You don’t want to be an inventor. Really, you don’t. It’s sort of like being a crack addict with ideas, but it’s way more expensive. I’ve got 2 patents granted (see linkedin: http://www.linkedin.com/in/bbunix ), and 7 more pending…
These days a patent can cost between $10-$20K depending on who’s taking care of you.
Right now, a patent takes about 36 months to work it’s way through the system, (http://www.uspto.gov/about/stratplan/ar/2010/USPTOFY2010PAR.pdf . ) add a year if you file a provisional patent first… and you won’t hear anything for about 2 years. Once you hear something from them (usually “no”), you begin the argument process with the examiner. You win, you get a patent. You lose you get nothing.
Overall maybe half of all applications result in a patent (http://www.patentlyo.com/patent/patent-applications/index.html) – and you’ll usually not get everything you’ve asked for… you might only end up with a tiny sliver.
The result is a horrifying number of patents never make a penny for their inventors… upwards of 90%, maybe as high as 99%…
So… a little math. The cost is $20K… and only 1 in 200 inventors will get their money back… remember we lost 1/2 who just don’t get a patent at all.. so our patent lottery collects $4 million dollars and awards a grand prize of at least $20K… and it only takes (at least) 4 years….
That’s dismal. But wait! It gets worse.
So you get your patent. Fabulous. All that means is that you now have the right, but not the obligation to enforce your government-granted monopoly on your invention for the period of your patent.
Now, if there’s a company using your technology, you can ask them to purchase a license. Send a letter to the President and Head of the Board of Directors. Chances are they’ll ignore it. So licensing is useless without the ability to enforce it.
However, Infringement suits can cost upwards of $5 million dollars a pop… so your patent had better be making a lot of money for the infringer to make a suit worthwhile.
And if you don’t have 5 million dollars handy?
Contingency. Find a lawyer to take on your case. They’ll generally take a cut, like 30%, but charge you expenses – a couple of hundred thousand perhaps… or worse, they’ll ask for $10K to “investigate”, and if they like what they see, they’ll take more money in expenses… and then their 30% at the end. And at the end of the day, it has to be worth their while (think that $5 million number) – so a winning suit has to worth at least $17 million for the lawyers to break even.
But they don’t win all their cases. So they’re going to want a return – maybe like a VC’s – a 5 to 10x return… that means your suit needs to be worth $85-$170 million. And that’s the award… which is essentially the licensing fee you’d get.
So how much is a license worth? Depends how much of their product depends on your patent. And what percent is a reasonable license fee? Anywhere from 1-25% depending… so their sales need to be 4-100x that $85 million dollar number, so like $340 million…
Or you could do what Lodsys tried to do, sue 34,000 people for $10K each. Fortunately there are companies out there like Article One partners – http://www.articleonepartners.com/ – who are crowdsourcing prior art searching. This is a great counterbalance to nuisance suits.
If you’re beginning to sense that the only people making money here are the lawyers, that’s pretty close to the truth. And if the infringement isn’t significant, it’s not worth enforcing, and you’re out of luck.
If you’ve made it this far, and I have, you might consider taking up standup comedy (which I’ve done)… because it’s just too miserable…
There are now only 3 alternatives:
1. Go into business for yourself and do the thing you’ve patented. If you’re lucky you may be able to get investors in the business. Good thing about this, is you can still sue and you get triple damages because you’re business is being harmed.
2. Sell the patent. Lots of companies will buy ’em cheap. Intellectual Ventures http://www.intellectualventures.com/Home.aspx collects them. Maybe you get your $20K back. Maybe.
3. Talk to a troll. They take more than the contingency lawyers, but cost nothing upfront. Acacia (http://acaciaresearch.com) are the mother of all trolls…
The great irony here is that these so-called evil trolls are the only entities whose interests are in precise alignment with an inventor wanting to monetize their IP. Everyone else is doing billable hours and maybes… if they agree to work with you, and it’s by no means guaranteed, they’ll go to bat for you at a level you could never afford, with a skill that comes from doing one thing very, very well.
And if an infringing company gets a letter from a troll, they listen. Unlike just about any other infringment letter they get.
And after a couple of years, maybe you get paid.