Building and Managing Your Corporate Patent Portfolio
February, 2006
A patent portfolio can be among a corporation’s greatest assets. This article will offer some basic suggestions as to how any company can build, manage and profit from its patentable innovations.
What Kinds of Innovations Can be Patented?
Building a corporate patent portfolio begins with recognizing the kinds of technological innovations that can be patented. Corporations often fail to recognize patentable innovations when they arise within the company. The categories of patentable subject matter enumerated in the Patent Act - “any new and useful process, machine, manufacture, or composition of matter” - only hints at the breadth of inventions that may be patented. No less an authority than the United States Supreme Court has stated that this phrase from the Patent Act should be construed to include “anything under the sun that is made by man.” Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980). The categories of patentable inventions have been deemed to include software-related inventions and even methods of doing business.
Keep in mind that a patentable invention need not represent a huge technological leap forward. Most patentable inventions are “merely” improvements over the state of the art.
Encouraging Employees to Recognize and Disclose Potentially Patentable Innovations
A good place to start the process of recognizing and protecting patentable innovations is to make available to all employees, particularly those involved in Research & Development, an “Invention Disclosure Form” (a.k.a. “Record of Invention”) on which employees can summarize their innovations for evaluation as to patentability. These forms can vary in length depending on the information asked. Clausen Miller PC can provide an Invention Disclosure Form suitable for your company.
A solid “paper trail” can be critical to obtaining and enforcing patents. Companies should indoctrinate and periodically remind employees of their obligations regarding proper record keeping and invention disclosures. Such records may be crucial if you are ever required to prove that your date of invention precedes another party’s.
One way to encourage employees to develop and disclose patentable innovations is to adopt a program that recognizes inventors for their patented inventions. Such a program can be elaborate, involving gifts or monetary awards to employees who reach certain patent milestones (first patent, fifth patent, etc.) or it can be relatively modest, involving small employee get-togethers where an employee is recognized for his or her achievements in front of peers.
When Do I Contact My Patent Counsel and What Can They Do For Me?
Once an Invention Disclosure Form has been prepared, the company should promptly evaluate the invention for possible patentability. While some companies perform this function “in-house”, often outside patent counsel are employed for this purpose. A patent attorney can provide an objective opinion as to whether your invention is patentable. If you do not use Invention Disclosure Forms, then you should contact a patent attorney as soon as the invention can be described in writing.
Timing can be a critical factor in obtaining patents. No U.S. patent may be issued on an invention that was in public use or on sale in the U.S. more than one year prior to the patent application filing date. In other words, you must file your patent application no later than one year after the invention is disclosed to the public.
What does “Patent Pending” Mean?
Your patent attorney will work with you and the inventor(s) in preparing and filing a U.S. patent application, as well as any foreign patent applications you desire. Once a patent application has been filed, you may place the words “patent pending” on any samples of the invention you make for sale or otherwise. “Patent pending” simply means that you have a patent application on file; it does not necessarily mean that you will receive a patent or how broad the patent will be if one is issued.
Once a patent application is filed, it is examined for patentability by a patent examiner and an “Office Action” is issued. At this point there is usually some additional work to be done by your patent attorney to place the application in proper form for allowance. The typical time required for a U.S. patent application from filing to issuance is now about two years.
What Can I Do With My Patent Once I Get It?
Once a patent has been obtained, periodic maintenance fees must be paid if the patent is to remain active over its twenty year lifetime. Most firms practicing intellectual property, including Clausen Miller, have computerized docketing systems which alert the client to these deadlines.
Of course, a patent does not produce income in and of itself. The true value in a patent lies in the patent owner’s ability to exploit (derive benefit from) the patent. This can be achieved in a number of ways. First and foremost, a patent gives you exclusivity in the marketplace. Patents can be used to prevent others from making, using, selling or offering to sell the patented invention. Alternatively, a patent can be licensed to another to provide licensing income for its owner. IBM Corporation, a company known for aggressively seeking patent protection on its innovations, generated $500 million to $600 million in licensing revenue from its patent portfolio in 1998 alone. Food for thought! Patents can also be cross-licensed to grant companies access to their competitor’s technology. Finally, a patent can be sold (assigned) outright to another party in exchange for some negotiated compensation.
Getting the Edge
Regardless of how you choose to exploit your patented inventions, a strong patent portfolio can give you a competitive edge in the marketplace against your competitors, provide a significant revenue stream, and increase your company’s value. Savvy innovative companies recognize these benefits and adopt formal programs to build, manage and profit from their patent portfolios.
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