PLAYING THE PATENTING GAME
Doctors are natural inventors. They cannot help it. Every day, they are challenged to invent new ways to heal injuries, save lives, and even make us look better. And every day they are confronted with tools, complex and simple, with which to meet these challenges. Often they know they could "do it better." And their solutions are far more than mere ideas, since they have been tested and proven in practice.
These kinds of solutions are also what patents are made of. As inventors, doctors have advantages: They know what is being done in their specialties and practice areas, so they know the "prior art." And they know how their own ideas are improvements over it.
The quality and legality of your patent strongly depend on the quality of your original application -- especially of the "specification" portion (Patent Office terminology for diagrams and descriptive text together). A good application describes the invention so well that an expert in your specialty -- another doctor or a medical engineer -- could build your invention, relying solely on the description in your application.
The official date of the invention is also important. That date is usually the filing date of the application, unless the invention was built before that date. The application date is important because it determines which prior art will be used to evaluate your invention's patentability, and heavily influences your right to assert your patent later on. First-time inventors usually have no idea that this first step is so important.
There are several kinds of patents, but only two are of interest to most physicians: (1) utility patents, protecting the structure, composition or method; and (2) design patents, protecting an invention's ornamental appearance. Utility patent applications require a written description of an example of the invention, along with drawings and "claims," which are the legal, abstract definition of the invention. Utility patents also require an often rigorous examination by a patent examiner, who usually requests changes to the claims, and possibly to the specification, before allowing a patent on the invention. Design patents require only a drawing for a claim, and no textual descriptions. Design patents undergo almost no examination, and are therefore allowed quickly.
Many inventors suffer dearly for attempting to simplify the application process. One of our physician-clients invented a new type of catheter for use in hemodialysis. Strapped for cash, and unable to pay the few thousand dollars necessary for utility patent applications, he applied instead for design patents on his catheter. Unfortunately, his lawyer at the time did not warn him that a design patent was only a stopgap measure, to be converted to a utility patent as soon as possible, certainly before any catheters were sold; nor did he tell him that design patents are rarely converted into utility patents and should therefore be avoided, if at all possible.
Months afterward, with financial assistance from his licensee, our client did convert his design patents into utility applications. But in the meantime, an infringer -- in this case, another company that wanted to produce and market the invention without paying the cost of its development -- argued that our doctor's patents were no good, citing first the "on sale rule," because our client's licensee had sold one catheter to a dialysis clinic more than a year before his utility patent applications had been filed. Second, they attacked the validity of the patent, saying that his utility patents should not rightfully benefit from the dates of the earlier design applications, because the two disclosures were not the same -- i.e., one was little more than a picture; the other, a picture with more complete text. They also said it was unheard for a design application to continue into a utility application.
While, in most cases, the last statement is true, in this case, we did persuade the patent examiner to give us the benefit of the earlier date because we pointed out that the drawing, together with his design patent's one sentence, really conveyed enough information so an expert in the field could build the catheter.
Eventually, the court upheld the legality of our client's patents, and the infringer had to pay. But the litigation -- which could have been entirely avoided if our client had been advised to pay just a few thousand dollars up front for a utility patent -- ended up taking several years and costing him hundreds of thousands of dollars, not to mention the cost to his licensee of several million dollars. And the enormous uncertainty for both our physician-inventor and his licensee cannot be measured in dollars.
What is involved in getting a utility patent? The first step is to prepare an application with the help of your patent attorney. To do this, your attorney will need a written description of your invention, including both text and drawings or sketches, and which together are called the "specification". The more detailed and accurate your written description, the better -- and less costly -- your application will be. So include the following in your description: how your invention is made, or how a prototype should be built; how your invention will be used; and how it will improve upon what is already out there. All this should be written so it can be understood by another expert in your field.
At this point, your attorney will not need fancy drawings, since the Patent Office will accept informal drawings at the outset. Nor will you need to be in the same city as your attorney, since inventors are everywhere, whereas patent attorneys concentrate mainly in the large cities, and dealings by mail, telephone and fax are the norm.
Your attorney will most probably recommend a professional search to determine whether your invention is patentable. This is typically done by hiring a specialist in the Washington, DC area to look at the files of patents maintained by the Patent Office, as well as to conduct various computerized searches. These patent searchers are experienced and know where to look, as well as what prior art to search.
