Sell Your Ideas With or Without a Patent

By Gene Quinn
November 14, 2015

stephen-key-bookStephen Key is an inventor coach of One Simple Idea: Turn Your Ideas Into a Licensing Goldmine and One Simple Idea for Startups and Entrepreneurs: Live Your Dreams and Create Your Own Profitable Company. He has a new book titled Sell Your Ideas With or Without a Patent. The title of the book will undoubtedly rub patent attorneys and patent agents the wrong way, but you can’t always judge a book by its cover, or in this case a title.

If you have read Key’s other books (which I strongly recommend) you know that he is not at all anti-patent. Indeed, Key has been quite successful as an inventor himself, holding a strong portfolio of patents that he has licensed, sold in some cases and successfully litigated. Key is not one who recommends inventors forego the patent process, but rather Key is a businessman who understands several critically important business realities – first, just because you can get a patent doesn’t mean you should, and second, before you rush off to the patent office you need to do your homework and have some reason to believe the invention has a market and is feasible to manufacture.

Let’s take a step back. I spoke with Key on September 21, 2015 (yes this article is long overdue) and he explained to me that his inventor coaching business – Invent Right – has both grown and changed over the past several years. “We are actively licensing for students every week,” Key told me.

As Key works with inventors he coaches, who he refers to as students because he teaches them how to do much of the work for themselves, he explained that increasingly he is seeing interest on the part of companies in licensing inventions without a patent attached to the product. “What we have noticed is that companies say they care about patents, but the bottom line is really about speed to market and how fast they are going to be able to sell them,” Key explained. “The life cycle for products is so short.”

“Before you even think about protecting your product with intellectual property, including a [provisional patent application], I want you to do some research,” Key writes in his new book. “The correct order to do things in is this: First, is your product idea marketable… If the answer is yes… Is your product idea unique? Third, is there a chance that it might be patentable? Only after these questions are answered are we going to begin writing your [provisional patent application].”

It is hard to argue with this approach. Frequently inventors are so determined to get a patent based on the misguided belief that obtaining a patent will result in a money truck showing up at their front door. Nothing could be further from the truth. If you do not have an invention that anyone wants to pay for it doesn’t matter that you have the right to exclude others from making, using and selling provided by the patent. Indeed, a patent can be a worthwhile endeavor, but only if the underlying business and market realities are favorable. Remember you will need to charge a premium for the product or service covered by your patent in order to at least recoup the cost of obtaining a patent. Running off to the patent office without proper research and business diligence is a recipe for making a huge mistake.

Let’s assume you have taken Key’s good advice and you have considered the marketability of the invention and whether it is unique enough compared with other solutions available. If the answer to those first two questions suggests you should be moving forward now you are at a place where you should consider a patent search to determine if a patent can likely be obtained, and to uncover the closest prior art so you know how to describe the uniqueness of your invention in a patent application, likely a provisional patent application, in a manner likely to place the invention is the best light possible.

Frequently I will hear from inventors that nothing like their invention has ever existed. Whenever I hear that red flags go up. It is unrealistic. Key agrees. “I can almost guarantee you that you will find something similar, but that is a great thing because now you know what not to do,” Key told me. Indeed, he is absolutely correct, and this touches on another lesson in his new book – you want to reduce risk in your project, including the risk that you will unwittingly spending a large amount of valuable time working on something that already exists and could never be patented.

“Really look at the prior art and really be the expert at that,” Key explained. “Once you understand the history you can invent for the future. Without understanding the prior art you don’t have a roadmap.” If only inventors would take this advice to heart! The inventor needs to be or become knowledgeable about the industry and about the prior art. If you do not take the time to read the patents located you will not see the evolution of the products, you will also not be in a position to see where things are heading and what others haven’t figured out yet. An inventor leaving the prior art to a patent attorney or patent agent is a mistake. They don’t need to become experts on the legal nuance, but they really do need to understand the prior art and where the industry is heading if they want any chance to succeed.

No what? “If we wait until it issues we will probably lose the marketplace,” Key explained to me. So what you want to do is file a provisional patent application, commonly referred to as a PPA. Filing a provisional patent application will allow you to use the terms “patent pending,” and now you have what Key refers to as “perceived ownership.” Assuming you or your patent attorney has appropriately described the invention to the fullest extent required you have locked in your rights to what you have described as of the filing date of the provisional patent application. Thus, you now have the possibility of obtaining a patent covering the invention, or “perceived ownership.”

