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Aug 11

The first thing the average inventor does when he or she first conceives of a new invention is to run off to a patent attorney.  This is done under the mistaken belief that the attorney is capable of producing all the “magic” that will culminate, eventually, in the inventor retiring to some tropical island and spending the rest of his or her days consuming My Tai’s with little umbrellas on top.  This approach is wrong on several levels.  This blog will deal with just one area, however: the patent search.

SHOULD YOU REALLY BE USING A PATENT ATTORNEY TO PERFORM A PATENT SEARCH?

The first thing an inventor should spend money on is a professional patent search, performed by a professional researcher.  It’s important to understand that not only must the person doing the research understand how to do an exhaustive search (which actually requires more library science expertise than legal expertise), but the researcher must also expend whatever time may be necessary to ensure that the search is as comprehensive as is reasonably possible under the circumstances.

Patent searching is a difficult and time consuming business.  It requires staff that are well-trained in general research, have a natural curiosity and inclination to “go the last mile” and, yet, do not demand a king’s ransom in order to do a good job.  While capable and competent patent attorneys can certainly do, at least, as good a job as a professional researcher, there is a significant disparity between what professional researchers charge (or the level at which they’re compensated) and what a typical, qualified patent attorney would charge.  Assuming an average of six hours per search, and compensation level for a professional researcher at $25.00 per hour (not including overhead and other operating costs) versus a professional fee level of $250.00 per hour for a qualified attorney, you can easily see that the cost of having a good patent search performed by a professional researcher versus one performed by a qualified attorney is considerably less expensive (i.e., $150.00 versus $1,500.00).

Some attorneys will claim, however, that they can perform a search for $500.00 to $750.00.  If so, then you need ask yourself the following question:  who’s actually performing the search???   What will the search include (more on that point below)?   Is it the attorney, who normally bills at $250.00 per hour, or is it some low-level, lower-paid subordinate (e.g., a paralegal, secretary or even, junior lawyer in the firm) that’s actually doing the research.  If so, then what are you actually getting?  Remember, a professionally done patent search requires three things: expertise, a willingness to be exhaustive and a lot of time.

WHY IT MAY BE BETTER TO SEPARATE THE PATENT SEARCHING PROCESS FROM THE “PATENTABILITY OPINION” PROCESS

A professional searcher merely performs the patent search and issues a patent search report; it’s not his or her job to provide an opinion as to whether or not you should proceed with a patent application.  Rather, it’s the patent attorney who then gives you an “opinion” as to whether or not you should try to file for a patent.  These are two distinct processes that should not be blended together; first the patent search and its’ results, then the patentability opinion.

An important point to consider here is if an attorney performs a patent search, what will the search include?  Will it include an international search as well as a product search?  A comprehensive search always includes a complete search of the U.S.P.T.O. databases, an international search and a product search.  This can take hours.  When the search is done, you have the chance to review it yourself.  Depending on your skill level, you may be able to determine if you should talk to an attorney or not.  There are times when the results of the search clearly indicate that there is just too much prior art to move forward.  Some engineers and serial inventors are very capable of going through their own search results and drawing conclusions.  If you have paid for an attorney to do the search and the “opinion” at the same time, you have wasted a lot of money (possibly thousands of dollars).

Second, while ethical attorneys will never engage in anything so reprehensible, from past sad experience with clients, we do know that there is the potential for a conflict of interest when you use the same attorney to both perform the search as well as to write the patent application.  A professional researcher has nothing to lose by finding prior art that could dissuade you from continuing to pursue a patent. 

IMPORTANT STEPS AFTER YOU’VE RECEIVED THE RESULT OF THE PATENT SEARCH

Once you’ve both received and reviewed the search results yourself, you should organize your questions and decide which Intellectual Property attorney you want to use.  A good attorney will ask whether or not you’ve had a search done and if so, he or she will want to review it.  The attorney will also ask you whether or not you intend to have a prototype produced and, if so, who will be building it.  Lastly, a good attorney will also ask you whether you’ve determined that you can make your product at a price the consumer will pay.  It’s important to remember that, once you’ve selected an attorney, you should have that attorney both review the results of the search and, where there does not appear to be a problem with proceeding, write your patent application as well.

