Patents: 10 Common Mistakes and How to Avoid Them
By Michael Neustel, US
Intellectual property is
usually the most valuable asset for a company. While trademarks and
copyrights are generally understood, patents are generally
misunderstood, resulting in the loss of millions of dollars to
companies every year. This article teaches engineers – and their
companies – how to avoid the 10 most common mistakes made regarding
Mistake #1: No Employee
One of the biggest mistakes
made by companies is not educating their employees about patents.
While the management and engineers of a company are the most important
groups to keep educated on patents, other groups of people associated
with the intellectual property of the company (e.g. technicians, sales
staff) need to be educated also.
In addition to educating
employees about what patents are, they should also be familiar with
how to identify situations that are specifically related to patents,
such as the creation of a new product, the suggestion of an
improvement to a product by a customer or a potential infringement
situation. If employees are not fully-educated on patents, numerous
patent rights are lost and expensive mistakes can be made. For
example, failure of employees to understand that a new improvement to
a product would be patentable can result in the loss of foreign and
domestic patent rights by the time the mistake is realized.
A seminar by an articulate
patent attorney with your employees can prevent the loss of valuable
patent rights – and avoid expensive mistakes.
Mistake #2: “Can’t Be
Another common mistake made
by engineers and companies is believing that a new technology or an
improvement to a product cannot be patented.
Engineers tend to believe
that many improvements they make to products are “obvious” and,
therefore, are not patentable. The reality is that many improvements
made to products are patentable – even improvements that you may
believe are obvious. “Obviousness” in the patent world is oftentimes
a different standard from what many engineers may believe.
If an improvement is
important enough to be incorporated into a final product, then that
improvement typically warrants an investigation into its
patentability. A patent attorney can provide valuable advice to help
you determine your chances for meaningful patent protection.
Mistake #3: No
Intellectual Property Management Program.
Many companies – including
mid-sized to large companies – do not have an intellectual property
(IP) management program. Without an IP management program, employees
do not know what to do when they have an invention.
A good IP management program
will encourage employees to disclose their inventions. Not only will
a good IP management program inform the employees of how and where to
submit ideas, it will also provide rewards to inventors that
participate – such as special recognition in the company or monetary
rewards. You can learn more about IP management programs at
An IP management program for
your company is similar to a gold mining operation digging for
valuable nuggets of information. Not only do you need to have an IP
management program, but you need to operate it effectively to
encourage internal disclosure of your company’s intellectual
Performing Patent Research Too Late.
Many companies believe that
patent research is the final stage of the product development process
when in fact it should be one of the first stages. Performing a
patentability search late in the product development process fails to
take advantage of some of the ancillary benefits associated with
For example, an early
patentability search can identify technology developed by
third-parties that could expedite the product development process for
a particular product. In addition, an early patentability search can
detect potential patent infringement issues up-front so the product
can be designed to avoid infringing upon a third-party’s patent
rights. Keep in mind that a patentability search is not
intended to be an “infringement search” since it is focusing solely
upon patentability, but sometimes potential infringement issues can be
A company should perform a
patentability search early in the product development process.
Companies can search the U.S. Patent & Trademark Office patent
www.uspto.gov or by using software such as PatentHunter (www.patenthunter.com).
It is recommended to hire a patent attorney to perform a final
patentability search prior to proceeding with a patent application.
Patent searches can reduce
valuable product development time and identify potential infringement
issues early on so you can steer product development in a positive
Mistake #5: Failure to
Perform IP Audits.
While most companies
routinely do financial audits, few companies routinely perform IP
audits of their intellectual property. While a good IP program will
help prevent the need for IP audits, it is still good for a company to
go through a complete IP audit once or twice a year to ensure that all
intellectual property is being protected properly.
An IP audit is basically a
review of all existing products and potential products being developed
by the company. Potentially patentable subject matter and trade
secrets should be identified for review by a committee to determine if
any further action should be taken to protect the intellectual
property. In addition to identifying the potential intellectual
property, potential public disclosure dates need to be identified also
which determine deadlines for filing patent applications.
Performing routine IP audits
will flush out the hidden intellectual property of your company and
ensure important rights are not lost.
Mistake #6: Not Taking
Advantage of “Provisional” Applications.
It is easy to identify the
inventions that you usually need to patent or should not patent – but
what about inventions that are difficult to classify? Filing a
“provisional” patent application oftentimes can preserve your foreign
and domestic patent rights when done properly.
A “provisional” patent
application is a patent application that provides “patent pending” for
a period of one year. The filing fee for a provisional patent
application is only $105 (as of October 1, 2007). In addition, a
provisional application does not require the complex claims section,
which makes provisional applications easier to self-draft. However,
provisional patent applications do require the same amount of subject
matter included in them as you would see in a formal application.
Provisional applications are also automatically abandoned after one
year and require the filing of a formal application during this
one-year pendency period if you want to retain your provisional
application’s earlier filing date.
