Patenting your invention: the ugly truth
Despite our words of caution in A Better Mousetrap about a patent being a double-edged sword, many inventors are still too easily persuaded to patent their inventions needlessly or prematurely.
Too often they’re given the impression that no matter what their invention, they must patent it to stand any chance of making money from it. Worse, it’s often early advice to new inventors from ‘experts’ who may not actually know much about patents. On TV programmes like Dragon’s Den the routine question ‘Have you patented it?’ is heavy with the implication that not patenting your invention is as bad as not brushing your teeth.
So as an antidote, this document lays it on with a trowel. And we make no apologies for it. Our view is: if you don’t weigh up all the complex pros and cons first, patenting your invention could be the most expensive mistake you ever make.
Plan your IPR strategy
Cash-strapped inventors and small businesses need to plan their intellectual property rights (IPR) strategies at least as carefully as big companies, who are very sophisticated about IPR. The theme of devising an appropriate IPR strategy, rather than rushing headlong into patenting, is developed in detail in A Better Mousetrap. All we need say here is that there are other forms of IPR beside patents for protecting an invention idea, but they don’t always get the credit they deserve.
Patent attorneys please note: our intention here is not to knock what you’re doing. You’re not responsible for a way less than perfect legal system. The following pages may contain opinions you can’t publicly endorse, but we hope that privately at least some of you will be on board with much of it. We know that you often do give inventors strategic advice but it doesn’t always sink in. That isn’t your fault but it often isn’t the inventor’s fault either. We want to plug an awareness gap, on the grounds that an informed inventor is likely to be a better client.
If you’re not rich, the patent system isn’t for you
Q: Why do patents exist?
A: To allow protected disclosure of new technologies so that they can be put to commercial use for the greater benefit of society.
And that’s pretty much it. Yes, a patent indicates ownership of an idea but be in no doubt: the main intended beneficiary of the patent system is business and industry. The theory is that only if there is a never-ending supply of openly disclosed new ideas will technologies improve and advance, markets expand, businesses grow and economies prosper.
Better still, the patent system operates worldwide, providing a global pool of ideas. Thus, a French company might make use of a US invention, or an Australian company make use of a German invention.
All this is fine for industry, which gets lots of new ideas to pick over. But two factors make the practice of the patent system very different from the theory.
Many patents are not available for exploitation. They’re owned by big companies who use the patent system to prevent others from using their ideas and inventions, except perhaps under strict conditions that they dictate through licences. (Licensing means retaining ownership of the invention but allowing others to use it in return for some form of payment.)
There’s nothing wrong with licences. They’re an excellent way of spreading the benefits of one idea across several companies or markets. Many inventors and companies license out their IP (which doesn’t just mean patents) in return for royalties. But large companies can use their patents as an offensive weapon, to frustrate or threaten competitors. Or because they can afford it they patent ideas they have no intention of using, simply to prevent others from going there.
This behaviour acts as a deterrent to innovation. It’s an exercise of power by companies more interested in maintaining control of a market than in seeing technology advance to the betterment of everyone. In this endeavour the passivity of the patent system is a big help to them.
“patenting your invention could be the most expensive mistake you ever make“
Then there are the so-called patent trolls. These are companies that buy unused patents cheaply, then hunt for companies they can pursue aggressively for ‘infringement’. Major companies have been hit by trolls (Apple was ordered to pay over $20m to one patent troll) but smaller companies can also become victims. Many companies pay up on threat because it’s cheaper than a court case, the cost of which could wipe out a small company. This kind of predatory activity is made easy by the patent system, which doesn’t give a damn about morality. The mere threat of (always expensive) legal action is enough to provide patent trolls with a good living in ‘compensation’.
(Some argue that trolls create a useful secondary market in patents, which can help inventors who otherwise can’t afford to enforce their IP. But if a troll buys an inventor’s patent cheaply and then gets rich off the back of it, only the troll really wins. And a troll will happily target a small inventor-led business if there’s a killing to be made.)
The high purpose of the patent system may be to encourage invention and innovation, but all too often the reality of the patent system has the opposite effect as inventors are discouraged, threatened and punished.
The only ideas actually available for commercial exploitation at relatively bargain rates – ground-floor opportunities to invest in innovation – tend to be owned by individuals or small companies. Commercially, there will be some real diamonds to be found here. Yet these are the patentees who run the biggest risk of being massively disadvantaged by the patent system.
Inventors and the patent system
What does the inventor of an idea get out of the patent system? If the inventor is a large company, the answer is: a lot of muscle. But if the inventor is an individual of modest financial means, or a typical very small company, the answer is: not much.
If you’re an inventor who has been granted a patent, then in theory:
- You are officially recognised as the owner of the invention. Anyone else who wants to use it commercially has to get your agreement, which you are unlikely to give without some form of financial reward.
- Anyone who uses your idea without your permission is effectively stealing from you, and you can take legal action against them.
- Your patent or patent application has a burglar alarm effect; it deters potential infringers who fear getting tied up in expensive litigation.
In practice there is a lot wrong with this system.
1: The cost
For the average private inventor without a lot of spare money, the cost of a patent can be massive and out of all proportion to any benefits. Broadly:
- You have to pay to be recognised as the owner of your own invention.
- Worse, you have to pay separately in each country in which you want to be recognised as its owner.
- Worse still, you have to pay – again to each separate country – annual renewal fees after Year 5 to keep your patent in force. As an added insult, the renewal fee increases over time.
