Patents rights are essential to prevent other companies taking your ideas and your brand, as well as making a profit from the hard work that you have put in. In my work as a patent attorney, I have seen the patents I worked on power a company from startup to IPO and enabled the company to stay dominant after patent expiration due to the goodwill accumulated on its branding over the 20 year patent life. It is important to understand the laws and rules surrounding your patent, particularly the term of life it has.
Value of Patents
Intellectual property (IP) and patents can be valuable assets that can help increase a company’s valuation. Here are a few ways that IP and patents can impact a company’s valuation:
- Competitive advantage: Patents, trademarks, and other forms of IP can provide a company with a competitive advantage in the market. This can help the company increase revenue and profits, which can in turn increase its valuation.
- Licensing revenue: IP can also be used to generate revenue through licensing agreements. This can help the company diversify its revenue streams and increase its valuation.
- Brand recognition: Trademarks can help a company build a recognizable and trustworthy brand, which can increase customer loyalty and revenue. This can also increase the perceived value of the company, which can in turn increase its valuation.
- Barriers to entry: Patents and other forms of IP can create barriers to entry for competitors, which can help the company maintain its market position and increase its valuation.
- Legal protection: IP can also provide legal protection for the company, which can help it avoid costly legal disputes and protect its revenue streams.
- Innovation: IP can also be used to protect the company’s intellectual property on any new product, service, software, process, design, and any other innovation that can be protected by IP laws, this can add value to the company as well as provide a competitive advantage
- Attracting investment: IP can be a major factor in attracting investors, especially for technology-based companies and startups. Investors are often interested in companies that have a strong patent portfolio and other forms of IP that provide a competitive advantage.
Overall, IP and patents can be valuable assets for a company, as they can provide a competitive advantage, generate revenue, build brand recognition, create barriers to entry, provide legal protection, protect innovation, and attract investment which all contribute to increase a company’s valuation. However, these benefits end when the patent expires.
Enhancing Credibility and Attracting Talent
One often overlooked aspect of holding patents is how they can elevate your startup’s credibility. In the eyes of potential partners, customers, and even future employees, patents signal that your company is serious about innovation and committed to developing unique solutions.
This perceived credibility is invaluable—it attracts not only customers but also top-tier talent who are eager to work on groundbreaking projects.
By showcasing your patented technology, you can draw in professionals who are looking for dynamic and innovative environments, thereby strengthening your team’s capabilities and your product’s development.
Facilitating Strategic Alliances and Joint Ventures
Patents can open doors to strategic alliances and joint ventures that might otherwise be inaccessible. Companies often look for patented technology as a basis for forming partnerships, as it reduces the risk associated with the collaboration.
Your startup can leverage patents to enter into joint development projects with larger corporations, gaining access to resources, markets, and expertise that can accelerate your growth. These alliances can also lead to co-branding opportunities that might increase your product’s market reach and visibility significantly.
Creating a Defensive Shield Against Competitors
In competitive markets, patents can act as a defensive shield, protecting your market share against rivals. By securing comprehensive patent coverage for your products, processes, or technologies, you can deter competitors from encroaching on your niche.
This defensive strategy not only protects your current product lines but also secures a safe space for future innovations, giving you the freedom to expand and evolve without the constant threat of competitive imitation.
Driving Business Decisions with Data Exclusivity
Patents provide a form of data exclusivity that is particularly crucial for startups in technology and life sciences. The detailed information and research data contained in patent applications can serve as a valuable asset, guiding business decisions regarding R&D direction and resource allocation.
Understanding which areas of your technology have been successfully patented can help you identify where to focus your innovation efforts next, ensuring that your R&D investments are strategically aligned with your business goals.
Enhancing Negotiation Leverage for Funding
When it comes to funding, every bit of leverage counts. Patents enhance your negotiating position with potential investors by demonstrating that your intellectual property is secure and potentially lucrative.
A strong patent portfolio can significantly increase your startup’s valuation during funding rounds. It shows investors that you have a tangible asset that not only protects your business concept but also offers potential for licensing deals, creating an additional revenue stream.
Boosting Valuation with Strategic IP Management
In the startup world, valuation is not just about current earnings but also potential future gains. Patents play a critical role here. A well-crafted IP portfolio can significantly boost your startup’s valuation because it presents a clear, defensible asset that investors can evaluate.
