What you don’t know about patents

If you’ve been fol­low­ing the Smol­tek news feed, you’ll know that we are apply­ing for pat­ents in spades. This is nat­ur­al; the pat­ents give us time to mon­et­ize the cut­ting-edge tech­no­logy we have developed with your investment.

We have pat­en­ted 17 inven­tions and have pending applic­a­tions for anoth­er four. The inven­tions are pat­en­ted in the EU, the US, and many oth­er coun­tries. At the time of writ­ing, we have 89 approved pat­ents and more than 20 pending pat­ent applications.

Every pat­ent applic­a­tion requires a lot of work, both before the applic­a­tion is filed and when the pat­ent is pending, as well as after­ward. Let’s take a closer look at what is required to apply for a pat­ent and how it works.

Requirements

To pat­ent an inven­tion, it gen­er­ally needs to meet the fol­low­ing form­al requirements:

• Nov­elty: The inven­tion must not have been pre­vi­ously known. An inven­tion can­not be pat­en­ted if it has been made known pri­or to the applic­a­tion, for example, by the invent­ors themselves.
• Invent­ive step: The inven­tion must be sub­stan­tially dif­fer­ent from any­thing pre­vi­ously known and must not be obvi­ous to any­one with know­ledge and exper­i­ence in the field.
• Indus­tri­al applic­ab­il­ity: The inven­tion must be cap­able of being man­u­fac­tured or per­formed in some sort of indus­tri­al way. Indus­tri­al­iz­a­tion in this con­text has a much broad­er mean­ing than usu­al and also includes activ­it­ies such as trans­port­a­tion, agri­cul­ture, hunt­ing, pub­lic admin­is­tra­tion, and health care.
• Sub­ject mat­ter eli­gib­il­ity: The inven­tion must be patentable.

The last require­ment needs some fur­ther explanation.

What’s patentable?

You can­not pat­ent an idea, a sci­entif­ic dis­cov­ery or the­ory, a math­em­at­ic­al meth­od, a pro­gram for com­puters, an artist­ic cre­ation, a present­a­tion of inform­a­tion, or schemes, rules, and meth­ods for per­form­ing men­tal acts, play­ing games, or doing business.

An inven­tion must be tech­nic­al in nature to be pat­entable. This means that the claims must fall into one or more of the fol­low­ing categories:

• Pro­cess: These claims refer to steps in a pro­cess or method.
• Appar­at­us: These claims refer to the struc­tur­al or func­tion­al aspects of an appar­at­us or device.
• Man­u­fac­ture: These claims are con­cerned with how an item is made and what it is made of.
• Com­pos­i­tion of Mat­ter: These claims cov­er chem­ic­al com­pos­i­tions and compounds.

Patent application

To apply for a pat­ent, an applic­a­tion must be filed with a nation­al pat­ent office.

An applic­a­tion must meet sev­er­al form­al require­ments. In par­tic­u­lar, it must con­sist of the fol­low­ing elements:

• Abstract: A sum­mary of the tech­nic­al con­tent so that inter­ested parties can eas­ily under­stand the inven­tion’s purpose.
• Descrip­tion: Instruc­tions suf­fi­ciently detailed to enable a per­son know­ledge­able in the field to apply the invention.
• Claims: A set of leg­al claims about what the pat­ent will pro­tect. Each claim should belong to one or more of the cat­egor­ies described above.
• Draw­ings: Any draw­ings and fig­ures neces­sary to explain the inven­tion and the claims.

The claims are the most crit­ic­al part of the applic­a­tion. They should be as broad and gen­er­al as pos­sible to provide good pro­tec­tion while being clear, con­cise, and sup­por­ted by the descrip­tion. They serve as the basis for determ­in­ing wheth­er an inven­tion infringes the pat­ent and are crit­ic­ally ana­lyzed dur­ing the pat­ent exam­in­a­tion process.