- You have to pay any translation fees required by individual countries. These are not cheap, as we’ll see in due course.
In other words, the patent system milks you every inch of the way. It has an interest in doing so, because most government patent offices have to recover their costs by charging fees. Renewal fees in particular are a major source of income. There is therefore little incentive within the patent system to reduce costs to patent owners.
Even large companies are starting to object to the cost of patenting, but for private inventors and small companies the expense can be crippling. See Patent costs later.
(NB: we haven’t mentioned patent attorney service charges, which can greatly increase the cost of patenting. However, patent attorneys don’t own the system and are not responsible for its official fee structures, so to keep life simple we’re not going to dwell on patent attorney fees. Except to say that you’ll definitely become aware of them if you choose to employ a patent attorney.)
“You have to pay to be recognised as the owner of your own invention”
2: The lack of real protection
Before they actively engage with the patent system, many inventors believe that a patent acts broadly like an insurance policy. An infringer does the dirty on you, the patent system leaps to your defence and it’s all sorted out. Given the amount of money the system extracts from patent owners, it’s a reasonable assumption. But a wrong one. Very, very wrong.
If someone infringes your patent the patent system does nothing. Absolutely nothing. No matter how blatant and commercially catastrophic the theft of your IP, the patent system won’t lift a finger to help you – though it will keep taking your money.
If you want to take action against an infringer, or defend yourself against someone who challenges your right to own your patent, you have to make all the moves and pay all the large legal costs yourself. And large means large. Total costs will obviously vary but it’s the norm for patent litigation – including appeals – to last years and cost in the millions of pounds or dollars. If you’re a home owner it’s probably fair to say that the cost of patent litigation that goes to court will far exceed the value of your house.
You’ll also face the severe personal stress of a process that can drag on for years, with victory for the injured party never assured. It’s not unknown for families, relationships and businesses to be wrecked along the way.
For all these reasons, if the scenario is a large company infringing or challenging the patent of an inventor or small company, the odds are stacked heavily against the poorer party. David may occasionally beat Goliath but that’s rare.
For big companies, patent litigation is part of the cost of doing business. They take it in their stride. In fact, well-publicised IP disputes may have PR value if they keep a company’s name in the media.
“If someone infringes your patent the patent system does nothing. Absolutely nothing”
For example, the mobile phone industry seems like one massive IP battlefield as manufacturers try to kick holes in one another’s patents because so many of the technologies they use are essentially the same. It seems almost a ritual, like medieval jousting tournaments with lots of dramatic posturing and manoeuvring but nobody (usually) getting too badly hurt. Each lawsuit will run its course, cost many millions, make headlines, and probably resolve little. Almost equally certainly, there will be no lasting damage to any of the companies involved.
The same can’t be said if you’re an inventor or small company sucked into a patent dispute with a corporate. Even if the judgment goes in your favour, there may be an appeal and many of your costs during the dispute – for example lost business opportunities, higher bank charges and evaporating investor interest – may be unrecoverable.
But in many cases it’s unlikely that you will win. You may start out confident that you’ve got a strong patent, but there is no such thing as a strong patent if you can’t afford to defend it. There may indeed be very little point in a patent if you can’t afford to defend it.
So in the real commercial world it isn’t patents that protect inventions and innovative products, it’s money. Many large companies know this full well, and use the fear of financial consequences to defeat a weaker opponent without a fight. To them there is no moral issue. Any tactic is allowable if there is a valuable commercial advantage to be had.
And that’s just your opponent. If your patent lawsuit has to be conducted outside your home country, you may also be up against an unfamiliar and quite possibly prejudiced legal system. For example, IP courts in the USA are notoriously hostile to non-US litigants and tend to view as anti-competitive any patent perceived as disadvantaging a US company. And any difficulties in the USA will pale by comparison with the problems you might have fighting your corner in China. (See Will China capsize the patent system? later.)
Does a patent in itself offer any protection? A common claim is that a patent has a useful ‘burglar alarm’ effect. The theory is that rather like the alarm box visible on the outside of a building, the very existence of your patent persuades infringers to slink away and seek easier pickings elsewhere. But the typical burglar alarm beats a patent in at least three respects:
- It’s inexpensive and its cost is easy to justify.
- When a burglary is attempted it does its job and sounds an alarm.
- After the police attend, they don’t send you a large bill for their services.
Burglar alarms do have one weakness: if someone is really determined to steal from you, a burglar alarm is not going to stop them. It’s exactly the same with a patent. It may deter companies with a conscience and a few small-time rogues but it won’t stop the big boys and it won’t stop experienced pirates skilled at ignoring or evading the law.
“there is no such thing as a strong patent if you can’t afford to defend it“
3: Ownership is not guaranteed
A charming feature of the patent system is that this precious patent, bleeding you dry for years on end, may one day – any day – be judged not to be yours after all.
If you own a patent, anyone at any time can challenge your right to own it as it stands (a qualification we’ll get to very soon). This makes a patent a totally insecure but still expensive form of intellectual property. And of course, a challenge to your patent triggers yet another costly legal process that you have to fund yourself.
Why might a company challenge your patent? Several reasons include:
- If you’ve accused them of infringing your patent, it’s a standard response. You challenge them, they challenge you back. It buys them time, makes even scarier costs inevitable, and nicely muddies the pool so it’s harder to see which of you is the good guy.
- They may want to start selling a product based on your patent but without having to pay you royalties, so this is their pre-emptive strike: knock down your patent, get you out of the picture.
- They may have a competing technology that your patent threatens, so they want to cut the ground from under you.
