Three Root Causes Why Most Patents Never Generate a Nickel of Revenue (Article 2 of 5) -

Three Root Causes Why Most Patents Never Generate a Nickel of Revenue (Article 2 of 5)

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LQ PATENT COLUMN,  by Craige Thompson

This article is the second in a five part series that address issues I discuss in my new book: Patent Offense. If you would like to know more about these issues, or you want to find out how to get a copy of the book, please click here or call my office (512) 649-1046) and we will be sure to let you know how to get a copy.

Thanks much!

In the first article in this series, I contended that a poor patent process is the failure mode that accounts for why so many million dollar ideas, no matter how brilliant the idea or ripe the market, nevertheless fail to generate a dime of revenue for the patent owner.

In the next 3 parts of this series, I will share from my observations 3 specific root causes of patent failure that arise from a poor patent process. In the final installment of this series, I will propose a complete systematic patent process that I have found to be the best way to eliminate all three of these root causes of patent failure, while (i) improving profit potential and (ii) saving time and money to boot!

Root Cause #1: No Plan to Succeed in PTO 

The patent process can be viewed as having three phases – before/during/after the Patent Office:

  • Phase 1: Pre-PTO, when you are drafting a patent application.
  • Phase 2: In the PTO, when you are trying to get your patent allowed.
  • Phase 3: Post-PTO, when you hope to monetize the patent.

The way I see it, the #1 objective in phase 2 should be to get a patent through the Patent Office as quickly as possible with the most valuable claim scope you can get. Here’s why…

Bouncing around aimlessly in the PTO is very expensive. Every unnecessary back-and-forth exchange with the Examiner generally costs thousands of dollars, and add a number of months (at least) of delay before the objective is realized.

As office actions, Requests for Continued Examination, and appeals compound the strain on cash flow, additional rounds of office actions postpone the day when the patent can be successfully monetized.

In other words, additional rounds of office actions push back the date when you can start to make money by:

  • licensing or selling an issued patent,
  • using the value of the issued patent as collateral for financing,
  • enforcing the patent against a competitor,
  • accumulating damages against infringers you don’t even know about yet, and
  • dominating your market with an exclusive “patented” product that justifies premium pricing.

The Most Painful Hidden Cost

There are additional “hidden costs” to unnecessary rounds of office actions that can easily gash the prospective patent owner for millions of dollars worth of lost opportunity costs.

Worse yet, a side effect of all those office actions is that you are paying to create a public roadmap for your competitors to design around your patent!!  That one hurts worst of all!

If you would like to know more about these hidden costs and how to avoid them, please contact me and we can discuss your situation.

The Underlying Root Cause

 Avoidable office actions occur until the Examiner gets what is necessary to allow the claims to issue.  The one thing that MUST occur before the patent can get out of the PTO is that the claims MUST have a Point of Novelty.  Without a Point of Novelty, the Examiner will never (they are not supposed to, anyway) allow a claim.  And even if they do allow it, the patent can be invalidated without it.

So, the secret to getting off the Office Action Roller-coaster and getting a patent allowed quickly with maximum claim scope is to clearly articulate your point of novelty early on in the process, i.e., before you file the patent application.

What is tragic to me is to see so many patents that fail to generate a big return on a great invention simply because they were tossed into the PTO without a point of novelty clearly in mind and set forth in the claims.

When that happens, I call it having “no plan to succeed in the Patent Office.”

That is what can happen when there is a rush to file a patent without thinking strategically about how to construct a patent to become an incredibly valuable business asset.

Bottom Line for Business

 To the extent that a patent that is not constructed *from the beginning* like a valuable business asset, it is not likely to resemble a valuable business asset where it counts– on the Income Statement and the Balance Sheet.

And in order to become a valuable business asset, a patentable idea must be successfully processed through the PTO.  In that PTO phase, success depends on starting the PTO phase with a clearly articulated Point of Novelty.  You are going to be spending a lot of time and money working with the Examiner unless and until your claims have one.

Before you file any patent you absolutely want to ensure two things:

1) that you have a point of novelty, and

2) that you have properly claimed the invention with that point of novelty.

If you would like to discuss how to position your business to plan for success in the Patent Office, you can reach me at (512) 649-1046.

To your success!

Article 1| Article 3 | Article 4| Article 5 

Craige Thompson, JD, EE, PE, Patent Attorney

Craige Thompson JD, EE, PE Patent Attorney Author of Amazon #1 Best seller, Patent Offense

Tawfiq Ali Principal Attorney, Ali Law Practice

Craige Thompson he has nailed the art and science of patent prosecution and defense!

In my time working and collaborating with Craige, I have found that he has nailed the art and science of patent prosecution and defense. His consciously defined best practices and unique insights truly set him apart – and, he communicates these in such a way that his clients can appreciate the value of his advice and strategies. Last but not least, he is one of the most decent people you will ever meet. In my estimation, Craige is unequivocally the smart choice when it comes to protecting products and inventions with quality patents – those that will stand up in court. Get to know him sooner rather than later.