“No more than 1 in every 100 patent earns enough to pay back development cost and patent fees. About 1 in 500 makes any money above its out-of-pocket costs.” – Peter F. Drucker in Innovation and Entrepreneurship
If this is true then why do so many people file patent application? There are about 200,000 patents granted in US every year. (You can see this report from U.S. Patent and Trademark Office for more detail.)
4 Reasons why people file Patent
- Measure of R&D progress: For individual it can build your credibility. For a research lab in can be the ROI measure for the top management. For an organization it can have a positive influence on the brand.
- Proof of uniqueness & usefulness: Any product which is backed up by a patent has a higher perceived value.
- Defensive measure: You can file a patent to get protection from possible future litigation (see this). Alternately you can use patent to cross-license technologies. (see this)
- Startup valuation: Not just for startups, patents can push up valuation of any organization. Look at how Oracle is trying to leverage Sun patents against Google Android.
What can be patented?
The common theme is the emphasis on the invention being new and useful. This is where patenting differs from any academic publication where the emphasis is only on advancing the state of knowledge.
Patent rules differ from country to country.
- In US: Almost anything can be patented as long as it is new – laws of nature, physical phenomena and abstract ideas cannot be patented – see this
- In India: Software cannot be patented – you need a hardware component as a part of invention
Getting a patent in one country provides protection in that country only. That does not mean that you need to file patent in every country separately. PCT or Patent Cooperation Treaty is an international patent law treaty which provides protection in all the countries signatory to this treaty.
Important point: Patent is always granted to an individual.
Warning: You need to start the patenting process before you invention is shown to others. Anything that is already sold, published or presented to external audience is NOT patentable.
How to go about patenting?
Let me concentrate on the US patenting process.
- If you are in the field of IT, the patent will fall under the category of Utility Patent.
- You NEED a registered patent attorney – this is where you can find one – India has 6 registered attorneys (2 each in Bangalore, Hyderabad & Mumbai).
- There is a searchable patent database – you can search for granted patents as well as patent applications – you can glance through it and get an idea of what patents look like.
- Before you can proceed, you need to search the database and see if something similar has been patented – normally this search is done by your patent attorney.
- Once you are satisfied that your invention is new you have the choice of either filing for a provisional application which will allow a time of one year to make the final application.
- After you have filed the patent the average waiting time is 26 months for the USPTO sends you the first response.
- Once your patent is examined, USPTO in most cases will raise a set of objections which you have to counter – average time for this process is about 10 months after the first response.
- If you are able to successfully convince the USPTO the indeed your invention is new then you will be granted the patent – you have to pay the patent fee.
- You have to renew the patent after 3.5, 7.5 and 11.5 years.
- In India, it would cost you around US$ 20,000 in patent fee and attorney fee to get a patent processed.
The USPTO site has a nice dashboard which provides useful statistical information.
This is a simplified version of the patenting process as described in USPTO site.