Patenting Your Invention: the Ugly Truth – Page 2

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’re 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.


   In practice, there is a lot wrong with this system.

 

1: The cost

   For the average private inventor without pots 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.

   (NB: we haven’t mentioned patent attorney fees. These can add very substantially to the cost of patenting. However, patent attorneys don’t own the system and are not responsible for its official fee structures. In the interests of good relations with your patent attorney, should you need to employ one, it’s important to keep a firm grip on this distinction.)

   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.

 

2: The lack of real protection

   Before they actually tangle 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 copies your patented-protected idea or product, the patent system does nothing. Absolutely nothing. No matter how blatant and commercially catastrophic the theft, 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 challenger, you have to make all the moves and pay all the large legal costs yourself. And large means large. Richard Margiano in Managing Intellectual Property says: ‘The average patent litigation lasts about two years and costs about $3m. An appeal can add another $2m and one year to that estimate.’

   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 marriages and homes 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 will occasionally beat Goliath, but that’s rare.

   For big companies, patent lawsuits are part of the cost of doing business. They take them in their stride. In fact, well-publicised IP disputes may have PR value if they keep a company’s name in the media.

   For example, the mobile phone industry seems like one massive IP battlefield as Apple, Research In Motion, Nokia – basically, all of them – try to kick holes in each other’s patents because so many of the technologies they use overlap. It seems almost a ritual, like medieval jousting tournaments with lots of macho combat but nobody (usually) getting too badly hurt. Each lawsuit will runs its course, cost many millions, make headlines, and resolve little. And 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 and investor confidence – 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. In the business jungle it isn’t patents that protect ideas and products, but money.

   Many large companies know this full well, and exploit the fear of financial consequences (including loss of support from investors and banks) to defeat a weak opponent without a fight. To them there is no moral issue. Any tactic, however dirty, is allowable if there is a valuable commercial advantage to be had.

   And that’s just the company. If your lawsuit has to be conducted outside your home country, you may also be up against a 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.

   But that could be as nothing compared to the problems inventors might in future have in fighting their corners in China (see Will China capsize the patent system? much later). Or India, Russia, Brazil, or any other emergent economy whose courts may or may not be scrupulous about respecting intellectual property rights.

   It’s often claimed that a patent has a useful ‘burglar alarm’ effect. The theory is that rather like the alarm box visible on the outside of your house, infringers take one look at your patent and slink away to seek easier pickings elsewhere. But the typical burglar alarm beats a patent in at least three respects:

  It’s inexpensive and its cost easy to justify.

  When a burglar attempts a break-in, it goes off.

  After the police attend, they don’t send you a large bill for their services.

   Patents and burglar alarms do however share one weakness: if someone is really determined to steal your property, no burglar alarm is going to stop them. Same with a patent. It may deter decent companies and a few small-time cowboys but it won’t stop the big boys and it won’t stop out-and-out pirates skilled at ignoring or evading the law.

 

 

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