- They may genuinely have a case. Not all companies are predators. Many will be acting in good faith to protect their own products and IP.
Your challenger will try to show that earlier patents or products contain key elements of the technology for which you have been granted a patent. Their legal argument will be that those elements should never have been in your patent and must now be removed from it. If a court agrees with them, that’s what happens.
The challenger’s aim is to rip the guts out of your patent until there is nothing left worth owning. Often this tactic succeeds, and for good reasons. Claims for technical novelty can be fuzzy at the best of times and official patent examiners are not infallible.
(For example, a 2003 US Federal Trade Commission report on innovation found that almost half of patents litigated to a conclusion in the USA were deemed invalid, and that the grant rate of US patents was much higher than in Europe and Japan, suggesting a relative lack of rigour by US patent examiners. That lack of rigour is unlikely to be confined to the USA, and it must always be remembered that the more patents a national system grants, the more money goes to the government running that system.)
“The challenger’s aim is to rip the guts out of your patent until there is nothing left worth owning”
The final judgment in a challenge may hang on who makes the more persuasive or (in very complex technology cases) intelligible argument. And that, as in other areas of law, can depend on which side spends the most money and hires the most skilled or ruthless legal team.
If you’re an inventor, that’s unlikely to be you. So, you’ve spent a ton of money feeding the patent system, and now your patent goes up in smoke. Does the patent system give you any money back? No. Can you sue the original patent examiner for getting it wrong? No.
4: The time factor
The patent system claims to be all about encouraging innovation, but few things are more harmful to innovation – certainly to invention – than the very inflexible timescale of patenting. Once an application is filed, actions have to be taken (and paid for) not to suit you and your project, but to meet deadlines dictated by the patent system. This is tail wagging dog on a grand scale.
Details of these timescales are easily available from national patent offices, so we won’t bother too much with them here.
“Invention projects lasting 5-10 years are the norm, not the exception“
The big point is that the moment you file a patent application, a clock starts ticking. It might as well be the timer of a bomb.
- After 18 months, your patent is published. Then the whole world knows about your idea. And this is not necessarily a good thing. In fact, it’s often a bad thing if your invention is still some distance from market and you can’t predict when it will get there.
- After 30 months you start paying filing and translation fees to each country in which you want ‘protection’ (pause for hollow laughter).
- At 5 years, you start paying the dreaded and unfair annual renewal fees, again to each individual country.
The big bills don’t come straight away. The initial costs are relatively low, making patenting a ‘buy now, pay later’ scheme – which is how so many inventors get drawn into a system that ends up doing them more financial harm than good.
At the start of your invention project, optimism may be running high and 30 months – let alone five years – seems plenty of time to turn your idea into a money-earning product or licence. Indeed, the patent system encourages exactly this thought process. It defers the main costs for a period so that they can be paid out of income from the sale of your product or the licensing of your patent.
But in practice, few inventions get to market in anything like 30 months. Many may still be nowhere near their market after five years, when renewal fees start biting. How does this happen? There’s no mystery to it: it’s life. Time flies. Funds dry up. Delays become routine. Prospects ebb and flow. Even when things are moving well, they never move fast enough. Invention projects lasting 5-10 years are the norm, not the exception.
You can deal with it, but you have to plan for it. And that must include planning the timing of any patent application, because patenting your invention too early is a good way of reducing or even destroying any chance of success. In their pre-patenting advice sections, national patent offices are unlikely to spell this out in the very big print it merits. Why should they? The patent system works for itself and for big businesses. It doesn’t work anywhere near as well for inventors or small businesses.
(And when governments periodically review various aspects of IP, they somehow never include inventors or start-up business owners on their investigating committees, which as a result don’t mention inventors when they report. Officially, inventors might as well not exist. But their money’s OK.)
We’ve complained a lot about the cost of patenting, so what exactly is it? Unfortunately it’s impossible to be exact because there are so many variables – for example, the length and complexity of the patent, where and how you apply, and the particular combination of countries for which you want cover.
There is information about fee structures on most national patent office websites but very little to tell you what your total cost will be in official fees over the lifetime of your patent, let alone additional patent attorney fees and the elephant in the room, potential litigation.
In 2005 – twelve years ago at the current time of writing – the European Patent Office published two cost models for guidance. These indicated that:
- A patent application of 18 pages valid in six European states for ten years would cost around €32,000 (£28,000 or $44,000) including patent attorney costs and translation and renewal fees.
- A PCT (Patent Cooperation Treaty) application of 26 pages valid in eight European states for ten years would cost around €47,000 (£41,000 or $65,000), again including patent attorney costs, translations and renewal fees.
However, the notes to the calculations state that for both applications the total cost might vary considerably, in some cases by up to 100 per cent, depending on the technical field. Excluded too are all costs for patenting outside Europe, and for additional states and languages within Europe.
Those costs will have increased since 2005 but the message is clear – applying for a patent is an expensive business.
If you’re lucky enough (or unlucky enough, maybe) to have an invention that will only sell or mainly sell in one country, patenting in that one country might be readily affordable and even a bargain.
But not many patentable ideas or products have such restricted sales potential. Products increasingly have global sales potential, so if you’re going to patent at all you may need to patent in several countries. And as you may have no idea which countries will turn out to be good markets, the temptation is to patent in more rather than fewer countries. That’s when costs start going through the roof.
(To keep things simple we’re talking here about the cost of just one patent. Some inventors and small companies may have more than one idea that they need to protect. The costs then don’t bear thinking about.)