The concept of “perceived ownership” may strike some as odd, but the unfortunate reality is that patents need to be defended and are easier to challenge now than ever. Do you ever have a fully quieted title to a patent any more? The answer is sadly no. What you do have is the perception that you own the rights, which can attach as soon as the application is filed. It is a business reality that if you are making money you will face competition, including unscrupulous knock-offs, but legitimate companies who are not looking to instigate court battles are increasingly interested in outside innovation, sometimes referred to as open innovation. They want your ideas and inventions, and if you have a solid provisional patent application many are now willing to enter into a licensing deal even when there is no patent yet issued.

“Licensing agreements are signed every week because of PPA,” Key explained. “If the patent gets issued maybe the royalty will become 5 to 7% and if the patent doesn’t issue it is maybe 1%.”

Key’s new book really talks about using a PPA as a strategy without needing a patent issued, which is why every inventor considering going the licensing route should read it. “Most important book I’ve ever written,” Key told me. “The game has changed. I wanted to write a book about what is real.”

As an inventor and patent agent friend of mine — Luis Figarella — recently told me, everyone wants to become an overnight success, but many years of struggle and sacrifice went into making that overnight success! Isn’t that the truth! So stop, take a step back and becoming informed! Start by reading all three of Key’s books. And if you aren’t willing to at least read Key’s books are you really serious about succeeding?

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 15 Comments comments.

  1. angry dude November 14, 2015 11:45 am

    Gene,

    One huge misconception that you and many other people (including book’s author and potus judges) have is making implicit assumption that patents are supposed to cover products or services – something that can be sold on their own.

    Patents cover inventions (useful “discoveries” if you want) , not products

    Let me give you one examples: Public Key Cryptography – an enormously important invention enabling e-commerce worldwide and zillions other things.
    RSA algorithm is just a couple of very simple formulas on paper – once you see it and grasp the idea any java-sipping 2-year CS college dropout can code it in less than 30 minutes…
    The RSA company principals were able to commercialize this idea ONLY BECAUSE of their very strong patent and litigation threat.
    I very much doubt they would be able to get a dime out of it today – with or without a patent.

    The book’s author, as well as some other people I know, had successes in the past with monetizing his ideas. So what ?
    NONE of this past experience is relevant today. The world has changed.

  2. Night Writer November 14, 2015 1:12 pm

    >>any java-sipping 2-year CS college dropout can code it in less than 30 minutes…

    Which justice was it? I think it was Bryer who implied in a recent opinion that if undergraduates could do it in a weekend then it wasn’t worth a patent. This illustrates the ignorance of science, technology and inventions of the SCOTUS.

    Consider another similar invention fiber optic cable. Once the principle is understood anyone that can make cable can build it. Most of these judges (justices) are so drunk on their own power that they believe that they can just imagine things in their head and they must be true.

  3. Paul Morinville November 15, 2015 5:28 am

    Angry Dude, The more inventors I meet, the more diverse the world of invention seems to be. There are a lot of ways to use a patent. Variations in market, type of invention, competition and many other factors drive how a patent is used.

    You are exactly right and Key is exactly right. In a world as diverse as invention, the best way to address it in law is simplicity. The constructs that work in every area of invention are thankfully simple: A patent is an exclusive right. It is presumed valid. It is a property right like all other property rights and its ownership can be transferred along with all of its rights.

    Complicating those basic constructs harms one area of invention for the benefit of another. It is impossible to change even small things in patent law without big consequences in some part of the invention world. Big changes have even bigger consequences.

    Big money buys big changes and that is why small inventors are screwed.

  4. step back November 15, 2015 7:00 am

    Night Rider @2

    It was primarily Justice Kennedy during the oral hearings for Alice who assumed there is such a thing as a generic computer and that a java-sipping group of SV nerds could ‘apply it’ in coded form with just a weekend’s worth of minimalist effort. If you want the exact text, I provide it in the below blog post with a link to the full Alice oral arguments transcript:

    http://patentu.blogspot.com/2015/10/aw-shucks-judge-double-dashes-down.html

  5. Benny November 16, 2015 1:57 am

    Night,
    You missed Angry’s point. The genius in RSA was the algorithm. Translating the algorithm into executable code is then a fairly simple exercise. Do not confuse algorithm with program.

  6. step back November 16, 2015 8:35 am

    Benny @5

    There is a world of difference between “is” and “was”.

    Many a great breakthroughs “is/are” considered trivial today and yet at the time of their creation and initial publication they “was/were” deemed difficult and unfathomable: Newton’s laws of Motion, Darwin’s Theory of Evolution, Watson/Crick’s structure for the DNA molecule, decomposition of messages into separately transmitted packets and reconstitution of the same at an addressed destination, etc.

