International patent strategies for individual inventors.

• Author: Modlin, Douglas N.

ABSTRACT

Independent inventors are often driven by their curiosity and passion to make highly novel inventions. In many cases, the commercial potential of these inventions is not fully understood at the time the invention is made. In addition, the limited funds available to independent inventors to cover patenting expenses present a barrier to the independent inventor in realizing the full commercial potential of the invention. The lack of an optimized patent strategy can reduce the ultimate value of the invention. The authors discuss examples of successful inventions, conceived by independent inventors that did not have apparent commercial potential or ways to achieve commercialization. The authors present strategies to help independent inventors develop cost effective approaches to preparing, filing, and prosecuting U.S. and foreign patents under the present U.S. "first to file" system. Additionally, the authors discuss some of the implications to independent inventors of proposed changes to the U.S. patent system under H.R. 2795 "The Patent Reform Act of 2005" which attempt to harmonize the "first to invent" U.S. patent system with the "first to file" international patent system.

Who are Independent Inventors?

Independent Inventors can be characterized in many ways, but for the purposes of this paper we will use a description consistent with the statistics reported by the U.S. Patent and Trademark Office (USPTO). The working definition put forth by the USPTO for an independent inventor patent is a patent for which ownership is either unassigned, i.e. patent rights are held by the inventor, or assigned to an individual at the time of grant. (1) Although the USPTO definition leaves open the possibility that an independent inventor patent could be assigned to an individual other than the original inventive entity, it is reasonable to assume that the frequency at which this occurs is relatively low. The statistics compiled by the USPTO provide some useful insights into the makeup and origin of independent inventors. Table 1 is compiled with information extracted from for the year 2003 which was the most recent year for which statistics were available. (2)

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Table 1. Independent Inventor Patent Statistics for the year 2003 as compiled by the USPTO.

In total, over 169,000 U.S. patents were granted in 2003. U.S. and foreign corporations received 45% and 43% of the total patents granted, respectively, whereas U.S. and foreign independent inventors received only 8% and 3.6%, respectively. U.S. independent inventors received 69% and foreign independent inventors received 31% of the over 19,600 U.S. patents granted to individual inventors. This statistic raises the interesting question as to why foreign independent inventors receive such a small share of the independent inventor patents granted in the U.S. Although it is beyond the scope of this paper to attempt to provide a definitive answer to this question, we will discuss several important attributes of the U.S. patent system, i.e. policies and cost structures, that favor the individual inventor and that therefore may contribute to this empirical observation.

Unique Attributes of the U.S. Patent System

One important difference between the U.S. patent system and that of most other countries is that U.S. patent law operates under a "first to invent" system, whereas most other countries operate under a "first to file" system. This difference is reflected in many subtle and not so subtle ways that impact both independent and corporate inventors. (3) Readers seeking additional information are directed to which are published in the Official Journal of the European Patent Office (EPO) (1999). (4) These articles present arguments in favor and against the adoption of a "grace period" and other proposed changes to the European patent system to designed to both benefit independent and academic inventors and also to simplify, e.g. cost-reduce, and unify the European patent system. The arguments in favor generally benefit academic and independent inventors whereas the arguments against generally benefit corporations. As of this writing, none the proposed changes discussed in these 1999 articles have been made to the European patent system.

One of the most important, and costly, decisions facing independent inventors is whether or not to pursue patent protection for their invention. Additionally, one of the first decisions faced by the independent inventor is whether or not to file for patent protection in his country of origin and, if so, when to file. Because both of the authors are U.S. citizens and most familiar with U.S. law and policies, our examples include inventions which are filed first in the U.S. and then filed internationally. In the case of non-U.S. inventors, it is assumed that they would file first in their country of origin and then internationally, although this is not always the case where the focus of exploitation of the invention is intended from the start to be the U.S. This assumption is supported by statistics published both in the Trilateral Statistical Report (2003) (5) and by the World Intellectual Property Organization (WIPO) (2005). (6) The data from both of these sources indicate that most patents are first filed in the country of origin of the inventor and that international patent protection is pursued subsequently.

Given the above, one would expect, consistent with the data in Table 1, that foreign independent inventors would obtain fewer U.S. patents than their U.S. counterparts, but an obvious question remains as to whether at least part of the more than the observed >2X difference (see Table 1) in the percentages of U.S. Patents obtained by U.S. and foreign independent inventors can be attributed to the unique features of the U.S. patent system that favor the independent inventor. It would be interesting to be able to compare the ratios of patents obtained by domestic and foreign independent inventors in the U.S., Japan, and the various European Patent Office (EPO) states. Unfortunately, the authors were unable to find published statistics from the EPO, the Japanese Patent Office (JPO), or WIPO on independent inventor patents, such as are published by the United States Patent and Trademark Office (USPTO). It would also be interesting to understand why independent inventor statistics appear to be available solely from the USPTO. One reasoned explanation is the focus of the U.S. patent system on the individual inventor, based on the Constitutional grant of patent rights to individuals, as expressed, for example, in the first to invent doctrine supra.

Independent Inventors and the U.S. Patent System

The U.S. government recognizes four general forms of intellectual property protection, each of which is owned by its creator unless the inventor assigns his rights to another person or entity. These four forms of intellectual property protection are trademarks, copyrights, trade secrets, and patents. Because the focus of this paper is international patent strategies for independent inventors, it is beyond the scope of this paper to discuss trademarks, copyrights, or trade secrets other than as might factor into the determination of an international patent strategy. However, please note that all forms of intellectual property protection should be considered in the context of an overall intellectual property strategy and that there are international considerations for each form of intellectual property which should be incorporated into a comprehensive intellectual property protection strategy.

There is little question that the motivations which drive independent inventors are similar to those of their corporate, government, and academic counterparts. However, independent inventors are directly responsible for the key decisions and their consequences with respect to the commercialization of their inventions. While all inventors undoubtedly derive a sense of satisfaction from the invention process itself and stand to gain from the successful commercialization of their inventions, independent inventors are often directly responsible and personally accountable for the key strategic decisions which ultimately determine the commercial value and hence the success or failure of their inventions.

Although the U.S. patent system has undergone continual evolution since its inception, the basic underlying concepts were incorporated into the first Article of the U.S. Constitution. The U.S. patent system was conceived by the framers of the U.S. Constitution who were very familiar with the English and /or European patent systems of their day and had strong adverse feelings about their lack of fairness and failure to provide proper incentives to aspiring inventors. (7) For example, under the Sixteenth Century English patent system, a patent was a legalized monopoly granted by the monarchy to an individual in return for loyalty or payment in the form of "Royalties." In hindsight, it is easy to see why Thomas Jefferson and other influential thinkers of his time, believed that significant reforms in the European system were necessary to preserve the beneficial aspects that they felt a patent system could provide to society while remaining consistent with the spirit and ideals of the U.S. democracy that they...