Patents 101: A Primer on the U.S. Patent System

This guest contributor post is courtesy of Drew Berweger with CSG Law.

Fifty years ago, a company’s tangible assets, including physical goods and real estate vastly outweighed the value of intangible assets.? Now, intangible assets account for the vast majority of the value of many companies. These intangible assets include Patents, Trademarks, Trade Secrets, and Copyrights.?

Acquisition of Patents is an area of the law that has many nuances based on technology-specific circumstances and business goals. For you, pursuing Patent protection can provide relevance and leverage with competitors, with Patents serving both as an offensive weapon and as a defensive moat around your revenue streams. Consideration must be given to how, why, and when Patent protection should be sought. Common questions around Patents are discussed below:

1)??? What is a Patent?

a)???? A Patent is a form of intellectual property that can protect innovative products and processes, including software, ornamental designs, and plants. A Patent provides a limited-time exclusive right to make, use, sell, offer to sell, or import into the U.S. the Patented invention.?

b)??? Patents are examined and approved after a review by a Patent Examiner at the U.S. Patent and Trademark Office (USPTO), headquartered in Alexandria, Virginia. This review process is conducted on the submitted Patent application, which includes a description of how to make and use the invention, as well as claims that define the scope of the invention. After a Patent is approved, it becomes an Issued Patent, and can be enforced in the U.S.

2)??? What does a Patent protect?

a)???? Patent protection is territory specific. A Patent granted by the USPTO is valid only in the United States, a Patent granted by the European Patent Office (EPO) is valid only in?participating member states, a Patent granted by the Canadian Patent Office is valid only in Canada, etc.

b)??? Patents protect the scope of the invention defined by the claims and give the Patent owner the right to exclude others from making, using, selling, offering to sell, or importing into the U.S. a product or process that is covered by the scope of the claims.?

3)??? Who should pursue a Patent and Why is it Important?

a)???? For Startups, Pursuing Patents Increases Funding Success

i)????? The European Patent Office ?(EPO) and the European Union Intellectual Property Office (EUIPO) recently published a?new joint study?discussing the beneficial impact of intellectual property (IP) rights, such as patents and trademarks, on securing funding for start-ups. Although the data for this study is based on European IP and European companies, the conclusion can be applied to U.S. companies as well.?

ii)??? The most exciting data point in the lengthy study is that, on average, startup companies with both Patents and Trademarks are more than 10 times more likely to successfully secure funding, as illustrated in the graph below:?

iii)? Additionally, the study determined that the likelihood of a successful exit, through acquisition or Initial Public Offering (IPO), and the value at the time of that exit, both significantly increase when the company involved possesses both Patents and Trademarks, as illustrated in the graph below:

b)??? For Mature Companies

i)????? A well-developed Patent Portfolio, which means the entirety of all Patents the company owns, provides many advantages to more established companies. A Patent portfolio can be used not only to deter competitors of your products, but can also create its own revenue streams through licensing to other entities and even as collateral for business loans.??

ii)??? The best Patent Portfolios require an investment, but they can provide multiples of that investment as a return.

4)??? What are Common Pitfalls or Areas of Caution around Patents?

a)???? Public Disclosure

i)????? If you publicly disclose your invention, you will have one year to file that Patent in the U.S., after that the public disclosure will be used to block your Patent in the examination process. Abroad, there is no one year grace period, the day after a public disclosure you will be blocked from Patent approval in those countries, including the European Union.?

b)??? Ownership

i)????? You must ensure that the inventors of your invention are required to assign their ownership of that invention to your Company through, most preferably, an Employment Agreement where the Inventor agrees to such assignments. In the U.S., if an inventor is not obligated to assign ownership to your company, they can market or license the Patent as they see fit—without your company’s involvement.?

c)???? Human Inventors

i)????? The U.S. Patent Office states that only human beings can be Inventors-Artificial Intelligence (AI) cannot.? For a Patent to be properly filed, all actual inventors of the Patent must be human to the exclusion of AI.? Guidance from the U.S. Patent Office explains that Patents that have been generated with AI assistance will not categorically be improper, but that each human inventor must have “significantly contributed” to the invention, and conversely AI must not have “significantly contributed” to the invention.? So, you must ensure that if AI is used at all during the Patent generating process, that only human beings make the overall significant contribution to the invention itself.? ?

5)??? Do You Have Questions?

a)???? The choice of how, when, and where to pursue Patents for your Company is a complex one.? Please contact CSG Law to begin the conversation and planning process so your company can realize the advantages Patents can deliver.

Drew Berweger is a Registered Patent Attorney with CSG Law and has comprehensive experience in many technological areas including medical devices, diagnostics, consumer devices and appliances, semiconductors, inkjet printers and scanners, image processing, and various software including Artificial Intelligence (“AI”) and Machine Learning-reliant technologies. In addition, Drew has drafted hundreds of patent applications and Office Action responses, as well as non-infringement and invalidity opinions, while also providing patent litigation support in discovery and motion practice. He continues to serve as an adjunct professor at a New York college teaching business law.

Drew earned his J.D. from Syracuse University School of Law, where he received certificates in Technology Commercialization and Corporate Counsel, and his B.S., in Environmental Engineering, from Manhattan College.

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