Searching Patents by Name, Keyword, and Abstract
Now that you’re familiar with the basics of running a patent search, you can begin refining your searches to be more specific. Covered in this article are three ways of doing that:
1) Searching patents by name
2) Searching patents by keyword
3) Searching patents by abstract
Before diving in, please note that no one of these methods is necessarily better than the others. It depends on the patent you’re searching for. Offered are some basic rules for choosing when to use each method. In fact, in most cases, it’s probably best to run a search using all of these methods – name, keyword, and abstract – just to be sure you aren’t overlooking anything. With that said, let’s begin with searching for patents by name.
(As done in all our patent search articles, we’ll be using Google Patent Search for all demonstrations. It can be much easier than using the USPTO’s search tools!)
Searching Patents by Name
Searching patents by name is most effective when you know or at least have a rough idea of what that name is. We can apply this to an example. Let’s say you believe you have invented the electric guitar. In this case, you can safely run a patent search for the name “electric guitar” and see if anybody else has already patented it, assuming there’s really nothing else it could be called.
So, where to begin? First, you need to click the “Advanced Search” link on Google Patent Search.
Once clicked, you will be taken to the “Advanced Search” screen. This is where you instruct Google to only search using whatever patent name you type in. To keep our example, we demonstrated how one would go about searching for patents with “electric guitar” in the name:
Google Patent Search refers to the name of the patent as its “title”, but just know that they mean the same thing and type the name you want to search for into the title box as shown above. When you’re done, click the “Google Search” button at the top of the screen to see the search results.
The search results will not look this way at first; rather, you will get a rather unhelpful-looking list of plain search results that just say “Electric Guitar” and nothing else. To get the view pictured above, you just need to select “Thumbnails” from the “View as” menu. Once you do this, you will see drawings of each patent, and have the ability to see quick information snippets of any one you hover your mouse over. From there, you are free to click on any patent that grabs your attention and get all the available information (abstract, claims, drawings, date issued, inventor name, etc.) by clicking on it.
This process can be repeated for any patent name you wish to search for! We will now move on to searching for patents by keyword.
Searching Patents by Keyword
In a perfect world, we would know the exact name of the patent being searched for and finding it would be as simple as keying in its name. Unfortunately, there are many situations in which this is not possible. For example, what if you invented something that doesn’t have an obvious name – say, a new, more puncture-resistant bicycle tire that uses a special new alloy to stay intact on top of rocks and rough terrain? It would be tough to compress all of that into a pithy, two or three word name. In these cases, you will probably need to search for patents by keyword.
Like searching patents by name, your first stop is Google Patent Search’s “Advanced Search” screen. Once there, turn your attention to the top of the page covered in blue. These fields are where you specify which keywords you want Google to look for in the patent database. Keeping our example, we’ll search for the keywords “bicycle tire.”
Again – click “Google Search” when you’re done, and adjust the “View as” menu on the page that follows to “Thumbnail.” You should then see something like this:
The results page looks much the same as when you search for patents by name, but with an important difference. Because you searched for keywords and not an exact name, these results contain all patents that have anything to do with bicycle tires. That means you’ll need to spend a bit more time preening through them as you would if you were searching for an exact name. This page, for example, has everything from bicycle tire treads to bicycle tire inflation systems. Keep searching through these until you find the patent you’re looking for. (Of course, if you don’t see a patent for something that you are inventing, this would be preferable to finding it!)
When you see a patent that looks relevant or interesting, click on it to learn more.
We will now turn our attention to searching by abstract.
Searching Patents by Abstract
Very simply, a patent’s abstract is an exact description of what the patent literally is; that is, the exact mechanisms, motions, moving parts, or physical things protected by the patent. This is very important information! All patent searches (including by name or keyword) should include reading the abstracts of patents that catch your attention. Only by doing so will you know, for sure, what the patent in question does or does not cover.
For example: shown below is the abstract of one of the bicycle tire patents we just looked at in the searching by keyword example.
When you click on a patent in the search results, you are taken to a page like this one containing more information about it. The opening paragraphs of the abstract can be found here. However, to read the entire thing, you have to click the “Abstract” link atop the page. Doing so will pull up the entire, scanned-in abstract that is on file with the USPTO (shown below.)
Only by carefully reading the abstract can you know if a particular patent fits the description of what you were searching for. Luckily, this is rather easy, and the process just explained can be repeated for any patent you want to find the abstract for. Simply search for a patent by name or keyword, click on those that look interesting, and click “Abstract” on the page that follows.
Best of luck, and be sure to read the other patent searching articles on PatentHelpNow.com!
