Got inspiration? I suppose all of us have had at least one really inspired, good idea for an invention. In business, we can often convert these good ideas into good money. How to do this is the subject of what lawyers call intellectual property rights. These are ownership rights over the intangible “products” of our imagination and our brains. We can thus claim ownership rights not only over the tangible products we sell, but also over the ideas which gave rise to their design, usefulness, and innovative qualities. The scope of Intellectual Property (IP) mainly covers ownership rights over what we write down (copyright), invent (patent protection for new, useful, or improved machines and manufacturing processes) or rights to trade secrets (like the Coca Cola recipe). Today, let us look at patent protection, focusing on key issues for management about how to get started with a patent application.
In 2007, nearly 500,000 applications were made for patents, of which only some 183,000 were granted. These figures represent a doubling of applications over the last ten years.
Although the top ten companies that patent inventions are all in the computer and software industry (each receiving over 800 new patents annually), many small and medium-sized corporations are equally successful in patenting good inventions on a smaller scale. Patents are recognized under the Constitution in order to “promote the progress of science and useful arts by securing for limited times to …inventors the exclusive right to their …discoveries.” Current patent laws give to the inventor a twenty-year protected monopoly right over the invention. You cannot patent an idea on its own (nor anything falling within “the laws of nature”), but have to discover or invent a new and useful process or machine. It is essential to show the invention has a useful purpose, in other words, it will perform the intended task. If the invention involves improvements to existing machines or processes, they must not be “obvious” (to anyone who is reasonably familiar with that area of business or technology).
Gaining patent protection is a complex process. It is important to use a patent attorney to handle your patent applications. Patent agents may be highly experienced; however, they cannot engage in litigation or arrange licensing agreements. An attorney is also useful to review corporate policies, guidelines, and employment contracts regarding intellectual property issues. Before paying out lawyer’s fees when you or your company is pursuing patent protection for the first time, you should develop a “to-do” check list and audit of current practice on intellectual property issues. This is vital to minimize problems down the road.
First, search existing patents. Ask your local library for the closest location of a Patent & Trademark Depository Library (on-line searching is free). Your search may reveal existing, similar patents (with drawings of the invention/process) and minimize wasteful applications. General guidance and relevant forms can be obtained on-line at www.uspto.gov. Second, all companies need to formulate or update clear policies on intellectual property rights. Consider whether the company owns all the inventions conceived by employees during working hours. Alternatively, are there incentive schemes to encourage innovation by the work force? How is intellectual property dealt with in employment contracts, especially for those working on research and development, design, or software applications? How are employees to be compensated for inventions: by shares in royalties, percentage of profits, or bonus payments? Are contractual arrangements with third-party inventors or manufacturers adequate to protect your company?
Third, how does the company keep potential inventions safely in house? Are there provisions for recording in writing or secure digital form the early designs, draft proposals, correspondence, and drawings? All work on the invention prior to the patent application needs to be independently dated and securely stored. This is frequently an important part of proving that your invention predates other rival claims. Fourth, it is important to consider how far confidentiality and restraint of trade clauses are needed in employment contracts to deter inventors from developing the invention for a competitor, without suitable safeguards. Fifth, is the invention so marketable as a niche consumer product that you might want to make and sell it now, even while it is “patent pending”?
Finally, all these preliminary steps should be submitted for approval or additions to your patent attorney. DIY Patenting is not an option. Choosing a good patent attorney or patent agent is crucial to success with patenting any invention and reaping financial rewards from it.
Andrew Trew is a lawyer and ethics consultant. He teaches Business Ethics at John Carroll University, Cleveland, Ohio, and is Chairman of the Cleveland Clinic Health System IRB, Cleveland, Ohio.
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