by Evan R. Smith and Charles M. Leedom, Jr
Entrepreneurs, technologists, and their
advisers should be aware of new, reduced-cost, alternative strategies for preserving
rights in patentable inventions during the early phase of concept development. These new
strategies derive from an important change in U.S. Patent Laws allowing the filing of
provisional patent applications.
Since the U.S. Patent and Trademark Office
began accepting provisional applications in June 1995, the popularity of this new type of
application has grown steadily. The Office received 8,000 provisional applications in the
last part of 1995, and expects 22,000 provisional filings in 1996 and 31,000 in 1997.
Advantages of Provisional Applications
Provisional applications can be filed with an
investment of as little as a few hundred dollars. An early provisional filing provides:
A precisely identifiable piece of
intellectual property which can be licensed, sold, or used to gain credibility with
Evidence of invention - an earlier filing
date provides procedural advantages, especially if others file similar applications.
The right to advertise the product as
An entire year to seek capital, test
markets, refine the product, and find out whether the idea has "critical mass"
before incurring the substantial expense of filing a regular utility patent application.
Preservation of Rights
A U.S. patent application (either provisional
or utility) must be filed within one year of the first public disclosure, public use,
publication, or offer for sale of the invention. Otherwise, all rights in the invention
will be lost. Product demonstrations, distribution of printed information and
advertisements, and discussions with customers about purchasing a product under
development can all start this one year period running.
U.S. laws permitting disclosures before filing
are generous compared to foreign laws. Under international conventions, patent offices in
most foreign countries treat applications filed within one year of a U.S. filing as if
filed on the U.S. filing date. However, ANY divulgation of the invention prior to filing a
U.S. application will result in forfeiture of patent rights in many countries, including
Japan, Germany, and other important markets.
In the past, many smaller companies and
entrepreneurs were discouraged from preserving foreign patenting options because of the
high, front-loaded costs of utility patent applications. The realities of new product
development often dictate "testing the water" through early contacts with both
potential investors and customers, and many entrepreneurs simply cannot justify the
typical $5,000 to $10,000 cost of a utility patent application at a point prior to any
disclosure of the invention.
A timely filed provisional application will
stop the one-year clock under United States law, and filing before any divulgations will
protect rights in most foreign countries.
Mechanics of the Provisional Strategy
Unlike a standard utility application, the
provisional application is not examined and cannot issue as a patent. The provisional
application has a life of exactly one year. Before the end of that year, if protection is
still desired for the idea, a utility application and any desired foreign applications
must be filed claiming "priority" of the provisional case.
Since the provisional application is not
examined, it need not meet all the format and content requirements of a utility
application. Attorney preparation time is reduced, because claims (the part of a patent
that defines the scope of coverage) are not required.
The provisional application must provide a
disclosure that: (1) is complete enough to enable a person of ordinary skill in the
relevant technical field to make and use the invention; and (2) discloses the best way of
making the invention known to the inventors at the time of filing.
Depending on the circumstances and the level
of protection desired, the following are a few examples of materials that the concept
developers might prepare for the attorney as the basis of a provisional application:
A complete description of the idea including
A detailed business plan describing the
product or service and its uses;
Preliminary concept marketing materials and
schematic or assembly drawings of a prototype; OR
For software inventions, a general
description of software functions and documented source code or flow charts.
Although cost-conscious clients may prepare
much of a provisional application themselves, they should work under the supervision of a
registered patent attorney having experience in both obtaining and enforcing patents, to
ensure that the application successfully preserves the desired rights.
Disadvantages of Provisional Applications
While the provisional application offers real
benefits to many companies and inventors, it is not the right strategy in every case.
The provisional route delays expenses for up
to a year, but similarly delays issuance of any patent. Thus, if protection is needed
quickly, it is better to immediately file a utility application.
Foreign Filing Issues
Filing any type of application creates a
deadline, one year from the U.S. filing date, for foreign filings claiming priority of
that application. Thus, when following a provisional strategy, foreign patenting expenses
may be accelerated to the extent the application is filed earlier in the development
cycle. This disadvantage can be minimized by using the Patent Cooperation Treaty (PCT) to
accomplish the U.S. and foreign utility filings. Although government filing fees for a PCT
application may be several thousand dollars, filing a PCT application further postpones
the expense of individual national filings for up to 18 months.
Initially, there was controversy about whether
the provisional application provides a valid basis for foreign priority claims under the
pertinent treaties. The European Patent Office and the World Intellectual Property
Organization (among others) have taken the position that provisional applications are fine
for this purpose. Although this issue seems to have been settled, the provisional-type
application is subject to interpretation by foreign courts, and prudence dictates filing a
utility application in cases where clients cannot abide any risk to foreign patent rights.
Excessive informality in the provisional
application could also undermine a foreign priority claim. High perceived importance of
foreign patent rights may justify extra effort to make the disclosure look more like a
utility patent application.
During the one year term of a provisional
filing, applicants may preserve U.S. and foreign patent rights while they develop the
invention, seek capital, evaluate marketability, offer licenses, and investigate
manufacturing arrangements; applicants can then decide whether the idea merits a more
significant patenting investment. This strategy is a useful option for individual
inventors, small companies, and even major corporations.
Copyright © 1997 Nixon
Peabody, LLP (Patent,
Trademark and Internet).
All rights reserved. Used with permission.
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