The Intellectual Property System is Broken

This article is not about patent trolling (the habit of individuals or companies that has been widely discussed in recent years). This article deals with a few more fundamental problems of the IP system.

If you’ve ever tried to invent something, you know that, if you want to be compensated for the value of your invention, you have to protect it, and the way to do that is filing for a patent. You can do that on your own, but, most of the time, you will need a Patent Attorney, as writing a patent application has its own specific language — especially in the heart of a patent, called “the claims” — that define the limits of exactly what the patent does, and does not, cover.

There is the beginning of all the issues. If you try to contact a Patent Attorney, most of them will not tell you some already standardised process or procedure; instead, each of them will find his or her own way to take as much money from you as possible.

So, let me list some of those services a Patent Attorney will offer:

Initial session – (cost £1500 - £3000+VAT) – this is usually a 4-8 hour session, where the attorney determines the amount of work and the nature of invention. Some IP firms charge for this, and others (although rarely) offer this short, initial session for free.

Next is search (sometimes, more of them and different types), and it is usually done before you begin anything, as what you have may already exist, or it is not patentable at all, as it may not belong into a category of device or the process.

Patentability search (Novelty search) – (cost from £700-£1500+VAT) – The purpose is to help you figure out whether your concept or idea is unique in comparison to what is already out there (previous patents / “prior art”).

Clearance Search (Infringement Search) – (cost to cover Europe up to £30000+VAT; similar cost for US or China) – seeks to determine whether your proposed product infringes any in-force patent claims.

There are also Freedom to Operate Search and Patent Invalidity Search, which have special cases of usage. Although I do not have specific details about the cost, generally, it is considered more expensive than the previous two.

If your invention is patentable, the next phase is preparing the patent specification, which involves creating a drawing, writing an explanation, and creating patent claims.

Patent Drafting (Preparing Specification) - (cost £3000 - £10000) - depends of the complexity of the technology, but, usually, what I have noticed, when it gets to the point of giving you a price, patent attorneys will always charge you the maximum amount. The price can also vary depending on whether the firm needs to write and draw everything from scratch or simply needs to amend things a bit and add claims only. Regardless, you can always accept the maximum as a rule of thumb.

After writing/drafting has been finished, next in line is filing.

Filing – (cost £1,500 - £2,500 firm fee; if filing on your own, it will cost you around £300 *1) – this is the actual process of applying for a patent in the patent office.

Progression (Report Response) - (£300-£500 per hour or £1500 to £2000 per report) – each time the patent office responds, the attorney will charge for his time, and, in total, for the entire patent, that time can be anywhere between 3-15 hours.

Now, if all this cost makes you dizzy, wildly spinning in your head, that is not all.

After filing a patent locally in your country of origin, you have 12 months to apply for an international patent, and that is really expensive, as you need to pay for each country you would like to apply in, and, for some like China, even when you apply, those patents will not protect you.

Filing Internationally – (cost £3,500 - £XX0,000) – protecting your invention in other countries and their markets. The cost is high; for example, a ballpark figure for filing in the UK plus 3 other European countries and the US could be anywhere between £15,000 and £40,000.

Now, let us talk about the issues.

As you see, filing a patent, unless you are an experienced patent attorney + inventor at the same time, is a very expensive sport, and it is not made for poor folks, regardless of how inventive or creative they may be.

In the UK, the average gross salary in 2016 was £28,000 (40hrs/week) *2, which can be translated into a net salary of £22,207. When cost of living is deducted, probably, if they try really hard, on average, people could save up to £5,000 a year. That means that, if they have an idea to patent, they will need to sacrifice at least 5 years of their hard work, in order to obtain a local patent. In the end, most of the time, according to the monetisation statistic, those patents will not give them any return.

There lies the first issue: the paradox where you can often hear politicians and economists saying that the reason for economic stagnation is that industries are not innovative enough, but the entire system is created in such a way as to prevent or turn away people who have ideas but are not rich enough. As the middle class is shrinking, those creative-and-innovative-but-poor people will just leg behind.

At this point, you could say that they have a choice to file the patent on their own, but, in reality, if you do not know how to search and what to search for, and if you do not have knowledge in the patent law area, your chances of writing good claims are very slim. Bad claims can only mean that some other company will copycat your invention and just make small changes, ripping you off.

Even if everything goes well, there are very good chances that a person will never succeed in making any money out of his or her patent, and that no one will ever want the invention.

But, let’s point out a few dangers of the patent process on its own.