Two examples of how patent costs can seriously handicap a small innovative business:
A UK inventor designed a radically new version of a familiar and essential piece of bicycle equipment. After ten years of self-funded development he spent – by selling his house – a further £40,000 of his own money on getting a trial batch of product manufactured. Before any sales were made he got a bill from his patent attorney for almost £20,000 for translating his patent into ten European languages and filing it, using local patent attorneys, with multiple European patent offices. He couldn’t afford anything remotely like £20,000, let alone any later costs of translation into non-European languages. He had no choice but to reduce his patent protection drastically, leaving his product wide open to copying.
Another product with international potential – a construction industry power tool. A self-financed company was formed by its inventor. As is typical, development took several years. Again, patent renewal renewal fees in excess of £20,000 a year began rolling in before the product was ready to sell. Eventually, a potentially multi-million pound turnover UK business had to be sold off cheaply to an overseas buyer because the company couldn’t afford to carry the patent fee debt any longer.
These are not isolated hard-luck stories. They’re typical of what can easily happen at the grassroots level of innovation, to brave small ventures run by intelligent people with their heads well screwed on.
For many years a statistic attributed to the US National Research Council – exact source not easily traceable by us – has been doing the rounds: around 97 per cent of patents generate less revenue than they cost to acquire. That’s highly plausible, and grim.
In many respects the high cost of patenting is crippling innovation. At the very least, it’s adding a thick extra layer of risk to projects that already have more than average levels of risk to contend with.
The most unfair and arguably immoral element of patenting costs is the annual renewal fee charged from Year 5 by each national patent office. Each country’s fee may ‘only’ be the equivalent of a few hundred pounds, but for a product needing multinational protection the annual renewal bill can soon climb into the thousands. Renewal fees of £15-20,000 a year to keep one patent going are not unusual.
Officially, patents stay in force for up to 20 years. It would be more truthful to say instead that patents remain in force for five years, after which you have to pay annually if you want to keep your patent for up to 15 more years.
“applying for a patent is, for many people with an invention, the first step towards losing it”
Renewal fees are legalised extortion. If you don’t pay the renewal fee for a particular country, you lose your patent in that country. Which puts your invention at immediate risk because anyone in that country can then use it without paying you a penny. And they know exactly what it is because details remain permanently on public patent databases such as Espacenet or USPTO. They don’t disappear when the patent lapses or renewal fees aren’t paid. Once available to view, forever available to view.
(One of the major benefits of the internet is that everyone now has free access to patents. Previously it was almost secret knowledge. You’d normally have to travel a good distance to your nearest patent library to consult documents manually – a whole day of a job just to look at a few patents. Now you can sift through any number of them very rapidly without having to leave home. A godsend for inventors but also for those with murkier motives.)
Thus, the renewal fee is an annual tax on owning an invention. An added twist of the knife is that renewal fees increase with time, supposedly to encourage commercial use. Most inventors don’t need encouragement, while large companies are unlikely to be influenced by the increase.
If you don’t pay, you effectively no longer own your invention. Thus applying for a patent is, for many people with an invention, the first step towards losing it. That is grossly unfair. Novelists, playwrights, musicians and film-makers don’t have to pay fees every year in many countries to retain ownership of their own creations, so why should inventors be treated differently?
The patent system should not be in the business of holding inventors to ransom. That’s a massive disincentive to invent and is the unacceptable face of a system supposed (remember?) to encourage innovation.
The official justification for renewal fees is that they encourage patentees to abandon patents that they are not exploiting or ‘working’. In other words, they help clear out the dead wood. But how does the patent system know that attempts are not being made to exploit a patent? It doesn’t. It can’t. And what business is it of the patent system anyway?
The bottom line is that the patent system is much more interested in getting money off you than in helping you to exploit or protect your patent. Even large companies now complain about renewal fees, but they impact disproportionately on inventors and very small companies. As mentioned earlier, it’s quite normal for an invention to take several years to get to market after a patent application has been filed. Those will not be years of inactivity and indifference. They will often be years of determined, dedicated and urgent activity.
But the patent system doesn’t see that. And it doesn’t care. All it wants is your money. And it is likely to want it at a time when you can least afford it. By Year 5, other essential business and development costs – testing, marketing, manufacture, premises etc – will be bearing in on entrepreneurial inventors and small start-ups. Competitors know this. So do potential licensees. Some will wait until you run out of funds to pay the renewal fees. Then they will pounce on your idea and take it for nothing, or force you into a deal that pays you a derisory amount.
That’s the world’s wonderful patent system at work.
The unpredictable cost of patenting
Some authorities seem almost in denial of patenting costs. For example, it’s worth looking at part of a letter written in 2009 by the President of the Chartered Institute of Patent Attorneys and published in an online magazine for entrepreneurs. It was in response to a complaint from a company MD about the high cost of patenting and included this:
‘The typical cost of applying for and obtaining a UK patent, using the services of a qualified patent attorney, is £3,000 to £4,000 […]. Renewal fees in the UK are also relatively modest. Costs can start to go up once you opt for wide-scale international patent protection, but such costs are generally only incurred once the product or invention has proved that it is worth protecting in international markets. […] Intellectual property is very often a company’s most valuable asset and no sensible director should neglect to protect the company’s assets: insurance premiums for plant and premises are likely to cost a lot more than the cost of obtaining and renewing patents.’