Patent pending

Once the applic­a­tion is filed, the leg­al terms “pat­ent pending” and “pat­ent applied for” can be used to dis­cour­age oth­ers from copy­ing the invention.

The mark­ing informs oth­ers that an applic­a­tion has been filed, and they may be liable for infringe­ment once the pat­ent has been gran­ted. How­ever, there is no enforce­able right until the pat­ent is actu­ally issued. 

The long journey of the patent application

It takes years from the moment the applic­a­tion is sub­mit­ted until it is gran­ted (or rejec­ted). It’s not a quick pro­cess because it is thor­ough. It has to be. The res­ult is a restric­tion on the rights of oth­ers, and thus, the gov­ern­ment wants to be on the safe side that it is justified.

When the pat­ent office receives an applic­a­tion, a form­al exam­in­a­tion begins. An officer checks that the applic­a­tion meets all form­al requirements.

Investigation far and wide

Once the form­al exam­in­a­tion is com­plete, the tech­nic­al exam­in­a­tion begins. A pat­ent exam­iner reviews the applic­a­tion, check­ing that everything needed to grant a pat­ent is in place. They also search glob­al data­bases to ensure that no sim­il­ar inven­tions are pub­lished. If the pat­ent exam­iner finds obstacles to grant­ing the applic­a­tion, the applic­ant receives a tech­nic­al notice. The applic­ant can respond if they dis­agree with the pat­ent examiner.

The applic­a­tion becomes pub­lic when the pat­ent is gran­ted or after 18 months from the fil­ing date if it has not been with­drawn before then. At that point, the recipe for the secret sauce becomes pub­lic. So, if one is not abso­lutely sure about being gran­ted the pat­ent, it may be appro­pri­ate to with­draw the applic­a­tion to keep the inven­tion secret.

Communication ping-pong

If the pat­ent office con­cludes that your applic­a­tion’s require­ments are pat­entable and that there are good chances to issue a pat­ent, the applic­ant receives a final notice. Then, the applic­ant can make minor changes, such as cor­rect­ing spelling errors.

Now comes a noti­fic­a­tion that the pat­ent office will “issue the pat­ent.” This is the very last chance to with­draw the application.

Finally, the pat­ent office announces that the pat­ent has been granted.

Now everything is peace and joy. Or is it?

Of course, it’s not. All com­pet­it­ors and oth­er trouble­some char­ac­ters have nine months to object to the pat­ent. Nat­ur­ally, the pat­ent hold­er can con­test the objec­tion. If the pat­ent office accepts the objec­tion, the pat­ent can either be revoked or amended.

What are the alternatives?

Apply­ing for a pat­ent requires a lot of work, takes quite some time, and costs a fair amount of money. Are there no more straight­for­ward and cheap­er alternatives?

Sure, there are.

For starters, you can just shut up. Keep your inven­tion to your­self. Don’t reveal your secret sauce. As a res­ult, your inven­tion enjoys a cer­tain leg­al pro­tec­tion as it is con­sidered a trade secret. If someone leaks the trade secret, they may be guilty of a breach of con­fid­en­ti­al­ity or cor­por­ate espionage.

One advant­age over pat­ents is that your secret remains secret, and anoth­er is that no one can freely copy it after twenty years. On the oth­er hand, there is noth­ing to stop a com­pet­it­or from reverse engin­eer­ing your products to find out your secret and then using it themselves.

Anoth­er solu­tion is defens­ive publishing.

Defensive publishing

One dis­ad­vant­age of keep­ing your inven­tion secret is that someone else may come up with some­thing sim­il­ar and apply for a pat­ent. Sud­denly, you are infringing their pat­ent – even if you have made your inven­tion entirely on your own and per­haps even long before them.

To pre­vent that from hap­pen­ing, you can pub­lish a detailed descrip­tion of your inven­tion. This makes it impossible for oth­ers to apply for a pat­ent on the inven­tion, as it is already known. This is called defens­ive pub­lish­ing because it is a pub­lic­a­tion that defends you against the very pos­sib­il­ity of someone else pat­ent­ing the idea in the future.