Searching Patent Applications
Running a search on already-issued patents is great, but that alone may not be thorough enough. The ideal patent search includes both issued patents and patent applications – that is, patents that have been applied for, but not yet issued. But how can you do this? Surely you cannot just walk into the USPTO offices and peek over the shoulder of inventors who are filling out their patent applications…or can you? Thanks to the Internet, you can now visit the USPTO website and search through patent applications, as well as already-issued ones. Let’s learn how.
The first step is visiting Google Patent Search at the following URL: http://www.google.com/patents.
If you read our article on running a patent search, you may already be familiar with this page. However, you’ll need to access a special section of it in order to search for patent applications. For that, you’ll want to click “Advanced Patent Search”, as shown below.
This takes you to an advanced search screen where you can specify that you only want to search applications, not already-granted patents. Once here, simply type in the nature of the patent applications you want to search for (we used “guitar strings” as an example) and check the box marked “Applications.”
Of course, you can refine your patent application search even more from this same screen. For example: let’s say you want to only search patent applications that were filed between September 2008 and January 2009. This would be achieved by using the drop-down menus next to the “Filing Date” option (shown below.)
If you have a specific patent application number in mind, you can key it into the box labeled “Patent Number.” If you know the title of the patent application or the name of the inventor, there are boxes for that information as well. Once you have customized the search page with all of the things you want to search for, simply click “Google Search” at the top of the page.
What will follow is a page of search results listing the patent applications that match what you searched for. However, we realize that the “raw text” look and feel of these results might not be the most intuitive way to look at them. Luckily, you can use the “View As” menu at the top of the page to change to “Thumbnail” view (shown below.)
Thumbnail view allows you to see the drawings for each patent application, as well as get brief snippets of information by hovering your mouse cursor over them. Simply click any patent application you are interested in to learn more. We’ll click “string bender for electric guitar” to demonstrate.
Here, you can discover just about anything about the patent application you clicked on, including the application number, when the application was filed, and who filed it. This information could be useful in any number of situations. For example, if you want to license someone’s invention, you will know who that someone is. If you want to know how old a patent application is, you will know for certain. And if you simply want to know if the patent is at all similar to the one you wish to file, reading the abstract and the claims will tell you.
If any of the terms we’ve used in this article were unclear, or you simply want to learn more about running your own patent search, browse the other articles and help resources on PatentHelpNow.com!
Searching Issued Patents
Running a patent search is critical for any inventor with serious ambitions of success. After all, there’s no point investing years of your life or thousands of dollars into something that’s already been done by somebody else, and a patent search is the best way to make sure that doesn’t happen. This was not always easy, however
It used to be that the only way to run a patent search was to pay a patent attorney to do it for you. Prior to the Internet, these attorneys basically had a monopoly on patent searches because they were the only ones with access to US Patent & Trademark Office files. The Internet has changed this dramatically. For one, you can visit the USPTO’s website and run a patent search yourself, for free. If you want to search issued patents (patents that people already have), click “Quick Search” or “Advanced Search” under the “Issued Patents” section.
The only problem with the USPTO’s website is that it is not exactly the most user-friendly resource out there. Luckily, there’s a much easier-to-use alternative: Google Patent Search. Like the USPTO, Google Patent Search lets you browse through all patents on file for free. Unlike the USPTO, however, Google makes this process as easy and painless as the Google search engine itself. For those of you who have never run a patent search from the USPTO site, this is a serious improvement!
You can access Google Patent Search at the following URL: http://www.google.com/patents
Here’s how it works. First, visit the URL above. Then, just like you would search for something on Google.com, type in what best describes the patent you’re looking for. For example, let’s say you thought you were the first person to invent the electric guitar, and you wanted to run a search to see if someone invented it already. You would type “electric guitar” into the search box as shown below. Then click “Search Patents.”
Following is a page of search results showing patents that match what you searched for. (Unfortunately for you, the electric guitar has been invented and re-invented many times over!) At this point, you can click on any patent that looks interesting or relevant. We’ll click the first one on the page.
This brings us to a much more detailed page about the electric guitar. You can read about the patent’s claims, learn when it was filed and issued, the inventor who has it, who the patent examiner was, the patent number, and more. You can also click “Read This Patent” to see the actual, scanned-in patent that is on file with the USPTO. Scrolling down will also enable to you to see other patents that have referenced this one – in this case, many other patents have.
This process is repeatable for virtually any patent search you might want to run. With some practice and effort, you can usually do all of your patent searching by yourself, for free, without having to hire any attorneys or search services to assist you. We will be covering this topic in great detail on PatentHelpNow.com as well.
Stay tuned for our other articles on searching by name, abstract, and keyword!