You may also want to do your own, less professional search, since there are sources now available on the Internet; some are free, while others require a subscription. You can order copies of patents for a few dollars each from these online databases, as well as from many libraries, particularly in larger cities. However, unless you are experienced, your own search should not substitute for a search done by a professional, but it can help you see what's out there in terms of prior art.
Once this professional search is completed, your attorney can better estimate your chances of getting a patent, and can write your claims with the results of this search in mind. You should expect to pay four or five hundred dollars for your search, not counting the time your attorney spends reviewing the results.
Expect a good patent attorney to need thirty to sixty days to prepare an application, although it can be done in a few days in an emergency -- say, if your invention was exhibited at a trade show eleven months earlier, and you are therefore afraid of a statutory bar such as the "on sale rule" mentioned above. This initial part of the patenting process usually costs from $2,500 to $5,000 dollars.
Once prepared and reviewed by you, the application -- along with a filing fee of typically $400 or more, depending on the number of claims -- is mailed to the Patent Office, located just outside Washington, D.C. (Your attorney can give you a list of the current Patent Office charges.) It may take from a few months to two years to get a patent issued, depending on the backlog in the Patent Office and which group your application is assigned to.
Almost all your dealings with the Patent Office will be by mail. The one possible exception is if you and your attorney decide to meet face-to-face with your examiner to discuss your invention and its claims, and perhaps to negotiate changes to the claims so the examiner will be satisfied that your invention is properly defined and therefore patentable. Expect to receive copies of communications -- called office actions -- from the Patent Office about your invention; again, the level of help you provide will affect both quality and expense. These office actions must be responded to in writing, along with arguments and possibly amendments to your claims. Most patent applications involve two office actions.
The majority of applications do result in claims being allowed, but there are no guarantees. (I have seen the number of claims range from 1 or 2 to over 100.) Your application can be expedited if someone -- possibly a potential licensee with whom you earlier shared your invention -- is already infringing.
Once the examiner allows some of your claims, you will receive a notice of allowance. At this point, you will have to provide more professional drawings prepared according to the standards of the Patent Office. Your attorney will have a draftsperson who will do this. The issue fee of $645 must also be paid at this time.
Once the patent is in force, you will be required to pay maintenance fees at various points throughout the lifetime of the patent, which is now twenty years from the date the application was filed. The amount of these fees escalates with time -- e.g., $510 at 3.5 years, $1025 at 7.5 years, and $1540 at 11.5 years, if you are filing as a solo inventor. (Double these amounts if you have licensed your invention to a large company.) Be aware that if even one maintenance fee payment is missed at any point along the way, your patent will lapse.
The cost of a typical simple patent application, including fees paid to your attorney and the Patent Office, ranges from $4,000 to $7,000 -- and includes a simple application, a simple search, and a response to one office action. More complex applications can cost $10,000 and up.
Finding the right licensee is not easy. Some licensees will not perceive the merits of your invention, while others will be wary of using an invention provided by an outside inventor. Still others will take your time just to see if you have something good -- with no intention of licensing it.
When looking for a licensee, having a patent application on file authenticates the inventor, because it is persuasive evidence that a real invention exists. As physicians you have an advantage here: Your credentials and experience show that though a novice inventor, you are "for real" -- someone with a proven and tested idea. So your patent application actually documents your invention, incontrovertibly linking it to you as the inventor. This helps protect you from the unscrupulous company that would negotiate with you, only to steal your invention for its own use.
The arrangement between an inventor and the company marketing and selling the invention is called a license. It is a special kind of contract that asserts that you as the inventor own property (e.g., the issued patent), but gives others permission to make limited use of your property (e.g., normally the right to manufacture and sell your invention in the country or countries where it is patented).
This contract has a number of features essential to the protection of the inventor's interests. The license can be exclusive, meaning you as the inventor cannot give another licensee the same rights; or it can be non-exclusive. The benefit to the inventor from the license is a royalty -- a percentage of all future sales of the invention. The license can be for any term, but is usually for the life of the patent.
