Howard M. Cohn - Patent and Trademark Attorneys

A U.S. patent is a document, issued by the Federal Government that grants to the owner of a new invention a legally enforceable right to exclude others from using the invention described in the document. Congress allows this right, for a term of twenty years from the filing of an application for patent, to encourage their public disclosure of their idea and as an incentive for investing in its commercialization. When a patent expires, or is held invalid, the right to exclude the others is lost.

Under What Conditions Is A Patent Granted?

Congress has specified that U.S. Patents will be granted if the inventor files a timely patent application which describes a new, useful and unobvious invention of proper subject matter. An application must be filed within one year of publicizing the new invention to be timely. This one-year grace period is not available in most foreign countries. Therefore, a U.S. inventor who wants to obtain corresponding foreign patents should first file a U.S. Patent before divulging their new invention to the public. The description of the new invention in the US Patent application must be detailed enough to enable others to use the new invention. Moreover, the US Patent application must describe the best manner known to the inventor of carrying out the new invention. The described invention must be new i.e., not used or invented by someone else.

The proper subject matter of a US patent is any product, process, apparatus Design Patents directed to ornamental designs for products.

Why Obtain A Patent?

An inventor usually patents a new idea to obtain commercial advantages that arise from the right to exclude others from using their invention. Given the high cost of research and development, the opportunity to recoup these costs through commercial exploitation of an invention may be the primary reason for undertaking research in the first place.

U.S. Patent rights can be commercially used in two basic ways: (1) directly, by the inventor's using the new invention to obtain an exclusive marketplace advantage (as where the US patented technology results in a better product or produces an old product less expensively) and (2) indirectly, by receiving income from the sale or licensing of the patent.

A U.S. Patent itself does not give the inventor the right to use the new invention. The inventor can use his invention only if by so doing he does not also use the invention of an earlier unexpired patent. While only one patent can be granted on a particular invention, it is easy to see how more than one patent could be infringed by making a single product. For example. consider that A has a patent on a new type of door and B invents an improved door of this type with a special lock. B could not sell the improved locking door since A's patent broadly covers all doors of this type. On the other hand, A could not incorporate the improved lock in his basic door since B's patent covers this combination. In these circumstances both A and B can be free to practice the best technology (locking door) only if each grants a patent license to the other.

A patent license may either be exclusive, granting the licensee the sole right to use the invention, or nonexclusive. A patent may also provide commercial advantages in addition to the potential for an exclusive market position or licensing income. For example, a patent often lends business credibility to start up ventures and can enable both technical assistance and financing necessary to bring a new product to market. An improvement patent may also provide the leverage necessary to cross license any basic patents held by others which block the path to market.

How To Obtain A Patent

Patents are obtained through an administrative proceeding in the United States Patent and Trademark Office. Since the legal rules that govern these procedures are quite extensive and often complicated, it is strongly recommended that an inventor seek the assistance of an experienced patent attorney before beginning the process.

Before actually applying to the Patent and Trademark Office there are several important preliminary steps that should be followed to prevent possible loss or damage to future patent rights. One of the most important of these preliminary steps is proper record keeping. Since United States Patents are granted to the first inventor, it may become necessary to prove when your invention was made. This is best accomplished by making a complete record of the invention from the first idea right up through development of commercial products. The invention record should clearly describe the invention with words and pictures (photographs, sketches, drawings, etc.) and should explain fully how it operates or is used. Each page of invention record should be signed and dated in ink by the inventor. The record should also be reviewed as it is made by at least one other trustworthy person who is capable of understanding the invention, who should sign and date the record under the notation "read and understood by…"

Another important preliminary step is the determination of whether the invention is likely to be considered patentable by the Patent and Trademark Office, and if so, whether a patent which might be granted would be broad enough in its coverage to be worthwhile in a commercial sense. A preliminary evaluation of patentability should be made by a patent attorney, based in part on the prior patents and other materials located by a search of relevant records in the Patent and Trademark Office. The attorney's opinion determining whether the invention should be patentable does not guarantee that the patent will be granted. However, if the attorney finds that the invention probably is not patentable or economically worthwhile, the considerable cost and effort of going forward with the process can be avoided.

The next step in the process of obtaining a patent is the preparation of a patent application. A patent application is a legal document, which must fully describe the invention with words and, where appropriate, drawings, and which includes claims that define the legal boundaries of the invention. It is essential to the validity of the patent, and its ability to adequately protect the invention, that the invention be described and claimed completely and precisely. Accordingly, the inventor should tell the patent attorney everything about the invention, including what problems it solves and what difficulties were overcome to make it work.

It is particularly important to tell the attorney about prior patents or other prior inventions of which the inventor is aware, so this information can be disclosed to the Patent and Trademark Office. The U.S. Patent Application will also contain a Declaration and Power of Attorney form which the inventor must sign indicating that he has read and understood the application and affirming that he is the first inventor. The U.S. Patent Application and a filing fee are then filed with the U.S. Patent and Trademark Office.

Basics Of The Patent Application

The U.S. Patent Application is a written description of your new invention, somewhat like a technical manual, and certain formalities must be observed. First of all, the U.S. Patent Application must contain a written description of the new invention, and of the manner and process of making and using it in clear, concise, and exact terms as to enable any person skilled in the art to which it pertains to make and use the new invention.

