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A Better Mouse Trap: Patents and the Road to Riches

Written by Gene Quinn
Patent Attorney & Founder of IPWatchdog
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Posted: Jan 9, 2010 @ 12:32 pm
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Image taken from US Patent No. 6,655,077 titled “Trap for a mouse”

To paraphrase the famous quote of Ralph Waldo Emerson, if you build a better mouse-trap the world will make a path to your door. Inventors and entrepreneurs frequently take this quote all too literally, thinking that if they make a better product theirs will sell and make them rich beyond their wildest dreams.

There are, of course, many different reasons why building a better mouse-trap is only the first of many steps on the road to financial freedom. There is no guarantee of financial success given by any patent office in the world. This is true even if you have a strong patent that covers a great product that enjoys robust consumer demand.  Unfortunately, many inventors operate under the misunderstanding that getting a patent is like owning Boardwalk and Park Place in the popular board game “Monopoly.” The truth is that turning an invention into cash is much more complicated than simply placing hotels on Boardwalk and Park Place.  Yes, you must have a patent, but you need to treat inventing as a business.



Among the many truths missed by most inventors and entrepreneurs is the fact that it is frequently better to have a weak patent and the financial ability to enforce the patent than it is to have a strong patent and no ability to enforce the patent. In the United States, for example, a 2003 survey of the American Intellectual Property Lawyers Association finds that the average cost of bringing a patent litigation is almost $2 million. How then is the individual inventor or small business owner supposed to be able to meaningfully exploit the rewards offered by the patent system? The answer is that the small players in the game of “patentopoly” frequently see their inventions infringed and find no real recourse available because they cannot afford to even consider undertaking the financial burden that is a patent litigation.

Increasingly inventors and small businesses are seeking representation in patent litigation on a contingency basis. While still relatively rare, more firms seem to be at least considering such representation, including a new advertiser to IPWatchdog.com — IP-Contingency-Lawyer.com, which is the website of Attorney Tara Williams from the Law Offices of James Scott Farrin.  Of course, in order to justify the investment of time and energy, lawyers who undertake such contingency representation must only take those cases where there are strong facts, a solid patent and an infringer who can afford to pay patent damages.  The rise of contingency representation in patent litigation is becoming the great equalizer, and does provide independent inventors and small businesses with a powerful option to enforce their patent rights.  If you have a patent and believe it is being infringed you should at least talk to someone like Attorney Williams to see if you do have a case.  Having patent litigators on your side who get paid only if you prevail makes for a very formidable team behind you.

Another mistake many inventors make is in believing that just because an inventor has been granted a patent does not mean that there will be a market for the patent product.  This is similar in ways to the believe that a patent creates a monopoly, which was discussed briefly above.  The truth is that without a market there can be no monopoly, and without a market or reasonable expectation that market demand can be created it probably doesn’t make sense to proceed from the invention stage into the patent process.

The patent only gives the patent owner the right to exclude others from making, using, selling and importing. A patent carries with it no expectation for market success. Granted, if the product does have a market a patent can be a significant barrier to entry that insulates the patent owner from competition, but a patent in and of itself does not guarantee business success. A patent only dangles the opportunity to achieve monopoly profits. This is due to the exclusive nature of the right and the ability to be the only player in the market. Again, a market is necessary, which means a product that people are willing to pay for is a pre-requisite. In the absence of a product that people want, and the business acument to capitalize on a market opportunity, a patent will not result in riches.

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Posted in: Educational Information for Inventors, Gene Quinn, Invention Marketing, Inventors Information, IP News, IPWatchdog.com Articles, Patents


About the Author

is a US Patent Attorney, law professor and the founder of IPWatchdog.com. He is also a principal lecturer in the top patent bar review course in the nation, which helps aspiring patent attorneys and patent agents prepare themselves to pass the patent bar exam. Gene started the widely popular intellectual property website IPWatchdog.com in 1999, and since that time the site has had many millions of unique visitors. Gene has been quoted in the Wall Street Journal, the New York Times, the LA Times, USA Today, CNN Money, NPR and various other newspapers and magazines worldwide. He represents individuals, small businesses and start-up corporations. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

 

9 comments
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  1. Social comments and analytics for this post…

    This post was mentioned on Twitter by ipwatchdog: A Better Mouse Trap: Patents and the Road to Riches – http://bit.ly/7YjNbo