When investors see a robust patent portfolio, they see a moat around your business model, which can be a compelling reason to invest.
Enhancing Market Position Through IP
Your patent is not just a right to exclude others; it’s a tool to carve out a niche in a crowded marketplace. With each patent granted, your startup can assert its position as a leader in specific technologies or processes.
This isn’t just about keeping others out; it’s about highlighting your startup’s ability to innovate and solve problems uniquely and effectively, which can attract more customers and strategic partners.
Patents as a Marketing Tool
Think of your patents as badges of honor that showcase your technical expertise and innovative capabilities. Publicizing your patented technologies can boost your brand’s credibility and market reputation.
This strategy not only attracts customers but also positions your startup as an industry leader, opening doors to media exposure and market influence.
Accelerating Business Growth Through Licensing and Partnerships
Patents can be powerful tools for business development. Licensing your patented technology can provide a steady stream of revenue without the overhead associated with manufacturing and market expansion.
Moreover, patented technology can be the basis for partnerships and collaborations, allowing you to leverage other companies’ resources and channels to accelerate your own growth.
Using Patents to Secure Exclusive Market Segments
By patenting unique products or services, your startup can secure exclusive market segments before competitors can enter. This first-mover advantage allows you to establish brand loyalty and customer trust, which are critical in the early stages of a startup’s development.
Strategic IP Planning for Long-Term Success
Effective patent strategy involves more than just securing patents; it requires a vision for how those patents will support your business goals over time. Consider where you want your business to be in 5, 10, or 20 years and how your IP assets will help you get there. This foresight can influence decisions about which innovations to patent, which markets to enter, and which technologies to develop.
Patents as a Defense Against Market Volatility
In fast-evolving industries, patents can offer a buffer against market volatility. By holding patents that cover key technologies or methodologies, your startup can maintain its market position even as other aspects of the business environment fluctuate. This stability is appealing to investors and can give your startup the breathing room it needs to grow at its own pace.
How Long Do Patent Rights Last?
How long do patent rights last, depends on various types of patents as well as the filing dates involved in patenting. Patents must be renewed on a regular basis. If you forget to renew your patents, competitors can take your ideas and use them for their own profit.
The length of time a patent lasts depends on the type of patent and when it was filed.
For utility patents, which cover new and useful processes, machines, manufactures, or compositions of matter, or any new and useful improvements thereof, the term is generally 20 years from the date of application.
For design patents, which cover new, original, and ornamental designs for an article of manufacture, the term is 15 years from the date of grant.
For plant patents, which cover asexually reproduced plants, the term is 20 years from the date of grant.
For patents filed on or after June 8, 1995, maintenance fees must be paid to the USPTO at 3.5, 7.5, and 11.5 years after the patent is granted to keep the patent in force. If the maintenance fees are not paid, the patent will expire.
It’s important to note that if a patent owner can show that they were unable to commercially exploit their invention due to regulatory delays, the term of the patent can be extended for up to 5 years.
Patent rights are only valid within a time limit, and the right to take legal action on anyone infringing on the patent should be within this period.
Variability in Patent Term by Type
The term of patent protection varies depending on the type of patent granted. Utility patents, which cover new and useful processes, machines, manufactures, or compositions of matter, generally last for 20 years from the date of the application. This allows inventors ample time to capitalize on their innovations before the patent enters the public domain.
Design patents, on the other hand, are granted a shorter duration of protection, lasting 15 years from the date of grant. This reflects the often faster pace of design changes in industries such as fashion and technology, where the look of a product may need quicker cycles of renewal and innovation.
Plant patents, which protect new and distinct varieties of plants that have been asexually reproduced, also enjoy a 20-year term from the date of filing. This duration supports the agricultural and horticultural sectors where breeding new plant varieties can be a lengthy process.
Extension and Adjustment of Patent Terms
While the standard terms are fixed, there are circumstances under which the term of a patent may be extended. Regulatory delays, especially in industries like pharmaceuticals where products require FDA approval, can significantly extend the time it takes to bring a product to market.
Recognizing this, the law allows for patent term adjustments to compensate for these delays. This can extend the life of a patent beyond its typical expiration date, providing additional years of exclusivity as compensation for time lost during the product’s development and approval process.
