How You File for a Patent Can Affect Your Bottom Line

Pick the filing strategy that’s right for you

3 min read
How You File for a Patent Can Affect Your Bottom Line
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Typically, the first step in turning an idea into money is to patent it. Starting this process raises the questions “How much does a patent cost?” and “How long will it take?” Unfortunately, there are no fixed answers to these questions. Some factors beyond your control, such as bureaucratic backlog and the complexity of a patent, will affect cost and review time. But your choice of a filing strategy is one thing that will have a predictable and immediate impact.

As a business evolves, so does the weight given to competing concerns regarding cost, timing, and international patent protection. In the United States, this weighting guides the strategic choice between a provisional or nonprovisional patent application.

For some organizations—such as universities that produce many inventions or start-ups—delaying costs while exploring the market is paramount. A provisional patent application establishes the priority of an inventor’s claim without requiring complete disclosure about its details, and it costs considerably less than a nonprovisional application. To maintain patent protection, the inventor must apply for a nonprovisional patent within one year. An unprofitable idea can be abandoned.

Going straight to a nonprovisional patent application is a more attractive option for companies with capital on hand, such as a start-up that has secured funding, as it reduces overall costs and the time to receive a patent.

To see how this works, imagine a small company that files a provisional application, and let’s use some reasonable estimates for the attorney and drafting fees involved. The up-front cost is US $3,630 ($3,500 in attorney fees and $130 in patent office fees). One year later, the company feels the idea is viable, so it files a nonprovisional application at a cost of $9,730 ($8,500 in attorney fees, $500 for formal patent drawings, and $730 in patent office fees). After 2.5 years from the provisional application filing date, the patent office typically issues an “office action” outlining its opinion about which claims in the patent are allowable and which are not. The applicant pays $2,500 for an attorney to prepare a response. If the response satisfies the patent office, the application is approved at about the 3-year mark, requiring a final $350 in attorney fees and $480 in patent office fees, for a grand total of $16,690.

If the same company had filed a nonprovisional application (also with an approval after one response to an office action), the initial $3,630 for the provisional application wouldn’t apply, so the total cost is reduced to $13,060, although most of this would have to be paid up front. In addition, the patent is issued at the 2-year mark following the initial application submission.

Provisional versus nonprovisional considerations also factor into international patent protection. For those seeking protection in just two countries, filing directly with national patent offices will result in faster grants and lower lifetime cost. This approach is typically taken by multinational corporations that know which territories they are interested in before filing any application.

Otherwise, the Patent Cooperation Treaty (PCT) application process is preferable. A qualifying application, such as a U.S. provisional patent application, filed in one country is treated as an application in all PCT member countries, which include most developed nations. It can be a relatively inexpensive way to obtain international protection while gauging which national markets are worth pursuing. However, use of the PCT process extends the time it takes for the final patent to be issued in all jurisdictions.

In one scenario, the company pays an initial $3,630 for the provisional application as described above. One year later, the company deems the idea viable, so it files a PCT application at an additional cost of $11,503 ($8,500 in attorney fees, $2,503 in filing fees—which can vary depending on the precise details of the application—and $500 for drawings). At the 2.5-year mark, the applicant must select the territories it wishes to pursue protection in. The company selects the United States, Canada, and Europe (the European Patent Office can issue a regional patent [PDF] covering about 40 European countries). The fees break down to $1,200 for the attorneys, $740 in U.S. filing fees, and approximately $2,000 per additional jurisdiction. At the 4-year mark, there are the inevitable office actions, as each patent office typically issues at least one. The cost to respond to the U.S. patent office is $2,500, and the cost to respond to the others is $4,000 each (including attorney fees and government fees). At the 4.5-year mark, the patent is issued, having cost about $830 in attorney and filing fees for the U.S. patent office and $2,000 for each of the other offices, for a total of $36,403.

The authors are patent attorneys at Waddey Patterson, in Nashville. Opinions are their own.

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