Do I Need A Patent?
Mark Levy

The fact you're reading this means you probably have an idea for an invention that you envision being made - by yourself or someone else - and marketed for a tidy profit.

For people at this fork in the invention road I'm often asked, 'Do I really need a patent?' If you have a potentially profitable idea, then I advise yes. But it isn't always easy to decide. And the decision is completely yours.

Consider these criteria:

1) Who'll produce it? - One way to decide whether you'll need to file a patent application is determining if your invention is something you want to manufacture, or you want to license to another company for manufacturing.

I'll cover licensing later. But up front let me say if you want to produce it yourself, it's usually advisable to get a patent, but that may not necessarily be required. However, if you want to license your invention to another company for them to make it, then by all means file a patent application.

2) Level of complexity - Another factor is the invention's complexity. If you're inventing a jet engine or computer chip, as a practical matter you're not going to manufacture those yourself, so licensing (and therefore a patent) is probably in order. However, if it's a small invention with few moving parts, it's possible you can make that yourself and not seek a patent. It's not my best advice, but it's your choice.

3) Shelf life - If you think the product will have a short life, and you're not particularly concerned about protecting it from competition that might come along, remember that getting a patent can take a couple of years after filing the application. If you've invented a fad device, toy, or clothing with short life, then you may decide to spend your resources on marketing, or taking out your favorite patent lawyer, instead of filing the patent application.

Every once in awhile I caution people that what looks like a fad might turn out to be more. The floppy disk is one example. In the 1980s, IBM introduced it for their service people as a temporary solution. Before they knew it, data storage was an entire industry. Not to pick on IBM, but when Thomas J. Watson Sr., IBM's first CEO, saw a computer in the 1940s he reportedly predicted worldwide demand for maybe five units. So be aware that the success or failure of ideas is often beyond our ability to predict.

4) Value - Deciding whether to patent your idea also depends on the value you give it, and what perceived future value. Bottom line: If the idea has any value, then file a patent application.

Sometimes it's helpful to think of your idea not in terms of abstract Intellectual Property, but as personal property in your home. The same principles apply. For some or even most of your property, a locked door is enough. Really valuable items also get an insurance policy. In effect, the patent is insurance protecting your idea.

5) Does it already exist? - No matter whether you want to produce the invention yourself or license it to another company, at least do a patentability or novelty search. You want to avoid wasting time and money by ensuring YOU are not infringing on someone else's patent. So the novelty search is advisable, whether or not you intend to ever apply for a patent.

Patent: What It Is and Isn't

Let's say you've decided to take the plunge and begin preparing that patent application. What will a patent give you?

Technically speaking, patents provide an exclusive but 'negative' right - that is, they give you the right to exclude others from access to your invention in three areas:
  • To prevent people from making the product in the United States or its territories.
  • To exclude people from using it here. As a practical matter, you wouldn't go after every customer who buys the product, but you have that right under the law.
  • To prevent people from selling it here, no matter where it is made.

Keep in mind, if you have only a U.S. Patent, you can't prevent people from making the product it protects in other countries. As an example of what can happen when Intellectual Property is not protected, some years ago Corning Inc. introduced fiber optics. But they didn't go to every patent office worldwide for protection. Once Corning was producing fiber, other foreign companies started making it. Fortunately for Corning, U.S. Customs did prevent sales here of the foreign-produced fiber, even though it was legally made and sold in other countries.

While the government grants the patent, it is your responsibility, not the government's, to enforce it. And while the government grants this monopoly allowing you to profit from your invention for 20 years, when the patent expires your invention goes into the public domain. At that time anyone else can make, use or sell your invention without your permission or paying you anything.

Pursuant to the Constitution, the government requires patents to expire because otherwise one person can control an entire industry - if that person was the first to invent a product. Thankfully, people other than Henry Ford had access to the internal combustion engine, and photocopiers are not made exclusively by Xerox anymore.