An obvi­ous dis­ad­vant­age is that your secret does not remain secret. Any­one is free to use your inven­tion. Moreover, you have made it impossible for your­self to apply for a pat­ent in the future, as it is already known.

World patent

Giv­en the options, pat­ents are not so bad after all. So, you decide to go through all the hoops to get a pat­ent gran­ted. Con­grat­u­la­tions! Your inven­tion is now protected.

There is only one catch. The pat­ent is only val­id in coun­tries where you have been gran­ted it. In the rest of the world, any­one can copy your inven­tion, which is now pub­lished and pub­licly avail­able. Darn!

Unfor­tu­nately, there is no world pat­ent or even a European pat­ent. Sure, many people talk about them as if they exist, but they do not. What exists is the pos­sib­il­ity of apply­ing in sev­er­al coun­tries at the same time. But in the end, each coun­try’s pat­ent office has to approve the pat­ent, and you have to pay fees for all of them.

The urgency of international patents

You need to know if you want to apply for a pat­ent out­side your own coun­try almost from the start, as inter­na­tion­al pat­ent applic­a­tions must be filed with­in 18 months. Guess why!

You are abso­lutely right. After 18 months, your nation­al applic­a­tion is pub­lished, mak­ing your inven­tion unpat­entable. Remem­ber the nov­elty require­ment? There­fore, all inter­na­tion­al applic­a­tions must be sub­mit­ted before that date.

Closing the loopholes

In the peri­od between the first applic­a­tion and the receipt of the inter­na­tion­al applic­a­tions, someone else may come up with the same inven­tion and apply for a pat­ent in their coun­try. If this hap­pens before your applic­a­tion is pub­lished, i.e. with­in the first 18 months, the nov­elty require­ment is met. As a res­ult, your applic­a­tion will be refused.

To close this loop­hole, the applic­a­tion must be filed even earli­er, with­in 12 months of the nation­al applic­a­tion. Then, the date of the first applic­a­tion also counts as the date of the sub­sequent ones under the Par­is Con­ven­tion of 1883.

Last deadline

A final dead­line to keep an eye on is 30 months after the first applic­a­tion. This is the time­frame with­in which inter­na­tion­al applic­a­tions must be completed.

So the pro­cess is that you first apply for a nation­al pat­ent, then start the inter­na­tion­al applic­a­tion with­in 12 months, and com­plete the inter­na­tion­al applic­a­tion with­in 30 months.

In between, you will hope­fully have been informed wheth­er the nation­al pat­ent has been approved, which indic­ates that the inter­na­tion­al applic­a­tions will prob­ably be approved as well. But, again, each nation’s pat­ent office makes its own decisions, so noth­ing is cer­tain until it is certain.

Need of patent agency

As you can ima­gine, apply­ing for a pat­ent is not easy. There is a lot to keep track of. Get it wrong, and you’re screwed. That’s why we hire a pat­ent agency to help us with this, even though we do a lot of the work ourselves.

Patent families

Every pat­en­ted inven­tion has a first pat­ent, the one that was first applied for, and then sev­er­al inter­na­tion­al pat­ents, all relat­ing to pre­cisely the same inven­tion. These are col­lect­ively known as a pat­ent fam­ily.

Cur­rently, Smol­tek has 89 gran­ted pat­ents across 17 pat­ent fam­il­ies. We have anoth­er 4 pat­ent fam­il­ies in the mak­ing and about 20 pending pat­ents. New pat­ent fam­il­ies are added reg­u­larly, and with them come many pat­ents over sev­er­al years.

Not what you think

I’m glad to see that you’ve stuck around until now. I guess it’s because my cliff­hanger at the begin­ning is work­ing. You are dying to know why it is not true that a pat­ent gives the hold­er the right to make, use, and sell an invention. 

