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MEMORANDUMTO: Clients and EntrepreneursFROM: Morris, Manning & Martin, LLPRE: Patents – When, Why & HowDATE: 2011___________________________________________________________________This Frequently Asked Question (FAQ) memo addresses typical questions from companies regardingpatents and intellectual property (IP). This document is authored by the Intellectual Property Group ofMorris, Manning & Martin, LLP (www.mmmlaw.com). The following questions are commonly askedby technology and business services companies. We hope this information is helpful to you. Pleasenote that there are additional questions that will be relevant in this area and you should consult an IPattorney at MMM (contact information listed at the end of this memorandum) with any other questions.1. Why should I consider filing a patent application?Answer: There are several reasons that filing one or more patent applications could be important. Afew of the common reasons are listed below: a. Protection against competitors – Having an issued patent (or patents) grants the patent holder the right to stop others from making, using, or selling the patented invention. Thus, if you believe you have a successful product, a patent may be the only way to prevent potential competitors from copying that technology and marketing it themselves. b. Adding value to your company – For many early-stage companies, patents (and pending patent applications) are a way to boost valuations and make a company more attractive to a potential investor. In fact, many investors and acquirers often comment that patent protection is a key component to a successful valuation. Further, pending patent applications can be just as important (if not more so) than issued patents, as a pending application carries with it the possibility of obtaining broad patent coverage. c. Discrete assets – Patents and patent applications are properties that can be bought, sold, and licensed like any other asset. Accordingly, patents can be used to generate revenue through licensing, or put a “wrapper” around a technology in an agreement.2. When should I begin thinking about patent protection?Answer: Generally, you should begin considering patent protection once product design ordevelopment begins in earnest. There is no requirement that a technology actually be “built” beforeapplying for patent protection (as long as the applicant can define with particularity how thetechnology will function), and thus you do not have to wait until after a technology is complete tobegin preparing a patent application. Further, as described below, waiting too long to apply for patentprotection can bar you from obtaining a patent. Additionally, there are ways to file a patentapplication relatively quickly and cheaply (see discussion of provisional patent applications below) toprovide temporary protection while product development, marketing, and the like are finished.
Memorandum - Patent FAQs2011Page 23. What is the difference between a “provisional” and a “non-provisional” (regular) patentapplication?Answer: There are two primary types of U.S. patent applications—provisional applications and non-provisional (or regular) patent applications. The critical distinctions between the two are describedbelow: a. Provisional Application – A provisional patent application is a temporary applicationthat acts as a placeholder and grants its applicant(s) a priority filing date for one (1) year. If a regular,non-provisional application is filed within one year of the provisional application, then the applicant(s)can claim priority back to the filing date of the provisional application. If no non-provisionalapplication is filed, then the provisional simply “expires” one year after its filing. Provisional applications are advantageous in that they do not have to meet the strict, formalrequirements of a non-provisional application, and thus can typically be prepared more quickly andcheaply than non-provisional applications. Also, because there are no formal formatting requirementsfor provisional applications, and because they are not required to recite specific “claims” (i.e., thelegal language that defines the scope of an invention), provisional applications can consist entirely ofinventor-supplied materials, such as technical specifications, white papers, internal diagrams andscreen shots, and the like. There are downsides to provisional applications, however. Mainly, a provisional application isonly as good as the content contained therein. Thus, a short “cover sheet” or “abstract” provisionalwith limited technical substance that only sets forth a high-level concept or idea will likely not bedeemed sufficient to support a filing date for a later, non-provisional application. b. Non-Provisional Application – A non-provisional application is a regular application thatis examined by the U.S. Patent & Trademark Office (USPTO) and must meet all formal requirementsof a patent application. A non-provisional patent application includes drawings that show, in detail, agiven invention, a detailed description of the invention, and claims that set forth the legal scope of theinvention. Non-provisional applications require careful planning, consideration, and drafting to be ofsufficient scope, clarity, and content to adequately and accurately describe an underlying technology.4. What is the timetable for preparing a patent application?Answer: The time it takes to prepare a patent application depends on a variety of factors, includingthe complexity of the underlying technology, the scope of patent protection desired, whether anypotential deadlines are on the horizon (e.g., timing with product release), etc. Generally, preparing ahigh-quality, non-provisional patent application requires about three (3) months, but this time can be(and often is) shortened due to timing and budgetary constraints. Quality non-provisional patentapplications can be prepared in less than a month in certain circumstances, but this approach is notrecommended. On the other hand, provisional patent applications can be prepared in much shorter amountsof time, especially if they consist entirely or almost entirely of inventor-supplied materials. Provisionalapplications consisting of majority inventor-supplied materials can often be filed within a few days.5. What is the approximate cost for preparing a patent application?Answer: The cost for preparing a patent application can vary greatly depending on many factors,including the type of application (provisional versus non-provisional), the complexity of the underlyingtechnology, the importance of the technology to the company, timing and budgetary constraints, andother factors. Some provisional applications can be filed for as cheaply as $500, whereas some veryhigh quality and complex families of non-provisional applications can cost upwards of $300,000.
