Thursday, June 12, 2014

Patents and the small business inventor

Patents are often described as as useful tool for small inventors and businesses to protect their intellectual property.  While not limited to small players, this is true, but only to a point and at a price.

Competitors with patents that may or may not apply to you can sue you over infringement. The cost of defending patent lawsuits is high and time consuming.  In our case, before our own patent application was approved, we were sued for infringement by a competitor who came to market years after us.  Even though it seemed obvious to us that the patent did not apply, the legal language of patent claims were challenging and imprecise.

Patent claims are legal claims, not technical specifications, and the patent itself describes a "preferred embodiment," so many other implementations that differ from the details of the patent, but provide similar functionality, are likely covered under the legal rule called the doctrine of equivalents.  The advice of a neighbor, who is an IP attorney for a large software company, was to settle.  While he said it might be distasteful, defending against infringement claims can be tricky, seemingly fickle, and surely will be expensive.  Winning may by pyrrhic victory at best, or a crippling loss at worst.  The suing company tends to have more time and money than small inventors running small businesses.  We've read of defenses costing $500,000 to $1 million, and can be $100,000 just to reach a settlement.  Our decision, bitter as it was, was to settle after spending what we'd consider two years of our own salary on lawyers and expert witnesses, and spending hours gathering documents and specifications and revenue numbers that had to be turned over during discovery.  Had the suing company offered us the terms we eventually settled on from the start, we'd have negotiated a license long before spending any money on lawyers and going through the hassles of discovery, preparing patent claims responses, etc.  But we were never afforded that courtesy, presumably because they just wanted to put us out of business with a lethal, legal blow.  We survived, but much less money and lots of wasted time and energy.

The cost of acquiring your own patent can be high, and often can take a long time.  The Yozons '079 patent took 6 years before it was awarded and issued.  Legal fees tend to mount as time seems to work to the advantage of lawyers more than inventors.  And you will need lawyers.  Remember that you will need to devote a lot of your own time and energy to acquire your patent as your lawyers will need a lot of information from you so they can understand it in detail.  Also, you'll need to be sure to keep up on the various maintenance fees the patent office requires after issuing your patent, though it's not clear how the USPTO is maintaining anything on your behalf.  It seems that you, the small inventor, are maintaining the patent office instead.

Even after you earn your patent, unexpected expenses and issues can crop up.  In our case, an unknown law firm filed an ex parte reexamination request, challenging the validity of our patent, even though we hadn't ever attempted to enforce our rights on anybody. For a big corporation, this may be business as usual, but for a small business, you will find it takes a lot more time to read other patents and help your lawyers defend your invention, the one you thought you already had and earned when the USPTO granted it.  Of course ever more legal fees will apply.

We were fortunate that our patent is strong, and we survived with all of our legal claims intact, without any modifications.  But we did spend a lot of time and money that could have been better used to run our business and pay salaries.  On a happier note, that big competitor who sued us years before for patent infringement was itself a target of a similar ex parte reexamination from the same firm that challenged ours.  In their case, it didn't turn out well as their patent was gutted, leaving only the final dependent claim that nobody likely infringed (including their own technology!).

But having a patent is not the same as being protected by the patent.  The USPTO won't help you defend what you might assume it asserted when it issued your patent in the first place, that your patent and legal claims are valid. That's left to you to do.

You can, of course, request that competitors and others who make, use or sell your invention acquire a license to your patent, or that they should cease doing whatever it is that infringes.  But that's easier asked than done.  If you are a small inventor, most likely they will simply say they do not infringe.  Some will not even respond at all.  They probably won't give you any details on why they don't infringe, even if you provide details on why you think they do.  They know that your bark is likely worse than your bite because defending your patent means more lawyers, and that means more time and money when you'd likely prefer to run your business to feed your family, pay your workers and serve your customers.

If you have a good idea, getting a patent is probably a wise move.  But remember that you need to expect to spend a lot of your time and your money acquiring, keeping and defending your patent.

Having a patent doesn't mean a thing if you cannot defend it, and most small inventors are up against better funded corporations that will use the legal system to their advantage, to dissuade you from moving forward because you fear you cannot afford the legal costs of securing your rights.  Others will use their patent portfolio against you, suggesting you may infringe any of a number of their patents even though they would never have suggested infringement if you didn't attempt to defend your own against them.

The patent system is flawed and doesn't serve the small inventor as much as you might think, but it really is your best hope in defending yourself from competitors who otherwise will make use of your invention, challenging you to an expensive legal fight.  When you are in a position to be up to that challenge, we wish all small inventors the best of luck.  Yozons is only now in a position to begin to defend its patent with the help of a law firm that believes enough in the strength of our case to partner with us.  Wish us luck!

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