A Patent Reality Check: When Does it Make Sense to Get a Patent?

Have you built a better mousetrap?
If so, you need to figure out how to sell
it before you patent it.

People are unquestionably ingenious and many believe that such ingenuity can lead to great financial rewards.  Indeed, most of us have heard our entire lives that “if you build a better mousetrap and the world will beat a path to your door”.  This combination motivates countless people each year to expend the time, effort and money needed to file and obtain a US patent on their idea.  In recent times, the number of patents filed yearly has approached 400K, with about 20% of these estimated to be filed by small businesses (as this term is defined by the Small Business Administration) and individual inventors. 

As a highly experienced patent attorney, I have benefited greatly from the perceived need to protect innovative ideas with patents.  But after years of writing patent applications that created little to no business value for my clients, I have decided that at this stage of my career I will only take on patent matters that are a critical aspect of capturing a significant aspect of the value available in a well thought out and executable business plan.  In other words, in my role as co-founder of the Lean Legal Team of Michael / Hutter, I will only obtain patents for clients if there is a realizable opportunity to make money from the innovation.

What do I mean by realizable business opportunity?  First and foremost, licensing is not one such opportunity. While a strong majority of inventors believe that they can license their idea upon obtaining a patent, the reality is that almost no patents are ever licensed when the sole aspect of the license is the patent itself.   Certainly, there is much press activity addressing the problem of “patent trolls,” the patents that are suitable for “trolling” only comprise a small minority of the total number of patents in force today.  Notably, however, the reason that such patents ever get licensed is that an existing or soon to exist business model infringes the patent owned by the “troll,” and the license is entered into to avoid litigation.

The In-House Solution

In-house counsel swims in the same tank as their clients
and know what the water is like.

I once had a very esteemed corporate partner at the very esteemed law firm where I first cut my teeth practicing law tell me that, although he appreciated the positive effects that technology like computers, fax machines (this was back in 1996 or 97) and email were having on the practice of law, he was not so happy with the pressures the technology created.  Specifically, in his opinion technology had changed client expectations such that they expected answers almost immediately, or as they used to say in my hometown of Mobile, Alabama – “quick, fast and in a hurry.”  Most clients think that “quick, fast and in a hurry” is a great thing (i.e., cheaper legal bills).  The truth is – that’s not always the case.

While it is true that some legal work is routine and can be cranked out quickly and reliably by an efficient and knowledgeable attorney, there are those legal issues that require more cognitive time.   These issues are not black or white, but the grayest gray.  These are legal issues that are inextricably linked to important business issues and, thus, require more than a superficial understanding of the client’s business and strategic objectives.   An attorney with a deep understanding of a client’s business is able to give more informed legal counsel, which leads to better business decisions.   However, in order for an attorney to gain this knowledge he must spend costly billable time interacting with the client, which results in larger legal bills.    

Large corporations were the first to realize that legal expenses could be reduced and results improved (especially for those problems that require a thorough understanding of the corporation’s business) by hiring attorneys as full-time employees.  Often referred to as in-house or corporate counsel, these attorneys give large corporations a distinct competitive advantage.  In-house attorneys are able to develop knowledge about the business and goals of their employer that inevitably leads to better decisions.

Until recently, only large corporations were able to afford to hire dedicated in-house counsel.  However, the Lean Legal Team at Michael/Hutter offers an in-house solution for smaller companies that gives them this same competitive advantage at a reasonable cost.  Michael/Hutter is able to do this by utilizing the latest technology and lean methodologies to deliver its services.  The Lean Legal Team offers in-house counsel services for a fixed monthly amount tailored to the needs of the client.  Visit our website  (Michael/Hutter) to find out how The Lean Legal Team at Michael/Hutter can help improve your business.