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PATENTS FREQUENTLY ASKED QUESTIONS (FAQ)
Unless otherwise specified these responses are for United States patents only

1. What exactly does a patent do for me?
2. How long does a patent last?
3. Where is a patent valid?
4. What about foreign countries?
5. How long does it take to get a patent?
6. What is a patent application publication?

7. What can I get a patent on?
8. Are there different types of patents?

9. What are the requirements to get a patent?
10. What does a patent contain?
11. Do I need a patent attorney?

12. Patent attorney versus patent agent?

13. What should I do first for a patent?
14. What are patent assignments?

15. What is patent infringement?
16. What is patent licensing?
17. What is patent maintenance?
   

1. What exactly does a patent do for me?

 
Legally, a patent gives you exclusionary rights that are defined by the claims in your issued patent or published patent application to prevent others from making, using, selling, offering to sell, or importing your product and / or process in the country that the patent is issued in.  From a business standpoint, a patent helps to safeguard your economic investment in commercializing your idea from concept to reality, by sustainably distinguishing and legitimatising your product in the marketplace. The patent also helps to reduce the chance that you are infringing someone else’s patent and acts as a deterrent to someone stealing your invention and taking it to market themselves.    Also, a patent as an income-producing asset has the ability to generate multiple streams of revenue through licensing royalties in different markets and territories.  This is because the technology that you are licensing from your patent is easily portable and can be replicated to be simultaneously used by different entities in various markets and locations, thus producing multiple revenue streams for you.  In addition, a patent adds value to your company by increasing your asset base.  Contrast this to a tangible income producing asset such as a building or a machine, where only one income stream can be produced at a time due to the physical limits of a tangible asset only being in one place at one time.
 

2. How long does a patent last?

For a period of 20 years from the filing date, assuming that all of the maintenance fees or annuity fees are paid, at which time the patent expires and enters the public domain with the patent owner’s exclusionary rights terminating and the patented technology being free for anyone to use without risk of infringement.  Note that if maintenance fees or annuity fees are not paid the patent will expire when the due date for the maintenance fee or annuity fee passes without payment.   In addition, a patent can be invalidated (premature expiration) or reduced in the scope of claim coverage by patent office reexamination, public opposition, or court action.   Also, an expired patent will forever act as prior art to prevent a new patent being issued on the same invention or an invention that is determined to be “obvious” to one skilled in the art in comparison to the previous patent.   Note that the 20 year from file date patent lifetime is a world wide standard for patents, thus simplifying knowing the life remaining in any particular patent in any country.

 

5. How long does it take to get a patent?

This is called the “prosecution” or patent pending period and it can vary, being anywhere from a just under a year to over 4 years from the file date depending upon a number or factors such as; the technology involved, regulatory approvals, size of the application, petitions to make special or filing for accelerated examination (to give priority to the patent application), patent office workload, and the like.  Currently the average time for the ”prosecution” period of a patent is 32 months from file date to issue date.  Typically purely mechanical inventions are faster that the average and electronic and chemical inventions are slower than the average.    Petitions for make special can be for the inventors age (65+), inventors poor health, some environmental / energy saving technologies in the patent application, some medical technologies in the patent application, imminent infringement or financing issues, of which are all petitioned for at the United States Patent Office and if approved result in your patent application receiving priority over "non special" patent applications, however not having a commitment of a specific issue date of potentially patentable subject matter for the patent application.  Another procedure termed "Accelerated Examination" can be used for any technology irrespective of the inventors age or health, wherein a commitment of a patent being issued within a year of its file date for potentially patentable subject matter by the United States Patent Office that requires a "super search" including foreign patents and non patent publications world-wide, plus additional analysis comparing the search results with the as filed patent application among other requirements that will add a cost of $3,000.00 and upward to the patent application.  With that said, a longer patent pending period is not necessarily a bad thing as it delays prosecution, issue, and maintenance fees, giving the inventor additional time to commercialize their invention, also allowing an inventor to sue for infringement based upon the 18 month patent application publication (prior to patent application issue), which was the major drawback of a long patent pendency period in the past, being prior to the 18 month patent application publication that was initiated in 2001 by the United States Patent Office.  Thus prior to 2001 a long patent pendency period delayed the ability of the inventor to sue for infringement until the patent application potentially issued.     

