Patent Value: Secrecy, Royalty, and Exclusivity

A patent moves through three stages: pending, published and granted. The patent value and nature of the patent rights changes at each stage.

Pending Patent Value: Chill the Competition

While your patent is pending, it remains secret. The competition does not know what is new and different about your invention. The competition faces uncertainty if they choose to copy the invention. They cannot attempt to design around your patent if they do not know the patent claims. So, they copy at their own peril. While pending, the patent value includes the ability to maintain secrecy.

Certain consumers are also savvy about the words patent pending. For these consumers, the words, patent pending, indicate that the product is unique. If they like a patent pending product, they do not price shop – they buy now. This can create an additional retail benefit for certain products marketed to certain consumers. So, another patent value is marking a product patent pending.

Many new small businesses maintain patent pending benefits as long as possible. To gain an extra year of patent pending, they file a provisional patent application. This strategy is sometimes called “time-shifting” by patent attorneys. The strategy shifts the time to prosecute, issue, and pay maintenance fees back by one year. This strategy lowers the initial cost of the patent application because the USPTO filing fees are lower. Delaying all of these patent costs can be a big benefit for a new, small business.

Published Patent Value: Court Ordered Royalties

The published patent value is the ability to collect a royalty from the date of patent publication. If someone infringes your patent, a court may later be able to force the payment of a reasonable royalty from the date of the patent publication. Of course, you have to complete the patent process, obtain a patent grant, and win a patent lawsuit without substantially changing the patent claims from the patent publication. This is most likely to happen with a well researched patent.

Patent applications automatically publish 18 months after filing. You may request early publication. You can also choose to prevent publishing if you promise to waive your patent rights in foreign countries.

So, by choosing to keep the patent unpublished, patent applicants are choosing secrecy over royalty. There are some good reasons to choose secrecy: your invention is difficult to copy without the patent, your competitors have not caught on to your success, design-arounds would be difficult to find without the patent application. There are some good reasons to choose publication: proof of patent existence to potential purchasers, and, elimination of certain protest rights at the USPTO.

The published patent value loses the value of secrecy and gains the value of a possible court-order royalty. Yet, you do not have the right to pursue a lawsuit.

Granted Patent Value: Excluding competitors.

The granted patent value is the ability to exclude your competitors from making, using or selling your invention. While a patent is pending or published, you cannot use the patent application to sue your competitor in court. The patent office must issue your patent before you can enforce your patent rights.

After the patent grant, you can your competitor in court, which will force your competitor to try and uncover evidence that your patent is not valid, or, that they do not infringe the patent. It is not unusual for legal costs to approach or exceed seven figures. A granted patent value is the threat and cost of a lawsuit.

The lawsuit costs include attorney fees, technical research fees, expert witness fees, court fees and the chance that money damages could be tripled. So, if you have competition that is copying you unfairly, you may wish to have your patent issue as quickly as possible, to get access to a court. By accelerating the examination of your patent application, you are also accelerating your legal costs.

Sometimes, the cost of a patent lawsuit is out of reach. The value to exclude a competitor from making, using or selling an invention can be so hight, some patent attorneys will work for a chance to share any award in the patent lawsuit. However, finding a contingency-fee patent attorney can be a time-consuming, because, evaluating a patent case can be difficult. The ability to find a contingency-fee patent litigator can depend on the strength of your patent. Again, this is another good reason to do additional research prior to filing a patent application.

Another common reason for wanting a patent to issue quickly is venture capital. Since the value of the patent is much higher after issue, some venture capitalists may require an patent grant before making any sort of investment. A pending investment is a valid reason for requesting accelerated examination at the patent office.