The Congress shall have Power… To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries. - The U.S. Constitution Article 1, Section 8, Clause 8
Relatively few people know that intellectual property rights in the U.S. come directly from the Constitution. Most notably exercised through patents and copyrights (and to a lesser extent trademarks and trade secrets), the Copyright Clause is a rare moment of specificity in a document often ambiguous on crucial issues of governance.
Historians, lawyers and political scientists generally agree that this ambiguity has been crucial to the Constitution's long stability, allowing each generation of Americans to interpret their founding document according to the needs of the moment. As constitutions in both the U.S. and abroad have tended to show, no founding document can anticipate a nation's needs over the course of centuries.
Highly detailed constitutions around the world typically break down. Many of the most specific elements of the U.S. Constitution itself have bred conflict and obsolescence. Few Americans, for example, face a foundational threat from quartering soldiers in their apartments. And most honest lawyers will admit that constitutional "Originalism" is little more than a very successful branding exercise. (Unless, of course, we accept that the founding fathers had firm opinions on climate change, the internet and AR-15s.)
Yet for all its specificity, the Copyright Clause thrives. It is arguably more important than ever, as intellectual property-dominant industries contribute nearly 40% of the modern U.S. economy and almost a third of the jobs. These industries include sciences, where patents protect inventions; the arts, with copyrighted films, pictures and novels; and even journalism where intellectual property law can protect not only a reporter's final copy but also the work that went into producing it.
The idea that artists and inventors should own their work is as old as America itself. It encourages people to seek out bold, new inventions, knowing that they will be enriched by their discoveries. It allows inventors to take invest in their research by protecting their right to profit if the work succeeds. And it prevents a nation of free riders from simply stealing the latest good idea and calling it their own.
When it comes to written work, such as books and computer code, intellectual property is protected through copyright law. Inventors protect their work through patents.
Applying for a patent can be a difficult process. An underfunded Patent Office has led many clerks to rubber stamp undeserving applications, and a woefully out-of-date code of laws has encouraged the rise of predatory, rent-seeking patent trolls. There is much about this system that Congress needs to update.
It's a heck of a lot better than the alternative though.
What Is a Patent?
A patent is a monopoly over some idea or invention. In the language of the authorizing statute it is "the right to exclude others from making, using, offering for sale, or selling" that invention in the U.S. AND to exclude others from importing that invention into the country.
Patents are issued for inventions. Specifically, there are three types of patents that the government assigns. We will use the specific language from the Patent Office:
- Utility Patents - These cover any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof;
- Design Patents - These cover any new, original, and ornamental design for an article of manufacture; and
- Plant Patents - These cover anyone who invents or discovers and asexually reproduces any distinct and new variety of plant.
Patent law is based around exclusivity. The person who holds a patent does not necessarily have the right to build or sell their device. They typically can do that, but a patent won't supersede any intervening law or property right that keeps someone from putting their product on the market. A patent only allows you to stop someone else from building, using or selling that same product or one substantially similar.
Patents are issued for a limited time. This is required by the Constitution. Currently a standard patent lasts 20 years from the date on which it was filed, although in some circumstances a patent holder can extend that.
A patent must be new, or "novel" in the language of the statute. This is to prevent someone from taking an idea already in the world and trying to slap their name on it. A patent must also be non-obvious to prevent people from monopolizing basic concepts. Together these are known as the test for "prior art."
Patent law excludes general concepts, abstract ideas, laws of nature and physical phenomena. A physicist cannot patent a new law of quantum mechanics no matter how hard they worked for it.
However, readers should note that this touches on one of the modern flaws in the patent system. While patents are supposed to go to inventors who create real, practical and useful tools, the last 20 years has seen an explosion in what are called "process patents." This is when an individual will file a patent for the general process of doing something in a certain way.
For example, in 1999 Amazon (AMZN) - Get Report patented the process of using one click to purchase something on a website. They did not create a specific technical process or invention allowing users to do this. They merely patented the concept of not re-entering your billing information at every transaction. While this did little to "promote the progress of science," it did force every other website online to either add multiple clicks to their checkout process or pay Amazon a licensing fee.
This patent has since expired.
How Much Does a Patent Cost?
Getting a patent is not cheap.
The costs of patenting your idea can range from under $1,000 to tens of thousands of dollars. Most of this money will go to lawyers, which we will address below. Absent the costs of paying a lawyer, the costs of filing a patent come almost entirely from filing fees to the patent office.
This is not a simple process and it does not involve a simple price sheet. In fact, the Patent Office's fee schedule is extensive. Factors that can determine your specific filing fee include but are not limited to:
- What type of patent you are applying for;
- Whether you are a large company, small business or an individual;
- Whether you are applying by paper or electronically;
- How many patent claims you have filed;
- How many pages your filing is;
- If you filed in a non-English language;
- The type of examination they needed to conduct on your claim.
The most basic filing fee for an individual is $75 if you apply for a utility patent in hard copy. You will then have to pay at least $165 for the search fee and $190 for the examination fees (designed to check your application against existing patents and to make sure it meets the standards for an application).
It costs at least $250 to have a utility patent issued to an individual. Then, over time, you must pay maintenance fees. An individual will owe at least $400 at the 3.5 year mark, $900 at the 7.5 year mark and $1,850 at the 11.5 year mark.
We cannot stress enough that these are the most basic, stripped down numbers. They will almost certainly not reflect your actual costs. In part this is because the process of getting a patent is more involved than its most basic mechanics, and so will likely trigger more fees from the Patent Office. In more important part this is because of:
Attorneys Costs in Patents
As noted above, most of your costs involved with filing for a patent will involve attorney's fees. The first type of legal bills involves application preparation.
Applying for a patent is a complicated process. It has to be done right or else you risk getting your patent application rejected or overturned by a court down the road, and the Patent Office charges steep fees if you need to refile or correct an existing application.
As a result, applying for a patent involves several preparatory steps. Your lawyer first will need to make sure that your patent does not violate prior art (stepping on the toes of a patent that already exists or an idea which has already been shot down as insufficiently novel). They will then need to prepare your designs in a way that explains your idea thoroughly and effectively. This means not only thorough research but also often hiring technical designers to produce appropriately detailed schematics.
This is expensive not only because lawyers in general charge a lot for their time but also because patent attorneys are among the most expensive of all lawyers. An attorney who can also understand engineering is a rare breed, and they bill accordingly.
To save money you can skip this step and prepare your application without a lawyer. Doing so, however, is risky. Your patent may get rejected because it conflicts with an existing issue or because you failed to explain what makes your idea novel. This can often happen subtly. You may have an otherwise innovative product, but if even one small section overlaps with a protected design, that can be enough to trigger a rejection of the entire thing.
On the other hand, your product might get approved. However, working on your own, you may not think to submit a thorough enough design. Unless you involve a lawyer you might accidentally define the scope of your patent too narrowly and allow a competitor to effectively copy your invention without violating your patent. Worse, you might define the scope of your patent too broadly, allowing someone to easily invalidate the entire document.
The second type of legal bills involve defending your idea against someone else who would like to claim it or otherwise block your patent. This can get very expensive. If someone wants to challenge your patent they can do so. In that case, you will have to go to court and pay a lawyer the resulting litigation fees.
There is no upper limit to how much that can cost.
It's never too late - or too early - to plan and invest for the retirement you deserve. Get more information and a free trial subscription toTheStreet's Retirement Dailyto learn more about saving for and living in retirement. Got questions about money, retirement and/or investments? EmailRobert.Powell@TheStreet.com.