A patent is a very important part of the process of inventing. But there are certain aspects of this process that are a complete surprise to many inventors when they finally learn the reality of the patent process.
Submarine Fees:
One of these aspects is that there are ongoing patent fees “after” the application fees for the patent. I call these “submarine” fees because, like a surprise attack from a submarine, they unexpectedly start coming right on the heels of applying for a patent. Yes, when your patent finally gets approved – after an appeal or two – you get the privilege of paying a patent “issue” fee when the patent is granted.
Then, there are “maintenance” fees every few years, with the first one due after a period of four years. These maintenance fees actually increase in cost with time, and if they’re not paid when due on a timely basis, it puts the patent into suspension and eventually into the public domain where anybody can make it without paying you one penny.
Diminishing Value
Most inventors whom I’ve talked with over the years, feel protected by the patent and believe that their invention’s value will remain the same throughout the whole patent duration. They think that they will receive the same kind of financial deal no matter when it happens within the patent’s life.
But probably the most surprising factor to inventors, is that while the maintenance fees continue to go up, the patent depreciates in value and each year it becomes worth less and less in the marketplace.
The reason why the patent value diminishes over time, is that any businessperson, licensee, manufacturer, etc. who takes on the invention, will need as much time as possible to get his/her return on investment (ROI) back. After negotiating the deal, it also takes time to set up and establish the manufacturing, distribution, and sales and marketing systems, etc. So after this initial start-up period, they will want the balance of the time protected by the patent to sell the product. Obviously, a patent with the maximum time left is more valuable and beneficial to an investor/licensee.
So sitting on your patent, and waiting for somebody to magically (poof) come along to buy or invest in it, can be a sure way to find that you have an invention that not only has very little time left to make the best possible deal, but has diminished in value, which makes it even harder to get a deal.
There are exceptions to every rule, and this is not to say that someone with a patent that has two, five or eight to ten years couldn’t still make a good deal come about. But in general, years of inactivity after the patent is issued, doesn’t fare well for the inventor in getting the invention licensed.
You can see that without action before, during, and after the patent has been issued, you’re just spending time, energy, money and resources for a piece of paper called a “patent”.
Beat the (Patent) Clock
So what does all of this mean to inventors? It means that from the get-go, instead of sitting back and hoping and wishing for a deal, that inventors need to take proactive steps to actively seek out licensees, manufacturers, investors, distributors, etc.
There are a multitude of ways to reach prospective buyers, licensees, etc. For example, inventors have options like advertising in publications that reach their target, participating in trade shows, contacting qualified companies directly, and exhibiting in online venues like cybershows. But I do believe that it’s important to have a mix of passive as well as aggressive venues. Remember that everything takes time, including this process of researching, finding, contacting, and negotiating with potential licensees and investors.
So now that you’re aware of the fact that there’s a clock ticking on maximizing your value of the patent, along with additional fees as time ticks, if you’re to capitalize on your intellectual property – your invention and the patent – bottom line, there’s not one minute to spare!
If you were patent pending, and then issued a patent, and now you’re at your first or later maintenance fees that need to be paid, and you still haven’t done anything to license or get your invention into the marketplace, it’s time to get moving and take action!
Copyright 2005-2006. Stephen Paul Gnass. All Rights Reserved.
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Stephen Paul Gnass is founder of InventionConvention.com, Executive Director of the National Congress of Inventor Organizations [NCIO] and an inventors advocate. Mr. Gnass speaks on the subject of the “Business of Inventing” [tm] and has had his articles reprinted in various magazines. As Senior Consultant with the Gnass Group, he consults independent inventors, entrepreneurs, and small businesses. He can be reached by visiting http://www.businessofinventing.com