A certain format is expected of the U.S. Patent Application, and it must contain one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor regards as his/her invention or discovery. (37 CFR§l.75(a))

The "gist" of the new invention will often be repeated in the summary, detailed description, claims and abstract, in various ways. There are various parts to a U.S. patent application, as follows.

Basics Of Claims

An independent claim is a self-contained description of the invention. It has three parts:

A dependent claim includes, by reference, everything set forth in a previous independent or dependent claim, and adds to or modifies the description of the previous claim(s).

Patent Pendency

The filing of an application for a U.S. Patent does not create any enforceable rights since the courts will only stop an infringer after the Patent is granted. Nevertheless, marking a device Patent Pending or Patent Applied For may discourage potential infringers since it puts them on notice that they may have to stop production once the patent is granted. It is unlawful to use such a notice unless an application for patent is actually pending in the U.S. Patent and Trademark Office. After the patent has issued, it is also good practice to mark the products sold under the patent with the patent number because it gives the inventor certain additional legal rights.

In the Patent and Trademark Office the application undergoes a process called Examination. After an initial processing stage (which may take 18 months or more) a Patent Examiner will review the application and write a letter (called an Office Action) commenting on it. The First Office Action often is a refusal to grant the patent, and the applicant then has an opportunity to modify the application to overcome the Examiner's objections. With the inventor's help, the patent invention lawyer or attorney will reply in writing to the Office Action, conceding some changes and arguing that others are not necessary. Typically, at least two such exchanges between Patent Examiner and patent idea lawyer or attorney are necessary to resolve all the legal and technical issues. In general, it now takes an average of about 18-26 months from filing to complete the Examination Process. During this period the application is kept secret, i.e., only Government personnel and people authorized by the inventor are permitted to examine the file.

When the Patent Examiner is satisfied that the application is in proper form and its claims are allowable, the applicant is notified that a patent will be granted upon payment of final government fees. In order to keep the patent in force until it expires it also is necessary to pay progressively higher maintenance fees at three and half, seven and a half, and eleven and a half years after the original Patent Grant. While the Patent Grant makes the information in the application available to the public, the inventor has the right to prevent others from making, using or selling what is claimed for as long as the Patent remains in force.

I keep my client closely informed of all issues and activity pertaining to their Patent Application. I do so by sending copies of all correspondence received from the U.S. Patent and Trademark Office and the Patent Examining Attorney. I also forward copies of all correspondence sent to the U.S. Patent and Trademark Office on my client's behalf.

Provisional Patent Application Basics

Provisional Patent Applications

In recent years, inventors have turned to Provisional Patent Applications as an inexpensive way to protect their inventions. Often this is necessary because an upcoming product release or trade show does not allow enough time to prepare and file a Utility Patent Application before disclosing their invention publicly. Provisional Patent Applications protect the invention for one year providing time to prepare and file a more detailed Utility Patent Application.

The Provisional Patent Application is not as detailed nor as costly as a Utility Patent Application. Its goals and benefits, as set forth below, are also somewhat different.

The priority date is important because it establishes the date when the subject matter of the disclosed invention was first filed in a Provision Patent Application. To gain the benefit of the earlier priority date, within one year of filing a Provisional Patent Application, the inventor must convert the Provisional Patent Application into a Utility Patent Application, incorporating the information contained in the Provisional Patent Application.

Filing of the Provisional Patent Application provides a one-year cushion. During the year, as the product or concept is further developed, additional Provisional Patent Applications may be filed. Failure to convert the Provisional Patent Application to a Utility Patent Application within one year of the filing date, results in the loss of the priority date.

Since the Provisional Patent Application will not be substantively examined, claims defining the scope of the invention are unnecessary. However, in order to receive the benefit of the earlier priority date,, the disclosed invention has to support the broadest invention that is ultimately claimed in the Official filed Patent grant incorporating the Provisional Patent Application.

A description of the invention and supportive drawings are typically the essence of the Provisional Patent Application. A Provisional Patent Application can even protect a theoretical working model that has not yet been reduced to practice. Just as the filing fees are substantially reduced, so are the legal fees for writing the Provisional Patent Application because far less work is involved.

Development of the invention should be continued after the Provisional Patent Application is filed with the goal of filing for a Utility Patent Application within one year of the priority date. As the development continues, it is often wise to file additional, more current Provisional Patent Applications. The Provisional Patent Application is not a substitute for a Utility Patent Application, which should be filed as soon as possible. I recommend that once the idea to be patented is developed, the Provisional Patent Application be drafted with all the details available and then filed as soon as possible.

Special Considerations

It is possible to sell a product without first filing for a patent, and then filing a Provisional Patent Application up to a year later, and finally filing a Utility Patent Application one year after the filing date of the Provisional Patent Application. The effect of this procedure is to gain a two-year grace period. The downside of waiting the extra year before filing the Provisional Patent Application is the loss of one's legal right to file patent applications covering the invention in foreign countries.