PatentHelpNow.com is a website dedicated to providing inventors with free patent help. You can contact us at: PatentHelpNow@gmail.com
Valuing a Patent Help
One of the most important tasks you will carry out as a patent holder is assigning a monetary value for it. This could become necessary for any number of reasons, such as:
- Selling the patent
- Licensing the patent
- Deciding how much equity to give to business partners investing or working with the patent
None of these decisions can be wisely made without first knowing, at least roughly, what your patent is worth. It is not always an easy task, as patent valuation is a somewhat inexact science. However, whether you have a provisional patent, a design patent, a utility patent, or a plant patent, some key principles should be observed.
1) What is the size of the market the patented invention could serve?
You should value your patent with an eye toward the size of the market it could serve. If you own the patent to a new kind of baseball bat, you would want to determine the size of the baseball gear market. Consider this the starting point, for without knowing how much money is spent on similar existing products, you have no valid basis for assigning a worth to your own. After all, wouldn’t you agree that whether your market sees $1 million or $50 million in yearly sales, there would be an impact on how much your patent is worth?
2) What have comparable patents been valued at or sold for?
One of the benefits of working with a patent attorney is that he or she will have access to comparables, or how much similar patents have been valued at or sold for. It could be that a new baseball bat was patented 10 years ago and valued at $500,000. Now, this does not necessarily mean that your patent is worth exactly that. Market forces change all the time, and the further back that similar patent was valued, the less it should influence that value you assign to yours. (Conversely, the more recently a similar patent was valued, the more that valuation should be heeded.)
Nevertheless, it pays to get a read on how similar patents are being valued rather than arbitrarily plucking an attractive number out of the air and assigning that as your patent’s value.
3) Determine the patent’s validity
One major factor that needs to be considered when valuing anything is risk. In this context, a major risk is that someone who buys or licenses your patent will find that it does not hold up in court – that is, that the courts might decide the patent is invalid. How could this happen, you might ask? The website JournalOfAccountancy.com offers 2 possible scenarios:
“If it is discovered after a patent has been issued that the inventors didn’t meet the statutory requirements for obtaining it-for example, if they weren’t the inventors (35 USC section 102(f)), or had published information about the invention or offered it for sale more than one year before the date of application (35 USC section 102(b))-the patent is invalid and substantially worthless.”
Obviously, this is not desirable and any perceived risk of it happening will reduce what someone is willing to pay for your patent. The solution? Consult your patent attorney on ways to investigate the validity of your patent and convey this to prospective buyers. The more you can eliminate the perception of risk, the higher a value you can assign to your patent.
4) Determine if your patent overlaps with other patents
Part 3 of our “Patent Facts and Fiction” series says that a patent does not give you exclusive rights to make your invention, only to prevent others from doing so. But what if making your invention would infringe on someone else’s patent? This type of patent overlap is quite common and could lead to your patent being invalidated by the courts. Work with your patent attorney to investigate if any overlap exists and communicate to prospective buyers or licensees that this will not be an issue. Eliminating this risk will allow you to value your patent higher than if it was left unaddressed.
5) Assess how much it would cost for someone to use the next best thing instead of buying/licensing your patent
No matter what you value your patent at, anyone thinking of buying or licensing it will investigate their alternatives. They will look for the “next best thing” and try to figure out if that would be cheaper than your patent. Since they are going to do this anyway, you had might as well figure out in advance and incorporate it into your valuation. Doing so offers you a strategic advantage – namely that if the next best thing is expensive (or there is no next best thing) you can use this as justification for charging more. Of course, if the next best thing is inexpensive or close to what you are asking, this could suggest a need to lower your valuation.
6) Determine why you are selling/licensing the patent and what your true needs are
You cannot value your patent in a vacuum, looking for the one, true, “right” value. Rather, you should assign a value by keeping your unique needs in mind. Why are you selling the patent? If you are just looking to cash out fast without a lot of meetings, delays, and deliberations, it might make sense to use a lower valuation. Money today is worth more than money tomorrow, and holding out for a trivially or even substantially higher price may not actually be worth it. Or, maybe it is – the point is that you need to make this decision consciously and not out of egotism or greed.
Keeping this 6 tips in mind will not instantly generate the “right” patent value for you, but it will ensure that whatever value you decide upon is far more realistic and valid than it would have otherwise been.
PatentHelpNow.com is a website dedicated to providing inventors with free patent help. You can contact us at: PatentHelpNow@gmail.com
Funding a Patent with Personal Savings Help
If you don’t like the idea of funding a patent with credit cards, loans, or investors, there is always a trusty standby: personal savings. Funding a patent with personal savings is actually not as painful as you might think, and unlike the other options, it does not leave you entangled with any other people or institutions after the fact. When you reach into your bank account and pay for a patent with your own money, that’s it. You own it, and you’ll never hear a word about the finance-related aspect of that patent ever again.