Let’s unpack that extract. The first two sentences are fine. The second two, less so. ‘Costs can start to go up’ ought to read: ‘Costs climb steeply’. And the claim that ‘such costs are generally only incurred once the product or invention has proved that it is worth protecting in international markets’ glosses over a fact of IP life that is nowhere near as reassuring as it’s made to sound.
This is that – as we’ve said previously – the patent system, not the invention or product, dictates application timescales. Many inventors must decide whether to patent internationally before the invention or product has had time to prove anything. Many inventions will still be in their R&D phase, and destined to remain there for some time. Market research may indicate good commercial potential but cannot prove it. Crucially, the invention is unlikely to be providing a healthy income stream to pay for its own patent.
At the points where key patenting decisions have first to be made, then (later) paid for, the typical invention or new product is more likely to be consuming money than earning it. Thus, what the CIPA President says is well meant, but at the very least needs heavy qualification.
“If you don’t have the kind of money needed to defend your patent, you may have lost before you start. In which case, you have to seriously question the point of having a patent at all.”
In his last sentence, we would agree that IP (of all types, not just patents) may be among a company’s most valuable assets. But as for the claim that ‘insurance premiums for plant and premises are likely to cost a lot more than the cost of obtaining and renewing patents’… Not sure. All we can say is that you might need to have a lot of plant and premises before their insurance premiums exceed the cost of patenting.
And to revisit a by now familiar point: the cost of a patent isn’t just the cost of patenting. It’s the potentially destructive cost of having to defend it should anyone infringe or challenge it. That might never happen – you just don’t know – but if you’re a small company, your risk of being targeted is likely to be higher because you’ll be seen as easy meat. And there is no guarantee whatsoever that if you ever have to defend your patent, you will win.
If you don’t have the kind of money needed to defend your patent, you may have lost before you start. In which case, you have to seriously question the point of having a patent at all.
What about insuring your patent against infringement? Basically, forget it. Or at least forget it as things stand at present. Intellectual property insurance products exist, but most are aimed at established companies with a healthy balance sheet and a track record of managing IP. We invite anyone to prove us wrong, but we’ve never heard of a private inventor or small company benefiting from patent insurance. All insurance is about making money from risk, so a priority for insurers is to ensure that their own risk is low. First-time inventors are very high risk, so they either won’t get cover at all, or premiums will be unaffordable, or exclusions will be so numerous that the policy has no teeth.
Typical US premiums are around $25,000 per $1m of cover, though many of the overall costs of patent litigation won’t be covered. IP insurance schemes exist in the UK, and we found one firm offering cover from around £40 per month. But there will a lot of exclusions for that price, so it may not cover the real risks inventors face.
Insurers tend also to go for conciliation – reaching a compromise agreement – to avoid court costs. This is sensible, but then all an infringer has to do is refuse to settle amicably and the insurer may walk away.
What can the patent system do to improve?
Probably not much, because the current system is too comfortable with itself. Fixing the elements that are most wrong would deprive national patent offices of much of their income; and in any case, getting the 180-plus member states of the World Intellectual Property Organization (WIPO) to agree on significant change is likely to be difficult.
Online functions and some procedural tidying-up notwithstanding, the patent system is basically too far behind the times – almost too Alice in Wonderland – to be fit for purpose now. It hinders rather than helps grassroots innovation. What it aims to do is economically sound, but it has become too complex and legalistic, too expensive, too self-serving rather than innovation serving, too ineffectual as a means of protection, and too open to manipulation by those with money.
(That’s quite apart from the patent trolls mentioned earlier, and the scammers who operate constantly on the fringes of the patent system, feeding off inventor naivety and ignorance.)
Any notion of giving value for money, or striving to actually give patentees the protection they’re supposedly paying for, seems to be absent from the thinking of those who control and direct national patent systems.
We can suggest some things the patent system might do to fix itself, though none of these remedies is likely to be adopted any time soon. In no particular order:
- Scrap renewal fees…
- …but make patent application more expensive. This would reduce the overall number of patents – a good thing because there are far too many of them, especially now that the Chinese are filing at a breathtaking rate. Many patents are for ideas too slight to be considered new technology. They debase the currency.
- Adopt a more rigorous approach to what is and is not patentable. Patenting is moving into areas of bottomless dispute potential, such as gene technology and business methods. Let’s get back to basics. A patent should be a clear, simple recipe for how something is physically made or done. It should not result in a battalion of legal experts fighting over it line by line and word by word.
- Given ever shorter product life-cycles, grant patents for less than 20 years. There is no magic in the number 20.
- Compel patent offices to continuously re-evaluate what they’re trying to achieve, beyond raking in fees. If far too many inappropriate patents are being granted, some might argue that this amounts to taking money under false pretences.
- Patenting in Europe should be much cheaper and simpler. A single patent should cover all EU countries. No translations beyond the three main procedural languages (English, French and German), no national validation fees and filings, no messing. One patent at one affordable price. This is by no means a new idea and the European Commission wants it to happen. The problem is that all EU states are required to agree and some don’t want to play. The latest attempt came predictably to grief in November 2010 when Spain and Italy vetoed it. Until heads can be knocked together, EU patent cover continues to cost about ten times as much as a US patent.
- Why translate patents at all? If it’s possible to assemble Ikea furniture anywhere in the world solely from a set of wordless drawings, it should be possible to present much – perhaps most – patent information the same way. Drawings are already important and much patent text (apart from the claims) is unnecessary. Even if text is needed, it could be structured in a more uniform and concise way. Machine translation is now feasible, though it’ll be interesting to see how it copes with the often (deliberately?) incomprehensible techno-legalese used in patents.