The most important and least understood aspect of the Provisional Patent Application is that it must disclose all of the elements set forth in the claims of the Official Patent Grant resulting from the later filed Utility Patent Application. That is, the description of the invention in the Provisional Patent Application must include enough detail for others to make or use the claimed invention in the Patent Grant. Moreover, if the Patent Grant is challenged, and the written description in the Provisional Patent Application is found inadequate, all could be lost.

Although a Provisional Patent Application does not require claims, it must clearly and exactly describe the invention and the manner and process of using it, in order to support the claims based on the Provisional in the later filed Utility Patent Application. But without incorporating claims, how can a Provisional Patent Application be drafted to support them?

The solution is straightforward. One must put great effort into preparation of the Provisional Patent Application, no matter how rushed for time, consider the broadest scope of the invention and ensure that it is covered by the Provisional Patent Application.

Before You Patent

1. Understand what a patent does. A patent is a grant to an inventor that allows the inventor to monopolize the manufacture, use, sale and importation of an invention. This right lasts a limited time (currently 20 years after the application date) and gives the patent owner the right to recover damages in a lawsuit against an infringer.

2. Keep a record of your invention. Record every step of the invention process in a notebook carefully. Describe and diagram every aspect and every modification of the invention, including how you came up with the idea for it. Depending on the invention, you may also need to build and test a prototype. Document all of these efforts. Sign and date each entry and have two reliable witnesses sign as well.

If you want help in your keeping records, The Inventor's Notebook, by Fred Grissom and attorney David Pressman (Nolo), contains ten worksheets to guide you in recording the critical details of your invention.

3. Make sure your invention qualifies. You cannot get a patent just on an idea. You need to be able to show how your invention works. And of course, your invention must be new. This means it must be different in some important way from all previous inventions. And your invention cannot be for sale or be known about for more than a year before you apply for a patent. To learn more, see Qualifying for a Patent FAQ.

4. Assess the commercial potential. Applying for a patent should be a business decision. Even without using a patent attorney, it costs over $1,500 in fees to file and obtain a patent from the U.S. Patent and Trademark Office (USPTO), so you want to make sure it's worth it. Before you spend the time and money to file a patent application, you should research the market you hope to enter. Make sure that something sets your invention apart from the other products already in the field and that there is a real demand for the product. Keep in mind that only a small percentage of inventions ever earn money.

For a list of marketability factors you can use to analyze the invention's potential, and for ways to improve your invention's commercial potential, see Patent It Yourself or Patent Pending in 24 Hours, both by attorney David Pressman (Nolo).

5. Do a thorough patent search. To make sure your invention is new, you need to search all of the earlier developments in the field of the invention. This involves searching U.S. (and sometimes foreign) patents, as well as other publications like scientific and technical journals, to find related inventions. For more information, see Patent Searching Online.

Deciding to File a Provisional Patent Application

Filing a provisional patent application (PPA) protects your idea and starts the process of getting a patent and making money from your invention. But before you dive into the PPA process, take the time to assess whether filing is right for you. Start by learning about the advantages of filing a PPA. Then, determine whether your invention is likely to get a patent in the long run. Finally, learn how to avoid some common pitfalls with PPAs.

Advantages to Filing a Provisional Patent Application

To start, it helps to understand some of the advantages that come with filing for a PPA. Here are the main ones.

It gives you time to decide if a patent makes sense. Once you file the provisional patent application, you have a year before you must file for a regular patent. This gives you time to better assess the commercial potential of your invention. If everybody you show it to says "No thanks," you may decide that pursuing a patent is not worth the potentially thousands, or tens of thousands, of dollars it would take to prepare the patent application.

You stake a claim on your invention. Once you file for the PPA, you may use a "Patent Pending" notice to deter others from copying your invention. Putting those words on the bottom of your invention or in an advertisement sends a message that you've filed an official claim on the invention, which often discourages manufacturers from stealing your idea.

You establish a "date of invention." The U.S. Patent and Trademark Office (USPTO) follows a "first to invent" rule. If there is a dispute between you and another inventor, the person with the earliest "date of invention" gets the patent. Because not all inventors can afford to create working prototypes and build and test their inventions, and not all inventors are diligent about maintaining witnessed notebooks to evidence the date of conception, filing a provisional patent application is often the easiest or even only way to establish the date of invention. Also, if your patent is later granted, the provisional patent application date (rather than the later date of the regular patent application) is the date from which your rights commence.

Is Your Invention Likely to Get a Patent and Make Money?

Not every invention is patentable. Only about half of the patent applications submitted each year result in a patent. And not every patented invention will make money — in fact, fewer than 3% of patented inventions ever make money. There's no reason to file a provisional patent application for an invention that will never acquire a patent or earn money, so it makes sense to determine the possible commercial success of your invention before you file.

Ask yourself these seven questions — and file a provisional patent application only if your answer to all of them is "yes."

1. Is it commercial (that is, will it turn a profit)? In making this determination, consider factors that affect profitability, like production costs, competitors, and the likely demand for the product. You can gather this information by asking people you know or experts in the field.

2. Did you invent it? This may seem like a no-brainer. Nevertheless, you can obtain a patent if you only — not your uncle or a coworker — invented something. So, if your late uncle is the person who really thought up and perfected "your" invention, you're not entitled to the patent (although your late uncle's estate can file for it).