Sounds pretty good, doesn’t it? Of course, some readers are no doubt calling upon the army of rationalizations and excuses for why this is impossible. Here are some of the most common:
1) “I barely make enough money to cover my living expenses as it is, never mind save some of it!”
2) “Saving money is pointless. Plus, it takes too long.”
3) “I can’t discipline myself to save up for something so expensive.”
If you’re serious about funding a patent with personal savings, it’s important that each of these excuses be rejected and replaced with proper thinking. Less that, the goal may never be achieved. So let’s begin with the first excuse. This is by far the most common reason people give for not saving money, both in their personal lives and for major purchases like patents. And there’s usually a grain of truth to it. Many people are, no doubt, struggling to make their current income stretch far enough. But in almost every case, there is something (often many things) a person could do to trim their expenses. How many of the people who claim saving is impossible are eating out 2-3 times a week, or buying expensive clothing, or taking vacations, or other nice, but non-essential purchases? More than you would think.
If you find yourself saying saving is impossible, put that theory to the test. Examine your finances. Is it really true that everything you currently spend money on is absolutely essential? Make a game out of it. Once you have determined the cost of getting your patent, make a list of your recurring expenses and ask yourself, “If I stopped spending money on this, and instead saved that money, how much closer would that bring me to getting the patent?” Almost every financially successful person thinks this way, and if you don’t already, now is the perfect time to start.
Another all-too-common objection is the idea that saving is pointless because it takes too long. An economist would ask (and so should you), “Too long compared to what?” What makes it too long? A provisional patent costs about $400 through LegalZoom.com. Let’s say you’ve assessed your finances and you can only afford to save $50 a week. If you really did save that money, you would have your patent in just two months. So ask yourself: Is it really true that two months (or even four or six months) is “too long” to wait to pursue your invention dreams? What’s the alternative? Unless you plan on funding your patent with credit cards, loans, or investors, the only alternative is not getting the patent at all. Kind of puts things in perspective, doesn’t it?
The third objection is the most honest, because it places the responsibility for saving on you. However, it is no more valid or true than the other two. Nine times out of 10, people who say that they can’t do something are really saying that they won’t do something. Think of people you know (or have heard of) who say they can’t stop eating, or can’t keep up an exercise routine, or can’t get better grades in school. Is there literally some cosmic force stopping them from doing those things? In most cases, no. The bare, crass fact is that those people are not yet motivated enough to follow through on their plans and find what they are doing already to be more satisfying. That’s all well and good, but the question that arises is “How bad do you want it?”
Do you look a year or two into the future and see yourself as a successful inventor? Are you prepared to do everything it takes to make sure that it happens? If the answer is yes, that should be all the motivation you need to save. If you really cannot summon the discipline to set aside a modest amount of money each week for something, chances are you really don’t want it as much as you claim to. We don’t say that to insult you or question your commitment, but at the end of the day, it really is that simple.
Luckily, as we alluded to earlier, saving money for a patent is not the excruciating chore you might think it is. If you start out with a provisional patent (as we always recommend doing), and you purchase it through LegalZoom (no headaches or lawyers!), all you will need to save is a mere $400.
PatentHelpNow.com is a website dedicated to providing inventors with free patent help. You can contact us at: PatentHelpNow@gmail.com
Funding a Patent with a Loan Help
Once you have decided to get a patent, the question often becomes, “How am I going to pay for it?” One attractive option is to get a loan from a bank and use it only to pay for the patent. However, this should not be approached mindlessly. Unlike credit card companies, banks are extremely conservative and often will not lend money unless you have impeccable credit or are willing to pay huge interest rates. This is especially true during the current 2008 financial crisis. So if you decide to use this type of patent financing, here are some things to keep in mind:
1) Check your credit score BEFORE applying for your loan.
It should go without saying that people with higher credit scores can borrow more money and pay less interest. That said, it’s amazing how few people actually take the step of checking their credit score before applying for a loan. This is mandatory, not optional! Even if you find out that you have a low credit score, knowing about it CAN help you. Credit reports often have mistakes and erroneous entries, that the credit bureaus are required by law to correct. One common example is that a bill you paid long ago might still be on your report as “unpaid.” If so, you can likely have this removed which in turn boosts your credit score.
2) Determine the amount of money you NEED and borrow NO MORE.
The correct approach for getting and using a loan is to identify what you need the loan for, calculate exactly how much you need, get the loan, and spend it only on what you planned. It is not, as many loan applicants seem to believe, exaggerate how much money you need and spend it on anything that catches your eye once the money is in your hands.
So, how much money do you need to pay for your patent? It depends. Start out with a provisional patent. Borrow no more than $500-$1,000, depending on whether you do it yourself or use an attorney. Therefore, you should borrow only that amount. If the bank insists on loaning you more, try to borrow as little additional money as possible or use alternative patent financing, like a credit card.