If you are in a situation
where you are not able to justify the expense of a patent attorney but
do not want to forfeit your patent rights for a new invention, then a
provisional patent application provides an economical and sound means
to protect your rights. A free version of PatentWizard® is
www.patentwizard.com if you want to self-draft your own
provisional patent applications.
applications are a valuable tool for inventors and businesses to
preserve their intellectual property rights.
Filing Applications at the Wrong Time.
Many companies file a patent
application too early or too late. Knowing when to file a patent
application is crucial to taking full advantage of your intellectual
For example, some companies
will file a patent application on every invention immediately after it
is developed. However, what these companies fail to realize is that
they have only one year from a patent application’s filing date to
file a foreign patent application. Hence, by filing too early in the
process, companies expedite when they have to decide if they want to
file in foreign countries. Oftentimes, this decision takes months of
product marketing and sales to determine if foreign patent protection
is worth the expense.
Conversely, filing a patent
application after you have made a public disclosure (e.g. offer
for sale, seminar, published on a website) will result in the loss of
most foreign patent rights. Furthermore, you will have lost all of
your United States patent rights if you wait more than one year after
your first public disclosure of the invention to file a patent
The best time to file a
patent application is usually after the invention has been approved
for commercial production and prior to any public disclosure of the
Patenting the Wrong Inventions.
Many companies simply do not
focus their patent strategy on the right inventions to protect and
instead waste thousands of dollars attempting to patent the wrong
An example of a good
invention to patent is a new potential “core” product or a significant
improvement to an already existing core product. An example of a bad
invention to patent is a new product that has little potential of
providing significant financial profits to the company.
While it is not a good
business practice to not patent anything, it is also not a good
business practice to patent everything. Every invention should be
closely evaluated on its merits prior to instructing your
patent attorney to prepare the patent application to ensure that your
company is wisely spending its money.
Failing to Evaluate Competitors’ Patent Rights.
It is not uncommon for a
company to underestimate – or overestimate – the patent rights of
their competitors. Knowing your competitors’ patent rights is crucial
to avoiding a costly patent infringement lawsuit and to ensure that
you are not unnecessarily avoiding the development of new
For example, underestimating
the patent rights of a competitor may occur if you fail to investigate
your competitor’s product simply because their product has a
significantly different structure and operation when compared to your
product. Patents can, and typically do, protect multiple variations
of a technology. Hence, you could be infringing upon a competitor’s
patent and not even know it. Considering a typical patent
infringement lawsuit today costs $750,000 or more, you have a valuable
reason to ensure you are not infringing on a competitor’s patent.
overestimating the patent rights of a competitor can be even more
costly to your company. Without understanding the scope of patent
protection offered by a competitor’s patent, companies oftentimes will
avoid product development that might be close to the competitor’s
product. However, if the competitor’s patent is “narrow” in scope or
if the competitor has improperly marked their products with the patent
number, your company would lose out on valuable opportunities to
develop products in potentially lucrative areas.
Patent attorneys are best
used to keep you out of costly patent infringement litigation so take
advantage of their advice when you encounter a competitor’s patent. A
side benefit of this advice is the establishment of the exact scope of
your competitor’s patent rights, thereby enabling you to design your
products in a more competitive manner without fearing infringement.
Mistake #10: Filing
Unnecessary Foreign Patent Applications.
A good IP program should
assist you in identifying which inventions deserve foreign patent
protection and which inventions do not. Contrary to popular belief,
filing in foreign countries oftentimes has little value for small to
mid-sized companies. There are always exceptions (e.g. companies
about to enter an initial public offering, companies looking to be
purchased by a large company), but usually when comparing the cost to
the benefit received, the best patent value still resides in the
The obvious reason for the
value of patents in the United States is that it usually is the
company’s largest market. In addition, filing in the United States is
relatively cheap compared to the fees associated with filing in
foreign countries, which typically ranges from $3,000 to $10,000
per country. In addition, many countries do not provide the same
types of protection as the United States.
If you are interested in
foreign patent protection, you should consult with a patent attorney
and consider filing a Patent Cooperation Treaty (PCT) application. A
PCT application can provide you up to 30 months from your earliest
effective filing date to file in foreign countries as compared to the
normal 12 months if you did not file a PCT application. A PCT
application can also typically be filed for around $4,000 (including
filing and attorney fees), thereby “buying time” so you can determine
what foreign markets justify patent protection for a reasonable
price. Most small- to mid-sized companies should closely scrutinize
any potential (or existing) benefit for foreign patent applications to
ensure that they are receiving significant value in those markets.
While companies make costly
patent mistakes every day, these mistakes can be easily avoided
through the education of employees and the implementation of a solid
IP management program. Because patent mistakes oftentimes have no
cure, an ounce of prevention is priceless.
Michael S. Neustel is a
U.S. Patent Attorney who owns Neustel Law Offices, LTD (www.neustel.com)
and is the founder of the National Inventor Fraud Center. Mr. Neustel
is a co-author of The Patent Writer and is also the founder of
Neustel Software, Inc. which develops intellectual property related
software products including PatentWizard (www.patentwizard.com),
and ConfidentialityWizard (www.confidentialitywizard.com).
Mr. Neustel provides intellectual property seminars to businesses and
groups across the United States.
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