Chapter 1
Background for Developing and Implementing a Patent Strategy

Why Should You be Seeking Patents?

You are a scientist or an engineer working for a corporation. The technology that you are developing is very exciting and quite novel and the resulting products should allow your company to outcompete its competitors. It does not matter whether your company is a so-called “high tech” firm, whether you are involved in biomechanical technology, life sciences or pharmaceuticals, or the development of more mundane products such as the gears or tools. The issues are the same. Your technological advances need to be protected.

You are an entrepreneur who has invested your life savings, after also obtaining financial backing from principal investors, into your company and are hoping to see the value of your company grow exponentially. You are, of course, worried about foreign companies pirating your products and, because of their lower labor costs and the fact that they have not invested heavily in R&D or in developing the markets, they may be able to produce comparable products at substantially lower cost. You need to prevent that, while increasing the value of your company.

You are an innovator who develops neat and novel products in your garage or basement. You are hoping to make millions of dollars from your innovations by producing and selling the products directly or by convincing an established company to produce these products and pay you royalties. However, your proposed products are so unique that you are worried that another company can simply steal them. After all, they can be easily reverse engineered. Concerns over how to protect your innovations keep you awake at night.

While the three specific scenarios presented here differ in many aspects, there are still underlying similarities. Let us address both the similarities and the differences by first focusing on the scientists, engineers, and other technologists who are employed by companies, as these individuals have certain benefits in obtaining patents.

Why Should an Employed Scientist or Engineer Seek to Obtain Patents?

The obvious issue faced by most scientists and engineers is that they are assigned complicated tasks as part of a project team by their managers. These projects have tight schedules and market windows open and close rapidly and a delay in introducing a product can be very expensive. In addition, scientists and engineers are generally much more proficient at solving technical problems than they are at writing detailed descriptions of the problems they have solved and how they have solved them. This becomes even more pertinent as the resulting documents will be intended for a legal, rather than a technical audience.

Despite the pressures placed on these individuals, there are very good personal reasons for them to pursue the obtaining of patents. The benefits to the employer are similar to those of the entrepreneur and, accordingly, will be addressed in the next section of this chapter. Suffice-it to say is that innovative companies should have good patent portfolios, as discussed in Patent Engineering [1].

In years past, an engineer or scientist might have served one employer throughout a long career. Those days are gone. The average tenure at a company today is approximately five years and scientists and engineers need to constantly think about their next employer. Most of us who have worked in industry have signed nondisclosure agreements whereby, typically, we have agreed not to disclose company information for a specified period of time, typically about two years after leaving the company. This serves the company quite well, but how about the employee who has either been laid off or is seeking better opportunities? What accomplishments can one present to a prospective employer? You simply cannot talk about what you are working on.

However, patent applications 18 months after filing and all patents are public record. They are, in fact, your publication record – a publication record that highlights your skills and accomplishments for everyone to see. Your patents clearly distinguish you from all others against whom you are competing for those coveted career opportunities.

In addition to serving as your publication record, many companies have financial incentives to encourage inventors to file patent applications and obtain patents. If your company has such incentives, this is a way to increase your paycheck.

Having to explain what you have accomplished also makes you take a step back and look at the thoroughness of your work. Have you really solved the problem on which you were working? Are there opportunities to enhance your products? Do you know how your advancements and products compare to those of your competitors? The process of filing quality patent applications and building a patent portfolio that protects your technology forces you to address these issues in a more critical manner than how you may address them otherwise. We have all learned about the “scientific method” whereby, when commencing research in an area, one first does a literature search to learn about what was previously done. This certainly is valuable in today’s competitive world where time pressures require that we work as efficiently as possible. This means that we need to know how others previously tried to solve similar problems and what they learned. It does not do either you or your employer any good to reinvent the square wheel. Moreover, as discussed in Chapter 10 of Patent Engineering [1], it is very important to know whether or not the products that you plan to introduce infringe upon the patents held by others.

Why Should Entrepreneurs and Companies Seek to Build Patent Portfolios?

There is no question that building and maintaining a solid patent portfolio that protects your intellectual property can be both expensive and labor intensive. However, not having a strong patent portfolio can be even more costly and time consuming as competitors try to force you out of business, sue you for infringing their patents, seek injunctions against your company to block the sale of your products, and wring expensive licensing fees out of your revenues.

It should be noted that the term “patent portfolio” has been used extensively. As was discussed in Patent Engineering [1], a single patent, or even a few patents, does not provide the level of protection needed in today’s market. There are often alternative ways of achieving an objective and, in case you choose to enforce your patents against a competitor (often referred to asserting your patents or an assertion), there is great strength in numbers as your competitor’s attorneys will seek to have your patents ruled invalid or irrelevant, claiming that their clients are not, in fact, practicing the technology that you have patented This is far more difficult if your competitor’s attorney has to challenge numerous patents.

In addition, there is marketing value to patents. Although a patent is not a measure of how great a technological advancement is, the fact that a device or process is patented is often used as a marketing tool to entice potential customers to buy your products. And, as will be discussed more fully later in this chapter, a solid patent portfolio can allow your company to have access to the intellectual property owned by others, as well as being able to profit from collecting licensing fees.

Why Should the Independent Innovator Build a Patent Portfolio?

Obviously, the reasons that patent portfolios are valuable to entrepreneurs are also valid for the independent innovator. However, there are reasons that are even more pressing for the individual than for the entrepreneur, assuming that the entrepreneur has already launched a company. The reasons include being able to exclude other, more established companies from simply copying your innovations. Without a proper patent portfolio protecting your advancements, any company which you believe might be interested in producing and marketing your products can simply copy them, perhaps even incorporating some further improvements that may make them more desirable to potential customers. Absent proper patent protection, there is no reason why a company should pay you anything to practice the technology that you so painstakingly advanced.

Moreover, you may be seeking to produce and market your own products. If you are an independent inventor, you probably will have to seek funding from investors. Today, there is a popular television show called Shark Tank, comprising several successful businesspeople who are seeking investment opportunities. Individuals with novel products present their ideas to these businesspeople (known as Sharks), seeking to exchange a percentage of the start-up company in exchange for funding. A common question asked by the businesspeople is “What prevents someone else from simply copying the product?”. On more than one occasion, the individual(s) seeking support were able to show that they had either obtained patent protection or had, at least filed, patent applications. This was one factor considered by the sharks when deciding whether or not to invest.

Certainly, an innovator does not have to be prepared to appear on a TV show. However, potential investors are looking to make money and they want some assurances that the novel products will not simply be copied.

What is a Patent?

Thus far, we have argued that it is important for those advancing technology to obtain patents. We have not yet told the reader what a patent...