Debunking the Myth that Patents Are Expensive

When a company considers protecting a product, be it a software program, mechanical device, or other product, the strategy must make good business sense. It is certainly possible to spend vast sums of money on large downtown patent firms and file many international patents, then spend virtually endless amounts of money litigating with infringers, but there are other alternatives.

The first way to limit the IP costs is to be very judicious with the protection. For example, if a software program is to be licensed only in the form of object code, there may be many inventions that lie beneath the surface that cannot be detected by a competitor.

These ideas are best kept as trade secrets and not disclosed for two reasons. The first is that the disclosure has the effect of educating a competitor in how the product is built. The second reason, which is even more important, is that even if there was protection on the idea, it would never be able to detectable when a competitor used the idea. Detectability is one of the key parameters in whether an idea is appropriate for patenting.

The second reason is that in selecting which portion of a product to protect, it is not always necessary to protect every detectable idea. Often, there are one or two key ideas that any infringer would have to violate to copy the bulk of the product. Even if there are many patentable innovations in the product, there may be just one or two ideas that would be the highest priority.

Having whittled down the possible ideas to one or two patentable ideas, the next step is getting the patents issued.

There are several things that can reduce the cost of having patent issued. The most important way to reduce the preparation cost is to be prepared. Do as much research into the prior art as possible, including internet searches, patent searches, and research competitor’s products. Define the differences between the invention and the prior art. As I tell all of my clients, the most important thing that can be done beforehand is a thorough business plan. As part of this process, define the exact features that need to be covered from a competitive standpoint as well as a functional standpoint. This definition will be further refined by the patent professional during the patent preparation and prosecution stages.

Preparing and prosecuting the patent application can be done by a number of different people. On the extreme end of the scale, attorneys in the mahogany paneled offices of large downtown office towers will likely be the most expensive option. Many large firms will not take small companies or independent inventors because they like to focus on very large clients with large amounts of legal work. Consequently, the large firms will price the small clients very high and I have heard many stories of small clients who have difficulty even getting their phone calls returned at such large firms.

There are plenty of smaller law firms and solo patent practitioners that charge much less than the huge downtown firms but give excellent service. For budgeting and management purposes, consider hiring a firm that gives fixed fee quotes as opposed to paying by the hour. The former method encourages the firm to be efficient and constrains the costs, while the second method is often abused at the expense of the client.

Another alternative is to prepare and prosecute the patent application in house. While there are considerable risks to preparing and prosecuting patent applications without a trained professional, I have known people who have done so with both great success and terribly disastrous consequences.

As a benchmark, if the idea is reasonably well defined, an average patent may take about 10-30 hours to prepare, depending on the drafter’s efficiency and familiarity with the technology.

Once the patent issues, enforcing the patent is often cited as a potentially costly activity, but there are other alternatives. The first strategy should be continuation practice. When handled properly, this strategy virtually eliminates litigation and is very inexpensive.

Another alternative to the expense of funding litigation is the use of contingent fees. If there is a high likelihood of prevailing in court, there are many patent litigation firms that will consider taking up the case and getting paid out of the eventual winnings in court. The costs during litigation are generally paid by the client, and the legal fees may be 20-40% of the verdict.

Always consider the business aspects of patent protection before embarking on this path. The costs along the way should be much less than the potential payoff. If the product could only generate a few thousand dollars a year in revenue, there is no business reason for getting a patent. However, if there are or could be millions of dollars at stake, there may be some financial and business justification for getting a patent.