Patents: How to Make Big Money

What did Edison, Bell and Einstein have in common? They all had business at the local patent office. Edison was one of the most prolific inventors and patented inventions constantly; Bell patented the telephone. Einstein was actually working as a patent clerk in Switzerland at the time he published the Theory of Special Relativity.

What is needed most for a good patent is a good invention. The public is not clamoring for another copy machine, though a clever variation or improvement that is useful may be patentable. A revolutionary invention – the light bulb, the telephone, the powered airplane – makes for a strong patent. That’s important because a weak patent may be unenforceable in court.

The first thing to do in the patenting process is to conduct a patent search to determine whether your invention is novel. If the invention has already been patented, another patent will not be issued. Instead, the application will be rejected for lack of novelty or, in legal parlance, for “obviousness”. The U.S. Patent Office has an online search page that allows searches from home, or a registered patent agent or search firm in the Washington, D.C. area can be used. Alternatively, an inventor can conduct a private search independently at the Patent Office.

The next step is filing the patent and processing it through the Patent Office. Usually, the Patent Office issues Office Actions and the inventor responds with arguments as to why a patent should issue. This administrative process typically requires two years, but it may require even longer.

Once the patent is issued, the inventor must scout for infringing products in the market. In the case of U.S. companies, the patent holder can sue for money damages in federal court. In the case of a foreign company or entity, it may be advantageous to sue at the U.S. International Trade Commission (ITC) because of the difficulty in obtaining jurisdiction over the foreign defendant. Further, the ITC has the power to exclude goods from the country, a power that a federal court lacks. The patent holder can then obtain licensing revenue from the foreign company for the infringement.

The biggest patent infringement verdict came in June, 2009: It was a $1.67 billion verdict between two corporations. Another big one was the $910 million verdict for Polaroid against Kodak.