What Any Decision Maker Needs to Know about Patent Protection

Richard Neifeld, Ph.D., Patent Attorney and Robert Crockett, P.E., Patent Attorney

I. Introduction

This paper explains the basic information a decision maker needs to know regarding patents. There are certain concepts the understanding of which is a prerequisite for this topic. Those concepts are provided in section II. Section III relates patents to countries. Sections IV and V explain the legal requirements for getting patents and how long patents last. Section VI discusses patent treaties. Section VII provides ballpark cost estimates for acquiring patents.

II. Prerequisite Definitions

The term "property right," also called "ownership of property," means the right to exclude others from using the property. Property was historically classified as either land or personal, personal property encompassing all property other than land.

The term "intangibles" means rights that are not land or tangible personal property. Intangibles include contractual rights, good will, and intellectual property.

The term "intellectual property" means property rights in certain intangibles, such as patents, trademarks, and copyrights.

Assignment means transfer of ownership of property. (For basic information on invention ownership issues, see http://www.neifeld.com/introart3.html.)

A patent is a property right that has the attributes of personal property. Those attributes include the ability to be bought sold (assigned), and licensed. Like all property, its exclusive right can be enforced. Enforcement of any property right includes the right to sue in a court for (1) damages and (2) an injunction to stop unauthorized use of the property.

There are different kinds of patents, including utility patents, design patents, plant patents, utility models, architectural design rights, and circuit architecture rights. This paper will describe only the most commercially important, which are utility patents.

Utility patents provide a property right to things having an industrial utility, including products, and processes of making and using products. Under current U.S. law, products include computers programmed to perform a useful function, including, for example, a business accounting function, and methods of using include computers running such programs. European law currently does not allow patents on accounting functions, also referred to as business method patents. On the issue of business method patents, Japan's law is currently somewhere in between that of the U.S. and Europe.

The exclusive right is defined by the claims and the disclosure of a patent. What the claims cover is called subject matter. That is, claims define or delimit "subject matter" to which the patentee has an exclusive right.

Unauthorized use of an intellectual property right is called infringement. Remedies for infringement typically include damages (money equivalent to the harm caused to the owner of the patent by the past infringement) and injunctions (a court order forcing the infringer to stop his infringing activity).

A specification is a written description, often including figures, of subject matter sought to be patented, such as an invention. I try to limit the use of the word "invention" in this paper because it is in many senses mis-descriptive of what a patent can protect.

A filing date is the date that a national or international patent office recognizes its receipt of an application filed in that office.

Prior art means knowledge generally known by other than the patent applicants prior to when the applicants made their discovery or invention. This is a generally applicable definition in the sense that there are several exceptions and fine points that vary from country to country. One major exception is that almost all countries other than the U.S. define the date of discovery or invention claimed in the patent application as the filing date of the application, not an earlier date when work leading to the discovery or invention was done.

III. Who Grants a Patent and Where is Each Patent Enforceable

Generally speaking, patent rights are granted by nations. Each patent is only enforceable in the nation in which it is granted. There are some international treaties that extend the one patent per nation concept. Europe, for example, has one agency, the European Patent Office, that grants European patents. There are a few other such regional patenting authorities, one for the states of the former Soviet Union, and one for certain states in Africa.

Currently, there is no international patent. That is, there is no single patent granted by any patenting authority that is legally enforceable everywhere. However, a world patent has been discussed for decades, and international organizations are making incremental progress towards such an international patenting system. Don't hold your breath, though. Most people in the patent business expect no international patent in the near future. Also, see below regarding international treaties that ease the burden of obtaining a patent on one invention in many countries.

IV. How Long Are Patents Enforceable

Generally speaking, patent are enforceable for twenty years from when the application for the patent is filed. There are of course exceptions and variations from country to country and application to application.