Patent terms can also be adjusted in cases of undue delays in the patent issuance process. If the patent office fails to meet certain examination timelines, the term of the patent may be extended to make up for the lost time. This ensures that inventors and companies do not lose valuable time in commercializing their inventions due to administrative delays.
Strategic Implications of Patent Term Length
Understanding the length of patent protection is vital for strategic business planning. Knowing when a patent will expire allows a company to plan for the eventual competition once the patent enters the public domain.
Companies can prepare by innovating beyond their current patents, improving existing products, or adjusting their market strategies to anticipate new entries into the market.
Moreover, the impending expiration of a patent can serve as a trigger for strategic decisions such as initiating licensing agreements or exploring new markets. Companies can leverage their expiring patents by negotiating licenses that continue to generate revenue even after the patent protection ends.
Aligning Patent Duration with Business Cycles
Startups should align their patent strategies with their business cycles. Given that utility patents last 20 years from the filing date, it’s vital to assess whether your current innovations will still be relevant towards the end of this period.
If you’re working in fast-evolving sectors like technology or biotech, consider shorter cycles for product development and iteration to keep pace with changes in the market and technology.
Proactive Patent Renewal Strategies
While you can’t renew a patent once its term expires, staying on top of maintenance fees is key to ensuring your patent doesn’t lapse prematurely. Set up reminders for the 3.5, 7.5, and 11.5-year marks post-grant to manage these payments. Losing patent protection due to an oversight can open the door for competitors to capitalize on your market share.
Preparing for the Post-Patent Phase
Start planning early for what happens after your patents expire. This foresight involves developing next-generation innovations that build on your original patented technology, potentially creating new patentable inventions. This approach not only keeps your product pipeline fresh but also maintains a competitive edge in the market.
Leveraging the Full Term of Patent Protection
Make the most out of every day of your patent term. Utilize the time when your product is protected to solidify market presence, explore additional markets, enhance product features, and build strong customer relationships.
The goal is to establish such a robust market position that even after the patent expires, your brand and products continue to be preferred by consumers.
Educating Your Team on Patent Importance
Ensure that every team member understands the value of patents and the importance of the patent protection period. From R&D to sales, every department can contribute to maximizing the benefits of patents. For instance, marketing teams should highlight patent statuses in promotional materials, underscoring your startup’s commitment to innovation.
Negotiating Licensing Deals Before Patent Expiry
As your patent nears expiration, consider negotiating licensing deals that allow others to use your invention while the patent is still active. Licensing can provide a valuable income stream and can even continue in some form after the patent expires, based on the brand strength and market penetration you’ve achieved.
Transitioning from Patent Dependency
Develop strategies to reduce dependency on patent protections as they begin to phase out. Focus on building a strong brand and diversifying your IP portfolio with trademarks and copyrights that can protect other aspects of your product, such as the name, design, or unique features that aren’t covered by the expiring patent.
Can You Extend a Patent life?
One can not extend the statutory term of a patent. The government though grants exceptions for rare cases, such as patents made for pharmaceuticals. This is because it takes long to test drugs before granting patents.
Utility patents are valid for 20 years, as we mentioned previously. Therefore, applicants expect the patent office to complete the approval of their patent application as soon as possible. The process can take time since the patent office has over 500,000 pending patent applications.
Patent office approval takes, on average, 24 months. Many applicants believe that the patent offices should pay them compensation for the time it took to approve their patent application but this is not the way that the patent office operates.
The patent office won’t extend the term of a patent if there is no substantial and unjustified delay, particularly if the patent office took less than three years for approval.
The patent office may extend the patent term for applications that have been pending for longer than three years in rare cases. These extensions are issued when more than one inventor is trying to obtain a patent for the same invention.
The patent office does not grant these extensions. If you wish to extend your patent term, you will need to request a Patent Term Adjustment (PTA). However, the patent office is not known for its willingness or ability to grant them.
The following are situations in which the patent office might grant you a patent adjustment (PTA):
- Within 14 months of your filing, the USPTO does not examine your new application.
- It does not respond to an appellate brief or amendment reply within four months.
- After you have submitted drawings and paid the issue fee, it won’t issue a Patent within four months.
- It does not issue an allowance or Office Action within the four months following an appellate decision.