3. Where is a patent valid?

Patents are normally only valid on a country-by-country basis, so if you are going to sell your product in other countries you will need to obtain patents in those countries.  However, remember that your United States patent exclusionary rights cover the making, using, selling, offering to sell, or importing into the United States. Thus, even if someone else was manufacturing your patented product in a foreign country, if they imported, tried to sell, or even used your product in the United States, you could bring an infringement action based on the claimed coverage for your United States patent.  But if they manufacture, sell, and use your product entirely in the foreign country where you do not have a patent, then your United States patent will not help you. 

4. What about Patents in foreign countries?

The most important thing to remember is that most foreign countries have an “absolute novelty” standard that means you must get your patent application filed in any countries patent office before any public disclosure of your invention.  The good news is that for most countries under the Paris convention, you can use your United States patent application date as your foreign patent application priority date as long as your file in the foreign country within 1 year of your U.S. file date.  There are many different ways to achieve foreign patent protection that depends upon which countries, the total number of countries, and your time schedule for commercialization in the various countries.  Thus the foreign patenting process can be optimized to some extent to accommodate your commercialization plans.  Please see the “International Issues” section of this Web Site and the "Patent Cost” section of this website for more information.   

6.    What is a patent application publication?

A patent application is published (disclosed to the public domain) at 18 months after the file date if not previously issued (usually not the case).   Once the patent application is published it is available prior art to be used against later filed applications.   An advantage for the patent applicant is that once their application is published they can sue for infringement instead of having to wait until the patent issues at a later date.  However, the claims in the patent application publication are subject to change at patent issue from examination of the patent application by the patent office which of course would modify the infringement claims.    Note that the 18 month patent application publication is substantially consistent internationally for foreign patent application publications also.

7.   What can I get a patent on?

8.    Are there different types of patents?

Fourth, the most difficult hurdle to overcome is that your invention must not be an “Obvious” improvement or change to similar inventions already made to someone skilled in the technology of your invention.  The Patent Office evaluates obviousness by combined any number of exiting patents or publications and using only selected portions of each patent or publication, and combining these portions to completely define your claimed  invention.  There needs to be a motivation, suggestion, or teaching in the patents and / or publications to combine them in a manner that completely defines your invention for your invention to be deemed “obvious” and therefore unpatentable.  In addition, combining these patents and publications cannot interfere with the function of the existing devices in the patents and / or publications, which in effect “teaches away” from combining the patents and / or publications.  However, the Patent Office can say that a motivation, suggestion, or teaching is inferred by the ordinary skill in this technology, where the motivation, suggestion, or teaching is not explicitly stated in the patents and / or publications.

Furthermore, in determining whether an invention is obvious, an Examiner may combine different features from several references to indicate what would be apparent to the ordinary skilled person in the inventor’s technical field.  If the skilled person would view the claimed invention either as an obvious combination of existing features disclosed in the several references or as an obvious extension of the existing technology, then the claimed invention is not patentable.  While the tests of utility and novelty are more straightforward, the test of non-obviousness requires subjective judgment regarding, for example, the actual content of the prior art, the differences between the prior art and the invention, the level of skill of the ordinary skilled person in the technical field, and the evaluation of objective evidence as having a nexus to the claimed invention (called secondary considerations) supporting non-obviousness for patentability such that the invention produces or has:

9. What are the requirements to get a patent?

There are 4 requirements; they are “statutory subject matter”, “novelty”, “utility”, and “non-obviousness”.

First, your invention must fit into the statutory class for the type of patent you are seeking.  For a utility patent the invention must be a process, product, machine, or composition of matter.  Note that this requirement prevents the patenting of an idea alone, as the invention must be a real device or process that produces a functional result. 