    According to the law passed by the US Congress, it is the inventor who defines by way of claims that which he regards as the the invention, not you, not Justice Kennedy. According to the laws passed by the US Congress, the patentability of an invention is not be negatived by the manner in which it was arrived at, be it “simple” or complex.

    Recent decisions by SCOTUS violate both of these Congressionally passed laws. Of course SCOTUS will never hold themselves out as outlaws. They exist at a level above and out of reach of Congressionally passed laws.

    As to inventors succeeding with their inventions even without patents, anything is possible. However without patents, the big boys can simply copy that which the little guy created.

    Didn’t we read recently that FaceBook is doing its own version of SnapChat?

    http://www.dnaindia.com/scitech/report-facebook-ramps-up-challenge-to-snapchat-tests-vanishing-messages-on-messenger-2145816

  7. step back November 16, 2015 8:38 am

    Benny @5
    I was also going to post the link to the Wiki History of Public Key Cryptography and so so separately here in hopes of avoiding Gene’s spam a lot catcher:

    https://en.wikipedia.org/wiki/Public-key_cryptography#History

  8. step back November 16, 2015 8:39 am

    do so

  9. Night Writer November 16, 2015 9:13 am

    Great post step back. I spent years trying to understand hindsight. I actually worked in real product management for a multi-billion dollar product. I was amazed that 1) we missed features of the product that were so important for selling the product and 2) that after looking at the competitor’s product with the features they seems so obvious. But a team of ph.d.’s working on our side didn’t figure them out (but once we saw them, it was just so obvious.)

    Now, many of the features of the modern smart phones seem so obvious, but I can tell you that they weren’t obvious to figure out. Even one of the most basic features of sending pictures to another phone wasn’t obvious. You know why? Because that feature was available for years on standard phones in Euriope and no one wanted to pay for the feature.

    Anyway, I find the current crop of Fed. Cir. judges (and the SCOTUS as always) completely lacking in any credibility of their understanding of hindsight or patent law.

  10. step back November 16, 2015 1:11 pm

    Night at 9

    I liken obviousness to instantly seeing the answers to riddles or foreseeing the punch line to a joke.

    Here’s one that most kindergarten pupils can answer within 30 seconds:
    What’s greater than G-d?
    More evil than the devil?
    Poor people have it.
    Rich people want it.
    And if you eat it you die?

    Remember, most kindergarten pupils can answer this within 30 seconds.
    Tick tock, tick tock.

    (Of course if you’ve seen this riddle before, the answer is “obvious”. No fair looking up the answer on the internet 😉 )

  11. nat scientist November 16, 2015 4:04 pm

    Nothing is obvious if no one gets it until you point to the art. Likely Marcel Duchamp did this sort of obvious detection, but then observations are too important to be left to the experts, let alone ripped apart by jackals with credentials.

  12. Stephen Key November 16, 2015 5:08 pm

    @Angry dude,

    You’re right: Our take on the relative value of patents is a little different. I’m not making the assumption that “patents are supposed to cover products or services”. I don’t think that they should or have to — I’m just wholly uninterested in those that cannot or will not be commercialized as far as my line of work is concerned. I’ve never particularly identified with the term inventor for partly that reason. My use of patents is for explicitly commercial purposes. I agree with @Paul Morinville: Even the slightest of changes has major implications.

    Does anyone want to weigh in on the merits of patent insurance, as it pertains to the discussion? It’s a subject I’m interested in learning more about, particularly about its potential to level the playing field.

    @Gene Quinn, thanks again for the interview. Happy to respond to any readers who have question about the book here.

  13. Anon November 17, 2015 10:54 am

    Stephen,

    Perhaps a nuance that is inadvertently missed, but patents that are not used (and never intended to be used) for actual commercialization in themselves are still used for “explicit commercial purposes” – or at least, can be.

    Making and keeping a buffer zone of competition-free “space” around products that are commercialized very much is a commercial purpose.

    Maximizing the “negative rights” of what a patent is is a multi-layered and sophisticated endeavor.

  14. Night Writer November 18, 2015 4:12 pm

    Step back @10, that is a good one. There is a phrase that came to my mind after the first line, nothing is great than G*d (burned into my brain.)

    There was a SNL skit back in the 1970’s that made fun of two blade razors by putting on a fake commercial for a 3 or 4 blade razor. They made fun of adding all those blades. The last line was “because you will buy anything.”

    Anyway, this SNL skit is another example of how multiple blade razors seem so obvious now, but before they were invented they were scorned.

  15. step back November 18, 2015 8:45 pm

    Night @14

    It is a term that ordinary artisans in the attending kindergarten arts use all the time but is not obvious in the adult world arts. 🙂

    That’s why they see it right away and we don’t.