Dear Inventor…

scylla and charibdisRecently, one of IP Draughts’ clients wrote to him, seeking advice.  The client is a scientist who has retired from full-time employment, and has made an invention.  He was trying to decide whether to continue with some patent applications, which had reached the stage where some real money needed to be spent, if the applications were to continue.

There is no employer involved, so the invention belongs to the scientist.  IP Draughts has no knowledge of the client’s financial position, but assumes that he does not have unlimited wealth.

The subsequent exchange of correspondence seemed to be of general application, so with the client’s permission IP Draughts has reproduced it below.  Only the names and other identifiers have been changed.

Dear IP Draughts,

They say:    I am between a rock and a hard place

As you know, I have tried with MegaCorp (“still thinking”) and later MaxiCo (using ~ the same NDA – and they are also “still thinking”). I have a deadline of    [   ] to decide about which countries to pay for the patent:

USA                                              £4100

European Patent Office       £4100

Japan                                           £6200

China                                            £4300

Australia                                     £2500

New Zealand                              £2200

Canada                                         £2500

India                                             £1550

Israel                                            £1700

Singapore                                   £1600

Malaysia                                     £2000

I will try another (MultiComp) but if they also “just think about it” I will have no income. If I just paid for USA and EPO and at some future date I finally get some company to agree royalties, would I then be able to pay the other countries, or is it “too late” ? Obviously this is a large investment of my own money with no guarantees.

One other possibility might be to just go for the USA patent and hope that they could sell through “subsidiaries” (e.g. [     ]).

I know it is hard times out there, but [      ] always said you are both an excellent lawyer as well as businessman, so I wonder if you could give me your own overview since you have undoubtedly seen this conundrum before….

All best wishes,

John

ulysses-and-the-sirens-waterhouseDear John

Sorry to hear about the lack of progress with these companies.

 This a not-uncommon problem.  You are reaching the point where the hard cash reality of rising patenting costs and a lack of definite commitment from potential licensees brings into question the viability of your technology as a business proposition.  No matter how good your idea, if you can’t get someone to buy it, it has no commercial value. 

 In your position, I would be reviewing how much of my retirement income/assets I can afford to gamble invest in what is becoming a rather speculative venture.  I would not base this just on my faith in the [     ] benefits, I would take a hard-nosed investment decision.  Do I have enough other assets, invested safely (eg in a pension scheme), that I can take a punt on this project and lose all of that investment, and do I really believe there is a good business (as distinct from scientific) case for this investment, bearing in mind the possibly luke-warm response so far?

If the answer is no, then don’t spend any more money.  If the answer is yes, but you can’t afford all of these patent costs, then you might consider focussing on key territories.  I don’t know enough about the technology and the market to say which those territories are, but from general principles, you might decide:

  •  If you can only afford £5,000, (and will be able to afford more for later stages in the filings), just file in the USA
  • If you can only afford £10,000 (and will be able to afford more for later stages in the filings), just file in the USA and EPO
  • If you can only afford £20,000 (and will be able to afford more for later stages), just file in the USA, EPO, Japan, Canada and Australia.

Another possible route at this stage is to talk to the technology transfer operation of Loamshire College or another university, to see whether they might be prepared to invest in the patent filings.  If their answer is yes, this would provide a lower-risk, lower-return option for you.

 I hope this helps you to analyse the problem and work out the best way forward.

 Best wishes

IP Draughts

Dear IP Draughts

Very hard-headed!!

As you say, I have been too focused on the scientific rather than the business side.

My most cordial thanks for your crystal clear thinking,

John

Do readers have any suggestions for John?  There is still some time before the deadline for taking action with the patent applications.

8 Comments

Filed under Intellectual Property

8 responses to “Dear Inventor…

  1. John has asked me to thank all the people who commented on this posting for their thoughtful contributions. He has found the discussion very useful.

  2. Crowd funding? I have no personal experience of whether it would work in this situation but I would love to see it tried.

  3. Just a thought Dear John. The figures you have been quoted; do they include VAT at 20%? Costs are often not clearly quoted with VAT and the final bill can be a surprise.

    PS I completely agree with Dario Colombo; excellent advice.

  4. The US small entity national stage of a PCT shoud be a lot less than that. Difficult to advise without market input and a look at the search opinion. No point in spending money if you are going to get bogged down in examination. UK(direct not EPO) and US is useful. Some companies do a lot of thinking when deadlines are looming – can’t blame them. Have you considered selling an option a small amount of immediate cash to keep their thinking caps on.

