If you’re just tuning in, this is a continuation of the Startup Intellectual Property Checklist series. Intellectual property is key to the success of a technology startup. But, what is intellectual property? How do you protect it? What about the intellectual property of others? This checklist provides a basic primer on key intellectual property issues each founder should understand, and a simple To-Do list of action items. Part 4 will feature items 10-12.
STARTUP INTELLECTUAL PROPERTY CHECKLIST
10) Nonprovisional Patent Applications
11) Slogging Through the Patent Application Process (aka “Patent Prosecution”)
12) International Patent Protection
10) Utility Non-provisional Patent Applications
If your startup or potential acquirer may not be willing to invest tens of thousands of dollars and years of time pursuing a utility patent, then read no further.
It’s helpful to think of the costs and timing of a non-provisional patent application in two stages:
1) initial filing (the sprint), and
2) ongoing prosecution (the marathon).
Initial Application Preparation & Filing
A good place to start is the finish line. Work backwards from the core innovation that you wish to block your competitors from using or copying. What core features do you hope to protect? Your patent attorney should work with your team to draft a non‑provisional patent application that broadly claims your invention while specifically describing examples or embodiments.
If you do not understand the difference between the claims and the specification, then ask your patent attorney or contact me (hyperlink). This understanding is crucial in seeking a robust utility patent that meets your startup’s business goals.
Costs & Timing
Costs for the initial preparation and filing of a non-provisional patent application can range from less than $10K for a simple invention to $20K or more for a complex invention. The number of preferred embodiments, or specific examples implementing your invention, will also affect the price.
You should expect the initial filing of a non-provisional patent application to take approximately one to two months from the date that you disclose all the necessary invention details to your patent attorney. While it may take only a few weeks to receive a first draft, the revisions and back-and-forth comments can easily add a few more weeks.
If you’re approaching the 1-year non-provisional and foreign filing deadline triggered by an earlier provisional filing date, then contact your patent attorney at least three months in advance of the deadline to begin the work on the non-provisional application.
After the initial filing, expect your non-provisional application to sit dormant for one to two years, sometimes longer. Once the USPTO patent examiner assigned to your application finally gets around to reviewing it, you can expect to receive a correspondence called an “Office Action” that will trigger a deadline for response.
Don’t be surprised to receive further Office Actions after your first response. Getting a patent issued will depend on several factors, including your budget, the closeness of the cited prior art, your flexibility and willingness to pursue narrower claims, etc. We’ll cover that in the next article.
11) Ongoing Patent Application Process (“Patent Prosecution”)
Slogging through the application process for a utility patent takes a great deal of patience, resolve and money. The wait time for the first response, or Office Action, from the USPTO examiner can take a year or more from the application filing date. You should expect that your first substantive Office Action will likely include claim rejections based on the prior art.
Office Actions Containing Restriction Requirements
Prior to searching the prior art, a patent examiner will preliminarily review your claims to determine if they cover multiple inventions. If so, the examiner will issue a Restriction Requirement dividing up the claims into groups and requiring the applicant to make an election.
As a startup, you will need to make a strategic decision as to which claims to pursue first in the “parent” application and whether you have the budget for promptly filing one or more “child” applications to pursue the unelected claims. If your budget is not sufficient at that time, you can file a child application later as long as the parent application is still pending (i.e., before issuance or abandonment).
Substantive Office Actions: Claim Rejections Based on Prior Art
A claim rejected under Section 102 (35 USC § 102) essentially means that the examiner found a single prior art reference, such as an issued patent or published patent application, that discloses each element recited in the rejected claim. Under Section 102, a prior art reference is said to “anticipate” the claim because the examiner believes all the claim elements, or claim limitations, are disclosed in the cited prior art reference.
Rejections under Section 103 (35 USC § 103) are known as obviousness type rejections. In these type of rejections, an examiner typically combines two or more prior art references to arrive at your claimed invention, the argument being that it would have been obvious to one of ordinary skill in the art to combine or modify such prior art in order to come up with the features recited in the rejected claims. Obviousness type rejections often involve an examiner’s subjective point of view as to what would be obvious to combine or modify.
A thorough response to an Office Action should contemplate both Section 102 and Section 103 rejections, even if the latter has not yet been cited. If your claims are rejected over prior art, which is highly likely in the first substantive Office Action, you need to consider to what extent you are willing to narrow the claims by reciting additional limitations. Attorney’s fees for an Office Action response may range between $1-5K.
Notice of Allowance
If and when the examiner allows your claims and agrees to issue a patent, a Notice of Allowance will be issued triggering a deadline for paying the issue fee. Time to celebrate, but don’t forget to consider any continuation applications in order to pursue additional claims. Though you may be content with the allowed claims at the moment, you cannot underestimate or fully predict a competitor’s ability to design around those claims.
12) International Patent Protection
Early Stage Considerations for Foreign Patent Protection
At the outset, you must remember one simple rule if you want the option for foreign patent protection: Do not publicly disclose your invention before filing a patent application. Otherwise, all bets are off for foreign protection, though you might still be eligible for US protection.
Foreign Filing Deadline
Assuming that you filed a U.S. patent application before any public disclosures, then the deadline for foreign filing is 1-year from the U.S. filing date, which is often called the “priority date” referring to the filing date of your first provisional application or, if no provisional was filed, your first non-provisional application.
Foreign Filing Options
Foreign patent protection is available through two routes:
1) Direct Priority Applications: Filing separately in each desired foreign country by the 1-year foreign filing deadline; or
2) PCT Application: Filing a single PCT (Patent Cooperation Treaty) application by the 1-year foreign filing deadline which buys an additional 18 months of time (i.e., 30 months from priority date) before deciding which individual foreign countries to pursue. The PCT application serves as a delay mechanism, postponing the individual foreign filings that would otherwise need to be filed by the 1-year deadline discussed above.
Direct Priority Applications may be suitable if any or all of the following factors exist at the 1-year foreign filing deadline:
- a limited number of foreign countries to pursue
- no possibility of desiring additional countries at a later time
- sufficient funds to cover each initial filing and ongoing prosecution
- non-PCT countries (e.g., Taiwan)
The PCT Application may make more sense if any or all of the following factors exist at the 1-year foreign filing deadline:
- cash flow needs to be preserved (i.e., insufficient funds to pursue individual foreign filings)
- unsure of which foreign countries to pursue
- desire to pursue several foreign countries
- possibility of desiring additional foreign countries at a later time
- possibility of licensing, merger or acquisition in the next 18 months that may change the financial picture for national stage filings