Last but not least, in spite of what many people believe, neither attorneys nor search companies are infallible when it comes to “turning over every rock” i.e., uncovering every single imaginable relevant patent.  Intelligent attorneys and well-managed patent search firms have the same disclaimer about not being able to guarantee that every relevant patent will be found.  Paying more to have an attorney search doesn’t eliminate this standard industry disclaimer.

Inventors frequently want to hire one person who can do everything for them.  Bad idea.  Hire the right professional you need to do the right job at the right time.

Apr 26

A few weeks ago someone commented on one of my blogs.  I was about to reply, indicating that I strongly disagreed, but instead I decided to wait, to think about my reaction, and to ask some of my seasoned inventor friends (and a few patent attorneys) before responding.  After considerable deliberation, I decided it was important enough to write a new blog about the subject of the comment.   

Here is the comment that was sent to me:  “A decent patent attorney should be able to see if a product is marketable and profitable and he should be able to offer advice on this. If he simply writes claims to collect your cash then you need to work with a different attorney and not use him again”.

In my opinion (and the opinion of everyone I polled) not only is the advice in the first sentence of this comment wrong, it is completely WRONG!   Most decent patent attorneys wouldn’t presume to offer you marketing advice; and, if they do, in most cases you’d be best advised to find another attorney.  Patents attorneys go to school first to study some type of science or mathematics-related course, and, then subsequently, an education in the law with, where possible, a specialty in patent law.  For most attorneys, nowhere along the way are they taught about marketing.  In fact, most attorneys are not good at marketing even their own business, let alone yours.  When I told my seasoned inventor friends (and patent attorneys) about the comments, they were all amused by the naivety of the writer. 

Marketing is an illusive concept.  The first part is market research.  Do you have a market?  What are the demographics pertaining to your product?  What industries and markets do you need to be concerned with or target?  Why would you want to pay an attorney his/her hourly rate to do this research?  If you need to hire someone to do this for you, hire someone who’s knowledgeable and who knows how to obtain the necessary information.

Next, there is the actual marketing/selling part of the invention.  How are you going to make your target market aware of your new product?  This is way out of most attorneys’ area of expertise. 

It is NOT your attorney’s job to tell you if you have a good idea.  It is your responsibility to make this determination with the help or others. 

I do agree with the last part of the statement about when to find another attorney.  A good attorney should ask you whether or not you’ve had a professional search done (you shouldn’t have an attorney do your patent search for you, either), who your engineer is, and whether or not you’ve established that you can make the invention at a price that the consumer is willing to pay.  If you don’t have this information yet, talking to the patent attorney at all, is premature.

You should expect to hire a variety of experts to help you.  Your attorney is only one of these experts.  If you are looking for a “general practitioner” who can do everything, you are setting yourself up for lots of disappointment and as well as buckets of wasted time and money.

Mar 22

I had a client call me last week for the sole purpose of venting.  It seems that she had received an office action from the USPTO and was upset over how much it was going to cost her to have her attorney answer the office action.   Her telephone call caused me to reflect and resulted ultimately in my feeling that I needed to blog about this particular issue.

First, it’s important to always bear in mind a simple truth: inventing is expensive.  There is no way around it.  If you are going to pursue your invention, it is going to cost money.  The exact amount of money varies from case-to-case depending on the complexity of your invention.

Second, it’s important to keep things in perspective: obtaining a patent for the invention isn’t the most costly part of the process.  However, it does seem to be the one that draws the most ire.  It will cause you less stress if you keep in mind that these fees are paid over a period of years not all at the same time. 