I have mentioned that the first few phases could cost up to £23,000 (£3000 + £1500 + £10000 + £2500 + 3 x £2000), and this sum is at risk immediately after the novelty search.

Let’s consider a scenario where people who carried out a search needed 3 weeks to conclude whether your patent has something similar already existing. If something similar already exists, you will lose £4500 (a year of hard work), and, at this point, it will be the end of the game for you. Now, if they conclude that nothing similar is out there, and that you are safe to proceed, you will go into the next phase.

Now, from this point on, patent attorneys will need about 1 to 2 months to draft your patent and then apply for it.

In this buffer time, it is possible that someone else will apply for the same thing, stealing your thunder, and, even worse, you will not know about it, until the final decision of the patent office.

Now, that will also mean that you are going to lose all £23,000, with the caveat of finding that someone overtook you while filing, just in matter of few days, after several years of waiting.

But, that is not the end of your troubles. Let’s say that your patent success depends entirely on it being internationally recognised, meaning you need to apply for a patent in the first 12 months, and there lies an even larger danger for inventors’ financial security.

Average pendency to first office action for the patent application is between 18-21 months, depending on the country, but that time can be much longer, and, in some cases, it has lasted 12 years or more. *4

This means the inventor needs to apply for an international patent before he even gets recognition locally.

What does this mean?

The inventor may decide to go forward, taking a loan from the bank, putting up his house as leverage, paying an additional £50,000 to £100,000 for international patent filing, completely unaware that someone already applied for the same thing just few days or weeks before. This means that the inventor, who had the good intention of solving real-world problems and making the world a better place, will be left homeless and penniless, just in one stroke at the end of the process.

Now, even worse, the novelty search does not go through patent applications, only through granted patents, which means that someone may have applied even before you carried out the novelty search or started drafting your patent, and the result you got was “wrong” (incomplete) from the beginning.

There is one additional real danger! It is possible that patent attorneys will steal your idea. It probably won’t happen for something that has a worth in the range of £100.000, but what if they find that your invention is worth a few 100 million in royalties? At this point you may say that they would never do that, and that a track record exists, if they ever attempt such a thing, but, in reality, the patent attorney could use a third-party company or person, who will apply instead, hiding any trace from you or possible investigation.

Lastly, if anyone infringes on patent, a person with average income will never stand any chance against a wealthy company — or even individuals with a good financial buffer — in the court of law, losing several hundred thousand — and sometimes millions — paying lawyers in a lengthy and very expensive process. One such example if portrayed in the movie “Flash of Genius” (2008) *5, a true story about college professor Robert Kearns, from Detroit, and inventor of windshield wiper, and his legal battle against the Ford Motor Company. In the end, Robert won the case, but the price of wining was 20 years of his life in a court battle, and, also, he lost his friends and family in the process. Behind the curtain, there is an army of inventors who never tried or lost the battle with huge corporations.

Now, if, at this point, everything about the Intellectual Property System looks like a huge gamble, it is true; according to statistics, you have more chances to earn money if you use those 5 years’ savings (£25000) and play roulette, placing your bets on BLACK or RED (47.4%) than applying for a patent, for which the monetisation success rate is just 3%. *6

Solving real-world problems and creating inventions is not an easy thing to do; it requires creativity, knowledge, intelligence, and many other merits. A general estimate is that only 1 person in 1000 has the potential to be inventor. With the currently-existing system, even out of those rare people, only 3% will succeed. Yet again, it seems that the world does not care very much about those who can actually solve our problems.

We tend to romanticise the invention process, thinking about it like the cartoon “Meet the Robinsons” (2007),*7 where a kid inventor just needs to show up in front of a wealthy businessperson, and that businessperson will instantly give the kid money, fame, and resources to continue his research, developing more and more amazing things.

But, the reality is that most of the big companies, like Apple, for instance, have some form of “Unsolicited Idea Submission Policy,” where they state that they will legally rip you off, if you show your idea to them: “You agree that: 1) your submissions and their contents will automatically become the property of Apple, without any compensation to you.” *8

The reality of corporations is that most of them are just waiting to brain rape you and grab your ideas, if they are of any worth to them, without even acknowledging you as the inventor or paying a dime for your inventions. Face it: the point of the game was always to be a greedy douchebag, making as much money as possible.

The Intellectual Property system is broken, and things will not get any better, until we do something about it.

A few weeks ago, I proposed a solution for how we could fix some of these issues, and, since then, I think that we could add a few more ideas, such as involving AI and excluding human lawyers from the loop.

If you have anything to add or correct, please comment.

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