Patent Baristas

Author and inventor John D. Smith doesn’t want you to file a patent application.  Smith, author of the book “Don’t File a Patent!” book (232 pp.) writes:

“The patent process is an illusion of protection that takes inventors’ hard earned money and gives them nothing in return.”

So, why would I write about NOT filing patent applications if I’m a patent attorney?  Well, it’s certainly not because of the very unflattering description of patent lawyers offered up by Smith.  It’s that Smith makes some very valid points even if his anger and criticism are sometimes misdirected.

Here are his 10 reasons not to file a patent :

1. The Patent Office has a posted “patent allowance” average of 40%, but the true allowance ratio with some classes of products is as low as 5 to 16%.

2. The Office Action rejection process is a moneymaker for patent attorneys, but a money loser for the Inventor.

3. Patent Examiners do not have “obvious skill in the art” to determine the patentability of every type of invention.

4. In your Office Action rejection, the Patent Examiner will cite the illogical 35 U.S.C. 103(a) “obviousness” rejection clause, which makes no sense.

5. Filing a patent application wastes valuable capital that you should be using to develop and market your product.

6. The patent process takes approximately 3 to 6 years; your product could be obsolete by the time the patent issues.

7. A patent does not protect your product against a copycat; it just gives you the right to sue.

8. The Patent Office is a complicated bureaucracy with many problems that may never be fixed.

9. Patent maintenance fees are expensive and unreasonable.

10. The Patent Office may be showing favoritism towards big companies that, year after year, are awarded hundreds or thousands of patents.

As you can see, most of the list is devoted to Patent Office practices.  Are there some valid arguments for not filing a patent application? Sure, plenty of them.

• Does the US Patent Office have a low percentage rate for patent allowance?  Fact.
• Do examiners beat applicants over the head with 35 USC 103(a) obviousness rejections?  Like a rented mule.
• Are patent maintenance fees expensive and unreasonable.  You betcha.

Mr. Smith seems to have had a very difficult and probably unnecessary, bad experience with the Patent Office.  But, saying never file a patent application is foolish advice without doing a more careful analysis.

For many innovations, like pharmaceuticals, consumer products, and many others, patent protection is great. In the United States , an inventor is granted the exclusive right to their invention for a period of 20 years from the date of filing the application. But, there are many times when patents are not worth the expense.

So, where do I stand on all this?  Consider these facts:

a.  Patents can be incredibly valuable and a critical asset to companies from start-ups to Fortune 500 sized blue chips.

b.  Patents can be a complete waste of time and money.

How do I reconcile these seemingly inconsistent statements?  To answer that you need a well thought-out business plan that addresses these three questions:

1.    How are you going to make your money?  Is it by licensing out the technology and collecting royalties?  Is it by making and selling a product directly?  Either way, how big of a market is there and how much can you realistically make from the invention?  Here, you need to look at some hard, very sane numbers and ask yourself if the risk/reward ratio makes protecting the idea worth the cost and effort.

2.  How long will you most likely need to protect your product?  Some products have a very short life cycle.  Given that filing and prosecuting a patent to issue can easily take 3-5 years, it would not make sense on a product that will be obsolete quickly.  On the other had, for some products — like pharmaceuticals — the most valuable years of the patent life are the last years.

3.  Can you police your invention in a practical manner?  That is, who is likely to infringe and can you sue them?  If your invention is one that takes place in the back of a shop and you can not detect the use from the product, you won’t be able to know if competitors are infringing.  If you can detect them, are they infringers you can collect from?  Generally, if the infringer is a private individual or small company, then they won’t have the money to pay anyway.  Likewise, if you don’;t have the money to sue and enforce the patent, perhaps the best course is to not file.

As Smith notes in his text, a patent merely gives you the right to keep others from using it.  More importantly, they are not self-enforcing, which means you have to enforce your rights yourself (read: sue).  You may want to consider if there are other types of intellectual property protections available for your product like copyright or trade secret.

Some advantages of trade secrets include:

• Trade secret protection has the advantage of not being limited in time (patents last in general for up to 20 years from the date of filing). So, trade secret protection could continue indefinitely as long as the secret is not revealed to the public.

• Trade secrets involve no registration costs (though there may be high costs related to keeping the information confidential).

• Trade secrets have immediate effect.

• Trade secret protection does not require compliance with formalities such as disclosure of the information to a Government authority.

Once you’ve made this analysis, then it becomes clear whether or not to file a patent application on your invention.  Regardless of the path you take, Smith’s book does have some helpful advice to an entrepreneur trying to get a product to market.  If you can get past his patent (and lawyer) bashing in the first half, his tips on how to manufacture and sell your invention yourself, which fill chapters 2-25, are really the useful part of the book.

I don’t begrudge Smith, though.  It is easy to understand his frustration.  There are a lot of difficulties in securing and enforcing a patent.  Unfortunately, Smith blames his patent attorney when most of the list of 10 reasons not to file have to do with patent office procedures that are not under the control of the attorney.  A good business plan (and good business advisers) could have saved him a lot of aggravation.

I even understand his sentiment when Smith opines that the word “attorney” may be Latin for “I need a bigger boat.”  Believe me, I think this same thought about my kids orthodontist every time I get a bill.  It’s easy to forget about all the capital expenditures, overhead and staffing expenses that are included in those bills and that the orthodontist doesn’t get to deposit that whole amount in his bank account.

It’s not about the hourly rate.  If you don’t have an attorney you feel confident is giving you the best advice for your business, you need to find another one.

Don’t File a Patent! Expanded Second Edition is available in paperback at Amazon as well as in paperback and PDF E-book format on Smith’s website, http://www.dontfileapatent.com.