To give you a better sense of how involved the process actually is, here’s a list of the most obvious costs in the patenting process:

  1. The first step is to have a professional search done.
  2. Second, you need a review of the search by an intellectual property attorney before you meet with an engineer or make final adjustments to your design.
  3. Third, have an intellectual property attorney draft an application for a utility or design patent.
  4. Fourth, when you’re ready to file, there are filing fees that have to be paid to the USPTO.  This is in addition to your attorney’s fees.
  5. After you’ve waited anywhere from 14 to 36 months, you should receive your first office action.  You will be charged for the attorney’s time to draft a response to this first office action.
  6. Additionally, if you’re not diligent and you fail to file your response before the appointed deadline, you’ll have to pay a penalty to get your patent out of “abandonment”.  This is what it is called when you don’t respond in time.
  7. Next, if there are no further office actions (generally not the case) and you get this far, there is a “Notice of Allowance”.  This means that the USPTO will issue your patent if you pay them the next fee which is around $800.
  8. Once your patent issues, however, you’re still not done:  there are maintenance fees that you have to pay periodically during the life of your patent.  All of the fees are listed on the USPTO website and your attorney can give you a list so that you know what to expect.

Don’t be caught off guard.  Always ask “what is this going to cost”.  Educate yourself on the patenting process.  There are plenty of resources out there.  We try to make sure every inventor knows what to expect, but you have to pay attention.

Mar 8

I recently had a call from a patent attorney who wanted me to introduce him to my clients so that he could offer to buy their intellectual property from them. He has, what is called, an “Intellectual Property Holding Company” or “IPHC”.

IPHC’s come in essentially three different flavors.  The first category consists of those whose purpose is essentially malevolent; they buy up IP, lie patiently in the grass and wait until a major company introduces an arguably infringing product, and then they pounce on that company with a lawsuit, demanding extraordinary damages.  The purpose of the lawsuit is not to pursue the actual litigation; rather, the purpose is to use the litigation to force a settlement in which the IPHC extorts a lucrative contract for licensing the patented technology to the infringer.  These types of predatory IPHC’s are commonly referred to as “patent trolls”.

The next category are tax-advantaged off-shore subsidiaries of major industrial corporations with significant amounts of IP.  These types of IPHC’s are set up principally as a tax dodge.  As a category, they consist of off-shore holding companies in tax-friendly jurisdictions that are set up exclusively to hold the parent corporation’s IP and therefore secure for the parent, favorable tax treatment when the earnings are repatriated to the U.S.

The last category consists of groups of individual inventors who decide to band together to better position themselves to ultimately monetize their IP.

I always approach IPHC’s, particularly the patent trolls, with a measure of caution.  And, while I do not know the type of business model being pursued by the company represented by my attorney caller, my antenna were up.  Nevertheless, I do believe that there are circumstances when selling one’s IP to an IPHC might be a good option for an inventor.  And, there are even some situations when I might actually recommend an IPHC to a client.

As a general rule, however, it’s my opinion that you have other options that will prove more lucrative for you and should be considered first. You will get a much better offer if you do the work that is required to get a good licensing agreement from a company that will manufacture and sell your product.  It’s hard work, it takes time and money, but the pay-off is much more satisfying.  Therefore, in most situations, selling your intellectual property to an IPHC should be considered only as an option of last resort. 

Remember: always be careful and get help.  When it comes to selling, licensing and otherwise monetizing your intellectual property, it’s complicated and the price of a qualified, professional advisor is miniscule compared to the amount of money you might end up leaving on the table.

Feb 12

Inventors frequently swing to two extremes when it comes to their business plan.

The first one is simply: have idea – get patent – make money.  I can’t even tell you how many ways this is a flawed plan.  This plan is relevant only in fantasy land and real inventors can’t afford to live in fantasy land.  You have no proof of concept, no numbers, no packaging, nothing to sell and no customers.

The other extreme is equally flawed:  have idea – buy a piece of business plan software – go to a class – fill in the blanks – make money.  It doesn’t matter how much dreaming you do at this extreme, you can’t have accurate numbers without doing the hard work up front.  Again you have no proof of concept, no numbers, no packaging, nothing to sell and no customers.  With this plan all you are doing is guessing.  Real inventors don’t guess.

Honestly, the first stages of inventing do not require a business plan.  You have to do your homework first.  In fact, unless you are presenting to a bank or an investor, you don’t need a business plan until you are in business.  And then, a business plan serves as a road map for you. 