Second, your invention must be novel or truly “new”, meaning that there cannot be anything just like your invention already invented.  The Patent Office looks at novelty by trying to find a single existing patent or patent application publication anywhere in the world (note that it is irrelevant if the patent is expired or not) or non-patent publication(s) (note that publications can be combined to show enablement (make and use) of the invention) anywhere in the world that directly anticipates or completely defines your claimed invention.  If this single defining patent or publication(s) are found, then your patent application fails the “novelty” test. 

Third, your invention must be useful to society or have what is called “Utility”.  This puts forth the requirement that your inventive idea has been converted; either by an actual working device or by generally accepted engineering standards into a real world device or process with a functional end result that has a beneficial use to the public.   

      a. New and unexpected results
b. Succeeds against conventional wisdom
c. Solves a new problem
d. Commercial success stemming from the claimed invention
e. Crowded prior art
f. Achieves the same result with fewer parts or steps
g. Solves a long standing problem
h. Synergistic results
i. Requires excessive prior art combinations, four or more
j. Prior art combinations are from non-analogous fields of art or technology
k. Failure of others to solve a known problem
l. The new invention has been copied in the marketplace
 

 In addition, obviousness requires that the references suggest, teach, or motivate their combination in relation to your invention or that “ordinary skill in the art” and / or legal precedent would implicitly teach the combining of the references or substitute for a functional element of the invention not directly found in a reference.  Examples of non-patentable obvious changes deemed “ordinary skill in the art” for the invention in relation to the prior art would be:

      a. Size changes
b. Material changes
c. Making portable
d. Making adjustable
e. Sequence changes
f. Making integral
g.Making separable
h. Making continuous
i. Automating a known process
j. Using a well established business practice
k. Reversing
l. Rearranging
m. Duplicating
n. Rearrangement of elements
o. Optimizing a setting within a range of values taught by the prior art

Note that if any of the above changes do result in a significant change of beneficial function to the user, then these changes may be non-obvious resulting in patentability, thus taking the "ordinary skill in the art" beyond obviousness and therefore potentially into patentability.

Also, a reasonable expectation of success should be achieved in combining the references, in other words it should “make sense” to combine the references by not destroying the principal of operation of the reference to achieve the combination, given the industry or field that the invention resides in, and with the ordinary skill in the art that exists.  Finally, the combination of all the references must teach the entire invention as it is claimed in the patent application. 

Note that in determining non-obviousness for patentability  the Patent Office looks for more than the mere combining of various prior art (reference) elements that were not expressly taught in the references, such that if the previously non-taught combination of reference elements yielded a predictable result it would be obvious (with the predictable result being ordinary skill in the art) and non-patentable.   

10. What does a patent contain?

A patent is written from scratch and must contain certain items.  A complete description of the invention including how to make and use the invention, identification of different versions of the invention with the best version identified, drawings, and claims.  The claims are what actually define your exclusionary legal rights of a patent.  The claims are the most important part of the patent and typically number around 20 or more.  The numerous claims are written in varying scopes of exclusionary right coverage to maximize your infringement net of protection.  This is done so that if your infringer either exactly copies your invention or makes alterations on your design in some manner, you have a claim that comes as close as possible to defining the infringers product to give your patent its maximum strength for an infringement claim.   A claim conceptually is similar to a legal description for real property by defining the metes and bounds on the invention, wherein a well written claim tries to protect the “concept” of your invention and not necessarily the exact embodiment or version taught by your working prototype.  Thus, the patent claim defines a "boundry" or the outer reaches of your invention concept and ideally the claim boundry is adjacent to matter that is in the public domain, resulting in claim coverage up to the limit of unpatentable subject matter.   This patent boundry is analogous to a real property boundry in that patent infringement = real property trespassing and the leasing of real property = the licensing of a patent, i.e. the right to trespass for a payment of a royalty.  The composition of the claims suite (the mix of independent and dependent claims and varying breadths of scope of the entire group of claims) are largely based upon two things, firstly what is in the public domain and secondly the anticipated modes of infringement.  Therefore, the public domain limits how far the scope of claim coverage can go and the infringement modes result in the claims being structured to be the most effective against the expected modes of infringement.  This results in two very important items of information required for the best claim drafting, first research to ascertain the public domain of the subject matter related to the invention and secondly to understand the business model of the invention, i.e. manufacturing, distribution, retail / sales, enabling profiles to be mapped of the expected infringers.           