Perhaps the most important element of a license is that, since it is a contract, both parties are free to make their own terms and conditions. This aspect, "private law," allows the parties freedom to formulate the agreement best suited to their own unique needs.
But this freedom to contract also means you must include each detail of what you want in your contract. If you leave anything out, a court will not put it there for you later on. Most doctors license their invention hoping their licensee will promote it through advertising, presenting it to other physicians and hospitals, and by introducing it to associations and at trade shows. Unfortunately, far too few physicians know they must spell all these terms out up front in the contract -- so they end up later in costly litigation over what they feel the licensee should have done.
When creating your contract, be aware that some licensees purchases a physician's patent because they have their own ax to grind. For instance, a licensee may already have a similar product on the market on which he does not currently pay a royalty. So even though that product may be inferior, it is already established and earns him a profit. He may purchase your invention just to keep it out of the marketplace.
One of our clients, a urologist, had a wonderful idea for a biopsy needle and licensed it to a major manufacturer. He waited for it to appear in the market, but it never did. It turned out his licensee had deliberately shelved our client's superior invention because it wanted to continue selling an earlier, inferior, unpatented, but more profitable design. Unfortunately, our client's license did not obligate his licensee to make its best efforts to promote the biopsy needle, and the court turned down his original lawyer's assertion that the parties to the contract had an obligation to put forth their best efforts, even though the contract did not include an express provision to that effect -- and even though the licensee had promised its best efforts in a letter. So our client's biopsy needle, which would have greatly benefited society, never made it to the marketplace, because his licensee had licensed it simply to keep it out of the hands of competitors -- and therefore out of the market.
Could this unfortunate situation have been prevented? Certainly. How? Through a little advance knowledge on the part of our client as to what a license is and what terms must be spelled out to protect the inventor.
So, as an inventor, insist that your license include provisions insuring that the licensee will make a real effort to promote your invention. The licensee can also be required to meet minimum royalty targets according to a specific time schedule, with a minimum royalty being paid even if those targets are not met.
The license can also be set up to expire if sales levels are not met according to a specified schedule, or after a reasonable time period. Or, after a certain amount of time, an exclusive license can become non-exclusive, allowing the inventor to look for another, more energetic licensee. Also, the license can expressly require the licensee to make reasonable efforts to promote the invention. While a court might have to interpret what is "reasonable," the restriction is still meaningful, and far surpasses no requirement at all.
Terms to prod your licensee into promoting your invention are not the only elements essential to your contract. Just as important is the size of your royalty. If your potential licensee argues that your new technology may not succeed, requires significant investment, or is "speculative," he is most probably aiming to pay you a tiny royalty -- say, five percent or less. So know that royalties can sometimes range into the double digits. After litigation, some courts have held them to be as high as thirty-five percent. However, you probably won't learn this from a company with whom you are negotiating. You must learn it beforehand, on your own.
If your licensee balks at paying you a high royalty, remind him that a royalty is inherently adaptive, so if your invention is not sold, he will not owe you any royalties. But there are other ways to adapt a royalty rate to a speculative invention. The license can state that the royalty is determined in part by the speculative nature of the invention, to escalate with increasing sales, or to be re-negotiated at some future time.
What happens to a successful invention? Others copy it, of course. Your success almost guarantees that someone will decide to infringe your patent. But don't worry; the only reason it is being infringed is because you have been successful. One of the rights you have as a patentee is to sue any infringer in any federal court where the infringing products are being sold. Such lawsuits are expensive, and beyond the means of most individuals. But, if you have negotiated your license wisely, your licensee will have to assist you financially in the common goal of preventing infringement. So, make sure your license states that the costs of litigation will be borne initially by the licensee, with the costs eventually shared -- but not until recovery is obtained. You as the patent owner should also have the right to begin litigation on your own, if your licensee is weak-kneed. In that case, as the party assuming the risk, you should get all the recovery associated with putting a stop to an infringer. But state all this up front in your license.
Your patent, if it is worth anything, is worth doing right. It won't break the bank if you do it correctly from the beginning. A small expenditure at the outset on the right kind of patent application -- as well as an explicit license -- will pay you huge dividends in the future by making your patent nearly invincible. Remember, putting your best effort up front is the best preventive medicine of all.