Fees and Procedures for the Patent Process

Updated Nov. 14, 2011

I. Is the Technology Worth Patenting?

The first question to consider is whether the invention will produce a return on the investment.  The invention may constitute a significant advancement in science, a unique solution to an age-old problem or may even create an entirely new technology.  However, experienced clients understand that patenting a new invention is a means to an end. 

Every year, thousands of unprofitable businesses are launched on the premise that the patent alone brings all the value to the equation.  This is not always the case.  So, what does the patent actually provide in value? 

 

Ultimately, the patent provides a barrier to competition.  This means stopping your competition from using the claimed technology, either by threat or actual litigation.  However, this barrier to competition can be immensely profitable.  Rather than competing on thin margins, "must-have" technology can command a premium while competitors are kept at bay.  In any good business plan, patents are only part of the total equation.

 

Capital investment of technologies and the benefit of patenting.

In the investment arena, patents are often far more critical.  New technologies often require a substantial initial capital investment to deliver the technology.  Investors are often hesitant to put money into an endeavor if competitors can closely watch the progress of the business model then jump in with copy-cat products if the market embraces the technology.

II. Costs and procedures for the patent search and opinion

Prior to initiating the patent process, a patent search is generally performed.  While there is no legal requirement to conduct a patent search provides a number of benefits:

  1. Is the invention patentable?  This question is really misleading.  Experienced patent attorneys can obtain a patent on virtually any disclosure by adding enough limitations to the claims.  While the patent will issue, the extremely limited coverage of the patent makes it easy to avoid infringement.  The better inquiry is whether a patent can be obtained that will prevent competitors from practicing the embodiment of the invention the public wants to buy.  From an economic standard, getting the results and opinion on the search is valuable.  If the patent protection sought cannot be reasonably obtained, then the cost of filing, prosecuting and issuing the patent can be avoided.

  2. Drafting optimum claims.  The patent search is a substantial aid to the patent attorney.  Knowing the prior art (already published patents and literature) an attorney can draft claims which push the envelope - seeking no less or no more than what the inventor is entitled to.  The resultant benefit is two-fold.  First, the quality of the resultant patent will generally be higher.  Second, the costs and time in obtaining the patent are reduced.

  3. Infringement avoidance.  The patent search often retrieves patents that might be infringed if the client makes, uses, offers to sell or imports the invention.  

There are numerous types and levels of searching as provided below:

Various levels of patent searching

Searching for interest is generally done by the inventor or company.  There is a perceived need in the market place for a technology but none can be found.  Frequently, companies that are unable to locate a solution for a particular problem invent the solution themselves. 

 

The knockout search is generally performed through various online search tools such as the U.S. Patent and Trademark Office's (USPTO) website or the private subscription-based Delphion.  Knockout searches are generally appropriate when the attorney or client are concerned that the technology may have already been patented in substantially the same form.  Knockout searches are typically performed on an ad-hoc basis or during an initial consultation. 

 

A full patentability search is conducted by interviewing patent examiners at the USPTO in Alexandria, Virginia.  With the assistance of examiners, the searches determine the classification of the invention.  Patents are categorized by thousands of classifications.  The advantage of searching by classification is that they are independent of various lexicons.  For example, one patent may call a critical structure a "pole" while the exact same structure in another patent may reference it as an "elongated member having a conduit disposed through the longitudinal axis."  Searching takes about two to three weeks.  The resultant opinion that interprets the search results takes at least another week.  Common costs are as follows:

 

  • Search on relatively non-complex technology:  $1,800

  • Search on technology of average complexity: $2,400

  • Search on relatively non-complex software or biotechnology: $2,400

  • Search on relatively complex software or biotechnology: $3,600

  • International search / litigation search with >= $1 million at risk: $10,000

 

Patent search flowchart

 

Once the search is completed, an estimate is provided for drafting and filing the patent application.

 

III. Drafting and filing the patent application

Based the results of the patentability search and opinion, the client makes a decision whether to proceed with the patent application process.   An estimate is provided for preparing the patent application.  Typical patent application budgets are as follows:

 

  • Relatively simple mechanical patent application:

    • $5,600 legal

    • $530 government filing fee

    • $500 draftsman fee

    • TOTAL: $6,562

  • Relatively complex mechanical patent application:

    • $6,800 legal

    • $530 government filing fee

    • $900 draftsman fee

    • TOTAL: $8,162

  • Relatively simple software patent application:

    • $6,800 legal

    • $530 government filing fee

    • TOTAL: $7,262

  • Relatively complex software patent application:

    • $8,400 legal

    • $530 government filing fee

    • TOTAL: $8,862

 

There are no hourly charges for telephone calls, legal drafting, meetings, research, or the like.  The steps are:

  1. ESTIMATE: A written estimate is provided for preparing and filing the application.  This will include the legal fee, the anticipated government filing fees and potential draftsman fees.  Here is what is variable about the estimate:

    • Government filing fees:  These fees can change based on two conditions:

      • Excess claims: more than three independent claims or more than twenty total claims are filed with the application.  This is typically needed if there are numerous ways to implement the invention and each embodiment is sought to be covered by the patent.  However, this generally varies by no more than $155. 

      • Changes in government fees:  The USPTO varies its filing fees year-by-year.  Typically, these fees are updated October 1st every year.  The change usually results in a difference between 10 to 50 dollars.  However, clients should be aware that under the Rules of the Bar, a law firm cannot advance government fees so if the USPTO hikes up the filing fee, it must be covered by the client.

