As published in the Winter 2010 issue of Currents, a publication of Schottenstein Zox & Dunn Co., LPA

The recent economic malaise has caused companies to seek to reduce costs in their business operations without losing ground to the competition and yet remain poised to advance when the turnaround comes. Patents continue to be counted among a company's most valuable assets. While the costs of preparing and filing a patent application cannot be avoided altogether, some strategies can be employed now to defer or reduce the expense of processing patent applications in the short term.

Long-Term Investments

Patents keep competitors from making, using, selling or even importing an invention for a period of 20 years from the patent filing date. Patents principally protect a company's investment in research and development, protecting innovations that (1) can be reverse engineered, or (2) may be developed as companies' technology teams vie to capture the lead for future products and services. Patents can also generate valuable royalty income from licensing.

A patent's life is relatively long, but the patent rights only start after the Patent Office has examined a patent application to assess whether the invention has technical merit. The patent application process is relatively lengthy in comparison to the acquisition of other property rights, typically taking between 12 and 24 or 36 months before the Patent Office reviews the application for patentability. Accordingly, patents should be viewed much like other long-term capital investments, and their acquisition carefully planned and executed.

Complex and Expensive Process

One of the challenges in patenting in difficult economic times is that patent applications must be prepared with care and forethought and processed strategically. From the central invention conceived by the inventor, patent counsel will advantageously draft the patent application to claim the wide variety of inventions that may be included in or derived from the original invention much like building several rooms (i.e., the claims) atop an established foundation (i.e., the specification).

For example, an inventor who describes a new chemical process for making a new class of compounds might claim: (1) the compounds themselves (including subclasses of various chemical derivatives), (2) a complete chemical process for making the compounds, (3) various sub-processes within the complete chemical process, (4) precursor substances, (5) articles made from the compounds (including manufactured articles, parts, coatings, etc.), and (6) methods of using the compounds, such as molding, processing, machining, etc.

An applicant may exact from a patent application as many separate claims as may be described in the application. The expense of preparing the application and seeing it though to issue is also not insubstantial, typically involving fees and expenses in low five figures for each application.

Once the patent examination begins (typically 12 – 24 months from filing), applications are measured against publications anywhere in the world (by anyone, including the inventor) or anything that was known or used by others in the United States before the invention and public uses or offers to sell the invention that occur in the United States. Thus, an applicant can forfeit all rights by publishing an invention, placing it into public use in the United States or offering to sell the invention in the United States, and then waiting over one year from the first of those events to file a patent application.

Patent applications also may be divided in order to allow the Patent Office to consider separate inventions discreetly. This often leads to a single application spawning several divisional applications, each of which must be filed and processed separately.

The System Does Not Accommodate Delay

Because new technology is being published and placed into use every day, any delay in filing means the applicant may face a strengthened state-of-the-art above which an invention must be patentably distinct to have a patent awarded. Deferral of patent filings cannot be indefinite, and deferring the patent application process delays issuance of the patent and its advantages. Conversely, processing the patent application typically involves additional costs for attorney fees, draftsman fees, fees for additional claims and extensions of time to respond.

Provisional Patent Applications

A provisional patent application may be filed for a reduced filing fee to establish a legal filing date for the patent application. A provisional application is not examined but holds the filing date for a year within which a non-provisional application must be filed. A patent's term extends 20 years from the first non-provisional filing date, so the filing of a provisional application does not establish a patent's term.

A patent application (provisional or otherwise) must be filed within one year of the first sale, offer for sale, use or public disclosure of the invention, and before any of these events if it is to be claimed for foreign patent applications by treaty. A provisional patent application can be filed without complying with the more stringent drawing and formality requirements of the Patent Office. The provisional application can be used to package several invention disclosures into a single filing from which several non-provisional applications may claim priority.

Where technical development proceeds incrementally, a series of related provisional applications may be filed over the course of a year in order to obtain a priority date for variations as they occur. Within one year of the first filed provisional application, a single non-provisional application is then filed to collect all the disclosures into a single application for examination.

PCT Filing Can Defer Examination

Many applicants (particularly in slow-to-market technologies, such as drug development or sophisticated electronics) use the Patent Cooperation Treaty (PCT) system to postpone prosecution for as long as possible. Using this strategy, the applicant first files a provisional application in the United States, and then converts the provisional into a non-provisional application along with concurrently filing a PCT application (to hold the United States filing date for foreign filings up to 30 months from the United States provisional application).

For a strategy to maximize delay, the applicant can file a PCT application originally, designating the United States and those foreign countries where patent protection is desired. By this route, one may delay up to 30 months (sometimes longer) from the initial provisional application filing date before it becomes necessary to file national phase applications in the United States and the other countries designated in the PCT application.

Reduced Claims to Focus on Immediate Market

Typically, patent counsel will advise pursuing the broadest claims to cover all variations of an invention. However, broad claims are likely to be the most difficult to obtain, expensive to prosecute and likely to extend beyond the client's current business needs.

Another strategy is to focus the patent claims on the most immediate market candidate technology (i.e., those most ripe for product implementation or for licensing to a mature industry). The Patent Office charges additional fees if more than a prescribed number of claims are submitted in the application. Additional claims also may have the effect of slowing substantive examination, because the Patent Office often divides claims on distinct inventions (e.g., compositions, machines, processes) for separate examination.

Applicants may be well-advised to focus the initial set of claims to a single type of invention (such as a composition of matter or a single process), leaving broader claims for later presentment through a continuing application filed, with all the priority benefit of the original application, before the first application is abandoned or issued.

While patent filings and associated costs cannot be deferred indefinitely, attention to the proper timing, type and substance of patent applications can defer and reduce overall processing costs until an improved economy makes examination and more extensive filings possible. Failure to be attentive to protecting patentable technology can have long lasting repercussions for companies once the economy recovers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.