Archive for the ‘StartUp’ Category

Often you are faced with the question: should I patent my invention? A quick, back-of-the-envelope calculation can help with this decision.

calculator-385506_1280

CAVEAT: these are all roughly sketched out figures. This post is written in my spare time between cooking, cleaning, childcare and work. It does not constitute legal or financial advice. The figures are rough generalisations that allow you to work out whether it’s worth investigating further but may vary considerable for each individual case. Always get professional help with the details. 

Patenting Costs

Obtaining a patent is not a cheap process. As of 2017, my very rough rule-of-thumb is to budget £50k per country over the 20 year lifetime (excluding taxes – ~$75k).

This is based on, for a typical case:

  • ~£10k for initial work (e.g. searching), drafting an application and the costs of first (i.e. priority) filing.
  • ~£10k for developing strategy after an initial patent office search (e.g. UKIPO or in the International phase) and for filing an International patent application within a year of the first filing.
  • ~£5k per country to enter the national or regional phase after the end of the International phase for the International application. This is about right for a simple US and European entry; countries requiring translations may be up to £10k per country.
  • ~£15k per country for prosecution and grant. This is likely the most variable figure, with variance typically being on the upside (i.e. more expensive) if you are unlucky with prior art or a particular obstinate examiner.
  • ~£10k per country for renewal fees over 20 years. Again, this varies per country.

In terms of the distribution with time, this breaks down to:

  • ~£10k / year for first 3-4 years.
  • ~£0.5-1k / year for next 16-17 years.

Hence, most of the costs are front-loaded to the first 3-4 years: you need ~£30k over this period to properly take part in the patenting process.

Return on Investment

For a decent return, you want the patent’s value over its 20 year life to be at least 3x its cost (excluding inflation). Say this is £150k.

This works out as a real return of at least 5-6% per year over the lifetime of the patent.

The value of a patent is unlikely to be gained evenly over its lifetime. Statistics show that much of a patent’s value is realised towards the end of its life, e.g. 10-15 or 15-20 years post filing.

Anything less than this and your business would be better off just investing in the stock market.

accountant-1794122_1280

How to Determine Value

This is normally the hard part. However, there are a few short-cuts.

Patent Box

For a UK patent this may be an easy calculation.

Under the UK Patent Box scheme https://www.gov.uk/guidance/corporation-tax-the-patent-box, you can claim for a reduction in corporation tax (to 10%) for profits associated with a patented product or service.

Looking at the statistics for the period 1 April 2013 to 31 March 2014, we see that an average patent box claim was ~£500k, with the average claim for small businesses being £17k.

Most of the claims, understandably, were made by large companies. As such, the £500k / year average claim may include a number of different patented products. However, small businesses often only have one or two patents or products. Hence, the small business claim may be closer to a lower bound on yearly value per patent.

Of course, you can perform your own calculations. For a very rough upper bound on the benefit, simply add up the profits derived from each of your main products or services and multiply by 0.1. (This does assume you are making a profit.) For a lower bound, multiply this 10% saving by 0.5.

Now remember this is a yearly saving. The total saving will thus depend on the lifetime of your product.

Assuming a rough product lifetime of 10 years, and a lower bound on the tax claim of £15k / year, this means that an average UK patent provides a saving of £150k over its lifetime. This just happens to be the number we came up with above for a decent return.

From these rough calculations we see a couple of things:

  • To justify a UK patent’s value based on a Patent Box claim, you need to be making around £150k / year in profit for at least one product or service.
  • If this applies, a UK patent covering the product or service will pay for its costs and make a decent return.
  • Patenting can thus be economically justified in this case.

Licensing

Another way a patent can provide a return is through licensing. (Someone pays you for your permission to use the technology of the patent.)

Looking at our rough figures, you would need licence fees of ~£150k over 20 years, or approximately £7.5k / year.

Hence, if you feel that you can get one or more companies to pay £10k / year for the technology, patenting is worthwhile.

The recent case of Unwired Planet v Huawei https://www.judiciary.gov.uk/wp-content/uploads/2017/04/unwired-planet-v-huawei-20170405.pdf provides some useful information on industry licensing rates that can information these calculations.

In this case, an average worldwide FRAND licence rate for major markets for mobile equipment and infrastructure for a portfolio of 2G, 3G and 4G patents was deemed to be 0.05%. Now Unwired Planet have around 2,500 patents. Some googling indicates total infrastructure and handset sales to be around $150 billion (split 1:2). If everyone licensed at this rate, the annual licensing revenue would be $7.5 billion, divided by 2,500 patents gives you an average licensing income of $3 million (~£2 million) per patent per year.

Of course this is an upper-upper-bound estimate, you won’t get a licensing fee from each sale and this may be time-limited (e.g. the value of 2G technology not used in current handsets is falling). However, it does show that a licensing revenue of £20 million per patent over its lifetime is not completely pie-in-the-sky and may be relevant if you are lucky and patent a subsequent core technology.

We can do another quick cross check using IBM. Figures circling around (and seen personally in talks by IBM) are that it takes in about $1 billion USD in patent licensing revenue per year (see here – https://www.forbes.com/sites/chuckjones/2016/01/19/if-patents-are-so-valuable-why-does-ibms-intellectual-property-revenue-continue-to-decline/#335ebe9f1433). IBM has around 200,000 granted patents (see here http://www.patsnap.com/resources/company-innovation-reports/ibm). This works out at ~$5k / patent / year in licensing revenue (~£4k). Extended for 20 years, this gives us a figure of £80k per patent in licensing revenue over its lifetime.

In this case, IBM covers its patenting costs, but there is only a small real return from licensing alone. Hence, for IBM licensing is a useful aspect to cover costs, but must form only a portion of the value of a given patent.

