A bit on Patents November 12, 2012

I’m currently working on some patent investigation as part of my work right now and I thought it would be useful to organize my thoughts into a post (and serves as great content as my first post in a year!). Patent litigation is rife in the tech industry right now and I think it’s useful for anyone in the industry to have at least a working knowledge of patents to understand some of the legal mumble jumbo (e.g. Apple vs. Samsung) without spewing complete uneducated BS.

So what are patents?

Simply put, it is a set of exclusive rights on intellectual property (IP). They give rights to the inventor for a limited amount of time (typically 17 years) to exclusively profit off the it.

Wait.. what is IP?

That’s a separate discussion but in brief they are creations from the mind. For IP to be patentable, it must be novel, non-obvious, and useful (this criteria is quite.. lenient)

Why?

Incentivization. Patents allow their owners to recoup costs for development and earn a profit without fear of their IP being stolen/reversed-engineered by competitors. The best example is in the pharma industry. R&D for new types of drugs can be well into the millions, given the extensive amount of testing and regulation needed. Patents allow companies to recoup these costs without a generic manufacturer potentially reverse-engineering and selling the same products at a reduced rate (given they didn’t invest in the development of the product).

Parts of a patent:

Reading a patent can be tricky (even more tricky than scientific papers thanks to legal wording). Unfortunately, many patents are not immediately obvious in what they cover. The summary, background, and cover page can cover a very broad range of subject matter and can be easily misinterpreted. The real meat of all patents lie within the specifications and claims.

Specifications: Describes the product or process in detail, what is is and how it is done.

Claims: Specific language to details exactly what is covered by the patent. The wording is very exact and is critiqued in detail by patent examiners and used to determine infringement. It’s considered the most important part of the patent but potentially also the least readable (unless you are a patent lawyer in that subject domain)

So what’s the issue?

It’s increasingly becoming common to see patent trolls (non practicing entities) to pursue litigation. These are people or companies that pursue and sit on patents with no plans to commercialize and with the sole use for litigation.  Given the overhead (low development times and cost), it is quite profitable to sit on patents and sue later innovators for a large sum of money. This both stifles true innovation and has created an environment of patent litigation. Large companies are amassing huge war chests of patents (Google and Apple) for mainly defensive reasons. It can be argued that  such measures are wasting money that could be used for further invention and preventing companies from taking risks for fear that they might get sued.

Some other interesting facts:

Patents are costly – in total with application fees and legal it averages around $10-30K

It takes usually 3-6 yeas for an application to be granted!

The pain isn’t over once you get the patent! There are ongoing fees to pay to maintain them (around $1K every few years). Also it is up to the patent owner to pursue legal action against those they think has infringed on their claims (a patent does not automatically prevent others from developing and selling a similar product)