  5. Pingback: Dear Inventor… | IP Draughts | Bendasbordello

  6. My two pennies worth….

    As Tangible IP already pointed out, the situation is not uncommon. IP Draughts already provided a sensible path to solve the issue. However, I would also consider the following questions, more from a business prospective than from a patent prospective:

    1. Do companies (you’re talking to) have an active patent portfolio they manage? If yes, in which territories? How long ago was the last filing? I think that interrogating the patent database can offer you a high-level overview of the companies (and sector) patent strategy.

    2. What are competitors doing? Who are they? Where are they filing? Other questions for the patent database, to gather more insights.

    3. Do companies (you’re talking to) value patents as methods of innovation?

    4. Is really your patent at the core of the technology? Is it broad enough?

    5. Are the companies (you’re talking to) big enough to absorb future patent costs? And, how is strategic your technology in relation to their business, products and future business aspirations (company strategy and vision)? Does your technology align with business aspirations?

    6. Why are companies (you’re talking to) “thinking” about your patent, but not actively engaging? Is yours a disruptive technology? or is it an “additive” technology? How much your patent will change their business processes?

    I take the point these questions does not answer the question “where to file”. However, I think it is important to do one step back, and ask these type of questions, to understand why the patent is needed, the likelihood of a licence (and fees recovery), and what do licensees value.

    The final thought: if you decide to approach a TTO for investment, it is worth considering a University which actively performs research in such particular area, instead of just a TTO which offer consultancy services for third-party technologies. Customers might see more value (and might be more reassured) if they might have access to a research team (meaning access to expertise and equipment) inside the University, unless your technology is ready to be sold as it is….

    Dario Colombo

  7. Dear John,

    As IP Draughts suggest your situation is not untypical. Their advice is very good. Just want to make a few quick observations/suggestions.

    1. Get a second opinion as to costs. They look a little rich to me.
    2. Be aware that Canada has a delayed entry option at 42 months so you can kick Canada off into the long grass for now.
    3. Do not under estimate the value of China.
    4. Don’t forget that you will be incurring further costs ad hoc from this point forward. So unless you can budget to pay for these costs say in the next 12 months you are possibly wasting your money paying anything further now.
    5. If you have not looked for investors. Start now ASAP.
    6. Much of the advice you need is actually technology/market specific. You need to identify an advisor ASAP who can provide that input and guidance assuming you do not have this yourself.
    7. If you have been talking to the Big Cos for anything less than six months then this is probably not long enough for them to “think”. They need much longer than that and usually at least 12-18 months. If you cannot hold out that long they your timing is wrong and you have a tough choice.
    8. Much better to talk to Small Cos who may be able to invest and take this forward. If you know of any talk to them now don’t wait for the Big Cos.

    For future reference if you all you have is the science do nothing with the IP until you have the business input. Securing IP based on science without the business input is often a waste of money and time.

    Patents should never be used to protect inventions but only to protect commercially useful inventions. Real commercial potential not that based on a banal understanding of where the technology could be used.

    Best of luck

    Nick White
    Tangible IP

  8. william.bird@patentive.com

    Confidential & Privileged

    general rules:

    1. First rule: ” Whisky is whisky and work is work”. In other words do not mix private with work – do not invest private money in a patent application.

    2. Second rule is that there are no rules. In other words there can be situations where one has so much money that one can afford to invest private money. Even then one needs to set the limit and not go over that.

    3. Rule 3 – find an investor/partner or a buyer. £10,000 in the pocket is worth many opportunities that are only in the bush.

    Kind regards,

    William Bird

    Patentive Prinz-Georg-Strasse 91 D-40479 Düsseldorf Germany

    William Bird mobile +32 (0)468239777 Ariane Bird mobile +32 (0)471735350 Fax +49 (0)211 26 00 6 599

    NOTICE: This email may contain confidential or privileged information intended for the addressee only. If you are not the addressee, be aware that any disclosure, copying, distribution, or use of the information is prohibited. If you have received this email in error, please call us at one of the telephone numbers above. Any legal advice expressed in this message is being delivered to you solely for your use in connection with the matters addressed herein and may not be relied upon by any other person or entity or used for any other purpose without our prior written consent.

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