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What do you need to know?

This outline explains the costs that go into an intellectual property portfolio. The patent system is primarily discussed herein, but similar considerations are also present for trademark and copyright filings. The differences will be discussed briefly at the end of the post.


Here is what I cover in this post:


What is covered by the initial estimate or quote?

A new client will typically ask for or receive a quote for a "patent". However, what is actually being provided is usually just the preparation or drafting of the initial application. This is the description of the invention to explain how the thing or process is made, used, or performed, the drawings to explain the thing or process, and the claims that define what the invention is and what other people cannot do if the patent is registered. The cost may also include the actual submission of the application to the United States Patent and Trademark Office (USPTO), which includes preparing supporting documents, uploading the application to the USPTO, and paying the filing fees imposed by the USPTO. However, the bulk of the estimate is usually in the preparation costs of the application itself.


Usually, the initial estimate just gets you to this point. As explained in other posts, the prosecution process goes on after this initial filing. The associated costs after the initial filing are explained more fully below.


What about conducting a search?

A search is conducted to answer one or more questions about the invention or the technology. The search to answer any of these questions is usually not covered by the estimate for a "patent", or the initial filing of an application. Some searching can be performed on your own by searching public patent databases (see additional resources below). However, a patent practitioner will have access to a more complete and up to date database of resources to conduct a more confident search. The cost of a search will depend on what questions you want answered. Whether to conduct a search is addressed in additional posts on this site.


What happens after the initial filing and what are the costs?

The patent process does not end after the application is filed. Instead, it is assigned an examiner to determine whether the invention deserves a patent. After the application is approved by the Examiner, then it is finalized and registered. This step also incurs additional costs.


Examination

Generally, the patent examiner will identify issues with the application, whether procedural in the presentation of the application or technical in whether the technology is sufficiently unique to deserve the monopoly provided by a patent registration. The Examiner will issue an Office Action explaining the issues with the application. The patent owner then responds in a written communication (through their representative) explaining why they deserve a patent.


Each exchange with an examiner will incur additional costs. There are many factors that contribute to how many exchanges are needed to move the application toward registration.


The greatest contributor of the cost is the desired scope of protection. If you define your invention more specifically, then it is easier to convince an Examiner that your invention is unique and sufficiently different to deserve a registration. However, if it is desirable to obtain broad protection to keep more competition out of the market, then it will take more exchanges with the Examiner to explain the narrower differences between your invention and what is already being done in the field. If the cost for a "patent" includes the examination process as well (which it rarely does), then the patent representative is generally more incentivized to obtain a narrow scope of protection and obtain a patent registration as quickly as possible.


Other contributors to the cost include the type of technology. Unfortunately, some areas are more difficult to obtain patent protection than others. In addition, unfortunately, the prosecution process is partly subjective based on the experience of the Examiner you are assigned. Therefore, the Examiner you are assigned, unfortunately, will have an effect on how many exchanges are needed to more the application forward.


Once the exchange with the Examiner is initiated, it is much easier to get an idea of what the process will look like and what the associated costs will likely look like. However, from the outset, it is usually best to expect and budget for at least two, and usually up to four exchanges with an Examiner. (This is not to suggest that there may be even more exchanges with an Examiner to move an application forward.)


The USPTO also adds costs to the process. The initial filing fee submitted with the application usually buys one to two exchanges with the Examiner. After the allotment is used, the Applicant must pay additional fees to the USPTO to keep the exchanges going with the Examiner.


There are many considerations in creating a patent prosecution strategy. The cost of the process is certainly a contributor. In some instances, a patent registration as soon as possible is very desirable. In this case, the Applicant may take a narrow scope of protection in order to expedite the examination process. This trade off may also make the examination costs less. However, in other instances, a robust and broad application with a minimum potentially adverse written record (file history) between the Examiner and the Applicant is more desirable in order to obtain the most or broadest protection possible. This strategy is likely to result in a more expensive examination process.


Issuance

Even after the dialog with the Examiner is complete, the application will incur additional fees. Once the Examiner agrees that the invention deserves registration, the Examiner will issue a Notice of Allowance. In order to obtain a registration, the Applicant must still pay an issue fee. The patent representative will also likely perform a final review of the application to find any errors or other issues that may have arisen during the exchanges with the Examiner and make a request to clean up the record before the patent issues. Other technical issues such as the ownership of the application and the identity of the inventors should also be confirmed. This step therefore incurs additional costs.


Are there other costs?

There could be other costs in the process as well. Each change in the application is usually accompanied by a fee. Therefore, if an inventor is changed, the request to record the change is accompanied by a fee and the preparation cost for making the request also incurs a cost. Other changes may occur, or other information recorded at the USPTO. For example, the ownership of the application should be recorded to confirm the assignment of the invention to the applicant. All of these actions may incur additional costs.


What about international filings?

In general, the application that is prepared for the US filing can also be used as the basis for international filings. However, each patent office will conduct its own assessment to determine if a patent deserves a registration in their jurisdiction. Therefore, each country will incur its own filing fees, examination costs, and registration fees.


What are annuities or maintenance fees, how much are they, and when are they due?

Patents, whether while pending as an application or once registered as a patent, generally require payments to the respective patent office to simply keep the patent alive. The amount and frequency of the payments depends on the jurisdiction. For example, the United States only requires three payments be made approximately 4 years apart after the registration of the patent. Many international jurisdictions, such as Europe, require annual fees to be paid that may increase each year up to a maximum fee. It is therefore very important to know what these fees are in the jurisdiction you are filing in, as they can add up quickly on a large portfolio. If the maintenance/annuity fee is not paid, then the patent registration will lapse, or the patent application will be abandoned.


How are trademark costs different?

Trademark costs are very similar to the patent costs in the timing of fees. The trademark will require the initial preparation, payment of a filing fee, and an examination process with a trademark examiner. Other actions necessary for the registration of a trademark is the requirement to show use of the mark in commerce. However, the fees and preparation costs for a trademark are typically much lower than for a patent. A trademark also does not have maintenance/annuity fees. Instead, the trademark must show use during the examination process and periodically after registration. This statement to show use is accompanied by a USPTO fee.


How are copyright costs different?

The copyright fees process is also similar to the patent and trademark process. The initial application is prepared and submitted with a filing fee. The application will be examined, and the application registered. The exchange with an examiner is usually much easier and the resulting preparation costs and filing fees are substantially reduced compared to the patent application.


Where can I find other resources?

You can find additional resources here:

For the USPTO fee schedule: USPTO fee schedule | USPTO

For maintaining a patent: Maintain your patent | USPTO

For calculating a patent term: Patent term calculator | USPTO

For USPTO patent searching: Search for patents | USPTO

For Google searching: Google Patents

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