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Patent FAQs
Questions
- Do I need a patent?
- What can a patent do for a SMB?
- What can't a patent do for a SMB?
- How much does a patent cost?
Do I need a patent?
The answer to whether you "need" a patent is up to you, and depends upon your understanding of the answers to the other three questions. Let's address those first, keeping in mind that the answers are on-average (common outcome) and not specific to any given situation.
What can a patent do for a SMB?
Things that a patent often can do for you, as a SMB owner: enhance the perceived value of your business; serve as collateral for funding; strengthen an exit strategy; deter other SMB owners from copying your invention.
The United States Patent and Trademark Office in 2019 completed a Congressionally-ordered study on how patents "impact" some small businesses. The study included a statistical analysis of employment and sales growth for businesses that were granted patents, compared to businesses that were not granted patents. One finding was that businesses receiving patent showed higher growth of sales and employment from two years after the patent grant.
Does this mean that getting a patent "causes" your business to do better? Probably not. The study showed a *correlation* not *causation*. More likely is that getting a patent is a *signal* that the business possesses other qualities that make it valuable: skilled workers, funding for product development, and a good understanding of market needs.
All these qualities do make your business more valuable. So the signal that you can send by obtaining a patent is an honest signal that is recognized by investors, lenders, and acquirers. Getting a patent will often enhance the perceived value of your business. A patent can serve as collateral for funding. And having a patent will strengthen your exit strategy, if you want your business to be acquired.
A patent also can deter other SMB owners from copying your invention. Everyone knows that patent lawsuits are expensive to prosecute or defend (think $100,000s or even millions of dollars in legal fees!). No SMB owner wants to incur that cost (you probably don't). So just sending a cease-and-desist letter might make a small competitor back off from copying your invention. Finally, if you have a really good idea, you might be able to license your patent to a big industry player who wants to use your idea and also wants to prevent other big players from using your idea.
The United States Patent and Trademark Office in 2019 completed a Congressionally-ordered study on how patents "impact" some small businesses. The study included a statistical analysis of employment and sales growth for businesses that were granted patents, compared to businesses that were not granted patents. One finding was that businesses receiving patent showed higher growth of sales and employment from two years after the patent grant.
Does this mean that getting a patent "causes" your business to do better? Probably not. The study showed a *correlation* not *causation*. More likely is that getting a patent is a *signal* that the business possesses other qualities that make it valuable: skilled workers, funding for product development, and a good understanding of market needs.
All these qualities do make your business more valuable. So the signal that you can send by obtaining a patent is an honest signal that is recognized by investors, lenders, and acquirers. Getting a patent will often enhance the perceived value of your business. A patent can serve as collateral for funding. And having a patent will strengthen your exit strategy, if you want your business to be acquired.
A patent also can deter other SMB owners from copying your invention. Everyone knows that patent lawsuits are expensive to prosecute or defend (think $100,000s or even millions of dollars in legal fees!). No SMB owner wants to incur that cost (you probably don't). So just sending a cease-and-desist letter might make a small competitor back off from copying your invention. Finally, if you have a really good idea, you might be able to license your patent to a big industry player who wants to use your idea and also wants to prevent other big players from using your idea.
What can't a patent do for a SMB?
Things that a patent often can't do for you, as a SMB owner: deter big players from copying your invention; grant you "freedom to operate".
As mentioned, patent lawsuits are expensive. SMB owners like you don't really want to pay for that. Big players, on the other hand, have deep pockets to fund litigation and drag things out until you give up. Big players can afford to challenge issued patents at the Patent Trial and Appeal Board through a process called Inter Partes Re-examination (IPR) - a kind of patent lawsuit where the patent holder literally can't "win" anything more than just keeping their issued patent. An IPR can cost a couple hundred thousand dollars just to protect the patent. So, even if you have a solid patent on a great invention, and a big player wants to rip you off, then you have very little chance of winning that fight. Another thing that a patent can't do: protect you from being sued by other people who already have similar patents. If you get a patent for a machine that makes ice cream cones, and someone else already has a patent for a similar machine that does the same thing, they can sue you even though you have an issued patent.
