Welcome back Passionistas! In this and the other two posts in the series, I tell you how to become a billionaire in 30 days…just kidding. I haven’t quite figured that out yet myself. However, I do discuss ways to generate additional streams of revenue using your intellectual property (“IP”), and with more money, you’ll be on your way to billionaire status in no time. If you missed the first part of this series, IP and Money Part 1: Trademark, check it out here. In this post, we’ll discuss patents.
IP and Money Part 2: Patent
A patent is an exclusive grant of property rights to an inventor, and there are three main types – utility, design, and plant. A utility patent is the most common and the one discussed here. Under the U.S. system, the federal government grants patents for new, useful, and non-obvious inventions for 20 years from the date of the filing of the patent application. In exchange for this temporary grant of a monopoly to the inventor, the inventor must provide a full description of how to perform the invention. These descriptions are published via the USPTO and play a key role in the continued development of an industry. Inventors can use these descriptions to discover new ways to build on that subject or create something better in its place.
The concept of an invention meeting the requirements of new, useful and non-obvious requires some additional explanation. “New” is pretty straightforward. In the U.S., we reward inventors and creators, not copycats. So you can’t get a patent on something that already exists because you didn’t invent or create it. To be “non-obvious,” the invention must have one or more significant differences over the most nearly similar thing already known to exist. So simply changing the color of an IPAD, the language on a GPS, or the size of a coffee cup holder, won’t cut it. There must be some significant change. Think going from a CD player to an MP3 player. Finally, the invention must be useful. So the invention must have a purpose and work because a machine that doesn’t work isn’t useful to anyone.
The patent application process is similar to the trademark process. To begin, you must file your application with the USPTO. Then, a patent examiner reviews your application to ensure that it meets certain legal requirements. This process takes a few years and necessitates back and forth correspondence between you and the USPTO. Once your invention has completed this evaluation and has met all requirements, you are granted a patent and your description is publish publicly.
Patents and Making Money
With patents, licensing equals money. Because U.S. law gives you the exclusive right to this invention, you can sue if anyone else uses your work without paying you a fee regardless of his or her industry. This is different from trademark infringement, which is industry or class specific. For example, say you registered your trademark Desire on Fire to sell candles. You later discover that someone else is using the name Desire or Fire to sell spicy hotdogs. In this case, even if the person had not registered her trademark, she probably is not guilty of trademark infringement. Your trademark rights extend only to the category of candles, and a consumer would not confuse your candles with the other person’s hot dogs simply because you have the same name.
Conversely, under patent law, if you patented a new hot dog cart and the Desire on Fire seller is using that same cart to sell ice cream but hasn’t paid you a licensing fee, she likely guilty of patent infringement. The industry of use doesn’t matter.
For small business owners, to use patent rights for optimal revenue generation consider selling an exclusive license to your product to a major corporation. Big business has the budget, infrastructure, and know-how to market and sell your invention to huge audiences. If you negotiate your license correctly, this can mean lots of money with little to no effort on your part. Note here that with patent matters, having a lawyer on your side is ideal. Patents can get complicated rather quickly, and if you’ve made it through the application process, you want to make sure you get the money you deserve.
That’s it for part 2 of this series. Have any creative ideas for licensing your patents or any questions/comments about this post? I’d love to hear from you. Please post your ideas, comments, and questions in the comment section below, and watch out for the last installment in this series IP and Money Part 3: Copyright.
The information is provided to you for educational and informational purposes only. It is not legal advice, and the author is not your attorney. This information is to be used at your own risk based on your own judgment. If you need legal advice, please contact a lawyer licensed in your state.