Selling Patents

Valuing individual patents is tricky. This article here is interesting – http://www.hayes-soloway.com/patent-valuation . It suggests a lower bound on patent transactions of around $90,000 (£70k), a median of around $200k (£150k) and an average of around $400k (£300k). Each of Kodak’s patents was valued at around $500k when recently sold in 2012.

These valuations are consistent with the numbers discussed so far. The lower bound on the value of patents when sold is a little above cost (but not below cost). The median amount provides the magical £150k figure discussed above, i.e. a real return of around 5-6%. If you are lucky and/or skilled (delete depending on your political persuasion), a value of around £300k provides a decent market-beating return of around 10%. The higher figures also compensate for the fact that average patent grant rates are around 50% – hence, there is a certain amount of survivor bias and each of these sells would need to factor in the sunk costs of their unsuccessful brethren.

Another caveat here – patents tend to be very illiquid and most patent transactions involve large companies with large patent portfolios. Hence, while these figures may be applicable to similar sized entities, they may not apply as much to small and medium sized businesses. The distribution of values is also likely to be a power law distribution, with a few patents having astronomical valuations, and a long tail of patents with low valuations.

Here, we see that if you are a large company, it is worth patenting for the value you realise if you sell your patents.

Access to Market

We now move into the more hand-wavy aspects of patent valuation.

Underlying all this discussion is the fact that patents allow you to sue those who are providing products without your permission that fall within your patent claims . Licensing is one way to realise this value by providing permission for cash.

Another way patents can provide value is by allowing you access to a market at a low cost through cross-licensing. This is where another entity has at least one patent that covers your product or service. They could thus prevent you from accessing the market by either refusing permission or demanding high licensing fees. However, you have a patent that covers their product or service. Hence, each side has a potential weapon they can deploy and the sensible outcome is to come to an agreement to provide permission to use each other’s technology.

The problem with cross-licensing is that these deals are typically performed in confidence. There is thus little data to quantify the transaction. Standard public licensing rates provide some indication of the value. Hence, the licensing figures from above may be used here.

Average licensing rates can vary from 0.01% to 30% depending on the technology, product and market. Most are probably below 5-10%, with higher rates for low volume, high profit products (e.g. software services) and lower rates for commodity items (e.g. phone handsets).

One (very rough) way you can value access to a market is thus to:

  • determine the size of the potential market for your product;
  • determine an average revenue for you for this market over a 20-year period; and
  • times this by 10%.

Working backwards from our figures above, this gives us an average revenue of £150k / 0.1 = £1.5 million over 20 years (which may be £300k / year for a 5 year lifespan, £150k / year for a 10 year lifespan, and £75k / year for a 20 year lifespan etc.).

If you are not selling your product yet, you can look at figures for the size of the potential market by dividing these figures by an estimated, percentage market share. For example, if you believe you can gain 10% of a market, the market needs to be worth £15 million over the 20 years (e.g. £3 million / year for a 5 year lifespan, £1.5 million / year for a 10 year lifespan, and £750k / year for a 20 year lifespan etc.).

The other flip-side to this is to look at the cost of litigation. If cross-licensing can avoid the costs of litigation then this also provides value. If we say an average court case costs between £1-3 million, then the value of your patent depends on the likelihood of litigation. In this case, if a chance of litigation is above 15%, patenting is cost effective. Here, you can also ask for a quote for litigation insurance in your market and use that to determine the value of any patent on a competitor’s product or service.

These simple calculations mean that, for a product with a 5 year lifespan and a potential market of only £100k per year, patenting may not be cost effective if looking at access to market.

Getting Investment

One reason why small businesses obtain patents is to gain investment.

Likewise, one reason venture capitalists invest in small businesses with patents is because they perform similar calculations to those above (although with prettier and more accurate spreadsheets) and realise they can obtain an above market return (or a market return for a given risk – 90% of small businesses fail folks).

Now venture capitalists have requests for funding from many small startups (understatement). Most of these will be refused. One way you can cut through the noise as a company is to show you have at least a strong chance of obtaining a patent. Hence, a patent application may provide an immediate effect by enabling leverage – i.e. the patenting costs may facilitate a much large amount of funding.

Of course, there are many different factors that influence funding, and most of these may be more important than a patent portfolio (such as founders / founder experience, market proposition, existing capital raised, and existing profit). Let’s say, conservatively, that having a patent increases your chance of funding from 0% to 10%. In this case, funding of £200k plus would justify an initial £20k patent spend (e.g. initial filing and International application).

Another way of looking at this may be to compare patenting costs and engineer costs. Say an engineer costs £50k / year, where on-costs are £75k (i.e. actual cost to company is 1.5x salary). The question to then ask is: what would increase your chances of funding more: 4 months of that engineer’s time or having a patent application?

If the answer is that, at your current stage of development, 4 months engineer time would greatly enhance your offering and increase your chance of funding by 50%, then limited funds may be better spent on that rather than patenting.

If you are at a stage where development has been kept confidential, and 4 months of engineer time would make only small incremental improvements to attract funding, then patenting becomes a better choice.

You can also run similar arguments with consultant costs and other areas such as marketing.

Marketing

Patented products make for good marketing.

This may only be a small proportion of a patent’s value but should not be overlooked.

For example, an average marketing budget may be 10% of sales. If a patent replaces 1% of that (i.e. has the same effect as 1% of the sales budget), then a patent could start to make a decent return if revenues are £15 million or more over 10 year (i.e. £1.5 million / year).

What Have We Learnt

Often it is difficult to provide an answer to the question: should I get a patent?