License To Bill

Another question I'm often asked is, 'What do I need to know about licensing my invention to another company?'

Licensing is a very nice way of making money. But in this realm, having that patent is virtually a necessity. If you want to license your invention to another company and have them produce it, they will want to see at least a patent application on file. What they're asking is, why should they pay an inventor licensing money when the day after they come out with your invention the competition steals it because there's no patent?

In effect, a company paying you for a license is buying patent protection from you. So you'll most certainly need a patent application at least on file for them to take you seriously.

Good To Know

While space prevents discussing all business reasons for pursuing a patent in detail, there are fundamental issues all wise inventors should know:

Patent Life Cycle - A patent is enforceable for 20 years from its filing date as long as you pay all the required fees. However, at any point during the patent application, or after the patent's been awarded, you may abandon the process. For example, in the two years it takes the U.S. Patent Office to review and grant your application, you may decide the market has dried up. You can pull the plug then or at any time.

Even after the patent issues you have to pay maintenance fees, which are really a tax every four years. You can decide not to pay them when they're due. In those cases the patent goes into the public domain and you won't have exclusive rights to the invention.

Ownership Rights - If there are two or more inventors on a patent application, and there's no other written agreement, then each inventor owns the whole patent - and any of the inventors can license the patent to other parties and not be accountable to the other inventors. As long as one of the parties has even 1 percent ownership, that person can license 100 percent of the patent for any amount of money, even for much less money than it's worth. In this case, the owner or owners of the majority of the patents are out of luck.

In my view, a better way is giving one party ownership, and grant the other parties a license to use it - but not sublicense it - in a subsequent agreement. Another way is to agree to split the profits, but not split the ownership.

Patent Pending - While your patent application is being evaluated you can produce your product, sell it, and label it Patent Pending. That means you have a patent application in the U.S. Patent Office that hasn't issued yet. It should have a chilling effect on your competition because any Tuesday the patent may issue, and you can then stop competitors from selling your invention if they're infringing.

An important variation is the phrase Patent Applied For. Should you run into serious problems and your patent is not issued, you have to remove the Patent Pending statement. But if you state Patent Applied For, you're allowed to keep that designation as long as you applied for a patent sometime in the past - it doesn't matter whether the patent application has been granted, expired or abandoned.

Employment agreement - These are fairly consistent in this country, although California interprets them somewhat more in favor of the employee. Basically a standard employment agreement says if you've invented something while you're an employee, then the invention is owned by your employer. That holds even if you thought of the invention on your vacation, using your own equipment, at home, and not necessarily even in connection with your work. As long as you're employed by that company then they basically own what's in your head.

An exception is if you were hired for a non-inventing role such as maintenance. Then you probably could invent things without turning them over to the company. However, if the company says your idea is in their line of business, or anticipated line of business, then they own it. If you work for a car company and you have a new mousetrap, the company can't say they own that invention because they're not in the business of mousetraps. As it turns out, even if it's clearly not in the realm of what the company is doing, it's sometimes difficult to get the company's permission for you to get a patent on your own.

Transfer or assignment - We call selling a patent or invention an assignment of the invention. Instead of using a bill of sale or a deed as used to transfer personal and real property, we use a patent when transferring the ownership of an invention. You can also assign rights to a patent or invention, and for that we use the word license, which typically earns a royalty. It's just different language but uses the same principles used for other property. If you were renting your car, you would still own it but someone else could drive it and pay you. Instead of renting or leasing, we say licensing. And instead of selling we say assigning.

Still undecided about pursuing a patent? In the end it's one of those all-important business decisions that keeps us awake at night. Simply stated, you have to decide whether you want to exclude others - or, for whatever reason, you don't mind competition. Above all, determine whether the idea has or will have value. Then act accordingly.

But beware: The more successful the idea, the more likely it is to be copied. So getting a patent can well make the most sense, and dollars.

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