Patents for Dummies

There were around 18,000 AI tech patents in 2013. Between 2000 and 2022, about 190,000 AI patents were granted worldwide. 

For the docs and engineers that think they may want to jump on this IP train by pursuing a software utility patent, or any other patent for that matter, here is a quick starter guide.

As we all know ideation is a dime a dozen. Even getting the patent is only one piece of the puzzle. But with just a little added knowledge you can have a patent granted and start business talks with large organizations (healthcare or otherwise). 

My hope is that reading this short guide will give you confidence to protect your novel ideas.

Let’s start with defining the major patent types:

1. Utility Patents

• These are the most common type of patents and cover new and useful inventions or discoveries, including processes, machines, manufactured items, or compositions of matter. They also cover improvements to existing inventions.

• Examples: New software algorithms, medical devices, machines, or chemical formulations.

2. Design Patents

• Design patents protect the ornamental design or appearance of a product, rather than its functional aspects. This patent type covers the unique visual qualities of a manufactured item.

• Examples: The shape and design of a smartphone, furniture, or a fashion item.

3. Plant Patents

• Plant patents are granted to anyone who invents or discovers and asexually reproduces a new and distinct variety of plant. These patents protect newly created or discovered plants that are reproduced through methods other than seeds, such as grafting or tissue culture.

• Examples: New varieties of fruit trees, flowers, or other plants.

4. Provisional Patents

• A provisional patent is a temporary patent application that allows the inventor to secure a filing date for their invention while giving them an additional year to develop the invention further or seek funding. It is not a full patent but provides a way to protect an idea while preparing to file a non-provisional (utility) patent.

• Examples: Early-stage ideas or inventions that require more development time.

5. Non-Provisional Patents

• This is the standard patent application that, once granted, becomes a utility patent. It requires a detailed description of the invention and how it is different from existing technologies.

• Examples: Fully developed inventions ready for commercialization.

Now, to determine if your patent is worth pursuing, instead of starting where many inventors do, with a “prior art search” (the term for an extensive foray into patent databases to see if someone already holds your exact patent or one that would make yours “insufficiently inventive”), it’s worth knowing if there is a demand for your product.

Evaluation of the total addressable market, or TAM, will be the best first step.

Total Addressable Market (TAM) more specifically refers to the overall revenue opportunity that is available if a product or service were to achieve 100% market share within a specific industry or market segment. It represents the maximum demand for a product or service in a particular market, without considering competition, market penetration, or potential operational constraints.

Here is an example of how to assess TAM for a hypothetical diabetes management solution which is a mobile app for tracking blood glucose levels, diet, and exercise, along with telehealth services for diabetes care…

1. Identify the Market Segment

   - The target market for this product includes people with diabetes (both Type 1 and Type 2).

2. Estimate the Number of Potential Customers

   - According to the International Diabetes Federation, over 530 million adults worldwide were living with diabetes as of 2021.

3. Determine the Average Revenue per User (ARPU)

   - If a company charges $500 per year for access to its diabetes management platform (including the app, telehealth services, and any additional features).

4. Calculate the TAM

   - TAM = Number of potential customers × ARPU

   - TAM = 530 million people × $500 per year = $265B annually

It assumes that every individual with diabetes would use and pay for this specific product at the given price point, which gives a clear picture of the market’s maximum revenue potential.

You will later want to make a few other considerations, including how much of the TAM pie you will realistically be able to capture. Some considerations include industry standard ratios, whether your device provides a 10X quality service and thus may be able to compete on a national scale, and whether your device is an adjunct/assistive device to an existing product.

Once you see that there is an enormous market share, keep going. Your prior art search begins.

To conduct a prior art search for patents:

1. Use Keywords: Use relevant technical terms, synonyms, and variations related to your invention.

2. Use Patent Databases: Search databases using keywords, and inventors' names if you have them.

Key Patent Databases:

- [Google Patents](https://patents.google.com/)

- [USPTO (United States Patent and Trademark Office)](https://www.uspto.gov/patents/search)

- [Espacenet (European Patent Office)](https://worldwide.espacenet.com/)

- [WIPO (World Intellectual Property Organization)](https://patentscope.wipo.int/)

Now you have a sizable market and an invention that seems unique enough. 

How do you know if it actually will pass muster?

To be eligible for a patent, an invention must meet several key criteria. These criteria ensure that the invention is genuinely innovative and worthy of patent protection. The primary criteria for patentability are:

      1.Novelty

   - The invention must be new, meaning it has not been publicly disclosed in any form before the patent application date. This includes previous patents, publications, or public demonstrations.

   - Example:If your invention has been described in a journal article or a prior patent, it lacks novelty. Even if it is not patented yet, a person who publishes on an invention first owns it.

    2. “Inventiveness” (or Non-Obviousness)

   - It should not be obvious to someone with ordinary skill in the relevant field, which is also tied to the reason it takes time for new and potential adopters to accept your groundbreaking idea. Also note that this area is one of frequent debate and litigation and which is why I strongly recommend working with a patent professional, ideally from a premier patent prosecution firm. This can cost around $10-15k for a “straightforward” invention.

    3. Utility (Industrial Applicability)**

   - The invention must have some practical application or be useful.

    4. Patentable Subject Matter

   - The invention must fall within the categories of subject matter that can be patented. Generally, this includes processes, machines, manufactured items, and compositions of matter. Abstract ideas, natural phenomena, and laws of nature are typically not patentable.