The description and drawings portion of the patent is the longest part of the patent and must “support” what is in the claims.  In other words, the description must explain and give insight to what the claims mean to aid in their interpretation with everything stated in the claims being explained in the description and equivalent alternatives.  Note that the entire patent once issued or published is prior art preventing future patents to issue as used in the previously described novelty and obviousness tests.  Thus, the claims in your patent define your exclusionary rights against infringers for 20 years from the patent application file date (see question 2 for detail) and the entire patent disclosure works to prevent similar patents from being issued forever.    

11. Do I need a Patent Attorney?

No, it is perfectly legal for an inventor to completely write, file, and prosecute (process) their own patent application through the U.S. Patent and Trademark Office (USPTO) on their own.  However, only about 15% of the patent applications processed by the USPTO are completely done by the inventors themselves.  The approximately remaining 85% of the patent applications are handled through either patent attorneys or patent agents.  The reasons are that an agent or attorney can usually obtain broader patent protection for the invention by having specialized knowledge of patent law, USPTO procedures, and better understand how various patents stand up in court. This broader patent protection can result in the patent having more value on a commercially successful invention and can become very important in the future. 

12. What is the difference between a patent agent and a patent attorney?

Both patent agents and patent attorneys must take the same exam (Patent Bar) to be able prosecute (process) patents before the U.S. Patent and Trademark Office, and both are usually degreed engineers of various disciplines, such as chemical, electrical, and mechanical.  A patent attorney in addition has a law degree and can practice law on issues surrounding a patent such as licensing, infringement, and other legal activities that are related to an issued patent.  A patent agent is limited to patent related activities with the U.S. Patent and Trademark Office up to the point of the patent issuing and cannot do patent licensing, infringement, etc.

13. I think I may want a patent, what should I do first?

First and foremost, keep your invention confidential, don’t disclose it to the public or put it on sale until you have a patent application on file.  In the United States you have a 1-year grace period after the invention is disclosed before you have to file a patent application.  Even though you have a 1-year grace period in the United States, it is not wise to disclose your invention to the public before you have a patent application file date for several reasons.

First, someone could take your invention and quickly file a patent application on it before you do, putting you in the difficult position consuming additional time and expense for proving a conception of your idea with diligence prior to the other person, which can be difficult to do unless you posses appropriate documentation on your conception with diligence related to your invention development activities.  In the real world, most inventors have inadequate documentation on their conception with diligence activities, thus the default would be the “first to file” in obtaining a patent on the invention, of course assuming that the other patentability tests are complied with as given in question 9.   

Second, you could be infringing another patent without knowing it and will have to abandon your invention after putting time, effort, and money into commercializing it.

Third, another individual could claim to be a joint inventor with you by making casual suggestions on your invention, thus claiming ownership of the patent that is issued to you. 

Fourth, you may have lost your ability file a foreign patent application, which can reduce the value of your patent to outside licensees of your technology.   

Remember that most foreign countries do not give you this 1-year grace period and if you disclose your invention to the public before you get a patent application on file, you probably cannot obtain a patent in other countries.  Please go to the “International Issues” sections of this Website for follow up information.