3. Do you own it? Your employer might actually own your invention if you were hired specifically for the purpose of creating an invention, if you signed an employment agreement requiring you to give up all rights in advance of creating an invention (commonly referred to as a preinvention assignment), or if you used the employer's resources (materials, supplies, or time) to create the invention (in this situation, your employer can acquire a "shop right").

4. Is it useful? Assuming that your invention does something — that is, it produces a result or makes a product — you should have little difficulty establishing usefulness. Aesthetic works — though they entertain, instruct, or amuse us — are not considered useful, and are therefore ineligible for patent protection, although they can be protected with copyright.

6. Is it novel? Your invention must differ physically or operationally in some way from existing inventions and knowledge — known to the USPTO as "prior art" — to be a candidate for a patent.

7. Is it something that is not obvious to other inventors? To figure out whether your invention meets this test, you have to consider whether people working in the field would consider the invention obvious.

Pitfalls of Provisional Patent Applications

After reading about all of the advantages we've described, you're probably ready to sharpen your pencil and get to work on your provisional patent application. However, provisional patent applications are not a panacea, so before you start, you should be aware of some potentially sticky points.

Inaccuracy will undo your protection. If your provisional application fails to explain how to make and use your invention, you can't count on the protections we've described. Leaving out an element of your invention or failing to explain all of the operating elements could be fatal to your application. Other inaccuracies include using faulty supporting data or drawings that don't match the written description.

You must file a new PPA in order to make modifications. The date of the provisional patent application refers only to what is actually in the application. If you modify the manner in which your invention operates or add any new technical information that was not in the provisional application (known as "new matter"), your original PPA doesn't cover it and you'll have to file a new one if you want to protect the changes.

You must file foreign patent applications within a year. You must file patent applications in any country in which you want patent protection within one year of your provisional patent application's filing date. If you fail to file for foreign patent protection within one year of that date, you will lose any right to obtain the benefit of your provisional patent application's filing date in foreign countries.

If you are ready to file for a PPA, you can use Nolo's Online Provisional Patent Application right now. It gives you plain-English advice as it takes you step by step through the PPA process. It completes the required government forms, files your application, and sends you the completed PPA with detailed instructions and four essential agreements. To learn more about this service, see Nolo's Online Provisional Patent Application FAQ.

Nondisclosure Agreements

Nondisclosure agreements are one of the best ways to protect trade secrets — valuable confidential information that businesses want to keep under wraps. That information could be a sales plan, a list of customers, a manufacturing process or a formula for a soft drink. By using a nondisclosure agreement, you can ensure that your secrets stay secret — or have legal recourse if they are misused or disclosed to the wrong parties.

A nondisclosure agreement — also called an NDA or a confidentiality agreement — is a contract in which the parties promise to protect the confidentiality of secret information that is disclosed during employment or another type of business transaction.

The use of nondisclosure agreements is widespread in the high-tech field, particularly for Internet and computer companies.

If you have a nondisclosure agreement with someone who uses your secret without authorization, you can ask that a court order the violator from making any further disclosures. You can also sue for damages.

Create a Confidential Relationship

The purpose of an NDA is to create a confidential relationship between the person who has a trade secret and the person to whom the secret is disclosed. People who have such a confidential relationship are legally bound to keep the information a secret.

An NDA is not the only way to create a confidential relationship. You can create a confidential relationship with an oral agreement or it can be implied from the conduct of the parties. However, these relationships are much more difficult to prove than a relationship based on a written agreement.

NDAs are often categorized as either "mutual" or "one-way." A mutual NDA is one in which both parties are exchanging confidential information — for example, you provide secret information for a company to evaluate and they provide you with secret information about their marketing strategy. A one-way agreement is used when only one party is making a disclosure — for example, when you explain your secret to a contractor or investor.

Protect Trade Secrets

Use of a nondisclosure agreement is one of the best ways to protect trade secrets — that is, any information that is not generally known and gives your business a competitive advantage in the marketplace. For example, through a nondisclosure agreement, you can prohibit someone from disclosing a secret invention design, an idea for a new website, or confidential material contained in a copyrighted software program.

Elements of a Nondisclosure Agreement

Definition of Confidential Information

Every nondisclosure agreement provides a list of the types or categories of confidential information to be protected in the agreement. The purpose is to establish the boundaries, or subject matter, of the disclosure, without actually disclosing the secrets. For example, an NDA may state: Confidential information includes programming code, financial information, related software materials and innovative processes.

Exclusions From Confidential Information

Every nondisclosure agreement excludes some information from protection, meaning that the party that receives the excluded information has no obligation to protect it. These exceptions are based on established principles of law — the most important one being that information is not protected if it was created or discovered by the receiving party prior to (or independent of) any involvement with the disclosing party. For example, if another company develops an invention with similar trade secret information before being exposed to the disclosing party's secrets, then that company is still free to use its independently created invention.

Obligations of the Receiving Party

The nondisclosure agreement will generally state that the receiving party must hold and maintain the information in confidence and limit its use. Under most state laws, the receiving party cannot breach the confidential relationship, induce others to breach it, or induce others to acquire the secret by improper means. Most businesses will accept these contract obligations without discussion.