If you con­sider the fol­low­ing two examples, you will see that it is pretty logical:

• Being gran­ted a pat­ent for a new type of medi­cine does not auto­mat­ic­ally give you the right to man­u­fac­ture, use, or sell the medi­cine. Even if the medi­cine rep­res­ents an innov­at­ive treat­ment, it must first under­go extens­ive clin­ic­al tri­als and be approved by drug reg­u­lat­ory author­it­ies before it can be made avail­able to the pub­lic. This step is cru­cial to ensure that the medi­cine is safe and effect­ive for its inten­ded use.
• Being gran­ted a pat­ent for an innov­at­ive improve­ment to the design of an appar­at­us already pat­en­ted by someone else does not auto­mat­ic­ally give you the right to make, use, and sell the improved appar­at­us. While your improve­ment may be sig­ni­fic­ant, you still need per­mis­sion from the hold­er of the ori­gin­al pat­ent to exer­cise the rights of the under­ly­ing appar­at­us, as the ori­gin­al design is still pro­tec­ted under their patent.

Now you under­stand why a pat­ent does not con­fer the right to make, use, and sell an inven­tion, right?

Patent rights

So, what is a patent?

It is essen­tially a right to restrict oth­ers from mak­ing, using, and selling an invention.

It does­n’t just sound crazy, it is crazy. Or…? If you pon­der the fol­low­ing two examples, it may not seem as far-fetched as it first appears.

• After long and costly research, you have developed a revolu­tion­ary medi­cine, but you don’t have the money or skills to build your own pill fact­ory. If you want a phar­ma­ceut­ic­al com­pany to pro­duce your medi­cine, you have to share the for­mula. Without the right to restrict oth­ers from mak­ing, using, and selling it, there is noth­ing to stop them from profit­ing from your hard work without com­pens­a­tion. With a pat­ent, you can approach sev­er­al of them without the risk of rip-off.
• You’ve figured out a really innov­at­ive improve­ment to someone else’s  device. Since you are an hon­est guy who does­n’t steal oth­er people’s ideas, you pro­pose the improve­ment with the hope of being com­pensated. Without the right to restrict oth­ers from mak­ing, using, and selling your improve­ment, you risk get­ting only a thank-you as a reward. With a pat­ent, you have a much stronger nego­ti­ation position.

Negative right is positive

The right of a pat­ent hold­er to deny oth­ers the use of an inven­tion is called a neg­at­ive right in pat­ent law.

The neg­at­ive right sounds neg­at­ive, but it is actu­ally some­thing pos­it­ive; it gives the pat­ent hold­er an exclus­ive right to decide who can do what with the invention.

For example, the pat­ent own­er can decide that nobody is allowed to do any­thing with the inven­tion, and thus be the sole user of it. Or the pat­entee can give selec­ted com­pan­ies the right to use the invention.

The lat­ter is called licens­ing. The pat­ent hold­er grants a party a license to use the pat­ent under cer­tain con­di­tions. The most com­mon con­di­tion is that the oth­er party pays a roy­alty – a fee for each item sold that is made using the pat­ent. How­ever, con­di­tions that lim­it the licensed right to a par­tic­u­lar applic­a­tion or geo­graph­ic area are also common.

We will explore what this means for deep-tech com­pan­ies like Smol­tek in a future art­icle. Don’t miss it!

Intermezzo

Now you under­stand why a pat­ent is not a right to pro­duce, use, or sell your inven­tion but a right to deny oth­ers that right. You can use this right to grant oth­ers per­mis­sion to pro­duce, use, or sell your inven­tion on the terms you dictate.

So who gives this right?

The gov­ern­ment does, through its pat­ent office.

But why does the gov­ern­ment, which is sup­posed to treat every­one in its ter­rit­ory equally, want to give someone an exclus­ive right to deny oth­ers the use of an invention?

Social contract

In exchange for dis­clos­ing the secret sauce, the pat­ent hold­er is giv­en the exclus­ive right to determ­ine, for a lim­ited time, usu­ally twenty years, who can use the inven­tion and under what conditions.