Patent attorneys typically err on the side of saying “yes”, as that is what they do day-in-day-out. It can be like asking a decorator: should I paint my house? (I decided not to say it may be like asking a car salesman: should I buy a car? :))

In certain businesses the answer is often “yes”, but the reason is “because that’s what we do”. Similar, in other businesses (I’m looking at you software), the answer is often “no”, with the reason being “because we don’t do that here”.

Hopefully, in the discussion above, I have tried to explain some of the areas and conditions where there may be an economic justification for obtaining a patent.

In particular, assuming a product with a 10 year lifespan, patenting may be cost effective:

  • if you are paying UK corporation tax and your product will earn £150k / year in profit;
  • if your market is worth more than £1.5 million per year and you can capture at least 10% of this;
  • if the patented technology is of interest to one or more acquirers;
  • if the chance of litigation is above 15% in your market;
  • if it increases your chance of funding from 0 to 10%; or
  • if it increases sales by 1% of products with revenues of more than £1.5 million / year.

Some of these value factors may be gained independently.  For example, a patent may allow you to reduce UK corporation tax, increase sales, provide access to a market and reduce litigation risk. The more the factors apply cumulatively, the lower the figures above need to be.

By sketching these numbers out on the back of an envelope, say over 30 minutes, you can get a feel for how relevant patenting is for your company.

If you look at these figures and gasp, then patenting may not be right for you. Although patenting is open to anyone, practically you need to be a business with actual or projected revenues of hundreds of thousands of pounds for the system to work properly.

If you are close to break-even thresholds, there need to be other good reasons to patent, or prospects for future growth need to be good, otherwise patenting may not be worthwhile economically.

If you are way over the thresholds, and you do not have a patenting strategy, then this provides strong basis for an argument to your Board of Directors to get one. It may justify spending a few thousand pounds on professional advice to fill in the details of feasibility.

If you have an existing patenting strategy, running these calculations once a year or so may enable you to make decisions on maintaining patents and patent applications, and provide justification to support existing budgets (or even to ask for more funds).

The link-bait title is only half tongue-in-cheek.

Last night I attended a great little seminar on improving business-to-business social media use run by Bath and Bristol Marketing Network [I cheated a little – it’s a network for “marketing professionals” rather than “marketing amateurs”]. The speakers were Noisy Little Monkey – a digital marketing agency [who I now respect even more knowing they have an office in Shepton Mallet].

The main points that filtered through my fatigued post-5.30pm brain were:

  1. Identify your audience.
  2. Use images/graphics as well as text.
  3. Plan, test, measure, evaluate, repeat.
  4. Social media is not about conversion
  5. Identify the Twitter geeks who are going to push your content.
  6. Use editorial and event calendars to generate a content plan for a year.
Social Media Drives Growth!

Social Media Drives Growth!
CC: mkhmarketing


Here’s some more detail:

Identify your audience

  • Even better, categorise it.
  • Identify 5-10 groups and write a half-page “persona” for each group.
  • E.g. Michael Smith – manager of a software company – 45 – lives in Hereford with 2 kids.
  • Bear these “personas” in mind when writing content.

Use images/graphics as well as text

Plan, test, measure, evaluate, repeat

  • The tools are there – e.g. X Analytics, Twitter analysis tools like FollowerWonk etc. – build evidence and base strategy on it.
  • Prepare a monthly report that gives traffic/demographic/content statistics.
  • Systematically experiment with variations on format and content and use the above statistics to evaluate. E.g. What topics pique interest? Do images actually make a difference to engagement and sharing?

Social media is not about conversion

  • Sales come from phone calls, website visits, face-to-face encounters. Social media is the noise that pushes people into the sales funnel. It does work.
  • That said the pressure on pushy sales is removed.
  • Educating and entertaining become more important.

Identify the Twitter geeks who are going to push your content

  • As in most things, only 1-5% of a group actually drives conversations.
  • For example, on Twitter there are key individuals that are followed by many – if you were looking to get exposure work out what they like and what makes them tick. Find out what their interests are to aim content at them for retweets, comments and blog conversations.
  • You can identify individuals using tools – you can sort by individuals who have a large number of followers in areas you operate in who are likely to retweet URLs.

Use editorial and event calendars to generate a content plan for a year

  • You might know when IP events are going to be held. You might know when technology events are to be held. You can  plan your content (e.g. blog posts) around these.
  • Also you can find out magazine and newspaper editorial calendars (just google “magazine name” + “editorial calendar”) – you can have a yearly plan of when articles are published and fit blog articles into this.

I have recently come across the Growth Accelerator scheme. They are on Twitter as @GrowthAccel. It looks potentially useful for small to medium sized businesses in England.

It is a public/private business coaching service for high growth companies. It is mainly funded by the government via the Department of Business, Innovation and Skills. To be eligible a company has to be UK registered, have up to 250 employees and a turnover of under £40 million. The coaching can fit with existing programmes and aims to help achieve high growth (~20% year-on-year for 2-3 years – but flexible for each company). There is a cost which is dependent on size: up to 9 people – £600; 10-49 people – £1,500; and 50-249 – £3,000.

One of their offerings is help and advice on commercialising innovation. This can involve the preparation of an intellectual property (IP) Audit. This generally covers the IP owned by a company but can be tailored for particular situations. For example, one company may want it to be directed at a planned new product launch, whereas another may want a more general overview. The selling point for companies is the UK Intellectual Property Office pays. This is worth at least the cost of the scheme for a larger size business, notwithstanding the business support coaching, advice and guidance.

As the cost is not particularly onerous and the scheme is heavily subsidised,  it might be useful for growing smaller companies or for projects in larger companies (e.g. new product launches). Larger companies such as Huddle and The Fabulous Bakin’ Boys are part of the scheme and so it should not be thought of as directed towards the smaller end of the business spectrum.