A patent is a piece of legal property and has similar attributes to other types of property, such as real property i.e. real estate or personal property i.e. an automobile.  However, the difference with a patent is that a patent is an “intangible” piece of property that is reduced to a set of legal rights.  A true intangible asset or property would be something like a company’s customer goodwill or the value of a well-trained workforce that cannot be reduced to a set of legal rights.    Thus even though a patent is an intangible asset, it has a tangible legal existence through the enforcement of its exclusionary rights. 

An assignment of a patent is essentially a “sale” of the patent, keeping in mind that the inventor listed on the patent is by default the owner of the patent if no assignment is made or the patent can be assigned or “sold” to another entity or individual.  This is the situation wherein an individual(s) are the inventor(s) listed on the patent with another entity owning the patent, such as in the case on an employee in a company who invents a device that is patented and the company owns the patent.    Further, in the case of two or more inventors, all of which are named in the patent, absent an assignment the multiple named inventors are then "joint owners" of the patent until such time as an assignment is made to either an individual, business entity, partnership, or the like.  The patent assignment being a contract requires "consideration" for an inventor(s) giving up their patent ownership, meaning that a bargined for exchange of value must occur.  In other words if the inventor is executing an assignment of their patent ownership to an entity, then the inventor must receive something of value, much like a sale, such that the inventor "sells" their ownership of the patent to an entity.    

Similar to real property the patent assignment must be recorded for a proper public notice and to have a record to be kept of patent ownership over time.  Although real property is recorded locally, usually at the county clerks office, patents are all recorded at the United States Patent Office and similarly foreign patent assignments are recorded at the corresponding foreign patent offices.

A patent has several phases in its life; first the patent application is filed and is a pending application and second later issues into a patent.  The assignment can occur in either phase, also a given pending application or issued patent can be assigned multiple times. 

The assignment itself is a contract that states for valuable consideration the inventor(s) assign all of their rights in the invention to the assignee.  It is important to remember that even if there is a consultant’s or employee agreement for the inventor to assign ownership in the invention while the invention is being developed i.e. prior to the filing of the patent application, an actual patent assignment or as applicable, patent application assignment must later be filed and recorded with the Patent Office to perfect the assignment.   

General issues related to basic patent infringement

The legal rights that exist with an issued or published patent application are to exclude others from making, using, selling, offering to sell, or importing the infringing device in the territory (country) that the patent is valid in.  Pay close attention to the words above, the patentee does not have the right to make, use, sell, offer to sell, or import their own invention, only the right to exclude others from doing so.  The effect of this to prevent the patentee from making their own invention, if say the government has regulations against selling the patented device, or another patent’s claims dominate the invention.  Another patent’s claims could dominate the invention if for instance your invention was an improvement of an existing patented device, wherein your patented device would encompass or “read on” the other patents claims.  Similarly, the other patent holder may not be able to make your improvement as they would “read on” your patents claims. 

This brings up an important distinction in patent law, the U.S. Patent Office (USPTO) is not concerned with infringement, as the tests for patentability, primarily being novelty and non-obviousness are not the same legal standard as exists for infringement.  Even though your invention was deemed novel and not obvious over a particular prior art patent(s) typically, that patent’s claims may still read on your patented invention.    In other words, you could be issued a patent that is infringing another patent, how can this be, well as previously mentioned the patent office looks at patentability (novelty and non-obviousness) primarily by comparing the claims of the patent application to the prior art (typically being the description portion of a published or issued patent(s), and as long as the prior art doesn't expressly teach or through ordinary skill in the art the applications claimed invention, it is patentable.  However, that same prior art patent (that the patent office looked at) for instance could have claims that extend beyond the literal scope of the description of the patent, wherein the prior art patent's claims could overlap your actual device potentially causing infringement.  Basically this happens (note this is not common but possible) because the prior art patents claims can have a broad interpretation as compared to that same prior art patents description, wherein it is the prior arts patents description that determines patentability.    Broad claim interpretation is desirable from a patent owner's point of view to make their patent more valuable, thus patents are intentionally written to emphasize broad claim interpretation.     