3) Devise a plan with a date for full repayment.
It is foolish to go into any type of debt without a plan for repaying it. At a bare minimum, any plan must include a date by which you expect to fully repay the debt with calculations of how and when it will be paid off. So, for example: you already had a provisional patent but now need to borrow $3,000 for a utility patent. Figure some things out before borrowing that money.
First of all: how will you pay it back? Presumably, you are borrowing the money because you don’t have it now. So how will you get the money to pay it back? With that question answered, you can move on to the question of how long it will take to pay the money back. How much can you afford to pay per month? How many months would you have to make that payment before the entire loan was paid off? Don’t forget to take interest into account; after all, no bank would lend you the money if all you had to repay was the exact amount borrowed.
Only when you have a written plan indicating exactly how and when the loan will be repaid should you accept it.
4) Get banks to compete with one another.
Loans often come down to a negotiation between you and a loan officer. Who wins in negotiations? Usually, it’s the person with the most options. And while you may not have more “options” than a bank (who can theoretically turn around and lend money to thousands of other people), you can get banks competing against each other. The best way to do this is to shop around. Get quotes from multiple banks and lenders and make each one aware that you have other offers. Websites like LendingTree.com can help you do this automatically by showing you side-by-side comparisons of how much each bank will lend you at various interest rates. You are then free to either accept one of those offers outright, or try to negotiate further with one of the banks in question.
The key is to approach funding a patent with a bank loan as a responsible consumer. If you execute all of the above four steps in order, rather than leaping at the first loan that seems appealing, you will undoubtedly have a better experience.
PatentHelpNow.com is a website dedicated to providing inventors with free patent help. You can contact us at: PatentHelpNow@gmail.com
Funding a Patent with a Credit Card Help
If you cannot patent your invention with your own savings, the use of a credit card is another option. Now, we understand that you might be weary of financing an invention this way. If you’re like most people, you’ve heard dozens of horror stories from people who allow themselves to be consumed by crushing consumer debt. The difference, however, is that most people run up credit card debt mindlessly, for impulse purchases that depreciate in value. Should you choose to use credit card debt, do so in a calculated and responsible manner. Borrow no more than you need and repay it on a set schedule with a clear date for full repayment.
That being said, let’s begin with some much-needed clarification on how credit cards work. (This will then be related back to your goal of funding a patent.) Very simply, credit card companies make the bulk of their profits on interest. For all the talk about the importance of paying back debt quickly, Visa and MasterCard want you to pay them back at a nice, leisurely pace. The reason is very simple: if everyone paid off what they charged in a nice, timely fashion, Visa and MasterCard would not make much money. Mary Hunt remarks on this in her book, Debt-Proof Living:
“Credit card companies reluctantly tolerate those of us they call “deadbeats” – cardholders who always pay their balances in full and do not participate in the payment of interest and fees.”
That’s right – in the eyes of a credit card company, you are actually scorned and discouraged from repaying what you owe in full. Someone who charges thousands of dollars and takes years to repay it, on the other hand, is a residual income stream for the credit card company. This is what most credit card holders become, charging more than they need. So they chug along, making the minimum payments each month and sending an extra 18%-22% or more in interest to the credit card company to boot. This is not an intelligent way to use debt!
What you are going to do is become one of the “deadbeats” discussed earlier. It all starts with determining exactly how much money you need and borrowing no more. In your case, the amount you need to borrow will be fee for a patent.
The first step to funding a patent with a credit card is determining the amount of money you need. Once you have that amount in mind, it’s time to find the ideal credit card to borrow it with. This can be a card you already have, or a new one that meets the criteria we’re about to give you (if your current card does not). Basically, the ideal credit card to finance a patent with has the following characteristics:
1) No annual fee
2) A credit limit at or above the cost of the provisional patent (preferably not much higher)
3) A grace period during which you can repay without interest (this will usually be anywhere from 1-2 months from the time of the charge)
*If your current credit card has a balance, look for a card that offers 0% APR on balance transfers.
The grace period requirement is particularly important. While paying off the cost of your patent over time isn’t the end of the world, it’s far more desirable to pay it off sooner than later. Credit cards that offer a grace period are ideal for this, as a disciplined borrower could theoretically repay in full during that time without incurring any interest or fees. This should be what you are shooting for. To make it easier on yourself, draw up a payment schedule. Examine your finances and determine how much you can pay back each month. Then draw up a schedule incorporating the monthly payments you can afford to make, and project when you will have it paid off.
Let’s say expenses are tight and you can only afford to pay $75/month toward your debt. That’s fine. The important thing is that you actually do pay it. To help yourself you may want to consider setting aside the amount of one monthly payment to ensure that you stay on track. Again, the more you can pay per month, the sooner you will be out of debt.