I recommend that anyone who is interested check out their website where you can apply online.

Part of a series teaching you how to reduce patenting costs.

OK. You’ve done a search and nothing appears to anticipate your idea.  You’ve got the green light to proceed with a patent application. What do you do?

You now need to prepare a patent specification. This will be the document that is filed at a national patent office to begin the process of obtaining a patent. The process of writing a patent specification is referred to as “drafting”.

As your legal rights are defined by the contents of the patent specification, in particular a section at the end of the specification called the “claims”, it is vital that the specification is properly prepared. Having seen a number of inventor-written patent specifications, I strongly recommend involving a patent attorney, if only to make sure the claims are well-drafted. This is because you need to have spent thousands of hours writing, revising and amending claims as well as understanding the law in at least one jurisdiction to properly draft claims; it is unlikely that most inventors will be in this position. Many inventor-written patent specifications are rejected during examination, wasting hundreds or thousands of pounds in official fees.

So if you need to hire a patent attorney to write at least a portion of your patent specification, how can you minimise his/her costs?

What is a Patent Specification?

In brief, a legal document usually consisting of around 20-40 pages of written text and a number of drawings or figures. It will be written in a number of iterations with the inventor. It has some similarities with a high-level standards document.

The written text consists of the following sections:

  • “Field of Invention” – This is a short paragraph – three or four sentences – which sets out the field of technology of the described invention. It generally mirrors the wording of the beginning of the main claim. The aim of this section is to guide a person searching for related documents; it may mirror the hierarchies expressed in one or more patent classifications. For example, if your invention is a new form of turbine blade for a wind turbine, the “Field of Invention” may be something along the lines of: “The present invention relates to turbines. In particular, but not exclusively, the present invention relates to a turbine blade and a method of constructing such a blade. The present invention is particularly suited for employment in wind turbines“.
  • Background” – This provides the background to your invention. It is usually one or two pages. Like a good detective story, it should describe the problems faced by existing solutions without hinting at your own particular solution. It is worth keeping this reasonably broad and reasonably brief, what might seem to you, the inventor, to be an obvious problem might not be so obvious to a generic “skilled person” in your field of technology.
  • “Summary of Invention” – This section typically mirrors, or makes reference to, the claims of a patent specification. If the following detailed description does not explain the advantages of your invention, you may wish to add these here. You may also wish to briefly expand on important portions of the claim language. As the “Summary of Invention” may need to be updated as the language of the claims is changed during examination of the patent application, for European practice I typically recommend only referencing the independent claims (e.g. “An aspect of the present invention is set out in claim 1“) and describing any advantages and/or expanding on claim language in the detailed description.
  • Description of the Figures” – This section briefly describes the figures or drawings. A brief sentence is needed for each figure. For example, “Figure 5 is a circuit schematic showing an example of the present invention“.
  • “Detailed Description” – This is the meat of the patent specification. It describes, in detail, each implementation of your invention (referred to as “embodiments”). Typically, the description is based on the figures. The figures may show the structure of an implementation from one or more angles, a flow chart or schematic illustrating a method of manufacture and a flow chart or schematic illustrating a use of the invention. Hence, the description may describe a structure, a method of manufacture and a use of one or more implementations. The figures may illustrate a hierarchy of abstraction – a feature may be illustrated in one figure at a systems level (e.g. a functional box) and in another figure at a detailed level (e.g. a circuit or engineering diagram). Any variation you can think of should be described. The detailed description should present your idea as a non-obvious solution to any problems described in the “Background”. The detail description should describe the general idea as well as the detailed implementations. The detailed description needs to support any claims (enable a general practitioner to replicate or create any product or process defined in the claims).
  • “Claims” – These are a number of paragraphs that set the scope of legal protection, i.e. any monopoly granted by an eventual patent.  They are the most important part of any patent specification. They are numbered. Claim 1 is what is called an independent claim – it does not refer to (i.e. include) the features of any other claim. Claim 1 cannot be anticipated by, nor rendered obvious in light of, any document published before the patent application is filed. However, it should also be broad enough to cover any immaterial modifications (“work arounds”). More features will be typically added to claim 1 during examination of the patent application as published documents relating to your idea are found. Dependent claims refer to other claims and include all of their material, e.g. if claim 1 specified feature A and claim 2 referred to the invention of claim 1 with feature B, claim 2 requires features A and B.

If you bear these sections in mind when providing information about your idea this can save time in drafting and hence save costs.

How Can I Help?

In most cases, the more information an inventor or company provides about an idea the better. The following tips should help reduce drafting costs:

  • The inventor is primarily responsible for the text of the Background and the Detailed Description and the Figures. He/she should concentrate on providing this. A patent attorney can quickly write the Field of Invention, the Summary of the Invention and the Description of the Drawings once this has been supplied and the claims have been drafted.
  • Figures are hugely helpful when drafting. Hand-sketched or computer-generated documents are fine. Flow diagrams and system diagrams are perfect. Editable engineering or network diagrams in a CAD or Visio format are also great. Don’t worry about cleaning these up too much, they will usually need to be edited as part of the drafting process. For example, a large engineering diagram may be broken up into several smaller cutaways. It is also useful to supply any drawings early in the drafting process. A usual number is 5 to 10.
  • For the Claims the most useful input is a series of keywords that the inventor believes covers the invention. It is also useful to indicate any features that he/she believes are essential (i.e. without which the idea will not work or will not have its effect). For the dependent claims, the inventor could attempt to identify any non-essential variations, modifications or specific implementations that have independent (non-obvious) advantages. For example, if claim 1 specifies a “biasing mechanism” but in one implementation a compressible rubber bung is particularly useful as it is easier to mould into a particular configuration then claim 2 could specify this bung.
  • A complete list of acronyms used in any text is useful. Those in a specialised field may not be aware of other abbreviations but a quick look at any Wikipedia disambiguation page shows how ambiguous some acronyms can be. This is especially important in technical fields with their own jargon (e.g. oil speculation, telecommunications etc.).
  • It is helpful if the inventor provides at least three different implementations of his/her idea, even if only one of them may find its way into a product. This is because designs often change during the product lifecycle and a patent specification has to take this into account. The claims should thus cover any changes that can be made which do not affect the underlying technical idea. Three different implementations helps provide basis, i.e. legal support, for any generalisations to accommodate changes. For example, an electronic device may have a display. Over a product lifecycle that display may be implemented by a LED array, a CRT screen and then by an AMOLED panel. Hence, the claims need to specify a display rather than any of the particular implementations. In any description the inventor may say “At the moment we use a LED array but ant display could be used including a projected image or an LCD panel.
  • As well as a description of a structure, a description of use and manufacture is also important. It may not always be obvious to provide this, especially when the inventor may consider it easy to infer these details from the structure. A good idea is to imagine a patent attorney as a well-meaning yet simple teenager; if you have a good attorney they will not be insulted (remember a judge’s or jury’s science education may only be at a high-school or GCSE level). The patent attorney can chose the appropriate level at which to provide the technical detail in the specification.
  • Review any documents provided by a patent attorney in detail and answer any questions in full.
  • Provide any supporting documents that may be relevant to the background of your idea. For example, old manuals, text book entries or old scientific papers. A useful tip is to dig out a shortlist of between 10 to 20 documents then provide the most relevant and informative 5.
  • Make use of change tracking software, such as “Track Changes”, and make your attorney use it too. This saves a lot of time when performing iterations of the text. In-line comments are also handy.
  • If anything does not appear clear or the language seems strange point it out to the drafting attorney. It some cases it may be a quirk of “patentese”, the language of patent attorneys; in many cases, it will get the attorney thinking and improving the specification.

Summary

For a patent specification to have any chance of passing examination, and being held up as valid in court, it does need to be drafted by a patent attorney. However, there are many steps an inventor or company can take to minimise the drafting time and thus minimise the drafting costs.

Part of a series teaching you how to reduce patenting costs.

OK. You have your idea. You may be an individual inventor, an engineer building a product or an office manager faced with an invention disclosure. You know that initial charges for drafting and filing a patent cost from between 3.5k to 10k pounds (5k to 15k dollars). What do you do?

The answer is some background research in the form of searching. If you find a published document that describes your idea, you have saved yourself the drafting and filing costs. You may have also found a potential partner or competitor.

In an ideal world you would get a search department of a patent attorney firm to perform a search for you. A thorough search and analysis may cost around 1.5-2k pounds (2-3k dollars). However, we do not always live in an ideal world: you may then wish to perform your own search.

Doing Your Own Search: Where to Start?

The obvious answer is Google. Here are some tips:

  • Write down a number of keywords that describe your idea or invention. About 10 should do. Perform searches on pertinent combinations of three of these keywords. About 5 or 6 separate searches as a start.
  • Limit the time you follow links and examine search results. About 10 minutes or 15 minutes for each search should do.
  • Record, record, record. A simple way to do this is a table in a word processor or spreadsheet. Record the search string (e.g. the search keywords) together with the three most relevant results. You can copy and paste the resulting links directly into the table.
  • Iterate. Use the results of the first set of 5 or 6 searches to modify your sets of keywords and search strings. Is there another term that keeps appearing in your most relevant results? Add that to your search string. Can you think of more generic terms or synonyms for your 10 or so keywords? Try them instead. Think in functional terms. For example,  “message” instead of “IP packet”, “clothing” instead of “shirt”, “bias” instead of “spring”, “rotate” instead of “pivot” etc.. Add a divider to your results table (e.g. page break / line), perform and record another 5 or 6 searches with these new keywords.
  • Use image results (“Images” option in Google) as a quick way to find relevant results. If you idea is related to a physical structure you can quickly scan the images displayed for that structure. Copy and paste relevant images, as well as the associated link, into your results table.
Doing Your Own Search: Next Steps, Patent Publications!

Has your Google research returned anything that appears to cover your idea? (“Knock out your idea” in patent slang.)