Time Periods

Some agreements require that the receiving party maintain the secret information for a limited period of years. This is often done with language such as: The receiving party shall not use or disclose the secret for a period of five years from the date of execution of the agreement.

Parties often negotiate over the time period. Five years is common in American nondisclosure agreements, although many companies insist on only two or three years. In European nondisclosure agreements, it is not unusual for the period to be as long as ten years. Ultimately, the length used will depend on the relative bargaining power of the parties.

Miscellaneous Provisions

Miscellaneous terms (sometimes known as "boilerplate") are included at the end of every agreement. They include such matters as:

Always Read an NDA Before Signing

Some agreements are titled Nondisclosure or Confidentiality Agreements, yet their terms have the opposite effect. Instead of agreeing to secrecy, the party with the secret effectively waives any claim of trade secret confidentiality.

If you sign one of these waiver agreements, you could lose the confidentiality of your trade secret and have no legal recourse. A waiver agreement usually contains language like the following (alternate terms appear in parentheses):

This agreement does not create a confidential relationship.
No confidential relationship is established or implied by the exchange (disclosure) of information (submission).
The exchange (disclosure) of information (submission) is not made in confidence.
No obligation of any kind is created (assumed, implied, imputed) by the receipt (exchange, disclosure) of information (submission).

To protect the valuable trade secrets of your business, get Nolo's downloadable eForm, Confidentiality (Nondisclosure) Agreement. You can customize this agreement according to the detailed instructions that are included.

How to Protect Your Invention When Pitching It

If you're trying to license your invention, protect it by filing a provisional patent application or using a nondisclosure agreement.

If you've developed a potentially marketable invention, you are faced with a dilemma. To make money from the invention, you must generally license the rights to it to another business, often a manufacturer or distributor. But in pitching the invention to potential licensees, you run the risk of disclosing so much information that the invention might be stolen or no longer protected by law.

So how can you shop your invention around without jeopardizing your rights? To protect yourself you can file a provisional patent application (if your invention is patentable) or use a nondisclosure agreement (if it is not patentable). If a potential licensee refuses to sign a nondisclosure agreement, take extra precautions.

(To learn more about another option for making money from your invention, manufacturing and marketing the invention yourself, see Should You License or Manufacture Your Invention?)

Filing a Provisional Patent Application

If your invention potentially qualifies for a patent, it may be worth your while to file a provisional patent application ($110 for individuals or small companies) and obtain "patent pending" status. Most often, this will deter rip-offs.

Using Nondisclosure Agreements

However, if you determine that the invention is probably not patentable, the best way to protect yourself is to have prospective licensees sign a nondisclosure agreement (sometimes called a disclosure agreement or confidentiality agreement) before you disclose any secrets. If someone signs a nondisclosure agreement and later uses your secret without authorization, you can sue for damages. (To see examples of various nondisclosure agreements as well as detailed explanations of their provisions, check out NDAs for Free.)

Nondisclosure agreements vary in format. Generally, they contain these important elements:

What's Confidential. Every nondisclosure agreement provides a definition of confidential information or trade secrets. Every nondisclosure agreement also specifically excludes some information from protection, meaning that the receiving party has no obligation to protect that information. Information is not protected if it was created or discovered before or independent of any involvement with you.

Obligations of the Receiving Party. The person or company you're sharing confidential information with generally must hold the information in confidence and limit its use. Under most state laws, the receiving party cannot breach the confidential relationship, induce others to breach it or induce others to acquire the confidential information by improper means. Most companies accept these obligations without discussion. If you enter into a mutual nondisclosure agreement (where you also agree to keep information confidential), you should also feel comfortable with these requirements.

Time Periods. How long must the information be kept confidential? This issue is often a subject of negotiation. Disclosing parties want a long period; receiving parties want a short one. Five years is a common length in the United States, although many companies insist on no more than two or three years. In Europe, it is not unusual for the period to be as long as ten years. Ultimately, the result depends on the relative bargaining power of the parties.

If the answer to these questions is only a few years, then you are unlikely to be damaged by a shorter (two- to three-year) period.

Disclosing Without an Agreement

It's always safest to get a prospective licensee to sign a nondisclosure agreement, but you may not always be able to convince them to do so. When that happens, you are left in a vulnerable position. If you disclose crucial information without the agreement, you risk losing your rights to the invention. If you don't disclose it, you risk losing a business opportunity.

Probably the most important factor to consider is the reputation of the person or company you're dealing with. If the company has a poor reputation, the dangers of losing your secrets outweigh the business opportunity.

How Intellectual Property Law Applies to Inventions

Under trade secret law, if you reveal your secret to the public, you lose your rights to the secret. In other words, once you've disclosed the secret, you can no longer claim that you own exclusive rights to it.

Under patent law, if you disclose details of an invention to the public before obtaining a patent, you must apply for patent protection within one year of making the disclosure. If you don't, the invention will no longer be patentable, meaning anyone can use it. If you have filed a provisional patent application, you still must file a regular patent application within one year.

