Patents rights are essential to prevent other companies taking your ideas and your brand, as well as making a profit from the hard work that you have put in. In my work as a patent attorney, I have seen the patents I worked on power a company from startup to IPO and enabled the company to stay dominant after patent expiration due to the goodwill accumulated on its branding over the 20 year patent life. It is important to understand the laws and rules surrounding your patent, particularly the term of life it has.
Table of Content
Value of Patents
Intellectual property (IP) and patents can be valuable assets that can help increase a company’s valuation. Here are a few ways that IP and patents can impact a company’s valuation:
- Competitive advantage: Patents, trademarks, and other forms of IP can provide a company with a competitive advantage in the market. This can help the company increase revenue and profits, which can in turn increase its valuation.
- Licensing revenue: IP can also be used to generate revenue through licensing agreements. This can help the company diversify its revenue streams and increase its valuation.
- Brand recognition: Trademarks can help a company build a recognizable and trustworthy brand, which can increase customer loyalty and revenue. This can also increase the perceived value of the company, which can in turn increase its valuation.
- Barriers to entry: Patents and other forms of IP can create barriers to entry for competitors, which can help the company maintain its market position and increase its valuation.
- Legal protection: IP can also provide legal protection for the company, which can help it avoid costly legal disputes and protect its revenue streams.
- Innovation: IP can also be used to protect the company’s intellectual property on any new product, service, software, process, design, and any other innovation that can be protected by IP laws, this can add value to the company as well as provide a competitive advantage
- Attracting investment: IP can be a major factor in attracting investors, especially for technology-based companies and startups. Investors are often interested in companies that have a strong patent portfolio and other forms of IP that provide a competitive advantage.
Overall, IP and patents can be valuable assets for a company, as they can provide a competitive advantage, generate revenue, build brand recognition, create barriers to entry, provide legal protection, protect innovation, and attract investment which all contribute to increase a company’s valuation. However, these benefits end when the patent expires.
How Long Do Patent Rights Last?
How long do patent rights last, depends on various types of patents as well as the filing dates involved in patenting. Patents must be renewed on a regular basis. If you forget to renew your patents, competitors can take your ideas and use them for their own profit.
The length of time a patent lasts depends on the type of patent and when it was filed.
For utility patents, which cover new and useful processes, machines, manufactures, or compositions of matter, or any new and useful improvements thereof, the term is generally 20 years from the date of application.
For design patents, which cover new, original, and ornamental designs for an article of manufacture, the term is 15 years from the date of grant.
For plant patents, which cover asexually reproduced plants, the term is 20 years from the date of grant.
For patents filed on or after June 8, 1995, maintenance fees must be paid to the USPTO at 3.5, 7.5, and 11.5 years after the patent is granted to keep the patent in force. If the maintenance fees are not paid, the patent will expire.
It’s important to note that if a patent owner can show that they were unable to commercially exploit their invention due to regulatory delays, the term of the patent can be extended for up to 5 years.
Patent rights are only valid within a time limit, and the right to take legal action on anyone infringing on the patent should be within this period.
Can You Extend a Patent life?
One can not extend the statutory term of a patent. The government though grants exceptions for rare cases, such as patents made for pharmaceuticals. This is because it takes long to test drugs before granting patents.
Utility patents are valid for 20 years, as we mentioned previously. Therefore, applicants expect the patent office to complete the approval of their patent application as soon as possible. The process can take time since the patent office has over 500,000 pending patent applications.
Patent office approval takes, on average, 24 months. Many applicants believe that the patent offices should pay them compensation for the time it took to approve their patent application but this is not the way that the patent office operates.
The patent office won’t extend the term of a patent if there is no substantial and unjustified delay, particularly if the patent office took less than three years for approval.
The patent office may extend the patent term for applications that have been pending for longer than three years in rare cases. These extensions are issued when more than one inventor is trying to obtain a patent for the same invention.
The patent office does not grant these extensions. If you wish to extend your patent term, you will need to request a Patent Term Adjustment (PTA). However, the patent office is not known for its willingness or ability to grant them.
The following are situations in which the patent office might grant you a patent adjustment (PTA):
- Within 14 months of your filing, the USPTO does not examine your new application.
- It does not respond to an appellate brief or amendment reply within four months.
- After you have submitted drawings and paid the issue fee, it won’t issue a Patent within four months.
- It does not issue an allowance or Office Action within the four months following an appellate decision.
- It doesn’t issue any patents within three years of the filing date. You have not filed a continuation, divisional, or purchased a delay for an Office Action response.
- Appeals, secrecy orders, or interferences cause the delay.
Can patents be renewed?
A patent is valid for 20 years, subjected to renewal through maintenance fee, from the filing date. After the 20-year period, the protection patent provides will end and no renewal can be done past the 20 year life.
What are the patent maintenance deadlines?
All utility and reissue utility patents issued after December 12, 1980 are subject to maintenance fees. Maintenance fees are not required for a design patent or plant patent or to register a statutory invention.
To keep the patent rights after a utility patent issue, you must pay three maximum maintenance fees.
- The first maintenance fee should be on the 3.5-year anniversary.
- Second maintenance fee due on the 7.5-year anniversary
- The third maintenance fee is due on the 11.5-year anniversary.
What happens after the patent expires?
Patents become public domain after the expiration of their term. What does this mean to a patent holder? This means that the patent holder will no longer have the ability to prevent others from using, making, or selling his invention.
Other people will be free to copy the patent-protected invention and sell it without the need for the patent holder’s consent.
This will allow other pharmaceutical companies to make generic versions of the drug and sell them to the public at lower prices.
While the inventor of a product can continue to make and sell it, he should be aware that others may also have made similar products. The patent expires, and anyone can copy the invention to sell his version, even if it is an exact copy of the inventor’s.
Patents rights expire, and previously protected technology and only available to a handful of people are now widely used. Prices drop, making it easier for more people to produce the same invention and then sell it to the public.
When a patent is approaching expiration, there are several strategies that a patent holder or a company holding a portfolio of patents can use to maximize the value of the patent before it expires:
- Licensing: The patent holder can license the patent to other companies, allowing them to use the invention in exchange for royalties. This can be a way to generate revenue from the patent before it expires.
- Litigation: The patent holder can file lawsuits against companies that are infringing on the patent in order to generate revenue from damages or settlements. This can be a way to generate revenue from the patent before it expires.
- Product development: The patent holder can use the remaining time before expiration to develop and bring to market a product that utilizes the patented invention. This can be a way to generate revenue from the patent before it expires.
- Sale: The patent holder can sell the patent to another company, allowing them to use the invention in exchange for a lump sum payment. This can be a way to generate revenue from the patent before it expires.
- Generating additional patents: The patent holder can use the remaining time before expiration to file continuation and divisional patent applications to extend the life of the patent.
- Creating a standard essential patent (SEP) and licensing it at FRAND (fair, reasonable, and non-discriminatory) terms.
The strategy that is chosen will depend on factors such as the strength of the patent, the market for the invention, and the resources of the patent holder.