V. What are the Core Conditions for Obtaining a Patent on Anything

A. The Substantive Requirements for Obtaining a Patent

The core requirements worldwide for obtaining a utility patent are (1) that the thing is useful and (2) that the thing is novel. There is a third requirement, which is referred to as either the "inventive step" or the "non-obviousness" requirement, which generally means that the thing being patented would not have been readily apparent or immediately obvious to someone working in that technology field. The U.S. applies the non-obviousness standard. Europe applies the "inventive step" standard. (The U.S. has imposed an additional requirement, called the "best mode" requirement, but that is a technicality not relevant to the purpose of this paper.)

B. The Procedural Requirements for Obtaining a Patent

The process of obtaining a patent includes the steps of preparing and filing an application for the thing to be patented, prosecuting the patent to issuance, and paying applicable government fees. While this sounds simple, it definitely is not. The preparation of a quality disclosure for a patent application is essential to the government eventually granting the patent and the resulting patent being legally enforceable and therefore accorded respect by potential business competitors.

Generally speaking, the specification must include a sufficient description to enable one of ordinary skill in the art to which it pertains to make and use the claimed subject matter in order for the application to result in a patent. This is generally true in all countries that issue utility patents. In addition, in the U.S., the specification must also disclose the best mode that the inventor had in mind for making and using the invention at the time of filing of the application.

Failing any of the substantive or procedural requirements can fatally flaw the attempt to obtain a patent.

VI. Treaties that Facilitate Obtaining Patents in More than One Country on the Same Thing

There are currently two mechanisms to facilitate extending patent protection on something to more than one country. They are the Paris Convention and the Patent Cooperation treaty.

A. The Paris Convention

The Paris Convention's core feature is that it allows the filing of a patent application in a second country that is a member of the Convention to be accorded the filing date of an earlier filed application filed in a first country. That allows a patent applicant to file the application in one country, and then to have copies of the filed application sent to agents in other countries for filing there. The Paris Convention has a time limit of one year (for utility patents). That is, the subsequently filed applications in the other countries must be filed within 1 year of the first filed application in the first country, to be accorded the earlier filing date. This right is incredibly important because, in most countries, public disclosure of the subject matter of a patent application prior to filing the application is an absolute bar to obtaining a patent for that subject matter. The Paris Convention allows the applicant to file a single patent application in one country, and then publicly disclose and sell products and processes disclosed in the application without automatically losing the right to a similar patent in the other countries that are members of the Paris Convention. Almost all countries of industrial/commercial significance are members of the Paris Convention. The Paris Convention has been in existence since about 1900 CE.

B. The Patent Cooperation Treaty

The Patent Cooperation Treaty goes one step beyond the Paris Convention. The Patent Cooperation Treaty allows a patent applicant to legally effect filing in every country that is member to the PCT by filing a single application, a PCT application, in any country that is a member of the PCT. The PCT application, however, will not issue into an international patent. Instead, if the applicant decides to obtain a patent in a country from the PCT application, the applicant must still file and pay for the "national stage proceeding" of the PCT application in that country. The benefits of filing a PCT application instead of national stage applications are (1) the PCT application allows for a minimum of 30 months to file "national stage" application during which time the applicant has no substantial patent related costs, (2) the PCT application reduces the formalities and costs required in filing applications in multiple countries, and (3) the PCT application process can provide an initial indication (prior to the 30 month period just noted) regarding the likelihood that the subject matter of the application is patentable so that the applicant can make an informed financial decision regarding cost/benefit of paying for the national stage proceedings in any country. Almost all industrially significant countries are members of the PCT. There are still some exceptions, like Thailand. The PCT has been in existence since the 1970's and it has been tremendously effective, with tens of thousands of PCT applications now filed annually.

The PCT incorporates the Paris Convention. What this means is that a PCT application can claim Paris Convention priority to an earlier patent application. Therefore, a patent applicant can, for example, first file an application for a U.S. patent. Then, the applicant can file a PCT application which legally has the U.S. patent application's priority date because of the Paris Convention. Then, the applicant can enter the PCT national stage in selected countries, for example, selecting the United States, China, Japan, Europe, and Korea for PCT national stage proceedings, and not selecting (and thereby abandoning patent protection in) all other countries.