- Make patent offices accept more responsibility in return for the fees they charge. At the moment it’s money for old rope. Fees should include a service that helps the patentee fight infringement. And if a court decides at any time that an examiner has made a bad call in granting a patent, all fees taken for that patent should be repaid.
- Strip patents of their overblown, almost mythic status. Other forms of IP protection can be just as good, if not better. Scepticism about the value of patents is growing among businesses who have to pay for them, but a patent is still regarded as a must-have by others, ranging from bar-room know-alls to bank managers and investors. The patent system is being propped up by ignorance. And that brings us back to the reason for writing this entire diatribe: too much advice to inventors is based on a mistaken assumption that every invention must be patented.
What can you do to survive the patent system?
Okay, you’re an inventor, or you’re involved in a project to exploit an invention. What do you do?
You may need a patent.
If market research indicates that you’ve got a game-changing idea with good medium- to long-term prospects, a patent may be essential (though it probably won’t be the only essential IP you need – registered designs, copyright and a trade mark may be at least as useful).
Some inventor-entrepreneurs own technologies that they exploit by licensing the IP worldwide. Their day job consists largely of administering licences and their business wouldn’t exist without patents. We’re happy to acknowledge that – though even they will probably admit that enforcing those patents is needlessly expensive and draining work.
But very few inventions fall into that golden goose category. If your invention is a single product that owes more to clever design than new technology, its market success may be far less dependent on a patent than you think. So ruminate your way through this checklist before even thinking about applying for a patent.
- Ignore anyone who says you must patent your idea. There’s no ‘must’ about it at all, and how much do they know anyway? Also ignore anyone who says you must patent your idea straight away. They’re dangerously wrong. Read the warnings in A Better Mousetrap.
- Study the pros and cons of all forms of intellectual property rights (IPR). For many inventions and products, a combination of (usually) much cheaper forms of IPR may give you more effective protection than a patent. More details in A Better Mousetrap.
- Don’t regard a patent as the best. Regard it as the worst. Think of it as a burden and distraction you don’t want, except as a last resort.
- To judge cost effectiveness, estimate what you patent is likely to cost and then estimate what you might realistically earn – in bankable money, not promises or percentages – from your invention. It may be pennies, even a fraction of a penny, per unit. If your predicted income won’t healthily exceed the cost of patenting, including those wretched annual renewal fees, a patent may make no economic sense.
- How long will your invention sell before interest in it fades or the technology needs significant improvements not included in your patent? Patents take years to be granted and many products have short life cycles, so if it’s all going to be over by the time you finally get your patent, it may not be worth the bother and expense.
- Don’t expect a company or licensee to pay the patent costs for you. Some may (in return for ownership of the patent) but most won’t.
- Look at all patents for similar ideas. Is there what is known as a ‘patent thicket’ (many overlapping patents)? Is there really much hope for another one? If all you’ll be doing is patenting a small difference that markets won’t rate highly, you may be throwing your money away.
- Will anyone actually want to steal your idea? Pirates are rarely interested in ideas; they want to leech off well-known products or brands. If your invention is never going to make the big league it may not be worth paying patenting-sized costs to protect it. (Or rather, to not protect it…) Look instead at other forms of IPR.
- Consider what other aspects of your invention you might spend your patenting money on. In many cases, having a product on the market and the support of distributors, retailers and even consumers may give you better (or no worse) protection than a patent. In effect you’re trading off one risk against another, and the greater risk may be leaving your project underfunded because you’ve diverted so much money into patenting.
- If you conclude that a patent isn’t justified, or it’s too early to apply, don’t be persuaded to change your mind because some company or bank or investor wants to see a patent application. It will be safer to walk away. If your invention is good enough they won’t be your only opportunity. Bear this in mind too: companies that insist on seeing a patent application before they’ll even look at an idea tend to be the ones least likely to want to deal with inventors. So you go to all that cost and trouble, just to make it easier for them to reject you!
- Alternatively, apply for a patent if that helps the project over a major hurdle, then abandon it before the big costs become due. For example: apply just prior to product launch, stick ‘Patent pending’ or ‘Patent applied for’ on all marketing material for 18 months, then abandon the application. By then you may have established a market presence that can survive the lack of a patent. It might be cynical, but if it’s effective business – why not?
- If a patent is genuinely justified – you’ve got a big invention with good sales, growth and licensing potential for at least several years – consider limiting your cover to a few key markets. Patent attorneys tell us that this is what big companies tend to do. However, experience may have taught big companies where their best markets for a new product are likely to be. You may have to guess, so guess based on as much research as possible.
- If a patent is justified, other significant costs will probably be justified too. Therefore, bring more people on board to share the overall cost of the project. This may mean diluting ownership and control of the IP, but if the alternative is painfully slow progress on your own, go for it.
- If a patent is genuinely justified, consider very carefully the timing of an application. As we explain in A Better Mousetrap, applying prematurely for a patent can be a huge mistake. If all you want to do in the early stages of your project is protect against disclosure, there are simpler and cheaper ways of doing it.
- Delaying filing also gives you time to think, and in that time other things may happen. You may conclude that you don’t after all need a patent.
- If you use a paent attormey for any aspect of IP protection – and we recommend that you do – clue yourself up beforehand and insist that you want the most appropriate IP protection for your invention and your circumstances.
- Tell him or her that you don’t want a patent unless it can be fully justified. And if you think it isn’t, don’t be easily persuaded otherwise. You’re the one paying, not them.
