Attorney gives primer on patents By LYNN WOODS

Attorney gives primer on patents
By LYNN WOODS

For small companies, filing a patent for a new product, service or business method provides important protection. However, obtaining a patent is expensive, and if the patent is challenged by a competitor, the legal expenses could be prohibitive.

Nonetheless, having a patent is a plus all around. It not only stops another company from copying your product, but also provides a competitive edge, boosts the value of the firm by attracting potential investors and brings in royalties, which increase profits.

Those were some of the points made by Steve Ackerman, a partner at Saile Ackerman L.L.C., a patent law firm specializing in electronics, semiconductors, software and biotech, at a May 23 talk at the Hudson Valley Center for Innovation in Kingston.

The basis for his primer was simple: intellectual property plays an ever-growing role in information economy. On average, 75 percent of the value of publicly traded companies is measured in the intangibles of intellectual property, compared with 40 percent 15 years ago.

Of the four categories of IP, patents are the most difficult to obtain, but the most valuable. Trademarks are a logo, symbol, name or even a smell or color Ackerman said Owens Corning had trademarked a particular shade of pink for its fiberglass that identifies a company. Trade secrets are information a company keeps confidential for competitive reasons, such as a customer list or secret formula. Copyrights apply to a work of authorship, such as a book, movie or computer program, limited in that they protect the expression of an idea, not the idea itself.

Patents are more far-reaching. They protect the ideas embedded in four different types of inventions: a machine or piece of equipment; a device or article of manufacture; a method or process of doing something; and a new composition, such as a chemical or genetic sequence. The whole idea behind granting a patent, which in the U.S. is good for 20 years, is to encourage people to disclose their new and useful ideas so others can build on their inventions.

To qualify for a patent, an applicant has to prove the invention is new and useful, and it’s not obvious in terms of what’s been done before. The second criterion is somewhat of a gray area, given that “just about every invention is based on a combination of previous things put together in a new way,” said Ackerman. Indeed, “the real test is, can a patent survive a lawsuit? When it goes under scrutiny and survives, it’s considered to be much stronger.”

In the U.S., 60 percent to 70 percent of the applications submitted to the U.S. Patent and Trademark Office are successfully filed. The application is published by the patent office 18 months after the filing date. (Average processing time is just above two years, according to the office’s Web site.)

Filing a patent in the U.S. costs $8,000 to $15,000 or even more, Ackerman said. The office’s filing fee is $500, with the remainder spent in attorney fees. More than half of the cost of the application is for the attorney’s search for similar patents.

An option for cash-pressed small business is a provisional patent, which is good for a year (after which you must file for a regular patent). The filing fee is $100 and the attorney’s fees are $2,000 to $4,000. The filer only has to provide a technical description and drawings (a regular patent application also requires a description of claims).

Ackerman said it’s wise to file a patent application before embarking on any kind of disclosure or public use of the item to be patented. Although the U.S. provides a one-year grace period for filing potential applications, in other countries a public disclosure or use of sale of the item prior to filing would result in a prohibition against filing altogether.

Given the cost, most companies don’t bother obtaining patents in every country in which they sell their product or service, choosing instead to get patents in their major markets. (They also might get patents in countries where they manufacture and where there’s lots of competition.) The exception is the pharmaceutical companies, which invest $600 million to $700 million in R&D to bring a new drug patent successfully through the clinical trials. Once out in the market, the drug can easily be copied by a generic. “Pharmaceutical companies live and die on their patents,” he said. “They absolutely need the protection” and will obtain patents for all the countries they do business in.

Once you have obtained a patent, it can be violated or challenged. Patent holders have six years from when they first find out someone is infringing the patent to take legal action.

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