C. Other Treaties Facilitating Obtaining National Patents

Europe has the European Patent Convention. The former Soviet Union has the Eurasian Patent Convention. Some African national have the OAPI treaty.

The EPC allows a single application to issue into a single European patent. However, generally speaking, that European patent is currently not enforceable in any European country unless the granted patent has been translated and filed in the country's national patent office within 3 months of the date of grant of the European patent. Hence, the substantial translation and national agent costs, and annuities costs, also exist for European countries. The other two treaties are currently of negligible importance.

VII. Costs and Cost/Benefit

No one can file a patent for an invention in all countries of the world. Anyone that thinks they can is fooling themself. Consider the following rough outline of costs. These costs estimates are ball park, and generally independent of country.

Initially, there is the cost of any determination whether to file a patent application (internal corporate patent committee review, patent prior art search and evaluation). Next, there is the cost of drafting a patent specification, claims, and figures. That currently ranges for typically patent applications from three to twenty thousand dollars, depending upon the importance of the invention, technological complication, budget, etc. Most of that cost is the cost of drafting the specification and claims, typical a few tens of hours of attorney time. There is the government cost of filing the application, which typically ranges between one and three thousand dollars. That is the cost to file a first application.

Consider now the cost to file Paris Convention or PCT national stage equivalents. This cost includes the foreign agent's docketing and filing charges, typically one to two thousand dollars, and the foreign government's filing fees, typically one to two thousand dollars. That is per country. If, however, the target country does not accept filings in the language in which the specification was originally drafted, then include the cost of a professional translator skilled in patent translations. That ranges from 0.20 to 0.40 cents per word. For a 50 page specification having 300 words per page at one and one half line spacing (15,000 words total), that will cost three to six thousand dollars. If you have a 100 page specification, double that value. If you have a 200 page specification, triple that value.

You have now considered the cost to get the application on file. Add to that the cost of complying with each government patent office's formalities requirements, and responding to each government patent office's examiner's review and rejections or requirements, including both the foreign agent's fees and the national agent's fees.

Now add in each government's charges for granting the application, the foreign agent's charges for paying for the grant, typically about two thousand dollars, the costs for your national agent to handle those transactions, and then the foreign government annuities, the costs for the foreign agent to track and pay those fees, and the cost for your national agent to track report to you, and pass along your instructions. The foreign government annuities vary from country to country, the determination of the date on which they are due varies from country to country, and the fees typically increase from about one hundred dollars the first year to over a thousand dollars near the end of the 20 year patent term. The foreign agent's fees depend upon the magnitude of the government fees but are never less than about one hundred dollars.

All of the foregoing assumes that no one challenges your patent application via an opposition proceeding or the like. Any proceeding involving more than just the patent application and the government will increase by tenfold the costs for that country, and impact the costs in the other countries as well.

Thus, to file for, obtain, and maintain a patent for something in all countries of the world would cost millions of dollars. Given those constraints, any patent applicant must make cost/benefit analyses to determine in whether and in which countries to seek patents. Moreover, the cost benefit analysis and timing of incurring costs in the patenting process are substantially influenced by the procedures (national, Paris, PCT, and EPC filings) used to obtain patent protection.

VIII. Further Information

This article has discussed some of the basics of patent law that every decision maker needs to know. Additional articles and resources on patent law and intellectual property can be found at www.neifeld.com.

IX. About the Authors

Rick Neifeld is a Ph.D. (in Physics) patent attorney and managing partner and President of Neifeld IP Law, PC. Neifeld IP Law specializes in U.S. and international patent protection, licensing, advice, and counseling. Rick is also a patent interference practitioner, former Chair of the Interference Committee of the AIPLA, and co-owner of the patent related services provided at www.PatentValuePredictor.com. Rick can be contacted at .

Rob Crockett is an Professional Engineer in electrical engineering and a patent attorney.