- Bear in mind that a patent attorney can’t do your business thinking for you. Though often the first clued-up professional an inventor meets, they’re legal experts, not business or marketing experts. And they’ll probably tell you that, so make sure you listen. Asking a patent attorney for advice about marketing your invention is like asking a plumber for advice about selling your house. They may have a smart idea or two but it’s not their trade.
Succeeding with and without patents: the experience of two inventor-entrepreneurs
Mark is a successful inventor, designer and entrepreneur whose products include the Strida folding bicycle and OneTouch™ can and jar openers. Though he patents almost everything he works on, he is very sceptical about the efficiency and value of patents. Read more from him at Tara Roskell’s excellent Ideas Uploaded. Here’s an edited version of his thoughts on invention protection without wasting money on patenting:
- The main use of a patent is as something to show the CFO/admin types at a company, who rarely put cash into just an idea, even if there’s a prototype. Dragon’s Den-type grabbers love patents: ‘Let the poor sap waste money on expensive patents, then we’ll snap up 80 per cent of the company for bugger all’. That said, not all CEOs are dragons and things tend to improve once a relationship is built up and everyone shares a common interest.
- Ideas are rarely ripped off when shown at early stages, and especially not by big companies who have more to lose in potential bad PR, and may even want a reverse type NDA.
- Fakers and copiers are only interested in the product, not the idea. They wait for all the hard work to be done and a market built. Only then do they copy.
- Use design registration. It costs much less than a patent, and if extended to the USA (or done just there) has a huge advantage in that there it’s called a design patent. That magic word ‘patent’ sounds more impressive to would-be licensees, CFOs etc.
- If you must have a patent, don’t license it – assign it. In effect you sell it, but keep a conditional interest. For example, you might negotiate a deal whereby if sales are less then x, you get first option to buy it back. (Like any property or capital goods, an assignment can be re-assigned back or ownership transferred.) Assignment has saved me a lot ooney over the years because – depending on the contract you negotiate – the costs for ongoing patent application(s), translations, reviews, and fighting (or scaring off) infringers are paid by the assignee, who is usually a company with a lot more money than you. And you can still take commission or royalties on sales, whichever is the more tax efficient.
- If relevant, enter competitions. These independently and publicly fix your invention in time and link it to you.
- Get sensible PR and publicity from trade media only, so as not to spoil a future launch into national media. This again independently fixes the invention in time and acknowledges you as the inventor and IP owner.
- Chasing infringers in their own countries is very expensive, especially when you’re the foreigner and especially when it’s China. But even fakers have to promote their wares, and this gives you your best and lowest cost way to nab them. So, for example:
- If they turn up a trade exhibitions or fairs, show evidence of your IP ownership to the organisers and have them kick off the infringing exhibitors. Ideally, invite the press to this confrontation, as it makes great PR. Asians especially hate to ‘lose face’ in such a public way. Milk as much PR from the results, to scare off others.
- eBay are now much better at removing fakes, even though it’s almost a full-time job reporting them. Amazon are not as diligent.
- Magazines and even blogs are keen to stay above board, so usually respond well if you point out that they’re mentioning or promoting fakes. Again, milk it for positive PR. Praise them for doing the right thing – like saving consumers from dangerous fake bicycles, or fake kitchen gadgets that don’t work.
The thread running through Mark’s tips is that you have to police your own IP because no one else will. This means finding infringers and doing something about them. It’s time consuming but far cheaper and probably much quicker and more effective than an IP lawsuit. And in doing it yourself you get known, which can be useful PR; and you get yourself respected, which may make other infringers think twice about copying your products.
John D Smith
John is a US inventor-entrepreneur who is even more dismissive of patents – so much so that he’s written an eye-opening and very readable book (ebook or paperback) called Don’t File A Patent. He is the inventor of Storm Stoppers® hurricane window protection panels, with sales of almost $10m since 2004 – without benefit of a patent. But it’s not as though he started out not wanting one. He spent around $25,000 on patent applications, only to be given the run-around for years by USPTO examiners who kept refusing him a patent despite ample evidence of novelty.
During the process he learned the hard way about the shortcomings of patents and the patent system. Out of this experience he wrote his book, which also contains many tips about what you should prioritise rather than a patent. John’s position is unequivocal:
‘Filing a patent is a game an inventor cannot win. You may be able to get a patent, but it will cost you tens of thousands of dollars and many years. And, in my experience, a patent is worthless!’
Mark and John, like a growing number of other entrepreneurial inventors, have discovered that patents don’t necessarily help products to succeed. In John’s case, an irony is that a previous invention for which he did get a patent failed commercially. The one that wasn’t allowed a patent was the winner.
John also argues that it doesn’t matter if others infringe your IP. You can’t stop it anyway, and with a patent to defend – or with a patent you think you should defend – you could be tied up for years in expensive, stressful, distracting, time-consuming and probably fruitless court cases. (Even if you win, being awarded damages doesn’t necessarily mean you will actually get them.) Without a patent, you’ve got the liberty to concentrate on beating your infringers in other, more effective ways, out there in the market-place.
Mark and John are not mavericks or special cases. They simply take a normal entrepreneurial view of life: don’t look for a set of rules and conventions to follow – do whatever gets the job done. If more inventors thought more entrepreneurially, they might not get so hung up on patents.
Will China capsize the patent system?
