"The process was abandoned for two reasons: [first], the company felt the competition was developing too fast and that by the time patents were granted and could be defended, the market would have already shaken out dramatically. We'd either be a top player or long dead by that time. Second, the company was dealing with some internal issues, and that caused some shifting priorities.
"As an aside, I advise a lot of entrepreneurs and generally tell them (especially if it's a software or method patent) go ahead and file a brief provisional if it makes you feel better... come back to flesh it out later. But "patent pending" -- which is what you're likely to be for the entire life of your startup -- offers you almost nothing in the way of marketplace protection. There's an obscure argument to be made in the way of 'IP portfolio' if you're looking to be acquired but suitors care far more about your base. So, in the meantime, focus on development, execution, and getting out there. Because at the end of the day that's what's going to matter. Do people use it? Do they love it? Are they telling other people about it? etc. The patent system is so slow and broken that an obsession with it is a major handicap to any entrepreneur."
Dan Brown of LoggerHead Tools, however, has had a different experience in patenting his unique tools:
"My experience has ranged from a little over one year to three to four years. Basically the time depends on a few factors:
- Novelty of your invention, the more novelty the less time it will take for the examiner to do his work, and the greater the chance you will receive a patent.
- Broadness of your claims, the broader the claim the more potential for prior art conflict, thus the more time the examiner and your attorney must address the claim in the context of the existing body of art.
- Amount of Art in your invention area, in a crowded area it will take more time to distinguish your novelty from the body of available prior art.
- Quality of your patent, and the thoroughness of your application. If the application is not prepared properly, or is lacking required information, you will consume time in getting it into the proper form for the examiner to do his work.
- Experience of the examiner within the art. An experienced examiner is more knowledgeable of the existing art and can draw upon that experience to get the job done quicker.
- Backlog in the area your patent is being reviewed in. Simply you have to wait your turn in line.
"In an entrepreneurial setting the Patent process is drain on cash flow, and if your product does not succeed in the market all of the Patent and Commercialization expenses are lost. The burden of the Intellectual Property expenses at the front end of an entrepreneurial effort drains needed cash that could be used to commercialize the product, thus often further reducing the chance of commercial success in cash strapped startups. But a commercial product success without the patents to protect your investment will result in fast following competitors copying you in the market and cannibalizing your opportunity. Thus pioneering a new product in the marketplace is an expensive and very difficult challenge, but without the risk protection a good patent offers, there would be little or no drive for entrepreneurs to pioneer new innovative products. The reality is that entrepreneurial pioneering efforts have a high chance of failure. "
In the world of tech start-ups, patent approval within the life of a start-up is growing more and more rare. With software and business processes, the amount of examination by the USPTO can take years to determine the validity of the patent application, and by the time a patent is approved, odds are against the company still existing in the form it did when the application was submitted. In a four-, five-, or even six-year timeframe, most start-ups are acquired or have failed. Unless the USPTO goes through a complete overhaul, it may not be worth the time, energy, and money involved in patenting intellectual property for those companies.
More news, commentary, and predictions from The Industry Standard:
Cyndy -
Unfortunately, your premise looks at only the veneer of the issue, while the substance goes much deeper.
First, not all companies want patents granted quickly. Pharma companies that require lengthy clinical trials before a new drug is approved want patents grants delayed as much as possible to align as closely as possible to the FDA approval date in order to maximize the benefit of the patent term. The strategies used to extend the patent pending period ("pendency") or patent term are many ... too many to go into here.
On the other hand, some companies in fast moving technology areas want patents granted quickly, so they can assert against an alleged infringer. In those cases, the applicant can request an Accelerated Examination which guarantees a final decision by the USPTO within 12 months of filing.
http://www.uspto.gov/web/patents/accelerated/
There are risks with opting for accelerated examination: the complexity of procedural compliance is high, there is a requirement to perform a comprehensive prior art search, and there are limits on the number of claims, to name a few. Mastering the process however, can provide some significant competitive advantages to high tech companies, and perhaps their investors.
Next, there are offensive and defensive reasons to build a patent portfolio (not placing your bets on one, "silver bullet" patent). They include: increased licensing revenue, or stronger position for cross-licensing negotiations - a response by one company to an infringement assertion, or to position a company within an industry standard (such as owning patents considered "essential" for Blu-Ray, Bluetooth, MP3, MP4, and so forth), and more.
Finally, know that 85% of the market cap of the S&P 500 is attributable to intangible assets, of which patents usually play a majority role. At this point, correlating patent quality (and portfolio size) to market cap becomes a more serious mission. Understanding how to evaluate patents in M&A, enforcement, or defensive corporate strategy environments, with an objective of increasing shareholder value, puts patents high on the list as mission-critical business tools (some shareholders get happy about that).
In the big picture, I echo the voice of many other industry experts regarding the need for the USPTO to timely grant only high quality patents as a service to its constituents. Patents are a business tool, not a one-shot lottery ticket. Managing patent pendency periods, patent quality, patent investment, and long term patent maintenance is not unlike managing accounts receivable cycles, inventory for products in a declining cycle, or maintaining physical plant and equipment. The software tools available to manage patents are not unlike CRM, integrated accounting systems, or shop floor control systems.
Managing patents is deemed such an important mission that some companies have received patents on managing patents. IBM (which generated $1B + in licensing) owns "Intellectual property management method and apparatus", US 7,089,192.
And while patents may grant rights to "intangible property", make no mistake that properly managed patents produce VERY tangible business results.
Ask Blackberry, Microsoft, SanDisk, Medtronic, Microsoft, IBM ......
Andy Gibbs
CEO, PatentCafe®
PatentCafe.com, Inc.
Mine Your Own Business™
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