   - A new machine or a method for manufacturing a product would generally be considered patentable subject matter.

These criteria collectively ensure that only genuinely innovative, useful, and clearly described inventions are granted patent protection.

When it comes time to actually writing the patent, talk to a patent prosecution specialist first. Someone that was previously a USPTO office examiner would work well. If you decide not to take this step, you will likely have significant delay in a patent granting date.

You should look at an example of a similar patented product and mirror the language and format as much as possible.

When doing so you will notice a few particularly confusing terms, the most critical of which are independent and dependent claims.

In a patent application, claims define the scope of the patent's protection.

    1. Independent Claims

   - An independent claim stands on its own and does not rely on any other claims in the patent. It defines the broadest scope of the invention and includes all the essential elements necessary to describe the invention.

   - Structure: It contains a preamble, transition phrase (like "comprising"), and a set of elements that describe the invention.

   - Example: “Claim 1: A machine for making coffee, comprising a water reservoir, a heating element, and a coffee brewing chamber."

   - Independent claims set the broad boundaries of the invention's protection. If someone creates a product that includes all elements of the independent claim, they may infringe the patent.

    2. Dependent Claims

   - A dependent claim refers back to and further limits an independent claim or another dependent claim. It adds additional features or details to narrow the scope of the protection.

   - It typically starts with a phrase like "The machine of claim 1, wherein..." and then specifies additional elements or variations.

   - The only real way to wrap your head around this one is to look at a few patents, but here are a few examples: 

“Claim 2: The machine of claim 1, wherein the water reservoir is removable."

“Claim 3: The machine of claim 2, wherein the heating element is a stainless steel coil."

   - Dependent claims provide specific embodiments or refinements of the invention described in the independent claim. They offer additional layers of protection, covering more specific aspects of the invention.

Understanding the difference between these types of claims is crucial for drafting strong patent applications that effectively protect your invention while covering various possible embodiments or versions.

With the illustrations section I highly recommend you have an artist take your sketches and turn them into USPTO-style art.

You will have your flag in the sand once the provisional is granted, and don't worry, you can make changes for the non-provisional, or the big bad daddy of patents. 

Once you hold even a provisional patent in hand you can relatively safely open up discussions with potential customers, including large firms.

The main caveat here is that you are NOT covered globally with your patent unless you file what’s called a PCT, which can cost around $10k.

The Patent Cooperation Treaty (PCT) is an international treaty that provides a unified procedure for filing patent applications in multiple countries simultaneously. The PCT is administered by the World Intellectual Property Organization (WIPO), and it enables an inventor to seek patent protection for an invention in many countries with a single application.

The PCT has over 150 members including in Europe, Japan and Canada which happen to be the biggest healthcare product markets outside of the U.S..

Now let’s say you want physicians you work with to use a medical device you’ve invented and provide feedback. 

First you should register your device with the FDA, another several thousand dollar spend unfortunately.

If your invention happens to be class I (there are 3 classes) meaning it is something relatively simple like forceps, you will be what’s called 510K exempt and you won’t need to get 510k approval, which is its own hurdle, and I recommend looking at the USPTO website for those details.

If you are 510k exempt and FDA registered, make sure you meet industry safety standards and then consider getting it out to users.

And in general please talk to someone who has worked for the FDA and knows the ins and outs of regulatory hurdles before you do anything like package and sterilize a device, for example. 

If you meet with firms that have extensive line catalogs that would more readily distribute and sell your product in house than if you tried to do it on your lonesome, here are a few thoughts:

If you have a provisional patent and aren’t sure of your products’ user adoption likelihood, consider taking what you can get, especially in this pre-patented stage.

Maybe you exit at this stage.. An example of a technology that was sold pre-patent is the acquisition of the biotech startup Exosome Diagnostics, with their pre-patent liquid biopsy technology, by Bio-Techne Corporation in 2018. The technology, which was still in the pre-patent stage at the time, was part of a deal valued at approximately $575 million. This technology was designed to detect genetic mutations and gene expressions from exosomes in bodily fluids, offering a non-invasive way to diagnose and monitor various cancers. 

This case illustrate the willingness of companies to invest substantial amounts in pre-patent technologies that show strong promise in their respective fields.

Royalty rates for inventions in the pre-patent status can vary widely depending on several factors, including the industry, the specific technology or innovation, the potential market value, and the negotiating power of the involved parties. 

However, there are some general trends: . For pre-patent technologies, royalty rates might typically range from 1% to 5% of the net sales or revenue generated by the product or service utilizing the technology.

In the licensing market, royalty can be paid in several different forms, including percentage royalty rate based on sales or other profit or cost measures, lump sum payment, milestone payments, or some combination of the aforementioned. According to the 2017 High Tech Deal Term and Royalty Rate Survey Report of the Licensing Executives Society, USA and Canada (LES USA and Canada), more than half of the licensing deals were executed with sales-based percentage royalty rates. 

Milestone Payments are another consideration in bargaining. In addition to or instead of royalties, licensors might negotiate milestone payments, such as payments upon reaching certain development stages or upon patent issuance or a number of units sold.

Whether you exit at the pre-patent stage or take your invention to the finish line, from someone who has been through the patent process personally, don’t let the red tape intimidate you and good luck with your groundbreaking idea!