Jim Finnegan is a Partner at Red Chalk Group with a proven track record of global success in creating significant value from patent assets. Prior to Red Chalk Group, Jim held IP leadership roles at Comcast Corporation, Qimonda AG, and Lucent Technologies/AT&T.
Securing a patent can be a pivotal decision for your business. It’s not just about protection—it’s about strategy, investment, and foresight. Here’s a candid look into the world of patents from someone who’s been in the trenches for three decades.
Introduction
With 30 years of experience in the patent licensing business, I’ve seen thousands of patents from a licensing perspective. I’m not a lawyer, but I’ve guided numerous companies and inventors through the intricate maze of patent decisions. Often, companies ask me whether they should file a patent. Here, I aim to share my perspective and ensure your patent attorney is truly serving your best interests.
What You Should Do:
What You Should Do:
File on the Big Idea
Startups often overlook filing for a patent on their business’s fundamental, game-changing idea. This is due to many reasons, but mainly because patents are considered by many to be a distraction and too expensive. After your company has had some success and gained momentum, the idea of patenting comes up, but it may be too late to file for the original blocking idea. Instead, incremental ideas are filed for patent protection that unfortunately hold less value. Your primary innovation—the cornerstone of your business—deserves protection.
Additionally, as you are looking for funding, potential investors will ask about your patent filings because it signals that your company has unique technology and know-how. It takes careful attention to file for that fundamental idea while not being too distracted with patenting the incremental ideas.
Think Long Term
While you are deep in the development of your idea and your business, consider how your company may pivot. Also, consider how your invention may be used in a decade. Often, the prime window for a patent’s licensing value is eight to ten years after creation. It can take that long for the industry to catch up with your breakthrough idea. Envision its evolution and future applications to ensure it remains relevant and valuable.
Evaluate Alternatives
If your company’s core competency is time to market or offering the low-cost solution, your invention may be just one way of many that gets the job done. If it isn’t a blocking idea and there are multiple, competing solutions, think twice before filing.
If your invention is a solution that might be easy to decipher alternative work-arounds through reverse engineering, it may also signal that it isn’t a blocking solution, and it may be better to skip patenting. A patent should offer a unique, non-obvious solution.
Scrutinize Your Patent Attorney
Ask your potential patent attorney how many of their patents have been litigated or licensed. If the answer is none, it might be wise to look elsewhere. Also, inquire about their rejection rate for client ideas. A diligent attorney will filter out unworthy ideas, ensuring only strong, defensible patents are pursued. It’s a bit of a challenge for a patent attorney to tell you not to file a patent, effectively taking work away from themselves. But that money comes out of your pocket, so make sure you have people on your team who are focused on your legal spending.
Why This Matters
Better choices on what ideas to file can significantly benefit the patent system. Here’s how:
- Cost Savings: Companies can save on patent filing, prosecution, and maintenance costs on incremental ideas that may have little value.
- Litigation Reduction: Stronger patents mean fewer “bad” patents in the system, which eliminates money spent defending against poor infringement claims.
- Higher Quality Patents: Encouraging attorneys to be bold and honest can lead to higher quality patents, benefiting everyone in the ecosystem but most importantly, your bottom line.
Industry Insights
Financial Impact of Patent Prosecution
Annually, businesses in the USA spend billions on patent prosecution. The costs cover everything from attorney fees to maintenance fees, making it a significant investment. In 2022, the US patent system saw approximately $45 billion spent on obtaining and maintaining patents.
Litigation and Licensing Statistics
Interestingly, only a small percentage of patents are ever litigated or licensed. Research indicates that around 2% of all patents are litigated, and approximately 5-10% are licensed. This underscores the importance of filing for patents that have real, enforceable value.
Conclusion
It takes bold patent attorneys to tell their clients, “Great idea, but this wouldn’t make a great patent.” Unfortunately, the industry leans towards a conservative, self-serving approach—more patents mean more revenue for firms. However, the true value of a patent lies in its applicability and defensibility, not just its existence. Make informed decisions and choose patent attorneys who prioritize quality over quantity.
By focusing on significant, long-term innovations and ensuring rigorous evaluation, companies can navigate the patent landscape effectively, safeguarding their inventions and investments for the future.