  2. 50% RETAINER: Prior to initiating the patent application draft, a 50% non-refundable retainer of the estimated amount is provided.  No work is initiated on the patent application until this retainer is received and placed in trust for the client.  Once retainer is received, the work is initiated and the client approves the proposed draft of the patent application, the balance of the fees become due.

Retainer Arrangement for Drafting Patent Applications

  1. BALANCE OF FILING FEE:  Upon approval of the final draft of the patent application, the balance of the legal fee (the remaining 50%) is due along with the government filing fee and the draftsman's fees.  In computer software applications and business method patents, there are typically no draftsman's fees since the attorney prepares the block-diagrams.  However, in mechanical apparatus cases, a professional draftsman is required to render the appropriate drawings that illustrate the claimed invention.  The draftsman's fees are billed at the cost incurred by the firm and there is no markup applied or passed onto the client.

  2. FILING OF APPLICATION:  Once all funds are received, the application is formatted and electronically transmitted to the USPTO.  Less than 2% of all applications are filed by this method which confirms receipt of the application, validates that it contains all the proper sections and issues an official serial number within seconds.  Law firms cannot advance filing fees and thus we cannot file the application without full payment of the government fees, draftsman's fees and legal fees.  To expedite the payment process, our office accepts checks, wire transfers and all major credit cards.  In the event that payment cannot be made, even if set against a deadline, our office cannot file the patent application.  Accordingly, it makes good sense for a company to inform its accounting department that funds will be required for this time-sensitive matter.

Optional Legal Work

 

  • Assignment: An assignment of rights in patent application from the inventors to a company or individual and recording the assignment with the USPTO.  $240 legal fee and $40 government fee.

  • Petition to Accelerate:  Special petitions that accelerate the pendency of the patent application.  $5,600 legal and a $130 government fee (sometimes there is no government fee in special cases).

  • Foreign Filing:  Filing the application in foreign countries can be extremely expensive.  Please discuss this option with us.

IV. Prosecuting the patent application

Once the application is filed, it is placed in the substantial backlog that has been a fixture of the USPTO for decades.  The Applicant anxiously awaits for a response from the patent examiner.  Currently, the USPTO allocates 14 months for the patent examiner to issue the first "office action" in the case.  If the examiner takes longer than 14 months, then the term of the resultant patent may be extended to make up for the delay.  In the vast majority of cases, the examiner rejects all or most of the patent application claims.  Patent attorneys and experienced inventors expect this to happen.  It would be quite easy to write a patent application that "sailed through" the USPTO.  However, it would likely seek less protection that which the inventor is entitled to.  The two main types of rejections are provided below:

 

Handling Patent Office Action Rejections

 

To overcome these rejections requires a detailed analysis of each prior art reference (typically an already issued patent).  Frequently, the original patent application is amended to overcome the rejections and more clearly distinguish the invention over the prior art.  Typical charges for amendments are as follows:

  • Relatively simple office action response: $1,200

  • Office action response of moderate complexity: $2,400

  • Highly involved and complex response: $3,600

  • Highly complex response and personal interview in Alexandria, VA: $4,800

The amendment or response is usually sufficient to overcome the rejection and cause the patent examiner to approve the patent application.  However, in many cases the patent examiner maintains his or her position on the rejection and issues a final office action.  Alternatively, the patent examiner may issue another rejection based on different prior art.

 

Amendment of Patent Application Flowchart

 

The office actions generated by patent examiners at the USPTO are the greatest unknown in estimating costs for the patent process.  There are thousands of different patent examiners and each one may handle a patent application in a different way.  Should a final rejection be received, a number of options are available to the patent applicant:

 

Options in Response to a Final Rejection in a Patent Application

 

After a final rejection is received, the applicant may (within two months) amend the application a last time to receive an "Advisory Action."  Alternatively, the entire patent prosecution can be "restarted" to allow for additional arguments by filing a Request for Continued Examination (RCE) along with the next amendment or response.  This incurs the typical legal cost for an amendment in addition to the government filing fee for a patent application (currently between $465 and $930 depending on the size of the company). 

 

A continuation in part application (CIP) includes new subject matter that distinguishes the invention from the prior art.  The CIP, like the RCE incurs the government filing fee.  However, the CIP is filed as a brand new patent application. 

 

Finally, an appeal may be filed to the Board of Patent Appeals and Interferences.  Under USPTO procedure, once an appeal has been filed, the patent examiner is required to conduct a conference with his or her supervisors.  It is not uncommon that the conference results in the patent examiner withdrawing the final rejection and allowing the patent application.  However, if the patent examiner maintains his or her position, the appeals process typically takes about 18 months.

 

V. Issuing and maintaining the patent.

Once the patent examiner determines the patent application is acceptable, he or she issues a "Notice of Allowance."  Upon receipt of the allowance, the issue fee and possibly the publication fee is due.  The issue fee is currently $870 or $1,740 depending on the size of the company.  In addition, a publication fee of $300 is due if the application was published.  As a general rule, our office requests that applications not be published to avoid incurring this fee.  However, if foreign patents are applied for, the publication becomes necessary and so does the $300 fee.

 

To maintain the patent in force, maintenance fees are due at 3.5, 7.5 and 11.5 years after the patent issues.  The fees are payable to the USPTO and are designed to clear out "dead wood" from the patent system.

 

VI. Enforcing the patent and reexamination

Enforcement and litigation of the patent can be an expensive endeavor.  Unlike many other areas of the law, the patent attorney that drafts the patent application is often a witness in the case.  Accordingly, another outside patent firm must direct the litigation.

Reexamination of a patent occurs when a patent believes that a patent was issued in error.  For more information on reexamination, click here.


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