  2. Your arguments are right on, and well known. Even among myopic inventors (like me).

    Not so well known are the pitfalls that await inventors and post-issuance patenters. There are the protection scammers and docketing service sinks who send out official-looking notices that make the un-initiated inventor think he needs to pay someone to keep track of certain events, like patent annuity payments. There were (at least in my case) patent trolls who wanted to snap up my ownership rights for a pitance. There was the whole government institution called SBIR (Small Business Innovative Research), which I spent 2 years on submitting my cutting edge software invention to without so much as a nibble. It turned out that SBIR had nothing to do with being innovative or doing research, but rather nominal “improvement” on known technology in a vast corporate wellfare system. There is the enormous pitfall of assigning your patent to a corporation. Attorneys love this one because they know what we inventors don’t know: the lowly inventor only has a 1-2% chance of ever seeing any money out of his invention and that he had better give away his rights to a corporation sooner rather than later or they won’t get paid. This unregulated giveaway screws the inventor out of his ownership rights, which was the whole reason for patening in the first place. Also, there is the most obvious catch-22: you can’t make a market without a product and you can’t develop a product without a market. Ideas do not bring in revenue or even sell. Banks do not lend money to businesses who do not have a demonstrated financial track record. I read that in China they do, however, but certainly not in America. In fact, the whole SBA (Small Business Administration) government program works through banks, which in turn won’t lend money without a proven financial track record. Corporations do not want new technology they do not own either. They will very quickly show you the door if you mention that you have a patent on the technology that you just presented because they know that that would reduce their changes of filching it from you without paying. Also, think of how many employees who didn’t read the fine print in their employment contract where it says that all inventions on their time are owned by the corporation. The result of that is, you have to quit working to invent something and stay unemployed borrowing and begging from friends and family in an attempt to make a product on a kitchen budget so you can get that illusive financial track record. And finally, there are the so-called angel investors. These pseudo potentates set themselves up as arbitors of capital without, as a class of human beings, having any sense of how to judge true science or technology. To a man they come off as the Prince did in “Amadeus” who told Mozart after a brilliant performance that there were too many notes in his piece. Angel investors are only looking for the next Google which they can’t find because they can’t see it. And there is the psychological fact that people are petty. It irritates them that you are the one who thought up the better mouse trap and not them. Emerson may have been a great American writer, but he certainly was no connoisseur or judge of the human condition.

    So, am I a bitter, disappointed, disillusioned inventor? Yes, but that doesn’t stop me from waking up in the morning and working frantically once again all day trying to realize my software invention so that it can change the world, all the while taking smug comfort that I am not some insignificant wage-whore in some meaningless corporation somewhere. Ain’t life grand?
    RT

  3. Gene,

    Thank you for this article! Many patent prosecution attorneys and patent agents witness these problems quite often, unfortunately. The movie “Flash of Genius” is further evidence of the magnitude of the problems, as pointed out in an article I co-authored for The Atlanta Lawyer magazine: http://www.AwakenIP.com/Flash.pdf.

    Thanks again.

  4. Sorry, the correct link is http://www.AwakenIP.com/flash.pdf

  5. [...] Continued here: A Better Mouse Trap: Patents and the Road to Riches | IPWatchdog … [...]

  6. [...] See the rest here: A Better Mouse Trap: Patents and the Road to Riches | IPWatchdog … [...]

  7. RT,

    Out of curiosity, I took a quick look at your Hive site:
    http://www.grammarapps.com/product_descriptions_8.html

    Your situation is not uncommon, namely, a computer geek who may (*** may means possibly) have a significant contribution but who cannot articulate it in 6 words or less.

    What you really need is the help of a marketing professional (not me).

    You average customer is not going to have the patience to read through that long dribble on your home page.

    I doubt that too many people will want to waste time calling you and asking for an over the phone walk through. There is too much down side for them in investing their time in such an endeavor.

    Anyway, sorry that you are so far disappointed with the way the system works.

    Maybe this will be a learning experience for you?

    Best of luck. :-)

  8. Step back,
    Thanks for looking at my web site. Actually, our first app can be found at http://www.hivewareforword.com. http://www.grammarapps.com is just for the technology platform. I have engaged a marketing company to finesse the technology to clients, that not being what I excel at. ;-)

    Yes I have learned a lot. I like patent attorneys for example. They are very capable people. They work with natural language words, whereas programmers work with analytical languages. Very similar in my view. But I stand by my negative comments about the larger patenting process. I don’t like the SBIR and SBA programs and the assignment practice since they waste innovator’s time and resources, and relieve the innovator of his assets without proper compensation. I don’t like corporations since they retard the innovation process. And VCs don’t have a clue and seem only interested in superficial para-linguistic signs to determine if a technology is worthy.

    Actually, our first app can be summed up in just two words: structured chat. This is what a trade show attendee dubbed it after seeing the prototype. My invention is discovering what that structure process is and how to make it computer tractable.

    RT

  9. [...] To paraphrase the famous quote of Ralph Waldo Emerson, if you build a better mouse-trap the world will make a path to your door. Inventors and entrepreneurs frequently take this quote all too literally, thinking that if they make a better product theirs will sell and make them rich beyond their wildest dreams. …read more [...]