  • If the answer is a resounding “yes” then it is going to be extremely difficult to obtain a patent. But hey, you’re not going to throw away thousands of pounds or dollars on a new patent application.
    • You may wish to think about modifications that are not covered by the search results.
    • If you are looking to proceed with commercialising an idea, you may wish to check that the search results are not associated with patented technologies. For example, check the website in the search result for the word “patent” (Ctrl-F) or make a note of the company name for the searching described below.
    • Print to PDF the webpage/image/text that appears to describe your idea. Save this somewhere safe. If other try to patent the same idea you may be able to use this result to invalidate their patent and avoid paying royalties.
  • If the answer is “no” then things may be promising. It is time to search another database! Patents this time. The best place for this is a website called “EspaceNet” provided by the European Patent Office.
    • There are three search fields in the “Advanced Search” that are useful: “Keyword(s) in title or abstract”; “Applicant(s)”; and “Inventor(s)”.
    • Use your most relevant search strings from your Google searching in the “Keyword(s) in title or abstract” search box. Record your results – I prefer to save the results page as a PDF.
    • If more than 100 results are returned try to narrow down your search. You can either add more search terms or look to see which classifications are applied to the most relevant results. The classifications are a code such as “H03M1/12”. You may find your relevant results all contain “H03” – hence, when repeating your search type “H03” in the “International Patent Classification” search box.
    • You can also look to see whether any inventors or companies keep appearing in the results. These may be your competitors. Try searching for patent publications from these inventors or companies (the company name goes in the “Applicant(s)” search box). Beware the applicant will be a legal entity – this may differ from the trading name; for example, if your idea relates to washing detergent a relevant applicant name may be “Unilever” as opposed to “Persil” or “Surf” (which are brand names). Also search using inventors’ surnames, as first names are often omitted, or given in the form of initials only.
    • For each relevant result (click on the hyperlink provided in the result list), work forward through citing documents (“View list of citing documents” hyperlink below “Priority Number(s)”) and backwards through cited documents (For EP publications these are listed in the “Cited Document(s)” row).
    • Set yourself 30 minutes of iterating to try to find 3 to 5 relevant patent publication results. Make a note of the numbers and download the PDF publications (click on Original Document after clicking on the hyperlinked search result).
    • Espacenet covers many countries worldwide, including US patent publications, those relating to most European countries as well as those published by the European Patent Office, and a number of Asian countries including Japan, South Korea and China.
Doing Your Own Search: Results

By now you should have documented any Google and patent publication results. Take about 30 minutes to talk through the results – preferably a conversation with the idea originator and someone of managerial level (e.g. someone responsible for funding a patent application).

If nothing has come up, the idea likely has scope to be patented. You may provide your results to a patent attorney or professional searcher to proceed with an application. The results will help focus the drafting process, possibly saving you money by reducing the time needed. If the results are good, you may save yourself a thousand pounds or so of searching costs.

If something has come up, do not despair! It may help to focus your inventive efforts by stimulating modifications and improvements which may be new and inventive. You have also performed an initial IP audit: the results may be used to influence freedom to operate searches. For example, if your idea forms part of a product, it may be that the idea has already been patented and one or more patents are in force and cover your product. You can then look to obtain a license to avoid the prospect of litigation or redesign your product to avoid infringement.

Summary

Performing your own search is relatively easy. It may take an hour or two of someone’s time, but apart from that it is free. It provides an initial filter on ideas, making sure you only spend money on what is more likely to be valuable.

When I talk to small businesses and start-ups I often hear:

“We would like to obtain patent protection but the process is too expensive.”

“You need millions to enforce a patent, why bother?”

“Where are we going to get thousands of pounds from to pay for an application?”

“The fees are so high!”

Patenting an invention is expensive. But so is doing business. Performing an audit, paying taxes, filing accounts, commissioning an advertisement, complying with employment legislation and paying for an office; these all cost money. Running a business is an expensive process, the idea is to earn enough revenue to pay for the expenses, while also making a profit.

Return on Investment

Similar to marketing and PR, patenting can increase revenue. A company can receive monthly and /or annual payments for licensed technology. You can think of this as a rent on intangible property.  A company can also increase sales of a product by offering a feature that cannot be provided by competitors without the fear of possible legal action.

Patents can also help a business by increasing investment, increasing a company’s valuation and/or increasing the amount of money that is paid for a company if it is acquired.

If the net financial benefit of a patent is greater than the costs of obtaining that patent, then obtaining a patent is likely a good idea.

Long Term Thinking

Patents require long term thinking. They last for 20 years from the date of filing.  A patent may only be granted after 3 to 5 years of prosecution before a national or regional patent office. The process of drafting, filing and prosecuting a patent application may cost between 10k to 30k pounds (15k to 40k dollars), over those 3 to 5 years. Renewal fees may then cost between 100 to 1500 pounds (150 to 2000 dollars) annually, depending on location.

If you can license your patented technology for 50k pounds (70k dollars) a year for at least 5 years following grant, you can easily cover that initial investment and add to your bottom line. You just have to plan up to 10 years into the future. This may be difficult if your business plan changes every 6 months.

Who Sets the Fees?

Obtaining a patent costs money for two reasons: official fees and professional fees. Typically, about 20-30% of total costs will be official fees. The rest are professional fees.

Patent attorneys typically operate on an hourly billing system – their fees are equivalent to other professionals, e.g. private doctors, lawyers and accountants.

A patent attorney, at least in the UK and Europe requires a science or engineering degree, potentially a Masters or Doctorate, plus between 4 to 8 years on the job legal training. The legal training consists of multiple sets of exams with 40-50% pass rates. A patent attorney’s charges, plus any service charges, must also cover business running costs such as office charges, paralegal charges, insurance, the cost of banking as well as other miscellaneous business costs. Hence, professional fees are predominantly set by the market. If the market requires, and pays a premium for, engineers, this will be reflected in professional fees. Patent offices also need scientists and engineers to perform examination, which sets official patent office rates.

Helping Reduce Costs

There are ways in which companies can make patenting more affordable. There are ways to reconcile short-term business demands with long-term thinking. There are also ways they can reduce professional and official fees.

Over the next few months I will set out some of these under the “Cheaper Patenting” series. Some suggestions are common sense. Most require a little thought and time. I hope they will help stack the odds in your favour.

On 29 March 2011 I braved the traffic on the Bristol bypass to attend Investability at HP Labs. Investability is a one-day event held by Bristol and Bath Enterprise Network (BEN) for entrepreneurs, investors and anyone else with an interest in the funding of early stage technology businesses.