Memorandum - Patent FAQs2011Page 3 As a general rule of thumb, a provisional application with limited attorney-supplied contentcosts approximately $1,000 - $2,000. For non-provisional applications, the typical cost isapproximately $15,000 per inventive concept. Keep in mind, however, that these estimates are justthat, estimates, and a patent application can be crafted to fit any situation and budget.6. I am preparing to launch a new product very soon—do I need to file a patentapplication before I do so?Answer: Not necessarily, but there are certain actions that can make it time-critical to file a patentapplication. Specifically, a patent application must be filed within one (1) year of any public use,public disclosure, or offer for sale (even private) of a given technology, or else the right to obtain aU.S. patent for that technology is lost. This is known as a “statutory bar.” Thus, any of theseactivities (including a new product launch) begins a one-year time period during which a patentapplication must be filed. It is also important to note that many foreign countries do not afford patentapplicants with this one-year grace period. Thus, for example, a public disclosure of a giventechnology (e.g., a white paper or doctoral thesis) may bar patent protection in many countries if apatent application is not filed in those countries prior to that public disclosure.7. Will a U.S. patent provide protection in foreign countries?Answer: Unfortunately, no. Every country has its own patent system with specific laws and rulesregarding examination and issuance of patents. Thus, if you plan to conduct business in any foreigncountries, you must file for patent protection in each individual country (with some limited exceptions,such as the EU). A patent applicant may file, however, an international “PCT” (Patent Cooperation Treaty)application within one year of filing a first patent application (e.g., a U.S. provisional application),which provides a temporary priority date to file later foreign patent applications. Typically, a PCTapplication provides thirty (30) months for an applicant to decide whether he or she wishes to pursuepatent protection in any foreign countries. If so, the applicant can file in those countries and claimpriority back to the filing date of the first filed patent application. If no foreign patent applications arefiled, the PCT application merely “expires.”8. How do I know if my technology is patentable?Answer: Whether a given technology is patentable or not depends on a variety of factors, but themost important issues to consider are (i) whether the technology comprises patent-eligible subjectmatter, and (ii) whether any “prior art” exists that teaches, suggests, or discloses the technology.Regarding the patent-eligible subject matter issue, most technologies are patent-eligible, but thisquestion often arises in the software and business method contexts. This question is still somewhatunanswered, but for now most experts are taking the position that software technologies willultimately prove to be patentable, and most companies in the field cannot afford to gamble that allsoftware patents will ultimately be held invalid. The scope of this patent-eligibility question is beyondthe scope of this memorandum, but please contact an IP attorney at MMM for further information. Regarding the “prior art” issue, conducting a patent search is one way to begin to understandthe relevant prior art that may exist in your field. A search is never guaranteed to identify any and allrelevant prior art, but it does help in identifying whether your technology area is a “crowded field,” andalso provides a sampling of what patents in your space “look like.”9. Whose name should appear on a patent application (i.e., who is an “inventor”)?Answer: U.S. patent applications require that individual inventors be named on a patent application.An “inventor” is one that contributed to “conception” and “reduction to practice” of the claimed subjectmatter in the application. Of these two criteria, conception is generally considered to be the mostsignificant. For example, a pure “bench engineer” or programmer not involved in the design of a
Memorandum - Patent FAQs2011Page 4technology is likely not an inventor, whereas one who develops the architecture or design of atechnology but does not necessarily contribute to actual construction or programming of the systemmight be an inventor. It is important to note that, absent an agreement to the contrary, patent rights of an employeedo not automatically assign to the employer. This is true even if a “work for hire” agreement with anemployee is in place. Accordingly, it is very important to obtain patent assignments from all inventorsnamed on a patent application.10. What happens after I file a patent application?Answer: After a patent application is filed, it is initially examined by the USPTO to ensure that allformatting and technical requirements have been met, and if so, it is passed along for examination bya patent examiner. Unfortunately, due to USPTO backlog, it can often be more than a year (or two)before a patent application is examined. Once examination begins, an applicant is often required tonarrow the scope of his or her patent “claims” and argue with the USPTO regarding why a patent isdeserved. After this negotiation process is complete, if the examiner deems the subject matter isworthy of patent protection, then a patent is issued. If the examiner believes the subject matter is notworthy of patent protection, then it is ultimately rejected. If this happens, and a patent applicant stillwishes to pursue patent protection, then he or she can appeal to the Board of Patent Appeals andInterferences. Please see MMM’s Patent Law Overview memorandum, or contact an MMM IPattorney for more information.11. Is there a quick and easy way to apply for patent protection?Answer: Yes, as described above, provisional patent applications can be prepared and filedrelatively easily, quickly, and cheaply in some limited circumstances. However, it is important to notethat these provisional applications only provide temporary protection, and they must include sufficientcontent to support a later-filed non-provisional application to have any significant value.12. What alternatives do I have to obtaining a patent to protect my technology?Answer: In some cases, patent protection may not be possible (e.g., it has been more than a yearsince an offer for sale of a technology), and thus you may want to consider alternate forms ofprotection. The type(s) of alternate protection best suited for you may depend on the subject matterof the technology, but for software and other computer-implemented technologies, the following formsare most typical: a. Copyright – Protects “original works of authorship.” In the software context, source code is protectable via copyright. Registering copyrights is not required to obtain protection, but is necessary to file a lawsuit. b. Trade Secret – A trade secret is a process, technology, formula, etc. that is not generally known or readily ascertainable. Trade secrets are advantageous in situations in which you are relatively confident that your technology cannot be easily “reverse engineered.” To maintain a trade secret, certain procedures and protocols must be implemented to show efforts keep the technology or subject matter a secret. *****For more information regarding any of the above-listed questions, or any others relating to patents orintellectual property, please contact one of the following attorneys in the MMM IP Group: John R. Harris - 404-504-7720 - email@example.com Daniel E. Sineway - 404-364-7421 - firstname.lastname@example.org