Note that a pending patent application prior to either issue or publication is not eligible for bringing a patent infringement suit.   A patent’s exclusionary rights are in the claims with supporting interpretation in the patent description, its file history, the prior art, and outside experts, in that priority.    Also, the patent’s exclusionary rights only exist for the patent term (currently 20 years from the file date) assuming the three maintenance fees are timely paid, after which the technology is free for anyone to use. 

Breadth of the infringement net

The make, use, sell, offer to sell, and import exclusionary rights are all independent, wherein an infringer only has to do one of these things to be infringing.  Thus, even if you only had a United States (US) patent, but your infringer is manufacturing knock offs in Asia and trying to sell in the US they have committed infringement.   The knock off manufacturer can only escape infringement if they perform all of their activities outside of the US, i.e. make, use, sell, and offer to sell.   Note that the US also includes US territories and possessions such as Puerto Rico.  Also, the U.S. government itself can be liable for infringement. 

Aiding in infringement, is another type of infringement which is termed either contributory infringement or inducement of infringement.  Contributory infringement requires that the individual have a knowing intent to infringe by knowing of the patent and to knowingly engage in activities that support a portion of the infringing device, such as producing a part that goes into an infringing assembly.  An exception would be if the part were considered a commodity or a staple article of commerce i.e. a very commonly used item that could be used in many types of different assembled parts.  Thus, as a corollary to this if the part is specialized for the use in a particular assembly then the case for contributory infringement is stronger. Inducement of infringement also requires that the individual have a knowing intent to infringe by knowing of the patent and to knowingly engage in activities that support a portion of the infringing device, such as inducing others to infringe by advertising or sending operating instructions related to the infringing device, etc.    

Sale of the patented product

Once the patented product is sold the patent owners exclusionary rights are terminated, this is termed the “first sale exhaustion” in other words the purchaser may thereafter use, repair and resell the product without fear of infringement.  

Interpretation of patent claim language

There are two types of infringement of a patent claim, one is “literal” infringement and the other is the “doctrine of equivalents”.  Literal infringement requires looking to the claims elements, which are the components that make up the invention in its minimal functional form.  If the infringing device literally infringes it means that the patent claim “reads on” the infringing device, if the infringing device has every element or limitation of the claim.  Note that omissions defeat infringement i.e. if the infringing device has fewer elements that the claim there is no infringement, however, if the infringing device has additional elements to the claim and also has the claim elements then literal infringement exists.   

The doctrine of equivalents allows the claim to be interpreted somewhat outside of its literal boundaries and evolved from courts wanting to find infringement for the sake of justice and originally stemmed from the mid 1800’s when patents did not have claims and only had a description of the invention.  The doctrine of equivalents is defined as applying if the infringing device performs substantially the same function in substantially the same way to obtain the same result as the claimed invention.  The differences between the claimed invention and the infringing device must be insubstantial in nature and are compared on an element-by-element basis.  The doctrine of equivalents has a number of limitations to prevent the patentee from expanding their claim coverage excessively.  The insubstantial differences cannot encompass the prior art such that the patent should not of been issued in the first place by the USPTO.   Another limitation is prosecution history estoppel, wherein if the patentee amended claims to narrow their coverage to gain allowance of the patent during the prosecution phase of the application, the patentee is precluded from applying the doctrine of equivalents for that particular amended claim element, in going with the logic, you can’t get back what you gave up.    Prosecution history estoppel is rebuttable by the patentee if the insubstantial difference was not foreseeable at the time of claim amendment, or had a tangential relation to the insubstantial difference, or some other reason that the patentee could not have earlier claimed the insubstantial difference.   Note, however, that if the insubstantial difference in question was amended out of the claim to obtain the patent in the prosecution history, then the insubstantial difference would have been foreseeable and prosecution history would apply.  