The highlight of the event for me was a keynote speech by Mike Southon who presented on what entrepreneurs could learn from arguably the most successful entrepreneurs in recent times: the Beatles (accompanying slides: here; Mike was arguably cheating though by being a professional speaker and motivator). Takeaway points included:

  • The five “p”s of a successful elevator pitch: Pain, Premise, People, Proof and Purpose;
  • The golf-club test: can your investor explain your idea to his mates at the golf club and get them to chip in?
  • Get a foil: i.e. find a team or partner who complements your skills and abilities, such as Paul and John. To paraphrase Mike, if have the technology brains but the thought of social functions leaves you dry, find a “talky, shouty” person to promote and sale your product or service.

Among those representing public support institutions, the atmosphere was bittersweet. The Regional Development Agencies (RDAs) and their associated programs were on their way out, as part of the political changes brought in by the new coalition government, but the new Bristol and Bath Science or S-Park was slowly taking form in what was a field in Emerson’s Green, Bristol. Excitement for the S-Park is gaining momentum, helped by the news that the UK’s National Composites Centre will also be housed on the site.

In the wake of the shutdown of a number of regional support agencies, many had the question: who would support business and innovation in the UK? One answer came from Dr. James Clipson of the Technology Strategy Board (TSB). The TSB are a Swindon-based organisation who offer a number of options for research and development funding in the UK. They offer three different R&D grants for single organisations:

  • Proof of market grant;
  • Proof of concept grant; and
  • Development of prototype grant.

These are available to pre start-ups, start-ups, and small and medium-sized businesses from all sectors across the UK. Applications are assessed throughout the year, but it is recommended to get application in as soon as possible: the vim and vigour (as well as the finance) instilled by the TSB’s new lease of life under the present government may suffer fatigue as the year passes. Plus funding is now awarded nationally (previously it was distributed through the RDAs), so you are in effect competing nationally. However, I was surprised to learn that up to 75% of applicants for low-level early (e.g. feasibility) grants receive funding and the competitions come with generous legal terms (e.g. any IP rights reside in the company receiving funding). This makes the TSB definitely worth a look for established SMEs who are looking to fund tentative market research projects.

Sean Smith of the University of Bath’s Technology Transfer unit also explained how Britain’s universities were available to help SMEs with innovation. Sean had a background in industry and so spoke with some understanding of the gulfs that sometimes exist between commerce and academia. He explained though that efforts on both sides to realistically understand the aims and goals of those involved in research projects could facilitate fruitful relationships.

I was pleasantly surprised by the number of angel and early stage investors who attended the event. In a session of three talks on the investment process the audience was roughly one third angel investors, one third entrepreneurs and one third others (e.g. me). Gonzalo Trujillo and Nathan Guest both delivered interesting overviews of the investment process, respectively from a finance and legal perspective. Takeaway points included:

  • An investor needs to be right for a company as much as the company needs to be right for the investor. Often at a long-term relationship will arise and it is important for the financial success of the company that this works.
  • As Gonzalo joked, an investment is much like a marriage: there is a lot of initial flirting and anxiety to work to a consummation (of a deal), but do not let this distract you from the real challenge: living together afterwards.
  • Nathan remarked on the need for initial legal paperwork, but warned not to get too bogged down in pages of text. An early situation is fluid – enough needs to be in place to allow a deal to proceed but exact terms can evolve and be added throughout the relationship.
  • Nathan also reminded attendees to carefully check the ownership for IP rights: conditions vary from right to right and depend on a person’s role, it is best to engage a professional to ensure that all valuable rights reside with the legal entity you are investing in.

The event ended with a look ahead to Venturefest on November 3 (a big event in the new S-Park) and the nascent Local Enterprise Partnership (more information: here, follow them on Twitter: @WofEnglandLEP).

Big thanks to BEN, including Martin Coulthard and Becky Smithson, and sponsors, including HP Labs, for a productive and informative event.

BathSpark is a new event that brings together the people of Bath who work in technology. Its stipulated aims are “to create opportunity, encourage diversity and spark new ventures”. It is described as “social networking (for real) with local digital people enjoying a drink, and talking about what they love”. It grew out of previous informal tech people meet ups under the organising eye of The Filter’s CEO, David Maher Roberts.

The inaugural meet-up was held on 23 February 2011 in the Market Bar (http://www.marketbath.com/) and was a roaring success. Around 100 people attended and there was a great range of people eager to chat about all things tech/creative-based, from start-up CEOs to coders to publishers to freelance types. It was good to see many dialogues between the two cultures. Some good contacts were made and information exchanged. I think many were surprised at the level of underground activity in the area. Many found it useful for locating talented Bath individuals for entrepreneurial projects.  Comments from attendees can be found here: http://www.bathspark.co.uk/events/16327966/?eventId=16327966&action=detail#comments.

Eden ventures kindly sponsored the bar, Future Publishing provided a magazine subscription prize and RipeDigital (http://www.ripedigital.co.uk/) did an amazing job producing laminated name cards (complete with Twitter usernames). Even though the ale ran out the bottles and pizza kept flowing to fuel the conversation.

The next meet-up is scheduled for 23 March 2011 but the date is not set in stone yet. 57 attendees have already signed up.

Bath. Well known for this kind of thing:

Not, however, so well known for this kind of thing:

PC

While the professional, scientific and technical, and information and communications, industries make up 13% of Bath’s workforce, they contribute 27% of the total gross-value-added (GVA) contributions (see page 24 of BANES’s Economic Strategy publication). The future of this area was the subject of a talk at the Octagon, Bath as part of the Treasure & Transform exhibition. The Chimp was in attendance (any factual errors in the reportage are my own, for which I and my hastily iPhone-typed notes apologise).

The Panel

The talk was in the form of a panel discussion chaired by Simon Bond, Director of Bath Ventures Innovation Centre (University of Bath). The panel featured the cream of Bath’s software industry: Paul Kane, CEO of CommunityDNS, Richard Godfrey, Director and Founder of i-Principles and Shaun Davey, CEO of IPL.