As mentioned, patent lawsuits are expensive. SMB owners like you don't really want to pay for that. Big players, on the other hand, have deep pockets to fund litigation and drag things out until you give up. Big players can afford to challenge issued patents at the Patent Trial and Appeal Board through a process called Inter Partes Re-examination (IPR) - a kind of patent lawsuit where the patent holder literally can't "win" anything more than just keeping their issued patent. An IPR can cost a couple hundred thousand dollars just to protect the patent. So, even if you have a solid patent on a great invention, and a big player wants to rip you off, then you have very little chance of winning that fight. Another thing that a patent can't do: protect you from being sued by other people who already have similar patents. If you get a patent for a machine that makes ice cream cones, and someone else already has a patent for a similar machine that does the same thing, they can sue you even though you have an issued patent.
How much does a patent cost?
Understanding the answers to what a patent usually can and can't do for you, as a SMB owner, let's consider how much patents cost. There are up-front costs, "prosecution" costs, and maintenance fees.
Up-front costs usually include a "patentability search", "drafting", and filing fees.
A patentability search is the patent attorney's best effort to assess whether you'll be able to eventually get a patent for your invention. This typically costs $1000 - $2000 and gets you a pretty good guess as to whether your invention is "new" and "non-obvious", which are two key hurdles in getting a patent. A couple thousand dollars is expensive, but if the patent attorney tells you up-front that your invention isn't new or is obvious, you can avoid spending more money on drafting.
Drafting is the process of converting your invention disclosure into a patent application with proper drawings, full description, and appropriate claims. The drafting process often involves the patent attorney asking you questions and sending you at least one draft of the application to review and mark up. Typically, drafting an application takes 12 - 20 hours depending on the complexity of the invention. This means that drafting can cost anywhere from $3600 to $9000 depending on the attorney's billing rate and efficiency.
Filing fees vary depending on how big your business might be. If you have fewer than 50 employees you will qualify as a "small entity". As of November 2023, the filing fees for a small entity are $664.
Prosecution costs arise when a patent examiner issues a rejection of your patent application and your patent attorney argues with them. The attorney spends time reviewing the rejection, coming up with a plan to argue against it, and making the argument. Depending on the attorney's billing rate and efficiency, each rejection can cost anywhere from about $2000 to about $5000. Often, patent applications are allowed to issue after 1 or 2 rejections.
Maintenance costs include the fee to get your patent issued after it has been allowed - currently, $480 for a small entity. After your patent is issued, you are required to pay additional fees to maintain it in force. These fees are payable at 3.5 years, 7.5 years, and 11.5 years after issuance. It's hard to forecast how much they will be in the future, but presently the 3.5 year fee is $800 for a small entity.
Given all this information, it is up to you to answer whether you "need" a patent.
Up-front costs usually include a "patentability search", "drafting", and filing fees.
A patentability search is the patent attorney's best effort to assess whether you'll be able to eventually get a patent for your invention. This typically costs $1000 - $2000 and gets you a pretty good guess as to whether your invention is "new" and "non-obvious", which are two key hurdles in getting a patent. A couple thousand dollars is expensive, but if the patent attorney tells you up-front that your invention isn't new or is obvious, you can avoid spending more money on drafting.
Drafting is the process of converting your invention disclosure into a patent application with proper drawings, full description, and appropriate claims. The drafting process often involves the patent attorney asking you questions and sending you at least one draft of the application to review and mark up. Typically, drafting an application takes 12 - 20 hours depending on the complexity of the invention. This means that drafting can cost anywhere from $3600 to $9000 depending on the attorney's billing rate and efficiency.
Filing fees vary depending on how big your business might be. If you have fewer than 50 employees you will qualify as a "small entity". As of November 2023, the filing fees for a small entity are $664.
Prosecution costs arise when a patent examiner issues a rejection of your patent application and your patent attorney argues with them. The attorney spends time reviewing the rejection, coming up with a plan to argue against it, and making the argument. Depending on the attorney's billing rate and efficiency, each rejection can cost anywhere from about $2000 to about $5000. Often, patent applications are allowed to issue after 1 or 2 rejections.
Maintenance costs include the fee to get your patent issued after it has been allowed - currently, $480 for a small entity. After your patent is issued, you are required to pay additional fees to maintain it in force. These fees are payable at 3.5 years, 7.5 years, and 11.5 years after issuance. It's hard to forecast how much they will be in the future, but presently the 3.5 year fee is $800 for a small entity.
Given all this information, it is up to you to answer whether you "need" a patent.