A more useful exercise is to develop a marketing plan after you know you have a product.  After all, if you can’t sell the product to a consumer, it doesn’t matter how good your business plan is.

The first inventing steps require your time and energy.  Do you own searching for like and similar products.  Search online, in stores and on the USPTO website.  Build a cheap version of a prototype.

The first thing you have to pay for is the professional patent search.  All of your business decisions will be based on the results of this search, but that is discussed in another blog.

FYI: You are still a long way from needing a Business Plan.

Nov 22

Your trademark can be as valuable to you as a patent and possibly more.  Consumers identify with your trademark, not your patent.  Most consumers don’t care if you have a patent as long as you have a great product.  When was the last time you went into a store and looked for a patent number?  Consumers look for names and/or websites.  Keep this in mind when you decide on a name for your product.  

So how do you pick a name?  This is tricky.  On one side, the USPTO has guidelines and requirements.  They want something “fanciful”.  That’s great if you have a million dollars to spend on marketing a name that has some kind of new spelling or is a new word all together, like Xerox (who had ever heard of this before they spent millions on commercials?).  Most of our clients don’t have that kind of budget.  For example, I doubt that 30 years ago anyone looked under “Apple” in the phonebook to find a computer.  They had the budget.

On the other side, you need to have a name that is reasonably easy for the consumer to find and won’t cost you multiples of millions of dollars in advertising.  Deciding on the right trademark is a delicate dance of words.  Try to find something that makes sense and then combine the words with something fanciful.  Make sure that you can get the domain name as well.  If you are going to market a product, you should make it as easy as possible for someone to find it.  Having a different name for your website than your product makes it very difficult to get the message to the consumer.  Try to make your message as clear and as simple as possible.  If consumers can’t find you, they won’t buy your product.

The name you give your product is part of your intellectual property.  As soon as you determine the name you are going to use, you should start using a ™ beside the name.  This is telling the world that you claim this name.  Most often you wait until you are selling product to go ahead and file your trademark with the USPTO.  Once you are granted the trademark, you will use ® to show that according to the USPTO, you own this trademark.

Bottom Line:  Spend time working on your trademark. It is worth it.  If you are having doubts, have a focus group done.  People will tell you if are on the right track.  Get help; do it right.

Oct 12

Inventors frequently tell me that they were advised by one source or another that an international patent search is not necessary if they don’t plan to sell outside of the US. 

I would like all inventors to understand that an international search is a critical part of all GOOD Patent Searches.  If something has been patented anywhere in the world at any time in history, you will not be granted a U.S. patent.  If the product was not patented but available to the public, it is considered part of the public domain and, again, you will not be granted a U.S. patent.

For example, I had a client who was trying to patent a type of metal hinged glove.  There was no prior art (previously granted patents), but there was evidence of metal hinged gloves in history (in fact, ancient history – i.e., “knights in shining armor”).  Because of the introduction of the metal hinged glove in the medieval times, the concept of the hinged glove had become part of the public domain and thus could not be patented.  The “knights in shining armor” were never even in the U.S.  But it doesn’t matter! 

We frequently find similar products patented in other countries.  In order to make good business decisions, you need a patent search that includes the international search even if you don’t plan to manufacture or sell outside of the U.S.

Sep 27

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Inventors are frequently afraid someone will steal their idea.  Some paranoia is good.  Too much is crippling.  You have to find a balance between protecting your idea and being able to get your idea incorporated into a tangible product that you can get to the marketplace.

 Here are some guidelines:

1.    You can talk in general terms about your project without giving an “enabling disclosure”.  An enabling disclosure would be when you give enough information for someone else to make the product. 

2.   If you want or need to talk about the details, use a non-disclosure agreement or a non-disclosure / non-compete agreement.  This is your due-diligence, your responsibility.

3.   Keep in mind that even though we have all heard stories about someone’s idea “being stolen”, most ideas are not stolen.  Ideas are like belly buttons, everyone has one.  People want to steal market share.  It is your market share that you have to protect.