Disclose "Around" the Secret. A licensee is primarily concerned with two questions about your invention: "What does it do?" and "Is it profitable?" Try to determine if there is a way to present your invention and an estimate of its costs without disclosing trade secrets. If you can give a company this information, it may enter into a nondisclosure agreement.

Establish a Confidential Relationship. A confidential relationship can, in some cases, be established without a signed agreement. An "implied" confidential relationship occurs when the conduct of the parties indicates that they intended to create one. An implied confidential relationship gives you legal rights similar to those created by a written agreement, but it is always more difficult to prove that an implied relationship existed.

Profiting From Your Patent FAQ

Once you have a patent, learn how to make it profitable by licensing or selling it.

How can an inventor make money with a patent?

Some inventors start new companies to develop and market their patented inventions. This is not typical, however, because the majority of inventors would rather invent than run a business. More often, an inventor patents the invention but makes arrangements with an existing company to develop and market the invention. This arrangement usually takes the form of a "license," a contract under which the developer is authorized to commercially exploit the invention (for a period of time) in exchange for paying the patent owner royalties. The royalties may be a percentage of the net revenues or may be a payment for each invention sold. Alternatively, the inventor may sell all of the rights to the invention for a lump sum or royalties (known as an assignment).

What does it mean to "license" an invention?

A license is written authorization to exploit an invention. An inventor usually authorizes a manufacturer (the licensee) to make and sell the invention in exchange for paying the inventor royalties.

A license may be exclusive (if only one manufacturer is licensed to develop the invention) or non-exclusive (if a number of manufacturers are licensed to develop it). The license may be for the duration of the patent or for a shorter period of time. The territory is usually limited to the geographic extent of the patent protection. For example, the owner of a U.S. patent will license the rights for the U.S. but will not be able to exploit beyond that patent territory.

The licensee may in turn license other companies to market or distribute the invention. The extent to which the inventor will benefit from these sub-licenses depends on the terms of the main agreement between the inventor and the licensee.

In some cases, an inventor or a company may trade licenses with other companies — called cross-licensing — so that companies involved in the trade will benefit from each other's technology. For example, assume that two computer companies each own several patents on newly developed remote-control techniques. Because each company would be strengthened by being able to use the other company's inventions as well as its own, the companies may agree to swap the licenses of their respective inventions.

For more on the ins and outs of licensing your invention, see Should You License or Manufacture Your Invention?.

Can inventors who are employed by a company benefit from their own inventions?

Typically, employee-inventors who invent something in the course of their employment are bound by employment agreements that automatically assign all rights in the invention to the employer. While smart research and development companies give their employee-inventors bonuses for valuable inventions, this is a matter of contract rather than law.

Even without a written employment agreement, an employer may own rights to an employee-created invention under the "employed-to-invent" doctrine. If an inventor is employed — even without a written employment agreement — to accomplish a defined task, or is hired or directed to create an invention, the employer will own all rights to the subsequent invention. Most companies prefer to use a written employment agreement because it is more reliable and easier to enforce than an implied agreement.

Both written employment agreements and the "employed-to-invent" rule allow the employer to become the owner of all patent rights. An employer may also aquire a "shop right," rather than ownership of patent rights.

Under a shop right, the employee-inventor retains ownership of the patent, but the employer has a right to use the invention without paying the employee-inventor. A shop right can occur only if the employee-inventor uses the employer's resources (materials, supplies, time) to create an invention. Other circumstances may be relevant, but use of employer resources is the most important criterion.

For example, Robert is a machinist in a machine shop and, using his employer's resources, invents a new process for handling a particular type of metal. If Robert hasn't signed an employment agreement giving his employer all rights to the invention and if Robert was not employed to invent, Robert can patent and exploit the invention for himself. His employer, however, would retain the right to use the new process without having to pay Robert.

Enforcing a Patent FAQ

If someone violates your patent, you can take legal steps to stop the infringement.

What constitutes infringement of a patent?

To decide whether an inventor is violating (infringing) a patent, it is necessary to carefully examine the patent's "claims." (Claims are terse statements of the scope of the invention, and most patents contain more than one of them.) The elements of each claim must be compared with the elements of the accused infringer's invention (usually a device or process).

If the elements of a patent claim match the elements of the device or process (called "reading on" or "teaching" the device or process), an infringement has occurred. Even if the claims don't literally match the elements of the infringing device, it is possible that a court would find an infringement by applying what's known as the "doctrine of equivalents"; that is, the patented invention and the allegedly infringing device or process are sufficiently equivalent in what they do and how they do it to warrant a finding of infringement.

For example, Steve invents a tennis racket with a score keeper embedded in the racket handle's end. The invention is claimed as a tennis racket handle that combines grasping and score-keeping functions. Steve receives a patent on this invention. Later, Megan invents and sells a tennis racket with a transparent handle that provides a more sophisticated score-keeping device than Steve's racket. Even though Megan's invention improves on Steve's invention in certain respects, it will most likely be held to be an infringement of Steve's invention, for one of two reasons:

In 2002, the Supreme Court handed down a ruling ( Festo Corp. v. Shoketsu Kinzoku Kabushiki Co. Ltd., 535 U.S. 722 (2002)) that makes it harder for patent owners who amended their patent claims to assert that others are infringing their patent. In essence, patent owners can use the doctrine of equivalents only if they can show that their amendment did not "surrender" the equivalents at issue — a complex and confusing standard that requires the advice of a patent attorney.

