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    Saturday, May 29, 2010

    What's the bottom line?

    Clients invariably ask how much it will cost to patent an invention. Sometimes the question comes after a lengthy explanation of patent law and the patent prosecution process. Sometimes it comes insistently by a first time caller, reluctant to disclose even their name. People want an estimate, a flat price, a round figure, a budget. Something that they can metricize and hang their hat on.

    The short answer is: we don't know for certain. Patent application drafting and patent prosecution have so many variables, many of which are not under the control of the patent attorney, that any estimate is a guess at most. The most a patent attorney can ever do, if they are not negotiating a flat fee (or maximum/minimum), which has its own hazards, is provide an estimate of what the average in a particular area of technology has historically been.

    Entrepreneurs however have the ability to manage costs based on choices they make. To explain this, it is necessary to understand some of the factors that go into cost:

    (1)Prior art search: whether a prior search is ordered, and how extensive; whether the client wants the patent attorney to evaluate the prior art search results; whether the prior art search results will require a design around; whether the client wishes the patent attorney to start drafting the patent application prior to the prior art search results being returned.

    (2)Stage of invention and production: whether the client has built a prototype or is working off unproven sketches; whether the client has made a production model; how complete is development of the invention; whether the client has a business plan.

    (3)Complexity of invention and technology: what art area is the invention in—mechanical, electrical, computer science, material science, chemical, etc.; does it have multiple embodiments; how key is the invention to the business plan.

    (4)The attorney fees per hour or per embodiment.

    (5)How many inventors are there and are their relative contributions known.

    (6)Whether the client is defensively applying for a patent application or offensively.

    (7)Whether the client wishes to pursue foreign patent rights.

    (8)Whether the invention is on the market now or has it otherwise been publicly used or made known to others not under a duty of confidentiality.

    (9)Whether the client wishes to file a provisional or nonprovisional patent application.

    (10)Whether other government agencies need to be involved (such as the FDA or the Department of Agriculture).

    (11)Whether the invention implicates national security.

    (12)Whether the invention is partially funded with Federal money.

    (13)Whether the client is a small entity or a large entity.

    This is not a complete list, but it does provide the entrepreneur with factors which can be used to help manage costs. Looking at the list, it should be obvious that entrepreneurs have a significant ability to manage patent costs especially in categories 1, 2, 3, 7, and 9. In short, if there is a prior art search, it will cost more. If there are multiple embodiments, it will cost more. If the client keeps adding to the invention, improving, and making changes, after the patent drafting has started, it will cost more. If the client wishes to pursue foreign patent rights, it will cost more. If the invention is incipient instead of developed, it will cost more.

    One scenario frustrating both for the client and the patent attorney, is the client who comes in, very enthusiastic, who wants an estimate, but has not thought through any of these factors, and then makes multiple changes and adds embodiments after patent application drafting has started. The estimates then bear no relation to the work being done and the client gets a significantly higher bill.

    Wise entrepreneurs, as mentioned in previous blogs, will make a comprehensive business plan. That plan should certainly include consideration of the above factors, at a minimum.

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