Finding Your Way Through The Patent Process: One Entrepreneur's Story

Entrepreneurs seeking protection for their ideas and inventions should understand the costs and risks involved--and first determine how a patent aligns with their business strategy.

After spending three years in law school, the complicated jargon in legal documents started to make sense and navigating a complex court system no longer seemed intimidating. But none of my training equipped me for the long and frustrating process of pursuing a U.S. patent as a young entrepreneur.

In 2004, I decided to pursue a patent for the adaptive technology behind the bar exam prep program I developed after my third year of law school. The software, which automatically adjusts to students’ strengths and weaknesses, is unlike any other program on the market--so I assumed the patent approval process would be fairly straightforward.

That was eight years ago. The United States Patent and Trademark Office finally sent me a notice of allowance in September, essentially approving my application pending payment of an issue fee. But I’m guessing other small business owners throw in the towel much sooner and never receive protection for their ideas. Or they’re so skeptical of the system that they never even try.

Here are four lessons I learned during my prolonged patent battle that I hope will help other entrepreneurs navigate a system foreign even to most attorneys.

Prepare for a long and expensive process. While some inventions receive a patent quickly, my application slowly worked its way through the patent office even as I practiced my idea and built a company around it. That’s not to say AdaptiBar didn’t offer a proprietary and innovative product; it’s just that we had to work hard to make our case for why and how our product deserves the legal protection that a patent provides.

We had to document how our program differed from the ideas covered by existing patents. We got rejected based on technicalities such as the details of our drawings. We had to revise, revise, revise based on the patent examiner’s feedback and keep going back until we got it right.

On average, it takes three years from the filing date for the patent office to rule on an application. And if it gets rejected, as mine did several times, the amendment process can drag on for years--assuming you have the perseverance to continue. In the end, I spent around $20,000 in application and attorney fees, a small expense compared to what other entrepreneurs often face. I benefitted from my existing network of attorneys, which brings me to my second point.

Hire an experienced attorney who knows your business. When I started working with an attorney with years of intellectual property experience who took the time to understand my company strategy, the patent application finally moved forward. He breathed new life into my patent application--just when I was ready to declare it a lost cause--by recognizing exactly where the U.S. Patent and Trademark Office believed it fell short. By reaching out to the patent examiner for an interview, a tactic he called an “often overlooked part of patent prosecution practice,” we were able to work with the examiner to finally get my application allowed.

The real key, though, was working with an attorney at McAndrews, Held & Malloy who acted as a counselor and took the time to thoroughly understand my business and industry. It’s important to choose someone who will learn your operations, competitors, and strategy, and then match the legal approach with all of those things.

Understand the potential risks and future costs. Soon after my application was rejected for the first time, I heard from the attorney of another patent holder looking to collect licensing fees. My application was rejected based on his patent from 1993, so he came looking for a payout.

In the end, I was able to convince him that I was not in fact incorporating his ideas into my software program, and he went looking for bigger fish. But had he squeezed me, it could have been costly. It was an unexpected challenge that I didn’t even realize beforehand was a possible outcome of my application.

Even if your invention doesn’t infringe on an existing patent, the application becomes part of the public domain typically after 18 months. Although there are severe penalties for violating a pending patent that eventually gets approved, you’re still exposing your idea to copycats and trolls.

And keep in mind that it costs an average of $3.5 million to enforce your patent by filing an infringement lawsuit against someone who illegally practices your invention. For startups watching every penny, that alone can be a deterrent to even filing an application in the first place.

Determine how a patent aligns to your business strategy. This really should be the first step. You need to be able to articulate a business reason for why you’re seeking patent protection. Because of the time and money involved in the process, it needs to be linked directly to business strategy.

For me, pursuing a patent was a logical business decision that would increase the value of my company’s portfolio for potential investors, give us a marketing advantage in the supplemental bar exam prep industry, and potentially boost revenue through licensing fees. My relatively low expenses also made continuing to pursue the patent a reasonable cost of doing business because it allowed me to claim “patent pending” technology in my marketing materials.

Patents offer a spectrum of value for companies--they can be monetized by being sold, licensed, or enforced; they provide defensive ammunition against other firms who might claim infringement against their own patents; and they make businesses more valuable to suitors, VCs, and private equity firms. Given the investment required, though, entrepreneurs should first identify exactly how pursuing a patent aligns with their goals.

In the end, it all comes down to this: Don’t go out and get a patent just for the sake of having one. Figure out whether your idea is unique, find the right attorney, align your legal strategy to your business strategy, and then prepare for a potentially long and frustrating fight with an uncertain outcome.

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Tarek Fadel is the CEO and founder of Chicago-based AdaptiBar, which provides an online simulator and prep program for law school students studying for the Multistate Bar Examination.

[Image: Flickr user Mike Lowell]

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