In 2007, the Supreme Court modified the standard of nonobviousness applied in patent infringement cases for combination inventions and determined that "ordinary innovations" are not patentable (KSR v. Teleflex, 550 U.S. __ 2007).

If a case is brought to enforce a patent on a method or process invention, the defendant can escape liability if they were using the invention more than one year prior to the patent application date.

What remedies are available for patent infringement?

A patent owner may enforce his patent by bringing a patent infringement action (lawsuit) in federal court against anyone who uses his invention without permission. If the lawsuit is successful, the court will take one of two approaches. It may issue a court order (called an injunction) preventing the infringer from any further use or sale of the infringing device, and award damages to the patent owner. Or, the court may work with the parties to hammer out an agreement under which the infringing party will pay the patent owner royalties in exchange for permission to use the infringing device.

Bringing a patent infringement action can be tricky, because it is possible for the alleged infringer to defend herself by proving to the court that the patent is really invalid (most often by showing that the U.S. Patent and Trademark Office (USPTO) made a mistake in issuing the patent in the first place). In a substantial number of patent infringement cases, the patent is found invalid and the lawsuit dismissed, leaving the patent owner in a worse position than before the lawsuit.

When does patent protection end?

Patent protection usually ends when the patent expires. Here are the expiration dates:

A patent may expire if its owner fails to pay required maintenance fees. Usually this occurs because attempts to commercially exploit the underlying invention have failed and the patent owner chooses to not throw good money after bad.

Patent protection ends if a patent is found to be invalid. This may happen if someone shows that the patent application was insufficient or that the applicant committed fraud on the U.S. Patent and Trademark Office (USPTO), usually by lying or failing to disclose the applicant's knowledge about prior art that would legally prevent issuance of the patent. A patent may also be invalidated if someone shows that the inventor engaged in illegal conduct when using the patent — such as conspiring with a patent licensee to exclude other companies from competing with them.

Once a patent has expired or has been invalidated, the invention described by the patent falls into the public domain: it can be used by anyone without permission from the owner of the expired patent. The basic technologies underlying television and personal computers are good examples of valuable inventions that are no longer covered by in-force patents.

The fact that an invention is in the public domain does not mean that subsequent developments based on the original invention are also in the public domain. Rather, new inventions that improve public domain technology are constantly being conceived and patented. For example, televisions and personal computers that roll off today's assembly lines employ many recent inventions that are covered by in-force patents.

What are the different stages of a patent's life?

Although most inventors are concerned with the rights a patent grants during its monopoly, or in-force, period (from the date the patent issues until it expires), the law actually recognizes five "rights" periods in the life of an invention. These five periods are as follows:

Trade Secret Basics FAQ

What is a trade secret?

In most states, a trade secret may consist of any formula, pattern, physical device, idea, process or compilation of information that both:

Unlike other forms of intellectual property such as patents, copyrights and trademarks, trade secrecy is basically a do-it-yourself form of protection. You don't register with the government to secure your trade secret; you simply keep the information confidential. Trade secret protection lasts for as long as the secret is kept confidential. Once a trade secret is made available to the public, trade secret protection ends.

What types of information can trade secrets protect?

Trade secrets often protect valuable technical information that cannot be sheltered under other forms of intellectual property law, such as the formula for Coca-Cola. Trade secrets may also:

What rights does the owner of a trade secret have?

A trade secret owner can prevent the following groups of people from copying, using, or benefiting from its trade secrets or disclosing them to others without permission:

There is one group of people that cannot be stopped from using information protected under trade secret law. These are people who discover the secret independently, that is, without using illegal means or violating agreements or state laws. For example, it is not a violation of trade secret law to analyze (or "reverse engineer") any lawfully obtained product and determine its trade secret.

How can a business protect its trade secrets?

Simply calling information a trade secret will not make it so. A business must affirmatively behave in a way that proves its desire to keep the information secret. Some companies go to extreme lengths.

Fortunately, extraordinary trade secrecy protection measures are seldom necessary. Although you should take reasonable precautions to protect any information you regard as a trade secret, you don't have to turn your office into an armed camp to do so. Sensible precautions include marking documents containing trade secrets "Confidential," locking trade secret materials away after business hours, maintaining computer security and only providing access to secret information to people with a reasonable need to know.

But the very best way to protect trade secrets is through use of nondisclosure agreements. Courts have repeatedly reiterated that the use of nondisclosure agreements is the most important way to maintain the secrecy of confidential information.

How can a business enforce its rights if someone steals or improperly discloses confidential information?

Every state has a law prohibiting theft or disclosure of trade secrets. Most of these laws are derived from the Uniform Trade Secrets Act (UTSA), a model law drafted by legal scholars. A listing of states that have adopted some version of the UTSA is provided at the end of this FAQ.

