Budgeting for a Patent

ATMAC Jan 01 2019

The initial investment required to draft and file a patent application depends greatly on the complexity of the invention. A more complex invention means more figures, more description and higher drafting costs.

Another factor that affects the budget is identification and refinement of the subject matter to be included in the application. Applications that include multiple inventive features have a greater chance of being allowed by the patent office and of being held valid by the courts during litigation. This is because each different feature and embodiment can act as a fallback position in the event another feature is found to be lacking in patentability. The more fallback positions, the greater the chance you’ll get a patent and the stronger it will be when you do.

R&D teams don’t naturally recognize patentable subject matter

The research and development (R&D) teams in many small and medium sized companies are generating patentable ideas without even knowing it. To a busy developer or engineer, creating inventive solutions is routine and nothing special. It’s just what they do.

Employment agreements should require disclosure of all potentially patentable ideas to company management; however, R&D team members often don’t recognize when the very projects they are working on and the brainstorm ideas they are having are patentable.

Without a patenting process in place to capture these ideas, patent rights evaporate into thin air. Failure to capture patentable ideas represents a tremendous loss of value to the company.

Ongoing strategic patent capture from R&D teams – $10,000 to $20,000/month

Our strategic patent capture service to capture inventions from R&D teams is designed to solve this problem. Especially suited for companies with innovating teams of 20+ individuals, we come to your office and work with your developers and managers to capture patentable ideas before they are lost.

We attend your feature brainstorming sessions and interview team members on an ongoing basis. As new ideas come to light, we fill out invention disclosure forms documenting the ideas and recording that they belong to the company. We guide you in developing a patent filing strategy to maximize return on investment and put in place a process for selecting which of the collected ideas are valuable enough to make the investment of a patent application. For the selected ideas, we draft and file the applications at the patent office.

Depending on the size of your R&D team and the number of captured and selected ideas, you can easily build a portfolio of ten to twelve pending patent applications within a year at a total cost of around $120k to $240k.

As time goes on, the pending applications are examined by the patent office and we work to overcome rejections and allow the applications to grant as issued patents. We also propose and file continuations and divisional applications to further bolster your portfolio at very little additional incremental cost.

Within a five-year period, your company can build up a portfolio of close to one hundred granted patents and pending applications – all generated from a sustained investment comparable to adding a full-time employee to the R&D team.

Strategic patent application – $6500 to $10,000

For protecting a single invention, a strategically drafted patent application with detailed description and several embodiments for solid protection will typically range from $6500 to 10,000. For best value, we work with you to ensure these patents are drafted to cover design choices and variations that are possible in addition to your original idea. Including variations and other embodiments that achieve the same result as your invention, even when those alternatives are not (or not yet) present in your go-to-market product, helps prevent others from easily designing around the patent.

Placeholder patent application – approx. $3500 to $5000

We have also done some placeholder patent applications priced in the $3500 to $5000 range. These more basic applications are designed for individuals with clearly defined inventions who are looking to preserve their rights on a soon-to-be-launched product. Typically these applications cover simple mechanical inventions for which the inventor has already built a working prototype and/or has computer aided design (CAD) drawings explaining the principle of operation.

Treat patents as an ongoing investment

When considering the costs of filing a patent application, it’s important to note that the patent filing costs are not the end of the costs. You will find many patent related advertisements on the Internet that do not provide any indication of the full costs. We believe it’s helpful for inventors to know about the complete costs upfront rather than only knowing some very low “get-started” fees.

Besides the initial patent application filing costs, there are costs associated with a variety of tasks that may be required various other stages in the patenting process. For example, if the patent application is rejected by the Examiner, there will be costs associated with overcoming those rejections in order to reach allowance. Likewise, if protection is desired in multiple countries, there will be separate costs for similar tasks required in each country. There are costs for allowance in order to the have the patent granted. There are also costs for maintaining the patents.

Total investment for protecting an invention in North America for twenty years – $35,000

The following table illustrates an example of the investment required to protect a single invention in both Canada and the United States for twenty years. As shown, a ballpark upper number for the full investment required to patent an invention in both Canada and the United States in this example is $35,000 CAD. The numbers are rough but realistic estimates given typical complexity. The example assumes the patent applicant is an individual inventor or small business with less than 50 employees (i.e., qualifying for “small entity” discounts at both the Canadian and US patent offices).

Year 0: Small entity filing in Canada

Task Typical investment (CAD)
Drafting new application $10,000
Filing fees at CIPO $600
Misc. after filing costs (assignment, certified copy) $650
  Total: $11,250


Year 1: Small entity filing in U.S.A

Task Typical investment (CAD)
Updating draft for US filing $1000
Filing fees at USPTO $1000
  Total: $2000

 

Year 2-4: Prosecution phase & issuance

Task Typical investment (CAD)
Canada $5000
USA $5000
  Total: $10,000

 

Years 2-19: Maintenance

Task Typical investment (CAD)
Canada $3200
USA $7300
  Total: $10,500

 

Grand total over 20 year life

$33,750

(~$1700/year average)

(~$140/month average

Download a PDF of this example of patent costs

In general, there are fees required at various times throughout the twenty-year life cycle of a patent. Unless you sell the patents and someone else takes over, once you start the process you should be prepared to see it through (or have a predefined exit plan). If you stop paying in a particular country, you will lose your investment and your invention will enter the public domain in that country. Sometimes there are ways to defer fees, but often there are critical deadlines with costs associated therewith and no way to defer past the deadline.

Monthly patent budget

We suggest allocating an initial investment to get a first application drafted and filed in a first country. Set up an ongoing monthly patent budget and accumulate the unused funds from the budget in the months when no costs are incurred so you’re ready to pay larger sums at later times when required.

Return on invention (ROI)

When you average the costs out over the full twenty-year period and consider the benefits that you can obtain by having a strong patent portfolio, you should find it’s not expensive.

Done properly, patents generate more in value than they cost to obtain. They are an investment. The world’s biggest innovating and most profitable corporations continually invest in patent applications. Many file thousands of applications each year. They do this because of the increased value that is created from the investment.

Ready to get started?

Request a Clarity Session or contact us and we will help you get the process started.