Infringer defenses against patent infringement

An infringer can attack the validity of the patent that is asserted against the infringer through finding previously unknown prior art to show that the patent should not of been issued in the first place, either through novelty, obviousness, or a statutory bar.  Additionally, any lack of candor on the part of the patentee during the prosecution phase or otherwise in front of the USPTO could be cause for invalidity of the patent, this would cover non disclosure of prior art, deceptions as to Inventorship, or misrepresentations as to enablement of the description for the make and use requirement of the patent.   

Other defenses include, non-enforcement of patent rights by the patentee over time i.e. sleeping on one’s rights or latches, or misuse of the patent by the patentee i.e. antitrust violations.  Note that, there is no statute of limitations in bringing a patent infringement suit, however, damage recovery is limited to the prior 6 years before filing the suit, resulting in an implied 6 year statute of limitations for damages, with injunctions available in any case.     

Another defense can be the experimental use exception, there is no infringement if the patented device is used solely for research or experimentation, however, the infringer cannot adapt this experimentation towards his or her own patent.

The infringer can always claim that there was permission to infringe or that an implied license was granted through sale of the machine from the patent owner.  

Damages available against the infringer

Permanent injunctions i.e. forcing the infringer to stop making the product, money damages from lost profits, imputing a reasonable royalty rate, and in cases of intentional or willful infringement the possibility of treble damages and attorneys fees.   

One caveat on lost profits damages, the court will only award this if the patent owner was in fact also manufacturing, using, selling, or importing the invention themselves (or an exclusive licensee).  This corresponds to the “but for” test, i.e. but for the infringement would the patent owner have made greater sales.  What this means is that if the patent owner was manufacturing in a limited quantity and the infringer was manufacturing in a much greater quantity, the amount of lost profits awarded would be limited by the patent owners capacity to support a greater manufacturing quantity.    

Thus, for a patent owner who does not manufacture, or manufactures in a limited manor, a reasonable royalty rate will be the damages awarded.  However, willful infringement may increase the damage award as mentioned above. 

Failure to mark the patented device properly i.e. no patent number can cause an infringer to claim innocence, however, the only effect is to reduce damages in that damages do not accrue until the infringer has knowledge of the infringement.  Note that, this marking requirement applies to products only; a patented machine or process has no duty to mark.

From a business perspective developing an on-going licensing process is one way of fulfilling the requirement of optimizing the value of a business’s intellectual property portfolio or a way for an individual or entrepreneur to obtain manufacturing, distribution, and sale of their product in a significant manner that would otherwise be difficult to establish.  One of the beauties of the licensing of intellectual property is that there is potentially unlimited opportunities for income by expanding your licensing to additional territories, uses, and markets for a given technology.  This is as opposed to a tangible asset such as a lathe in a machine shop wherein the income from the tangible asset is strictly limited to the physical output of the machine, say running 24 hours a day.

The following list is a starting point of issues to consider prior to entering into a licensing agreement to protect your interests and to allow you to secure alternative licensee’s should the relationship prove unsatisfactory.  Basically you and the licensee are open to defining the scope of the licensee’s activities and what you expect in return for royalties with the following given to clarify obligations of the parties.   Remember you are “selling” your proposal to the potential licensee and need to create a win-win situation for both yourself and the licensee while at the same time adequately protecting yourself.

The first step is to have an awareness of the intellectual property assets that you have that are available for licensing.  Thus, having an intellectual property portfolio that clearly documents all aspects of your patents is important. Locate potential licensee’s to consider their capabilities, past reputations, and “fit” with your goals in licensing your technology.  You and your potential licensee are contemplating entering into a fiduciary relationship which means that good faith, honesty, and each parties best efforts are important in making the ongoing relationship a success for each party.  Thus, investigating the potential licensee’s past performance in similar agreements and the background of the potential licensee is important. 

Compare a license agreement with an executory contract in that with an executory contract there is less risk because a contemporaneous exchange of value occurs and each party has a better understanding of the goods or services received.  With a fiduciary relationship in licensing there is a required trust of the other party into the future making the value exchanged not as obvious.  Discuss with the licensee what your goals and expectations are for the relationship. The grant of the license defines the scope of what and where you are allowing the licensee to use your technology.  This would cover issues such as whether the license is exclusive or not, and whether the licensee can assign the license to third parties. The term of the agreement normally cannot exceed the life of the patent, however, non-patented technologies with longer terms could be included also.