A trade secret owner can enforce rights against someone who steals confidential information by asking a court to issue an order (an injunction) preventing further disclosure or use of the secrets. A trade secret owner can also collect damages for any economic injury suffered as a result of the trade secret's improper acquisition and use. Here are some examples of incidents that can lead to trade secret lawsuits:

To prevail in a trade secret infringement suit, a trade secret owner must show (1) that the information alleged to be confidential provides a competitive advantage and (2) the information really is maintained in secrecy. In addition, the trade secret owner must show that the information was either improperly acquired by the defendant (if the defendant is accused of making commercial use of the secret) or improperly disclosed by the defendant (if the defendant is accused of leaking the information).

The "Inevitable Disclosure" Doctrine

In some cases, a company may prevent a former employee from working for a competitor if the company can demonstrate that employment with the competitor will inevitably lead to disclosure of trade secrets. In a 1995 case, PepsiCo successfully argued that a former executive could not work as Chief Executive Officer of Gatorade/Snapple because the executive could not help but rely on PepsiCo's trade secrets as he plotted Gatorade and Snapple's new course, giving the competitor an unfair advantage over PepsiCo.

Some states have rejected the inevitable disclosure doctrine because it challenges an employee's basic freedom to switch employers. In one case, a court refused to apply the doctrine unless there was additional showing of bad faith, underhanded dealing, or employment by a competitor lacking comparable technology.

Is stealing trade secrets a crime?

Intentional theft of trade secrets can constitute a crime under both federal and state laws. The most significant federal law dealing with trade secret theft is the Economic Espionage Act of 1996 (EEA) (18 U.S.C., Sections 1831 to 1839). The EEA gives the U.S. Attorney General sweeping powers to prosecute any person or company involved in trade secret misappropriation and punishes intentional stealing, copying or receiving of trade secrets. Penalties for violations are severe: Individuals may be fined up to $500,000 and corporations up to $5 million. A violator may also be sent to prison for up to ten years. All property used and proceeds derived from the theft can be seized and sold by the government.

The EEA applies not only to thefts that occur within the United States, but also to thefts outside the U.S. if the thief is a U.S. citizen or corporation, or if any act in furtherance of the offense occurred in the U.S. If the theft is performed on behalf of a foreign government or agent, the corporate fines can double and jail time may increase to 15 years.

Several states have also enacted laws making trade secret infringement a crime. For example, in California it is a crime to acquire, disclose or use trade secrets without authorization. Violators may be fined up to $5,000, sentenced to up to one year in jail, or both. (Cal. Penal Code Section 499c.)

STATES THAT HAVE ADOPTED SOME VERSION OF THE UNIFORM TRADE SECRETS ACT

State	Statute
Alabama*	Ala. Code. §§ 8-27-1 et seq.
Alaska	Alaska Stat. §§ 45.50.910 et seq.
Arkansas	Ark. Stat. Ann. §§ 4-75-601 et seq.
California	Cal. Civ. Code §§ 3426 et seq.
Colorado	Col. Rev. Stat §§ 7-74-101
Connecticut	Conn. Genl. Stat. §§ 35-50 et seq.
Delaware	Del. Code Ann. Title 6 §§ 2001 et seq.
District of Columbia	D.C. Code Ann. §§ 36-401 et seq.
Florida	Fla. Stat Ann. §§ 688.001 et seq.
Hawaii	Haw. Rev. Stat. §§ 482B-1 et seq.
Idaho	Idaho Code §§ 48-801 et seq.
Illinois	Ill. Ann. Stat. ch. 140 §§ 351-59
Indiana	Ind. Code. Ann. §§ 24-3-1
Kansas	Kan. Stat. Ann. §§ 60-3320 et seq.
Louisiana	La. Rev. Stat. Ann. §§ 51:1431 et seq.
Maine	M.R.S.A. Title 10 §§ 1541 et seq.
Maryland	Md. Com. L. Code §§ 11-1201 et seq.
Minnesota	Minn. Stat Ann. §§ 325C.01 et seq.
Montana	Mont. Code Ann. §§ 30-14-401 et seq.
Nebraska	Neb. Rev. Stat. §§ 87-501 et seq.
Nevada	Nev. Rev. Stat. §§ 600A.010 et seq.
New Mexico	N.M. Stat. Ann.§§ 57-3A-1 et seq.
North Carolina*	N.C. Gen. Stat. §§ 66-152 et seq.
North Dakota	N.D. Cent. Code §§ 47-25.1-01 et seq.
Oklahoma	Okl. Genl. Laws §§ 6-41-1
Oregon	Or. Rev. Stat. §§ 646.461 et seq.
Rhode Island	R.I. Gen. Laws §§ 6-41-1 et seq.
South Dakota	S.D. Cod. Laws §§ 37-29-1 et seq.
Utah	Utah Code Ann. §§ 13-24-1 et seq.
Virginia	Va. Code. Ann. §§ 59.1-336 et seq.
Washington	Wash. Rev. Code. Ann. §§ 19.108.010 et seq.
West Virginia	W. VA. Code. §§ 47-22-1 et seq.
Wisconsin	Wis. Stat. Ann. § 134.90

* Although they have adopted portions of the UTSA, Alabama and North Carolina are considered to have taken "major departures" from the UTSA because Alabama narrows trade secret protection while North Carolina broadens it.

Patent Articles

Patent Basics

What Is A Patent?