From that point, it’s just a matter of holding yourself to the schedule you made. If you make your payments as planned, you will have successfully financed your patent without going into the crushing debt most borrowers do. Good luck!
PatentHelpNow.com is a website dedicated to providing inventors with free patent help. You can contact us at: PatentHelpNow@gmail.com
Funding a Patent with an Investor Help
Not everyone is suited or willing to fund a patent with credit cards or bank loans. Some of the possible reasons for either scenario are:
1) An insufficiently high credit score.
2) Carrying too much existing debt.
3) Banks typically will not lend less than $1,000. (i.e.: the amount for a provisional patent)
4) The payments cannot be afforded.
5) Other
For what it’s worth, we strongly suggest correcting whatever is keeping your credit score down, and/or repaying existing debt before financing a patent. However, for those who simply cannot or will not wait, there is another way: funding a patent with an investor. Rather than committing yourself to a strict repayment plan, with a bank or credit card with payments due immediately, using an investor can buy you more time and flexibility.
For example, let’s say you plan to turn the product you are patenting into a business. You want to mass-produce the invention in order to sell or license it. Great! The only problem is that the process takes time.
Using an investor gives you more flexibility. Rather than demanding immediate repayment, the investor will understand that commercializing the patent is a gradual process. The deal can be structured in such a way, that the investor provides the initial capital for the patent and recoups his money if and when you license it. Of course, the investor will not be doing this out of the goodness of his heart; he will expect a cut of your future profits. Furthermore, you shouldn’t take just anyone’s money. You need to be careful about whom you allow to invest in your patent. Here are some guidelines:
1) Borrow a little from someone who has a lot.
In his book, Succeeding, John T. Reed advises businesspeople to ‘borrow a little from someone who has a lot.” This applies to funding a patent with an investor as well. Think about it: if you need to borrow $3,000, and you borrow it from your Aunt Susan who only has $5,000 to her name, she is going to hassle you non-stop until she is repaid in full. She will not be able to “think long-term” and wait however long it takes for your patent to make money. And if it never makes money, you could be in for serious trouble. Don’t put yourself in a situation where a mistake could bankrupt someone. Rather, try to only take investment money from someone who has way more money than you need him/ her to invest. The less money respectively that they lend you; the less they will bother you.
2) Make it crystal clear what the investor’s recourse is.
Letting someone invest money in your patent is a business deal. Business deals are inherently risky. For this reason, you and your investor need to be on the same page about what the investor’s recourse is, should the patent fail to make money. Some investors will want to know that you’ll repay them if that happens. Others will happily shoulder the risk and eat the loss. Either way, you need to establish this before any money changes hands. Do not take money from anyone until you know what they expect of you if the worst-case scenario happens. Obviously, from your standpoint, the ideal investor is one who is okay with having no recourse; one who will eat the loss if your patent is a bust.
3) Don’t be too quick to sign away future profits.
Some inventors are so desperate to get the capital they need, that they will sign over rights to future profits to people willing to invest. Don’t go overboard with this. If you need $500 for a provisional patent, it’s probably smarter to use a credit card or even a payday loan than to give someone 50% of your future profits. Who knows? Maybe your patent won’t go anywhere and the investor will have invested that money for 50% of nothing. But you have to consider the flipside- What if it becomes a huge hit? Then the investor sits back and collects 50% of a lot for a measly $500. Therefore, you should try to sign away as low of a percentage of future profits as possible.
4) Only use an investor if you cannot use debt financing.
The great advantage of debt financing (using a bank loan or credit card) is that once you repay the debt and the interest, that’s it. The bank or credit card isn’t going to claim any future profits whatsoever. For this reason, you should generally only use an investor if you cannot fund the patent using debt. It’s more straightforward, less of a hassle, and if you have the discipline to repay what you borrow, is far more advantageous than bringing in a silent partner.
(Perhaps the only time it would be better to use an investor is when the investor contributes something other than money; say, if he/she is a well-connected insider in the industry your patent pertains to. In this case, it may be more advantageous to work with them than use debt financing.)
Keep these four tips in mind and you will eliminate many of the hassles and risks of working with investors. Good luck!
Sample Patent License
Patent licensing is a rather broad topic and it’s easy to get lost in theoretical discussions of it. However, fundamentally, a patent license is nothing more than a legally-binding contract spelling out certain conditions and actions that each party is responsible for taking. Perhaps the best way to move from the abstract to the specific is to examine an actual patent license and discuss what the most important parts of it mean.