- It doesn’t issue any patents within three years of the filing date. You have not filed a continuation, divisional, or purchased a delay for an Office Action response.
- Appeals, secrecy orders, or interferences cause the delay.
Regulatory Extensions for Pharmaceuticals
One of the most common scenarios where patent life extension is possible involves pharmaceuticals. The process for getting a drug to market is often lengthy due to the required comprehensive clinical testing and regulatory review by entities like the FDA.
Recognizing that these processes can significantly eat into the effective market life of a patent, regulatory extensions are available. This can add up to five years to the term of a patent, helping to recover the time lost in regulatory processes.
Patent Term Adjustment Due to USPTO Delays
Another scenario where patent life can be extended is through Patent Term Adjustment (PTA). This adjustment compensates for delays attributed to the US Patent and Trademark Office (USPTO) during the patent prosecution process.
If the USPTO takes longer than expected to process a patent application, the term of the patent may be extended to make up for this delay, ensuring that the patent holder does not lose out on the full term of exclusivity due to administrative slowdowns.
Utilizing the Patent Term Extensions
While the basic patent term is set, these extensions can provide significant additional years of protection, which can be particularly valuable.
For example, in industries like biotechnology and pharmaceuticals, even a few additional months of patent protection can translate into significant revenue when dealing with blockbuster drugs.
Strategic Considerations for Patent Extensions
When considering the pursuit of patent extensions, it’s important for companies to weigh the cost against the potential benefits.
Applying for extensions, particularly regulatory extensions, involves a detailed submission process including proving the specific delays and their impact on the patent’s effective life.
This requires strategic planning and potentially significant legal and administrative work.
The Role of Patent Extensions in IP Strategy
Incorporating the potential for patent extensions into your overall IP strategy can provide a competitive edge. For startups, especially those in fields with long development cycles, planning for possible extensions can be crucial.
Understanding the mechanisms of patent extensions can influence decisions about R&D investments, partnership opportunities, and business scaling strategies.
Exploring Patent Term Adjustments (PTA)
It’s important to understand the scenarios that might qualify your patent for a term adjustment. Patent Term Adjustment (PTA) provides a way to recover time lost due to delays caused by the USPTO.
For startups, this means keeping detailed records of the prosecution timeline and being proactive if your patent application process extends beyond typical time frames.
The Power of Patent Term Extensions (PTE)
For sectors like pharmaceuticals and biotechnology, Patent Term Extensions (PTE) can add significant value. If your startup is developing products that require regulatory approval, like drugs or medical devices, being aware of the potential for PTE is crucial.
Engage with IP consultants early on to navigate this complex terrain, ensuring you fully understand how to leverage these extensions effectively.
Proactive IP Management
Don’t just react to patent timelines; proactively manage them. Work closely with your patent attorneys to forecast potential delays and prepare documentation that supports an extension application. Understanding the nuances of PTA and PTE claims can save you time and resources, and potentially extend your competitive edge in the market.
Building a Strategy Around Patent Life
Consider your patent’s lifespan as a critical element of your business strategy. If extensions are possible, they can offer additional time to maximize ROI on R&D investments. Align your product launch, marketing strategies, and investment pitches around the life of your patents, including any potential extensions.
Leveraging Extensions for Market Advantage
Should you succeed in extending your patent’s life, use this advantage tactically. Extended protection can deter competitors, secure your market position, and provide more opportunities for licensing or partnerships. Communicate this extended protection to stakeholders and investors to underline the stability and long-term viability of your IP.
Educating Your Team on the Value of Extensions
Make sure that your entire team understands the potential and value of patent extensions. From R&D to your legal team, ensuring everyone is on the same page can streamline the process and enhance your chances of securing an extension. Regular training and updates on patent law changes can keep your team informed and proactive.
Can patents be renewed?
A patent is valid for 20 years, subjected to renewal through maintenance fee, from the filing date. After the 20-year period, the protection patent provides will end and no renewal can be done past the 20 year life.
What are the patent maintenance deadlines?
All utility and reissue utility patents issued after December 12, 1980 are subject to maintenance fees. Maintenance fees are not required for a design patent or plant patent or to register a statutory invention.
To keep the patent rights after a utility patent issue, you must pay three maximum maintenance fees.
- The first maintenance fee should be on the 3.5-year anniversary.