What Makes Bath Good for Software?

First up was a discussion of the attributes that make Bath attractive for software and high-tech companies. This included:

  • Excellent local universities (e.g. Bath & Bath Spa) providing a stream of talented people.
  • Great quality of life, especially for families.
  • Unique concentration of creative skills, e.g. in publishing, design and the arts.
  • A culture of quality, of building things well.
  • A good (if not affordable) transport link into London.
  • A concentration of affluent people, e.g. for investment.

What Difficulties do Businesses in Bath Face?

Next, the talk moved on to the difficulties faced by software and high-tech companies in Bath. These included:

  • Transport problems; e.g. high cost of train travel, difficulty getting into the center of the city; unpredictabiltiy of traffic; congestion and pollution.
  • Lack of office space suitable for software firms. Many offices were converted houses which were not suitable for the kind of open plan offices needed to allow productive brainstorming and idea sharing.
  • Communications infrastructure: outside of Bath University’s JANET link high-bandwidth connections were rare (although we were told BT are looking to install fibre in Kingsmead, mainly for residential customers). Also poor wi-fi (and 3G) coverage.
  • Cost of housing (I wholeheartedly agree with this one!): this prices out talented young people, e.g. between 18 and 40; who find other areas more affordable.

How Can Bath Improve?

Having looked at the difficulties, ways in which Bath could improve its position were discussed:

  • Stop non-city-centre traffic from needing to pass through the city centre (this would need lobbying of the Highways Agency on a national level).
  • Lobby BT/Virgin to upgrade communications infrastructure. Innovative ideas such as laying fibre along the river/canal tow-path or in existing drains and/or providing wi-fi from the hills were put forward.
  • Develop world-class conference venues. International conferences were a great way for Bath to attract talented people and become a thought leader (this was thanks to Muir Macdonald, MD of BMT Defence Services).
  • Continue the recent co-operation between the public and private sectors; consultations were always welcomed.
  • Use SMEs in Bath for local services; there are many companies in Bath that outsource services to London-based firms when local equivalents exist.
  • Increase promotion of high-tech industires in Bath. High-tech industry has often been the poor relation to the tourism industry when it comes to press coverage and marketing, which needs to change.

My Two Cents

Comparisons were made with Old Street (so-called “Silicon Roundabout”) and Cambridge (so-called “Silicon Fen”). I have worked in (and with) software and high-tech comapnies in both these locations. Bath can learn certain lessons from these areas:

  • Bath needs more innovation centres. The current Innovation Centre is at capacity and the awkward location in the bow of the river in the city centre is not great for commuting. BANES has earmarked the Bath City Riverside (where I will soon live) as sites with potential for development. These industrial areas on the edge of the city (Twerton / Newbridge), with easy road access, would make ideal (and cheap) sites for incubation centres that would solve the office space problems discussed above. Cambridge have recently opened their Hauser Forum in a similar edge-of-city location, which complements sites such as St Johns Innovation Centre (where I have worked). These buidling provide more than office space, they enable like-minded talented young people to mingle and connect, building a network effect that results in real growth and GVA.
  • The panel discussed attracting highly-educated, young 18-30-somethings to Bath to work in the high-tech industries. It was amusing listening to the ideas put forward, because the Chimp falls exactly within that demographic. For the Chimp the greatest difficulty coming to Bath is a lack of affordable family housing; if you were employed in Bath on a good yet (business-wise) affordable salary you would not be able to afford any 3-bed property outside of the estates in the south-west of the city. There are more affordable properties outside of Bath, but this means you will need to drive into Bath, and thus face the traffic problems discussed above. Here real brave thought and leadership is required, not only from the public sector, but from the more conservative and outspoken Bath public who often put a blanket ban on talk of development.

Summary

I will leave you with a corruption of Paul Kane’s ad-libbed marketing soundbite:

High-tech businesses in Bath thrive.

That they continue to thrive will be down to a continuation of the brave public-private partnerships and investments exemplified by the Treasure and Transform exhibition and seminars.

Image thanks to electricinca / Flickr

Image: Idea go / FreeDigitalPhotos.net

Here is some text I prepared for the Wired.com “Patent an Invention” Wiki :

Unfortunately, the patent system, both in the US and worldwide, is quite complex and it is surprisingly easy to accidentally invalidate an otherwise valuable patent portfolio. Bearing this in mind here are some initial tips:

1. Do not disclose your idea to the public before consulting with a patent expert. “Disclosing” may involve detailing your idea on a blog, sending a design to 3rd party manufacturers or selling a product. Most patent experts or attorneys offer free initial consultations. While there are certain safety nets under US patent law, these do not apply worldwide – if you wish to sell your product or idea in London, Delhi or Shanghai its best to err on the side of caution.

2. The patent system has several built in time-limits which must be observed. For example, from an initial patent filing you have 12 months in which to file related applications in different countries worldwide. If you miss these time limits you may be stuck with a US or Estonian patent when actually your service has really taken off in Mexico. Again, this requires you to do some research or obtain an expert/attorney opinion.

3. Obtaining your own patent and potentially infringing someone else’s patent are the two different sides to the patent game. Each will need to be considered when releasing a new product or service. In most cases they can be considered independently.

4. Infringing someone else’s patent is not the end of the world. You can ask for consent to use the claimed technology (for free or for a licensing fee). Many companies bundle licenses and technical help together as one service, implementing someone else’s technology as part of a bigger (and in its own right patentable) solution can be cheaper and easier than recreating the technology from scratch (why reinvent the wheel when designing an electric car?).