Emerging economies will have an enormous impact on the patent system, and none more so than China. In a TechCrunch article Vivek Wadhwa reported that China’s IP strategy includes filing a million patents a year by 2015 [1,010,406 in 2016!], aided by a system of rewards to those filing the most applications.
To put this in perspective, the US Patent Office (USPTO) currently receives 450,000 patent applications per year from all sources (and rising), while UK-IPO lags with 22,000 (and falling). The USPTO figure is split roughly 50-50 between US and non-US applications, so the Chinese aim is to file at four times the rate of US applicants.
Commentators predict millions of poor quality patents, in Chinese, that act as landmines for any company wanting to do business in China. (The patent searches we carry out at abettermousetrap.co.uk already bear out the predictions of poor quality, compounded by often sparse detail and very hit-and-miss translation; in our darker moments we suspect that some Chinese filings are copied from published non-Chinese patents.) But what about the effect on the global patent system?
A deluge of Chinese filings can only add to the workload of national patent offices, increasing delays and backlogs. Even if they’re overwhelmingly China-only applications for now, they’ll still be prior art and it won’t be long before Chinese companies routinely seek multinational cover. Translation problems alone could become horrendous. And inevitably, much more IP litigation will take place – is already taking place – in Chinese courts. That’ll be fun.
And that’s just China. Patent applications in India are starting to increase steeply too, and other rapidly developing countries will follow suit. Could USPTO, UK-IPO and other national patent offices keep pace with them all? As the system currently operates, it seems unlikely.
China could be the catalyst that either kills or cures the patent system. Without fundamental change, an already bloated system could collapse under its own weight fairly soon. The era of domination by the USA and Europe, and the primacy of English, is coming to an end. It’s merely a matter of time.
And what will happen to patent costs? A question we’ve been asking for a while, without getting an answer, is how inventors and small companies in China, India etc will be able to afford multinational patent cover at present rates. US and European patentees already struggle to pay, so how will applicants fare in countries with much lower per capita incomes? One solution is state subsidy. Another is to farm out examination and translation to low-wage countries. Neither is likely to be acceptable to richer countries. So what will the answer be?
It seems logical to assume that the world patent system cannot survive for long in its current form. Unless there are drastic changes – and the patent system doesn’t do drastic change – we think companies will increasingly throw up their hands in despair and start to ignore it. A kind of uncomfortable anarchy will reign, if it isn’t reigning already.
A culture of disregard
This goes off at a bit of a tangent, but we think it’s relevant.
At bottom, patents rely on the majority of people respecting them. It’s then easier to deal with the minority who don’t. But thanks to the internet and the opportunities it opens up for no-risk theft, we’re now in an era characterised by disregard for other people’s IP. People who wouldn’t physically steal so much as a can of beans from a shop will without much hesitation steal the work of musicians, film makers, games creators, writers and other producers of downloadable content. And they’ll scream blue murder about any attempt to thwart them with paywalls, copy protection, threats to disconnect or legal action.
To a worryingly large proportion of the world, nothing that can be copied is sacred. What’s yours is now mine, whether the act of taking it hurts you or not.
Once this culture of disregard becomes the norm, patents will be even weaker than they are now. They’ll be just one more thing to take without paying the originator. To publish a patent will be to give an invention away, because the remedies are so few, so complex and so expensive as to be unavailable to all but wealthy companies. And it doesn’t help that the patent system allows so many similar patents in so many fields. Confusion always helps thieves.
So far, the threat to patentees comes from a relatively small number of infringers or trolls, and they’re already hard enough to deal with. But start getting very large numbers of infringers and it’s a different ball game. The risk to an individual infringer will be tiny, which will increase the temptation to infringe. Many won’t even think they’re doing wrong. The ‘all information should be free’ mantra will encourage them to believe they’re only exercising their natural rights.
An illustration, of sorts: we read a news item about a man who had ‘invented’ and manufactured a type of umbrella that struck us as commercially doomed but familiar. We did a patent search and in minutes found four patents for exactly that idea. (Note that: four patents for the same idea.) Our man was infringing. Maybe he knew it, maybe he didn’t.
Either way, he was behaving as though it was his idea. And in the grand scheme of things, did it matter? Would he make a fortune? Probably not. He might be lucky to break even. Would the four infringed patentees miss out on a fortune? Probably not. In all likelihood there would be no big winners or losers here. Would the four infringed patentees even find out? Even that might be unlikely.
So let it go. Let sleeping inventors lie. In this example (and many others) the question of patent ownership is irrelevant, because the cost of enforcing any of the four patents will far outweigh any financial benefit to anyone except the lawyers.
The situation might change if the umbrella became a massive hit – but maybe only slightly. Our man might now in theory be worth pursuing for infringement. But his profits might give him the means and incentive to defend himself vigorously against a lawsuit, making it expensive and hazardous to sue him.
That’s the culture of disregard at work. It’s doubtless happening all the time – thousands of patents being casually infringed, maybe innocently, maybe not. Often nobody loses on any major scale. But where do you draw the line? When can you not ignore infringement? As disregard for IP becomes endemic and enforcement costs climb, inventors and small companies may find they can’t draw the line anywhere. Unless we see truly radical changes to the patent system – no more cosmetic tinkering round the edges – those without deep pockets will find it next to impossible to enforce their patents. It will become pointless to try.
In that event, there will either be much less innovation or patents will be replaced by other, more practical forms of protection and deterrence. Innovation is an ingrained characteristic of most developed or developing societies, so that leaves only the second option.
Overall, there is far too much wrong with the current patent system – with worse to come – for it to be considered fit for purpose.