- Second maintenance fee due on the 7.5-year anniversary
- The third maintenance fee is due on the 11.5-year anniversary.
Finite Protection Period of Patents
Patents are granted to encourage innovation by providing inventors exclusive rights to their inventions for a limited time. For utility patents, this period is 20 years from the filing date of the application, while design patents last for 15 years from the date of grant.
This limited duration is intended to give inventors a temporary monopoly as a reward for their innovation and public disclosure of their invention, after which the patented technology enters the public domain.
Maintenance Fees and Patent Life
While patents cannot be renewed, maintaining them for their full statutory term requires the payment of maintenance fees. For utility patents, these fees are due at 3.5, 7.5, and 11.5 years after the patent is granted.
Failing to pay these fees will result in the patent expiring before the end of its 20-year term, effectively shortening the patent’s life.
These fees help ensure that only those patents that are economically valuable to their holders are maintained, reducing clutter in the patent system by allowing less useful patents to lapse.
The Strategic Implication of Non-Renewable Patents
The inability to renew patents encourages companies to continually innovate rather than rely indefinitely on existing technologies.
For startups, this means planning product development cycles and business strategies around the patent term, ensuring continuous innovation and adaptation to the market’s evolving needs.
This can involve developing new technologies to patent or improving upon existing ones to stay ahead in competitive markets.
Transitioning From Patent Protection to Brand Development
As the end of a patent’s life approaches, it’s important for startups to shift their strategy from relying solely on patent protection to other forms of intellectual property and brand development.
This can include strengthening trademark protection or investing in brand loyalty, which can provide competitive advantages even after patent protections expire.
Leveraging Patent Expiration
Startups can also prepare for the expiration of patents by planning to capitalize on the newly public domain status of the technology.
This could involve preparing to scale production and reduce costs on products that no longer require royalty payments, or it could mean creating generic versions of products whose patents have expired.
Understanding Patent Renewals and Maintenance Fees
Although patents themselves cannot be renewed beyond their maximum statutory life, regular maintenance fees must be paid to keep them active until their expiration date. For utility patents, these fees are crucial checkpoints at 3.5, 7.5, and 11.5 years after issuance.
Missing these deadlines can inadvertently lead to your patent lapsing, which may open up your market to competitors. It’s essential to budget for these fees as part of your ongoing IP management strategy.
Strategic Budgeting for Maintenance Fees
Startup founders should anticipate these costs from the outset. Allocate funds in your financial planning to cover these fees, ensuring your patent doesn’t lapse due to financial oversight. This proactive financial management demonstrates to investors and stakeholders that you are committed to protecting your assets long-term.
Leveraging Maintenance Fees for Business Planning
The schedule for maintenance fees can serve as a strategic business planning tool. Each fee deadline can act as a milestone to assess the value of continuing patent protection versus letting a patent lapse, which could be strategic if the technology has become obsolete or has been superseded by new innovations within your startup.
Creating a Reminder System for Fee Payment
To avoid missing maintenance fee payments, set up a robust reminder system within your organization. Utilize calendar alerts, financial management software, or IP management tools that trigger reminders well ahead of each deadline. Ensuring timely payment without a rush reduces the risk of oversight and patent lapse.
Educating Your Team on the Importance of Maintenance Fees
Make sure that everyone involved in product development and business strategy understands the significance of patent maintenance fees. Regular team meetings and updates on patent statuses can help foster a culture of IP awareness and diligence across your startup.
Handling Unpaid Maintenance Fees
In case a maintenance fee is missed, the USPTO does offer a grace period to rectify the oversight. Understanding the details of this grace period and the associated surcharge fees is important to regain patent protection without losing rights, albeit at a higher cost. Educate your financial and legal teams about these contingencies.
Analyzing Patent Value at Each Renewal Phase
As each maintenance fee deadline approaches, evaluate the continuing value of each patent. Does the technology still provide a competitive edge? Is it contributing to your revenue through licensing or direct product sales?
This ongoing evaluation should guide whether to continue investing in a patent or let it lapse and free up resources for more valuable innovations.
Long-term Strategic Planning with Patents
Integrate patent timelines into your strategic business planning. Consider how patent expirations might impact your market position and prepare by diversifying your technology and product offerings.
