You would think that, being an IP lawyer, I’d write a bit more frequently about IP issues. But something else always seems to get in the way. Here is one of those rare posts. I guess I just got bored beating up on ACT.
This post came about because I’ve been thinking a bit about some of the most common myths and fallacies surrounding my area of practice, and in particular the poor maligned patent. This post has been prompted by some of the stuff I’ve read or been told by clients about patents.
So out of a desire to set things straight I offer you my wisdom, or lack of it. And I won’t even charge you for it.
Here are (in no particular order) just some of the most common myths about patents.
If you have a patent then that gives you an unfettered right to exploit the patented invention
No. A patent is really a negative right. It gives you the right to exclude others for the life of the patent (20 years from filing in most countries). You can still infringe someone else’s rights when you make, use or sell a patented invention. For example, if your patented invention is an improvement on an existing technology, you may not be able to exploit the improvement without infringing any patent rights in the underlying technology.
I can get a worldwide patent for my invention
No. Patents are territorially limited. A New Zealand patent won’t stop anyone from doing anything they like in Australia, for example. But you can file patent applications in more than one country for your invention.
If someone gets a patent for their invention then that automatically increases its value
No. The claims of a patent describe the scope of the monopoly right given to the owner. The claims describe what is protected, and if the claims don’t cover the most important and innovative features of the invention then the protection offered by the patent will be worthless. That’s why you’re a mug if you invest in something because it is patented but without getting someone to analyse the scope of the claims of the patent.
But a well-drafted patent that encompasses the essential features of a valuable invention will potentially be extremely valuable.
Once I get my patent granted I can’t have it taken away from me
No. Just because you get a granted patent doesn’t mean you can enforce it, or that it won’t be challenged or even revoked. If you try to enforce a patent against an infringer and they decide to fight back the first thing they will do is look for grounds to invalidate your patent. They will look for any prior art or prior publications to show your invention wasn’t novel, and might try a host of other arguments.
But a well-drafted patent that takes into account the prior art can be hard to knock out. It may have a deterrent value, discouraging potential infringers.
So if I am going to spend all this money and my patent still isn’t bullet-proof, why should I bother?
If you have an invention that you want to make money off, and if you want to take it offshore, then unless you can secure some form of IP protection for it you’re probably not going to make a great deal of money. Someone will always be able to make it cheaper than you, and someone will do it if they think it is good.
I once had a client who thought his invention was so powerful and so revolutionary that people would fall over to throw money at him, even though the invention wasn’t protectable in any way. He was convinced that once he released his invention onto the market people would be queuing up to sign licensing deals with him, even though he had no IP rights to license. I asked him why people wouldn’t just copy his invention without permission and give him the one-finger salute. His response was that people in business were generally honourable and just wouldn’t do such a thing. Heh.
Savvy investors understand the importance of IP protection. When they look for businesses or technologies to invest in they will hunt out opportunities that provide a competitive advantage. It’s not enough for a product to be innovative, if the day after it’s released onto the market a dozen or more competitors start to copy it.
The only people who make money off patents are patent attorneys and multinationals
No. I have a number of SME clients who’ve done very well out of their patent portfolios. And for a number of well-known New Zealand companies, their patent portfolios are of critical importance.
Contrary to what some people may think, the vast majority of patent attorneys are responsible and professional, and will steer a client away from trying to patent something that either can’t realistically be protected, or that has no prospect of making any money.
Patents are expensive. Maybe I’ll wait until my invention starts to make money and has demonstrated that it is commercially viable, before taking this step
This is a very bad idea. You can only patent things that are novel. Generally speaking, if you have disclosed your invention, published any details of it, or made sales of any products encompassing it, it will be too late to get patent protection. So you have to either take the plunge early, or not do it at all.
It can be expensive to secure good patent coverage across the world for an invention. But the costs don’t all come at the beginning. You can file a provisional application initially in New Zealand, which might cost a few thousand bucks, and then you will have 12 months to file a complete specification that fully describes your invention and includes all the claims. If the countries you want protection in are signatories to the Patent Cooperation Treaty (PCT) you can further defer the cost of filing in those countries. That gives you time to work out whether the technology is commercially viable, and gives you time to find licensees or investors before spending serious dollars.
But I’ll just require people I’m disclosing my invention to to first sign a confidentiality agreement
Confidentiality agreements can be useful where you aren’t ready to disclose your invention to the world. But they have their limitations. If you make an offer to someone to license or sell your invention and you haven’t got a patent application in place for it, then in some countries you will be prevented from getting any protection for the invention in the future.
