Increasing the value of your business: 4 Things to think about before applying for a Patent

Part 3 of 4: 4 Things to think about before applying for a Patent

In this 4 part series, Attorney Lori Williams shares information on how trademarks, copyrights, patents, and Crowdfunding can increase the value of your business

IP Attorney Steve Hansen

By: Lori T. Williams, Owner/Managing Attorney of Your Legal Resource, PLLC

You have a great idea for a product you want to bring to market. Someone suggests you try to patent it. Then what happens? In many cases, nothing! The USPTO has thousands of patent applications on file that never see the light of day.

Some of the applications are in process waiting to be approved by a patent office examiner, which can take 1-2 years.
Other applications have been rejected.
Some patents were originally approved, but lapsed because they were not renewed.
Other patents were approved by the patent office, yet never made it to the marketplace.

Why would someone go through the trouble of obtaining a patent and then not launch a product into the marketplace?

One reason might be a lack of capital to take the business model to the next level.
The patent may cover only an improvement, and a broader and earlier patent owned by another company may block a product launch, unless a license is obtained.
Another reason might be a lack of vision by the entrepreneur. Not all inventors make great business owners. They may be more passionate about tinkering with the next invention, rather than bringing a product to market.
Not all patents were intended to launch a new product. Some are actually intended to generate royalties without launching an associated product, or to stop expansion by a competitor.

Attorney Steve Hansen advises his clients to consider 4 things before applying for a patent:

Are the patentable features commercially beneficial?
How will you commercially exploit the invention?
Will the patent be difficult to enforce?
What is the life cycle of the invention?

While all of these factors are important, Hansen believes clients especially need to focus on whether the invention is commercially beneficial. ”Clients often develop a particular product or method of doing something and think that it has never been done before, in which case their potential patent protection would be broad (and commercially valuable). Often, however, a patent search reveals that only certain specific features of what the client invented are sufficiently new and important to be patented. Any patent that they can get will be limited to those new and important features. If a competitor can make a product that effectively competes with the client while avoiding such features, the competitor will able to design around the client’s patent (should the client succeed in getting one) and reduce the patent’s value. In that case, the new and important features–while perhaps patentable– are not very commercially beneficial because they don’t drive demand for the product, and the investment in patenting may not be worthwhile.”

(Click here to learn more about the above four factors noted by Hansen).

According to Hansen, new developments in Patent Law include recent scrutiny around “statutory subject matter, “ i.e., what types of things can be patented regardless of how new they are. The Federal Circuit and the Supreme Court have been attempting to articulate appropriate standards to determine whether things like software should be afforded patent protection. Most recently, in a case called Prometheus the Supreme Court struck down a patent for a medical diagnostic test on the grounds that it did not constitute patentable subject matter. “This area of the law remains murky and difficult to apply,” says Hansen.

Additionally, President Obama signed the America Invents Act (AIA) into law last year. This law is a significant overhaul of the 1952 Patent Act, and effective March 2013 the AIA changes the U.S. from a “first to invent” to a “first to file” country. It also provides significant new mechanisms for challenging the validity of issued patents outside of district court litigation.

However, just because someone is the first to file for a patent, it doesn’t mean they don’t have to take further action to protect it. Hansen encourages his clients to monitor patent applications, to make sure that they remain relevant. ”A patent application includes a fixed universe of information that cannot be altered once it is filed. It is essentially a snapshot in time. The claims can be altered based on what is in the patent application, but no new information can be added. Patent applications may sit in the Patent Office for 1-2 years (or more) before an examiner reviews them. If product designs go in a new direction, new patent applications may need to be filed to cover the new features or else you may find yourself with a patent that does not protect your own product. That is why is important to make sure to periodically check your pending applications and compare them to the current state of the relevant product’s development to ensure that the applications are tuned to the current product design. If they are not, you may need to file additional applications.”

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Lori T. Williams is a 23 year attorney based in Birmingham, MI. She owns a legal referral and legal consulting business called Your Legal Resource, PLLC. She assists individuals and small businesses in need of legal advice or representation by connecting them with the right legal specialist for their situation. She also provides consulting services for attorneys and other professional service providers on how to generate more business through effective branding, marketing, networking, and by creating strategic partnerships. For more information, visit www.bestlegalresource.com.

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