Forward-thinking startups use patent expirations as opportunities to innovate further, ensuring a pipeline of new, patentable technologies that sustain business growth and investor interest.
What happens after the patent expires?
Patents become public domain after the expiration of their term. What does this mean to a patent holder? This means that the patent holder will no longer have the ability to prevent others from using, making, or selling his invention.
Other people will be free to copy the patent-protected invention and sell it without the need for the patent holder’s consent.
This will allow other pharmaceutical companies to make generic versions of the drug and sell them to the public at lower prices.
While the inventor of a product can continue to make and sell it, he should be aware that others may also have made similar products. The patent expires, and anyone can copy the invention to sell his version, even if it is an exact copy of the inventor’s.
Patents rights expire, and previously protected technology and only available to a handful of people are now widely used. Prices drop, making it easier for more people to produce the same invention and then sell it to the public.
When a patent is approaching expiration, there are several strategies that a patent holder or a company holding a portfolio of patents can use to maximize the value of the patent before it expires:
- Licensing: The patent holder can license the patent to other companies, allowing them to use the invention in exchange for royalties. This can be a way to generate revenue from the patent before it expires.
- Litigation: The patent holder can file lawsuits against companies that are infringing on the patent in order to generate revenue from damages or settlements. This can be a way to generate revenue from the patent before it expires.
- Product development: The patent holder can use the remaining time before expiration to develop and bring to market a product that utilizes the patented invention. This can be a way to generate revenue from the patent before it expires.
- Sale: The patent holder can sell the patent to another company, allowing them to use the invention in exchange for a lump sum payment. This can be a way to generate revenue from the patent before it expires.
- Generating additional patents: The patent holder can use the remaining time before expiration to file continuation and divisional patent applications to extend the life of the patent.
- Creating a standard essential patent (SEP) and licensing it at FRAND (fair, reasonable, and non-discriminatory) terms.
The strategy that is chosen will depend on factors such as the strength of the patent, the market for the invention, and the resources of the patent holder.
Transition to Public Domain
Once a patent expires, the protected invention enters the public domain, meaning that it is no longer under the exclusive control of the patent holder.
This allows competitors and new entrants to freely manufacture, use, or sell the invention without the need for licensing agreements or fear of infringement litigation.
This phase can drastically change the competitive landscape, especially in industries where patented technologies form the basis of core products or services.
Impact on Market Dynamics
The expiration of a patent can lead to increased competition as other companies can legally explore the previously patented technology.
This often results in the introduction of generic versions of products, particularly noticeable in the pharmaceutical industry where the introduction of generics can significantly reduce the cost and increase the accessibility of medication.
For startups and established companies alike, this can compress profit margins but also broaden the market base.
Strategic Adaptations for Continued Innovation
For companies that originally held the patent, the expiration can serve as a catalyst for innovation. Anticipating the end of a patent’s life, companies can invest in research and development to improve upon the original patented invention or develop new technologies.
This ongoing cycle of innovation is vital for maintaining a competitive edge and sustaining growth, especially in fast-paced industries where technological advancements are rapid.
Leveraging Brand Loyalty and Quality
Companies can also focus on non-IP competitive strategies such as enhancing brand loyalty and maintaining a reputation for quality. Even when a patent expires, a strong brand can retain customer loyalty despite the availability of cheaper generic alternatives.
Focusing on superior service, better product features, and strong customer relationships can help maintain a competitive advantage.
Preparing for Patent Expiry
Forward-thinking companies can prepare for patent expiration by diversifying their patent portfolio and developing a robust pipeline of new products.
This strategy not only mitigates the risks associated with the expiration of a single patent but also ensures a steady flow of new products to the market, keeping the company’s innovation profile active and engaging.
Exploring Licensing and Monetization Options
Even after a patent expires, there may be opportunities to monetize the underlying know-how or associated branding through licensing deals or partnerships.
Companies can license their expertise in manufacturing, product development, or market penetration to other firms looking to capitalize on the now-public domain technology.
Wrapping it up
The expiration of a patent does not signify the end of opportunity; rather, it marks a new chapter where strategic foresight, innovation, and adaptation become key. By planning for this phase and integrating it into their broader business and IP strategy, startups can navigate post-patent landscapes effectively, leveraging their accumulated knowledge and market position to continue thriving.
