obtained and a patent holder seeks to enforce a patent through litigation, the costs can be staggering. The American Intellectual Property Law
Association (AIPLA) reports that median litigation costs for patent litigation is $650,000 when less than $1 million is at stake, $2.5 million when $1-25 million is
at stake and $5.5 million when more than $25 million is at stake (page 29 of the 2009 AIPLA Report of the Economic Survey). It is easy to see why patent litigation
has been dubbed the sport of kings.
While obtaining a patent may involve significant capital investment, there are numerous benefits to doing so. In the case of large companies, patents of large IP
portfolios may be licensed as a significant revenue stream. Some companies also use patents offensively to sue competitors, but most use patents as a defensive measure
such that if a competitor sues them, they can countersue and make litigation less attractive to the competitor. In the case of individual inventors and small
businesses, the entire company may be built around a single core technology, and patents present a potential means to deter larger competitors who could otherwise
swoop in and knock the small business out of the market. Further, a pending or granted patent may help a small business to obtain funding from venture capitalists.
Generally, Applicants first attempt to determine whether a patent on a target technology is worth the expense. This determination may be made based on the estimated
overall value of the invention. When the invention is deemed to have the potential to be valuable, a brief search may be performed to determine whether a similar
technology exists. This may also allow Applicants to determine what scope of coverage may be obtained based on the search result. Large companies that are familiar
with the market may choose to forego this step. However, individual inventors and small businesses may search U.S. patents and published patent applications using
the USPTO website and may also perform a Google search. However, there are certain risks of
performing a search for related art. For example, U.S. patent law requires that material information known by Applicants must be disclosed to the USPTO. Failure to
disclose such material information may render your patent application and/or potential patent invalid. Also, knowledge of such material information present in another
patent that is discovered during a patent search may lead to a finding of willful infringement (and hence, treble damages) if a patent infringement suit is brought by
the owner of the patent having the material information. What may constitute material information is beyond the scope of this article. Despite these potential risks,
and especially for smaller businesses, it may be worthwhile to conduct a search to get an idea of the landscape of the technology.
Prior to filing an application, Applicants should keep in mind that an Examiner may reject a patent based on documents that already exist (called "art" in patent
parlance - Examiners will call documents "prior art", but many attorneys prefer not to for legal reasons). There are two types of art-based rejections - anticipation
Anticipation rejection under 35 U.S.C. § 102: This is where the Examiner alleges that a piece of art discloses ALL of the features
recited in a claim (remember that a claim recites what Applicants want his or her enforceable invention to be). In other words, if a claim recites features A, B, C,
D and E, the Examiner must show that all of these features are disclosed in a single document.
Obviousness rejection under 35 U.S.C. § 103: This is where the Examiner alleges that all of the features are taught via a combination of one or
more documents, and that there is some reasoning for the combination. For instance, an Examiner may allege that features A, B and C are taught by document 1,
D and E are taught by document 2, and it would be obvious to combine these documents to arrive at the claimed invention for some reason (efficiency, cost
For these reasons, Applicants generally search for relevant art before deciding to file a patent application. To minimize mistakes of analyzing the relevant art,
prudent Applicants tend to contact a qualified patent attorney for guidance through the process. Naturally, neither Applicants nor the Examiner can search all
documents that exist, and there is always a risk that the invention is not patentable even if a patent is granted. However, a search may help Applicants to make a
determination as to what is out there in the field of the invention.
A provisional application is relatively cheap (the filing fee is $110 for a small entity), and will hold a priority date for the subject matter disclosed therein
as of the date of filing for one year. For instance, if Applicant A filed an application on Monday, January 1, 2009, and if Applicant B filed an application
directed to the same invention on Tuesday, January 2, 2009, then the application of Applicant A generally has priority over the application of Applicant B. In other
words, if patents subsequently issued on both applications, Applicant A would have the right to prevent others (including Applicant B) from making, using and
selling the invention.
A provisional application is unexamined and cannot itself yield a patent. Because Applicants likely do not know at the stage of filing a provisional application what
the precise scope of the invention may be, Applicants generally disclose as much information as possible about the potential invention (e.g., any discussion,
figures, etc.). The reason for such an extensive disclosure is due to the fact that only disclosed subject matter receives the benefit of the priority date of the
provisional application. This subject matter can then be used as content for a later non-provisional patent application (the REAL patent application
that may yield an enforceable patent).
Provisional applications may have the further benefit of preserving international filing rights. In many countries, publicly disclosing or offering an invention for sale
prior to filing a patent application bars obtaining a patent in that country. This differs from the U.S., where Applicants have one year to file a patent application
subsequent to such disclosure. However, when a provisional application is filed prior to such a disclosure or offer for sale, Applicants have one year to subsequently file
in the foreign country or to file a Patent Cooperation Treaty (PCT) application.
The above overview attempts to provide information as to what a patent actually is and whether seeking a patent may make sense. For more information, please see
the USPTO's general information.