The sample license discussed below can be read in full at: http://contracts.onecle.com/occulogix/brunner.lic.2004.10.25.shtml
PATENT LICENSE AND ROYALTY AGREEMENT
THIS AGREEMENT (the “Agreement”) is made by and between OccuLogix, Inc. (formerly Vascular Sciences Corporation), a Delaware Corporation (the “Licensee”), and Prof. Dr. Richard Brunner (“Brunner”) living in Germany and listed as inventor along with Prof. Dr. Helmut Borberg (“Borberg”) in US patent application 09/000,917, which is the parent application of US letters patent 6,245,038 issued June 12, 2001 (the “Patent”).
Seen above is the beginning of the patent license. It begins by specifying who the agreement is between (OccuLogix, Inc. and Professor Dr. Richard Brunner), which patent is involved, and when the patent was issued. Consider this the bedrock of any patent license. No matter whom you license your patent to or license a patent from, any legally-binding agreement will need to spell out who the contract is between and the patent(s) in question before going into any more detail.
Consider this priority number one!
WHEREAS, Borberg assigned all his right, title and interest to the Patent and the Patent Rights to Dr. Hans Stock (“Stock”);
WHEREAS, Stock originally licensed any and all of his rights, title and interests to the Patent and the Patent Rights to the Licensee in an undocumented oral agreement;
WHEREAS, Stock executed a patent license and royalty agreement with Licensee as of August 6, 2004 and amended and restated that agreement as of the date hereof;
WHEREAS, Brunner executed a patent license and royalty agreement with a predecessor of the Licensee as of May 6, 2002 and amended and restated that agreement as of the date hereof;
WHEREAS, Brunner continues to desire to license any and all of his rights, title and interest to the Patent and the Patent Rights derived there from to Licensee, and
WHEREAS, Licensee continues to desire to obtain an exclusive license to all of Brunner’s interest in the Patent and the Patent Rights derived there from and to exclusively own the License to any and all of his rights, title, interests and ownership to the Patent and any and all related patents, rights and inventions that specifically relate to the Patent whether owned now or at any time in the future by Brunner (the “License”), and
WHEREAS, Brunner shall be eligible to receive any and all consideration and compensation from the Licensee, such as those pledged to be made by the Licensee to Brunner under the terms of this Agreement.
NOW THEREFORE, in consideration for guaranteed Advance Royalty Payments and Royalty Payments as described below, and other good and valuable consideration, the parties agree as follows:
This part of the license spells out some basic facts pertaining to the license, such as:
“The licensee (OccuLogix) will be obligated to make payments to him according to terms set forth later in the agreement”.
Consider this a basic framework of expectations, setting the table for more detailed requirements that come later in the contract.
2. License Grant. Brunner confirms that he has exclusively licensed, and does hereby continue to exclusively license, in accordance with the terms set forth below, unto Licensee, Brunner’s entire undivided right, title, ownership and interest in and to the Patent and the Patent Rights, throughout the Territory, to be held and enjoyed by Licensee the same as it would have been held and enjoyed by Brunner if this Patent License and Royalty Agreement had not been made and entered into. The exclusive license granted herein also includes an exclusive right for the Licensee to grant expressly or implicitly, directly or through its subsidiaries or affiliates, sublicenses to the Patent and the Patent Rights without the requirement to pay any additional royalty fee or sublicense fee to Brunner, to end users of the patented method including medical practitioners and medical clinics.
This is an area where not all patent licenses will say exactly the same thing: the specifying of what, exactly, are the rights being granted by the license. In this case, Professor Brunner is granting his “entire, undivided right, title, ownership and interest in and to the Patent and the Patent Rights, to be held and enjoyed by Licensee the same as it would have been held and enjoyed by Brunner if this Patent License and Royalty Agreement had not been made.” Not every patent license grants such a wide scope of rights, but this one does, and if you don’t want yours to, this is the place to make the statement.
5. Advance Royalty Payments. Licensee agrees to pay Brunner Fifty Thousand Dollars ($50,000 USD) annually as an advance and credited against any and all Royalty Payments paid in accordance with this Agreement. Such Advance Royalty Payments shall be non-refundable and be paid to Brunner and in equal payments of Twelve Thousand Five-hundred Dollars ($12,500 USD), made quarterly, on or before the expiration of Forty-five (45) days after the reporting close of each prior calendar quarter.
Advance royalty payments are spelled out in this section of the license. In this case, OccuLogix is paying Professor Brunner $50,000 each year as an advance in exchange for the patent license. This number is not set in stone and is completely negotiable between you and whomever you enter into a license with. Just remember that this is the place to specify whichever number you do agree on.