The other big limitation is the fact that some people just won’t sign confidentiality agreements. This isn’t because they plan to screw you over, but because some people receive so many ideas that they just don’t want to be tied down. Many large companies have a policy of never signing confidentiality agreements with inventors who knock on their door. This can be a problem for you if the company that won’t sign is the only logical business partner to progress your idea. In those situations you can either choose not to do business with them, or first file a patent application to cover what you are going to disclose.
Some people say you should never discuss any new business opportunity with a person who won’t sign a confidentiality agreement with you. In my opinion this is not always the best advice. There are sometimes good reasons for a person not to sign a confidentiality agreement. Sometimes it’s corporate policy and the person you’re dealing with has his/her hands tied. Likewise the people who say you should never let yourself be tied up by confidentiality agreements, and that such matters demonstrate a lack of faith and trust, are probably being a bit naïve.
I’ve heard patents can take years to be granted. My invention might be obsolete by that time
It can take years in some countries for an application to be granted. You can’t sue for infringement of a patent until it has been granted, but in most countries the damages you can claim for infringement are calculated from the date the patent application was published. This means that as soon as a patent application is published it will have a potential deterrent effect.
I don’t need a patent, because I can keep my invention a trade secret
Actually this is sometimes true. We all know about the Colonel’s secret recipe or the Coke formula. Those are good examples of trade secrets that have stayed out of the public domain.
But the trouble with trade secrets is that your protection is lost once someone spills the beans. In some cases it just isn’t possible to maintain trade secret protection. For example, if the very act of putting your product onto the market tells would-be copiers everything they need to know about the product, your trade secret won’t be very secret.
Treating something as a trade secret can often work for formulations and recipes, but only where the secret is known by only a few people, and only where consumer protection laws (e.g. product labelling laws) don’t require the disclosure of the secret (e.g. an ingredients list) to customers.
I don’t need a patent, because copyright will protect my invention
New Zealand is an odd country when it comes to industrial copyright laws. If someone copies a product in New Zealand then, in some cases, the copier can be held liable for infringing the copyright in the design drawings of the product. Most countries don’t have similar copyright laws, so industrial copyright protection is of limited value outside New Zealand. Relying on industrial copyright might not always be the best strategy if you want to export your product.
Copyright is a particularly useful form of protection in some industries. For example, the source code in a piece of software will attract copyright protection, preventing any direct copying of the software without a licence.
And of course copyright is also particularly valuable in protecting the work of designers, artists, writers and others involved in the creative arts.
I don’t need a patent, because a registered design will protect my invention
Registered designs protect the shape and appearance of a product, rather than the way in which it works. In many cases it can be useful to seek both patent and registered design protection for a product.
But if the innovative features of a product aren’t really down to its visually-apparent design features, a registered design may be of limited value.
I don’t need a patent, because a good brand is more important
There is no reason why having strong patent protection and a good brand can’t go hand in hand. But relying on branding alone requires you to have the marketing expertise to create a perception that your product is better in some way than the others. If there are no IP rights in existence to stop someone else with a powerful brand from copying and selling your product, you may lose much of any market share you had established.
Software patents are a bad idea
This is perhaps the one area of patent law that attracts the most heated debate. The draft Patents Bill before Parliament will exclude software from the list of patentable matter.
For some in the open source movement the essential evil of software patents is an article of faith. But this faith is based on a number of arguments that don’t really make much sense. The most popular are:
- Only big bad nasty multinationals benefit from software patents. This is untrue, because a lot of SMEs seek patent protection. A number of smaller companies have also had big paydays thanks to those big nasty multinationals infringing their rights. For example, i4i recently slammed Microsoft (yes, the evil baby-eating Microsoft) for US$280 million. In 2009 a jury awarded Uniloc US$388 million against the same baby-eaters, and although the damages in that case have to be reassessed after Microsoft appealed, they’re still likely to be huge.
- Software doesn’t need protection because it already has copyright protection. There is copyright in aspects of the software, namely the source code and the screen display and graphic interfaces. But there is more to software than code. Copyright doesn’t protect algorithms or functionality. There’s nothing more demoralising to a software developer than to see someone else copy his/her software, but doing so without actually copying the code user interface. In those cases there’s nothing the developer can do if he/she doesn’t have patent protection.
- Why allow two types of protection over software? Other creative endeavour doesn’t have such dual protection. This is completely untrue. It is common for different types of IP to protect different aspects of an invention. It’s the same for software. Software patents don’t protect source code, whereas copyright does.
- Software patents stifle innovation. The evidence for this is largely anecdotal. There is no reliable data to support this proposition. There has been almost no software patent litigation in New Zealand, which doesn’t make sense if the existence of software patents is crushing innovation.
Most of the arguments against software patentability are really just arguments against the entire patent system in disguise.