Key Elements of a Patent Program for Small Companies

There are many reasons why even small companies should consider implementing a program under which key inventions can be identified and protected through the filing of a patent application in the United States and/or in selected countries outside of the US.  For example, for patent applications that mature into issued patents, proprietary processes, systems and designs developed by the company can be protected by securing the right for the company to exclude any third parties from practicing those developments in the applicable geographic jurisdictions.  Also, these patents can be used as the basis for obtaining royalty income for the company through strategic licensing of the patented inventions.  Yet another major advantage of holding patents is the incremental value that they bring to the overall valuation of the company.

For companies that have or expect to have at least a reasonable number of valuable technological developments made over time, a patent program may provide a very strong cost vs. benefit result.  For a relatively small investment of time, resources and money, it is often possible to sigfinicantly increase the valuation of the company as well as its perceived technical position in its industry not to mention the potential monetization opportunites available with respect to issued patents.  The inventions considered under the program for filing may derive from employees of the company, contractors under an obligation to assign inventions to the company or from third parties in connection with arrangements such as joint development where the company is entitled to own some or all of the potentially patentable inventions.

Once a company decides that it wishes to implement such a program, there are a number of key elements that should be considered and implemented in connection with program roll-out.  As a starting point, it is very helpful to document these and other elements of the program via a policy statement which is available for access by employees and management.  The presence of such a document makes it clear to all how the program works and what the relevant expectations should be.

One element which may be included in a patent program (but which is not always included) is some form of monetary or other compensation to inventors in connection with their efforts under the program.  This is sometimes known as an “honararium”  and it can be structured in various different forms with the intention being to most effectively incentivize inventors to take the time to document their inventions, make IP counsel aware of the inventions and work with counsel as needed in connection with the patent procurement process.   So, for example, an honararium may be set up to pay an inventor a set sum of money (e.g. $1000) upon the filing of the patent application in the US Patent and Trademark Office and may also pay the inventor another sum of money upon issuance of the patent in the US.  There are a great many ways to structure an honararium if desired.  Non-monetary consideration such as key inventor dinners, plaques, etc.  may also be considered and included.

A form, typically referred to as an “invention disclosure form” or IDF, should be developed and widely distributed to all employees particularly those that are most likely to develop potentially patentable inventions.  This form should be standardized and used in all cases as the means for inventors to document their inventions and to submit them to the appointed company representative for processing.  The form will typically include areas for the inventor(s) to address questions such as: (i) what is the problem addressed by the invention; (ii) what prior solutions that problem is the inventor aware of and what are their relative shortcomings; (iii) what is the invention in detail; (iv) are there alternative embodiments to the invention; and (iv) how does the invention fit into the company’s products or services as well as the overall industry.  The answers to these questions can be reviewed by company personnel to determine the relative value of the invention against others and to make the determination whether to file a patent on the invention or not and if so, where.  The company should set up an email box and/or use an online form submission process so that all completed IDF’s can quickly be available for review and processing.

As alluded to above, a critical component of a program is to have a predetermined and consistent process for reviewing, ranking and determining which inventions should be filed as patent applications.  This includes the people included in the decision making process and what their particular roles are, whether or not formal meetings will be held and how often, the criteria to be used in ranking and making filing decisions and whether any additional input and/or technical information will be required prior to making a filing.  The criteria for ranking and making filing decisions often depends on the overall strategic goals of the company but may include, for example, the specific novelty of the invention, the scope of the market/products/services covered by the invention, where the invention fits in the company’s overall portfolio and the detectibility of the use of the invention.

A patent program may also include other aspects such as the periodic education of groups of employees within the company most likely to invent as well as the active solicitation of inventions via calls and in-person meetings.  In some cases, “brainstorming sessions” may be conducted where groups of inventors may meet in person under the guidance of a patent attorney and possibly some technical and business experts with the goal of developing and documenting a series of potentially valuable inventions for possible patent filing.  These sessions may be free form or they may be set up to address one or more specific problems.

Another program aspect is consideration for how invention disclosures, patent applications and issued patents may be tracked.  There are numerous commercial software programs and applications for handling this aspect or this function may be outsourced to outside legal counsel or a company specializing in providing this service.

In conclusion, a patent program can be set up anywhere on the spectrum from extremely informal to a very formal, very structured program such as those used by some of the largest inventive companies in the world.  A solution closer to the informal end is typically most appropriate for smaller innovative companies with the ability to grow and scale over time as the number of employees, the products/services portfolio and the relationships of the company with third parties grow.  With the recent passage of the America Invents Act and its provisions converting the US from first to file to first to invent jurisdiction in 2013, it is even more important now for companies wishing to protect their innovations through patents to adopt and implement a consistent and efficient process for making inventions known within the company and acting on them as quickly as possible.

About the author

Chuck Lobsenz

Chuck Lobsenz has particular expertise in intellectual property/patent matters and in structuring/negotiating and closing complex technology arrangements particularly in the telecommunications and software industries. Prior to joining Symbus, Mr. Lobsenz was the General Counsel at Virtustream, Inc., a cloud services and software provider. While there, he was responsible for managing the legal team as well as handling all legal matters affecting the company. Mr. Lobsenz has also held the position of Associate General Counsel – Intellectual Property at Clearwire Corporation, a publicly traded provider of fourth generation wireless voice and data services. At Clearwire, Mr. Lobsenz had responsibility for managing all intellectual property matters for the company as well as providing legal support for many of the company’s key commercial transactions. While at Clearwire, he designed and implemented a highly successful intellectual property asset management (IPAM) program resulting in a substantial and strategic set of patent assets for the company. In addition, Mr. Lobsenz negotiated and closed a multitude of complex deals such as joint ventures, new sales channel relationships, technology development arrangements, multi-billion dollar telecommunications equipment acquisitions as well as numerous other deals with companies such as Google, Intel, Motorola, Samsung, Microsoft, and Cisco. Prior to Clearwire, he spent many years in the private practice of law, working with a number of highly respected national law firms including Hunton & Williams and Baker & Botts. Chuck began his legal career at IBM. Prior to law school, he worked as a semiconductor design engineer for Texas Instruments as well as a software engineer for Honeywell Aerospace.