6. Royalty Payments. Licensee agrees to pay royalties to Brunner totaling One-Half Percent (0.5% in USD). Royalty Payments shall be non-refundable and be calculated and paid based upon Total Net Revenues that Licensee, or any subsidiary of licensee or any company affiliated with licensee receives from the bona fide commercial sales of its…
This is an extremely important part of the license: the specifying of the amount of royalties that are to be paid. This agreement calls for OccuLogix to pay Professor Brunner 0.5% of all income derived from the patent. Again, this is completely negotiable and subject to what you and your licensee agree on.
8. Accounting and Timing of Royalty Payments and of payments of Sublicense Fees. Upon making each Royalty and Sublicense Fee Payment, Licensee shall provide Brunner with a summary of the accounting used to determine the amount of Royalty Payment and Sublicense Fees due. Royalty Payments and Payments of Sublicense Fees shall be made by wire transfer and shall be computed on Total Net Revenues received by the Licensee by the reporting close of each calendar quarter and distributed and paid to Brunner and on a quarterly basis, on or before the expiration of Forty-five (45) days after the reporting close of each prior calendar quarter.
Another important clause shown above is the specifying of when and how often royalties are paid. In this case, royalties are to be paid by wire transfer and 45 days after the close of each prior calendar year. Decide on a schedule you and your licensee are comfortable with and simply modify this clause to reflect the agreement.
As you can see by reading the full sample license, many of these clauses are generic and can be easily changed to suit your own needs. You can assemble your own patent license just by going through this one and making your desired changes. (Of course, the more complex the deal is, the smarter it becomes to have a patent attorney give everything a once-over before you sign!)
PatentHelpNow.com is a website dedicated to providing inventors with free patent help. You can contact us at: PatentHelpNow@gmail.com
Patent Licensing Resources
Although it’s not recommended to solely rely on the internet, there is a wealth of information readily available regarding patents. Of the many sites that offer information about patents, some are informative, and some are devious attempts to lure you into spending money. How can you spot a good patent information resource? And what should you beware of?
If the site ends in ‘.gov’, it is a government site and all information is factual. The following is a list of online reliable resources to find information on patent licensing:
1. United States Patent Office Resources:
USPTO Website- This is your most valuable resource on the Internet, as you can trust it completely. They aren’t trying to sell you anything, and if you are diligent and willing to read through it all, it is a fine patent resource bible, if you will.
The government site is rather modern looking and full of graphics, but also features a text only version for those on dial up who need more speed in their searches or just want to cut to the quick and get straight to the heart of the matter.
Their search page, http://www.uspto.gov/main/profiles/acadres.htm offers several ways to look up patent information and find the answers you are looking for.
The site also features an excellent glossary of terms to help you decipher the legal jargon you are going to have to live with to get a patent for your invention.
In fact, their “Guides” page has a lighthearted page at http://www.uspto.gov/web/offices/ac/ahrpa/opa/kids/special/mumbo.htm which actual uses the term “Mumbo Jumbo” to help you understand the complicated stuff and take some of the wind out of the sails of the three piece suitability you will be running into when you deal with the legal folks. It helps take some of the mystery out of the process and we recommend it for anyone just getting into the patent game.
Also on the web, http://www.tms.org/pubs/journals/JOM/matters/matters-0203.html is an article titled “Using the United States Patent Office Website as a Research Resource,” by David V. Radack, which is like having your own tour guide of the US government site, and is excellent reading.
We could spend this whole article just talking about the USPTO, but let’s look at some other resources as well, to be fair.
2. The World Intellectual Property Organization (WIPO) Resources:
http://www.wipo.int/portal/index.html.en – The home site of the specialized agency established by the United Nations in 1967, and a visit here is recommended for those with international needs and questions.
3. GOOGLE Resources:
http://www.google.com/patents – Individual patents are given as results to a search, displayed based on relevance to search terms.
The results of your searches on Google consist of seven key elements related to your patent search, which are Patent Title, Patent applications, Sorting options, U.S. Patent Number, Filing Date, Assignee name and a Patent snippet, which is “a snippet of text from the patent to show where the specific search terms were found.”
4. LawInfo.com Resources:
http://resources.lawinfo.com/letters/frm_patentlicense.cfm?act=fill
This is a GREAT resource for people who already have a patent and need to create an “Exclusive Patent License Agreement.” The web site features an online form to fill out to grant the exclusive right of a licensee to use your registered patent.
If you have a patent on a revolutionary kitchen utensil that you want to exclusively license to a company, you would use this form to grant them the license to use your patent.
There ARE scams out there, and an excellent web page to visit to help determine if an offer to help is legitimate or not is: http://www.inventnet.com/scam.html. In general, the .org and .gov sites are the ones to be trusted the most, but you should also pay attention to legal firms who offer free advice on the web.
PatentHelpNow.com is a website dedicated to providing inventors with free patent help. You can contact us at: PatentHelpNow@gmail.com