The pat­ent own­er bene­fits from

• Com­pet­it­ors can only use the solu­tion under a license, allow­ing the pat­entee to recoup its invest­ment either by licens­ing or by being the sole pro­vider of the solution;
• without a license, com­pet­it­ors can­not copy the solu­tion, allow­ing them to recoup their investment;
• com­pet­it­ors are forced to devel­op their own inven­tions rather than pla­gi­ar­ize, giv­ing them an advant­age in the mar­ket­place; and
• they can talk openly about their inven­tion without risk­ing los­ing the bene­fits, mak­ing it easi­er to nego­ti­ate with investors, part­ners, and buyers.

Soci­ety and human­ity at large will bene­fit from

• that the details of new tech­no­lo­gies become pub­licly avail­able, allow­ing know­ledge to spread and soci­ety to develop;
• oth­ers can find prob­lems and solu­tions, which improves the inven­tion and devel­ops the tech­no­logy faster
• any­one can exploit the tech­no­logy after the pat­ent expires, and
• the inven­tion is not lost to humanity.

Historical retrospect

The idea of giv­ing the invent­or a time-lim­ited exclus­iv­ity goes back a long way.

As early as 500 BCE, the Greek city of Sybar­is, in what is now Italy, is said to have giv­en invent­ors the right to make money from “any new refine­ment in lux­ury” for a whole year.

Almost two thou­sand years later and a bit fur­ther north on the Apen­nine Pen­in­sula, this idea had evolved into some­thing akin to today’s pat­ents: In 1474, the Sen­ate of Venice decided that the invent­or was gran­ted ten years of leg­al pro­tec­tion against poten­tial infringers in exchange for com­mu­nic­at­ing new and invent­ive devices to the Repub­lic. This is gen­er­ally con­sidered the birth of pat­ents and pat­ent law as known today.

In the more than five hun­dred years since then, the pat­ent sys­tem has developed in small steps in many parts of the world. Some milestones:

• 1474: The Vene­tian Pat­ent Stat­ute intro­duced the world’s first pat­ent sys­tem, pro­tect­ing new inventions.
• 1555: France intro­duces the pub­lic­a­tion of pat­ent descrip­tions, increas­ing transparency.
• 1624: Eng­land form­al­izes pat­ents as rights for inventors.
• 1790: The United States passed its first pat­ent law intro­du­cing a stand­ard­ized pat­ent process.
• 1791: France cre­ates a mod­ern pat­ent system.
• 1883: Par­is Con­ven­tion for the Pro­tec­tion of Indus­tri­al Prop­erty stand­ard­ized inter­na­tion­al pat­ent laws.
• 1970: Pat­ent Cooper­a­tion Treaty (PCT) sim­pli­fied glob­al pat­ent filings.
• 1977: The European Pat­ent Con­ven­tion (EPC) uni­fied pat­ent pro­tec­tions across Europe.
• 1994: Agree­ment on Trade-Related Aspects of Intel­lec­tu­al Prop­erty Rights (TRIPS) integ­rated pat­ents into inter­na­tion­al trade.

Let’s sum up

What have we learned? Pat­ents give the hold­er the right to restrict oth­ers from mak­ing, using, and selling inven­tions. The gov­ern­ment grants this right for a lim­ited peri­od, usu­ally twenty years, in exchange for mak­ing the inven­tion gen­er­ally known for the bene­fit of human­ity. And that this idea is at least more than 500 years old (if not 2500 years).

You could say that in the long run, pat­ents turn inven­tions into open source. Even the name reflects that. The word pat­ent comes from the Lat­in patere, which means “to be open” (for pub­lic inspec­tion – just like open source).

Amaz­ing! Isn’t it?

In an upcom­ing art­icle, we will look deep­er into patents—or rather, their import­ance for you as an investor and share­hold­er in a deep tech company.