Patents 

Most people have heard variations on a remark attributed to Ralph Waldo Emerson: If a man can make a better mousetrap than his neighbor, though he builds his house in the woods the world will beat a path to his door. To keep the discussion concrete, let's imagine a present day inventor of a new mousetrap who not only invents a better mousetrap but is also successful in marketing it. The higher the inventor's profit margin, the more others will want to copy his invention. Let's assume that the inventor selects Figaro as the brand name and actively promotes the product. However, he does not legally protect his invention, but relies on the consumers' loyalty, goodwill and brand identification to ensure future sales.

Taking measures to develop loyalty and goodwill may be sufficient until a larger and better known competitor turns up. For example, what if economies of scale and lack of development costs mean that the competitor can sell the same mousetrap for 20 percent less? Goodwill may not be enough to ensure customer loyalty at a higher price. A patent would be much more helpful, because it would prevent the competitor from selling the new trap until well after the original firm had a chance to get on its feet. This situation illustrates that it is the smaller firm that often has the most to gain from protecting intellectual property.

As bad as the situation is without patent protection, it could be worse. Let's assume that customers are so taken by the Figaro promotion that they are willing to pay the 25 percent premium the firm charges in order to stay in business. Imagine what would happen if the company had to stop using that name or had to face an expensive lawsuit. Imagine what would happen if it turns out that someone else actually has a current patent on one or more features of the better mousetrap. By failing to consider the intellectual property of others, the new firm would not only be forced to stop selling under the name Figaro, but might be forced to stop selling the mousetrap altogether.

• Avoiding Patent Infringement 

Utility patents - what people usually mean when they use the term patents - provide 17 years of exclusive rights for inventions that deal with the way things work. Design patents afford 14 years of protection for significant improvement in the appearance of useful items, such as car bodies or furniture. Both of these patents do more than prevent copying; they forbid the making, using or selling of an invention similar to or the same as the protected invention, even though the second invention was independently created. (Plant patents, which will not be covered in this discussion, may not give the same protection.)

Copying may actually be a way to avoid infringement. The inventor of the mousetrap might have avoided potential problems by using technology that was described in a printed publication, publicly used or on sale. Products that are on sale and give no notice of patent coverage are relatively free from the risk of infringement.

Any person trying to market fairly new technology that doesn't appear to be patented should keep in mind that an inventor has one year from public sale or disclosure within which to file a patent application. In addition, because patents often take two or more years to obtain, there is still a chance that a patent could be issued at a later time. Although there is no liability for infringement prior to issuance of a patent, a competitor would have to cease making, using or selling the technology once the patent was issued, thus risking the loss of both start-up costs and inventory.

Of course, if our inventor was determined to make a better mousetrap, there would be no interest in copying something else in the market. Still, before spending too much time and money on research, the inventor should ensure that others do not have exclusive rights in the area being explored. The inventor certainly should not assume that, because a product is not on the market, it is un patented. As many independent inventors have learned to their chagrin, it is usually easier to patent something than to market it profitably.

• A Patent Search 

The inventor should hire a patent attorney or agent to conduct an infringement search. A patent agent is a technically trained person who has passed a special examination given by the U.S. Patent and Trademark Office; a patent lawyer is one permitted to draft contracts and provide other general legal services. Patent searches can be expensive if one must consult foreign records; it is much less costly to determine whether technology is currently patented in the United States. Yet, as we will see, there is value in going somewhat beyond that point.

A search might reveal that (1) someone else had a patent that has since expired, i.e., the information patented is now in the public domain; (2) no current or expired patents cover the area of proposed research or (3) someone else has a current patent covering all or part of the proposed design. Let's consider these potential results in order.

• The Invention is in the public domain 

If the mousetrap (or an obvious variation) was disclosed in an expired patent, the inventor is free to manufacture and market it without concern for the patent laws. Also, even if the inventor didn't find exactly what he or she originally had in mind, a host of good and freely used ideas that are even better might have been discovered. These alone could be worth several times the price of the search in saving research and development time.

• One or more elements of the proposed mousetrap appear new

If, after a thorough search, our inventor's proposed improvements to the mousetrap seem not only to be novel but also to offer significant advantages over the prior design, the inventor may seek a patent and/or begin selling the mousetrap without further ado. If, however, the inventor begins selling without first filing a patent application, he immediately forfeits possible protection in many other countries and also forfeits any possibility of patent rights in the United States after one year.

• Aspects of the proposed design are covered by a current patent

If an un-expired patent is found to cover any part of the proposed mousetrap design, the inventor knows that he is not free to use it without a license. Infringing on a current patent exposes one to a suit for damages as well as an injunction against future use. Even an injunction might mean substantial costs, including the loss of current inventory, and a patent covering even a small feature of the new mousetrap might give rise to the need to retool. Although deliberate infringement is more serious, ignorance of others' patents is no defense.

Whether or not our mousetrap inventor takes measures to preserve the intellectual property, he or she certainly should avoid infringing on the rights of others. Although this is not difficult in the case of copyrights and trade secrets, patents and trademarks are another matter altogether.

Unquestionably, it costs precious start-up capital to have patent and trademark searches performed; however, proceeding in a new venture without doing so is equivalent to erecting a building or signing a long-term lease without checking the real estate title. Searches will not make the product appeal to the public, but they will ensure enjoyment of any hard-won market success. A patent search is comparatively cheap insurance against the possible need to retool or to absorb inventory losses. Moreover, a close look before adopting a trademark is cheaper in the long run than the cost of advertising and new promotions designed to advise customers to seek the mousetrap under a new name.