Patents Can Protect Or Pose a Threat, But Mostly They’re Misunderstood

When owners and employees of small and medium-size businesses hear the word patent, strong feelings usually come up. There is excitement when the business has patents that give it the right to exclude others from providing or using novel products and services that the business provides to its customers. This gives the business a competition-free window of time to build market share, develop products, expand sales and operations, and achieve valuation goals. Or there can be a feeling of fear that others who own patents, including dreaded patent trolls, might sue the business for patent infringement.

These lawsuits may disrupt the business ability to provide products and services, impact the business ability to raise money, adversely affect valuations, and pressure the business leadership into signing a license agreement.

Lets dive into these two scenarios and learn how you can make the most of each one. The goal of the patent system is to encourage people not to hide their brilliant ideas from everyone else, but instead to disclose their ideas and make them widely available.

In exchange for disclosing, a patent holder has the right to exclude others from making, using and otherwise commercially exploiting patented inventions based on their idea. These inventions, which are actually functional implementations of the idea, must be both novel (new) and nonobvious at the time the patent is filed to people who work generally with devices, products or services in the field of the invention.

How can you get patent protection? In the United States, the quickest, easiest, and cheapest way to start is to file a provisional patent application. A provisional application includes drawings and descriptions of the invention (the idea and its functional implementations) in enough detail to teach others skilled in the art how to build and use the invention.

The provisional application provides a one-year placeholder that can be used as the basis for a nonprovisional patent application filing that will be examined by the patent office and eventually, hopefully, result in an issued patent. The cost for filing a provisional patent or a nonprovisional patent may vary from around a few thousand dollars to $15,000, or even higher if the technology is complex. This may amount to about 1% of a typical seed fund or angel-investor fund of around a million dollars.

It is also important to file patents in the early stage of the company. For example, Google filed its first patent before the company was even founded.

To extend a patent worldwide, a patent-cooperation treaty application can be filed and then used as the basis for obtaining patent protection in most countries, e.g., in Europe, Asia or Latin America. Businesses typically choose countries where their inventions can be either manufactured or used. Your local patent attorney can give you suggestions on how to proceed. With patent protection, your business will get a protectable competitive advantage.

What happens if you get sued for patent infringement? First, just because someone accuses you of patent infringement does not mean that you actually infringed. But you do need to respond. The actual invention protected by a patent is defined only by a set of claims listed at the end of the patent. Start by looking there.

Does your device, product or service include every element in at least one of the claims? If so, your options include negotiating with the accuser or attacking the patents validity. Your patent attorney can help you figure out a response strategy that best meets your business goals.

Steven Blair and Yuke Wang are technology attorneys with Schwabe, Williamson & Wyatt.