Many companies are tempted to buy on price. That works pretty well if you’re buying a commodity, like corn. The thing is that patents are not commodities. They’re really just the opposite. The whole purpose of a patent is to make your technology, your improved product, exclusive—to make it worth more than a commodity.
The real question to ask is this: How much value do patent applications add to your business, as compared to how much they cost. Granted, that is not an easy determination to make. More on that below.
Where it really gets shortsighted is when companies choose to file “quick and dirty” provisional patent applications. They enjoy the illusion of security, thinking (or hoping) their technology is protected. It may not be.
A patent application is valuable only insofar as it contains a full and complete disclosure of the invention sufficient to support prosecution of reasonably broad claims, or, as I like to say, claims commensurate with the scope of the invention. By the time a non-provisional patent application is examined, it may be too late to remedy any shortcomings.
Generally, the law prohibits adding “new matter.” That’s why we like to front-load patent applications with all the explanation and all the details that we think might be useful during prosecution, that is, negotiation with the patent examiner.
What is a patent? Provisional vs. non-provisional
A patent conveys the legal right to exclude others from practicing the claimed invention for a period of 20 years from the filing date. A worthy patent confers market leadership, revenues, and margins. It adds to the capital valuation of your company.
A regular or non-provisional patent application is presumed to lead to the issuance of a patent. A “provisional” application, in contrast, is not even examined. It will not lead to the issuance of a patent. For that, a non-provisional application must be filed within one year of the provisional filing date. The non-provisional may claim the benefit of the filing date of the provisional.
Drawings. Prior art search.
How much is a patent worth?
Let’s say that with a strong patent you can sell $1,000,000 a year of your new improved product at a 50% margin, for a profit of $500,000/year. Without that strong patent, you’ll be subject to low-price competition. Perhaps you’ll sell only $300,000 a year at a 10% margin, for a profit of $30,000/year. The difference in profit is $470,000 per year. The term of a patent is 20 years. In this example, the present value of a strong patent is several million dollars.
Granted, it is not easy to determine the value of a patent, let alone to predict it. But if you don’t expect the technology to pay off, why bother with a patent at all?
Don’t play kick the can!
A provisional patent application is an invisible line in the sand. After a year, it goes “poof.” In other words, a non-provisional must be prepared and filed within that one-year period. And that extra step costs money.
As a very intelligent person has explained to me, filing a provisional is just “kicking the can down the road.”
Oh, to be sure, there are times when a provisional patent application is appropriate. It’s a small fraction of cases.
But if the invention is reasonably complete, i.e., at the “proof of concept” stage, and if time permits, it can be a better investment to proceed with a good, strong, complete, non-provisional filing from the get-go.