Royalties can be defined by market levels and can vary greatly depending upon the split of tasks between you as the licensor and the licensee.  Other items to consider related to royalties are minimum payments, method of payments, method or calculating payments, and consequences of non-payment.Inspections, audits, and documentation of the licensee’s activities should be considered also.

Control of your technology and associated documents should be defined also, such as maintaining confidentiality and control over what is publicly disclosed.  Also, what are the parties’ obligations to each other for technical and other support activities such as marketing, distribution, promotion, manufacturing, proper part marking, etc.

How are improvements to the technology going to be handled, who is going to own what improvements and who is going to pay for the improvements, this is often called “grantbacks”.  Who is going to police, enforce, pay for, and receive any awards of damages related to infringement of the patent by third parties?

Are you indemnified from the various liabilities related to the licensee’s manufacturing, use, and sale of your technology, such as who is responsible for product liability and related items such as standards compliance, codes, required permits, etc. Under what conditions can the agreement be terminated by either party.  What constitutes official notice between the parties. What obligations exist for the parties after termination of the agreement.

How are disputes to be handled, either through arbitration, specific courts, etc. Is there any antitrust risk in you and the licensee executing this agreement; also are there controls that need to be in place for preventing future antitrust issues.  This could include tying contracts, resale restraints, having more that 20% of the market, or having less than four technical alternatives for consumers that use your technology.            

17. What is patent maintenance?

All intellectual property has some form of on-going maintenance needs to maximize the legal strength of any particular items such as a patent, trademark, copyright, trade secret, various forms of proprietary information, etc.  This is where the intellectual property liaison comes into play as being an individual who is involved with your technology on a daily basis to ensure all of the right activities are accomplished.   Click on “Intellectual Property Portfolios” for more information on the intellectual property liaison tasks. 

Amendments should be minimized as amended claim elements have a reduced scope of infringement coverage, see the “Patent Infringement” FAQ answer for detail.  Next, always have full disclosure to the U.S. Patent Office (USPTO) for all known prior art and be careful that  inventorship is correctly stated in the application.  Lack of candor with the USPTO on any issue related to patentability and all other information can subject the patent to invalidation.    

For maintenance fee payments to the USPTO, normally your patent attorney will docket these in their calendar to be paid and give you a reminder, however, it would be wise as a backup for you to calendar the maintenance fees also, just in case something should happen over the years, with ownership transfers, etc.  The maintenance fees are due at 3, 7, and 11 years after the issue date with each one having a subsequent 6 month window to pay.  If the fee is not paid then the patent expires at that maintenance fee date.

Infringement watch, you must police your patent rights, track all infringement activity, and enforce your patent, to avoid the charge of latches or sleeping on your rights.  Also failure to bring an action against an infringer for an excessive amount of time can result in a reduction of damages available; see the “Patent Infringement FAQ answer" for detail. 

Always keep an eye out for damaging prior art that you may not of known about during the filing and prosecution of your patent.  It is better for you to know about it sooner and assess the potential for harm against your patent validity, that to have an infringer surprise you with it later.

Be aware of anti trust risks, especially over time as companies are bought and sold, inadvertent monopolies can develop and expose you to the charge of “patent misuse”.   See “Anti trust” under “General Intellectual Property” for more detail.

Be careful that no implied representations are made to any potential or actual infringer that somehow permission is given, to say manufacture an infringing device.  This can happen inadvertently through the sale of a machine for example that can only perform the infringing process. 

Always ensure that proper public notice is given on the patented device either with the “patent number” or during pendency “patent pending” to not be subject to an infringer claiming innocent infringement, although this does not relieve the infringer of being guilty of infringement, is does have the potential for reducing the amount of damages awarded.