1. Patenting High Tech: Domestic and Global Perspectives
National Small Business Innovation Research Conference
National Harbor, Maryland
May 16, 2017

2. Patenting for SBIR Firms: Protecting SBIR Inventions
For SBIR firms, patenting is another method of protecting valuable technological inventions
SBIR laws protect SBIR Data through the nondisclosure obligation on the government (and even on firms that subcontract to SBIR firms for their SBIR technologies)
Patenting, conversely, involves disclosure of the SBIR firm’s technology and at least some SBIR Data within the body of the patent in exchange for the patent monopoly

3. Patenting for SBIR Firms: Trade-Offs to Consider
Patenting and SBIR protections involve trade-offs
SBIR protections arise from the law, are free to the SBIR firm, and don’t involve disclosure of SBIR data or secrets
Patent protections require extensive disclosures
A patent must provide sufficient information in the body of the patent that an individual “skilled in the art” could make or replicate the patented invention
In exchange, the law provides the patented invention freedom from infringement
This is called the “patent monopoly”

4. Patenting for SBIR Firms: Patent Disclosures
A person “skilled in the art” would be someone who knows the technology area, i.e., an engineer, scientist or technician
The patent’s background section describing the invention is likely to include at least some (if not extensive) SBIR Data in the process of making a complete disclosure of the invention
Disclosure of SBIR Data in the patent relieves federal agency officials from their nondisclosure obligation regarding the disclosed SBIR Data when the patent issues to the public
The nondisclosure obligation regarding that SBIR Data is said to be waived because the nondisclosure obligation cannot apply to something that is disclosed

5. Patenting for SBIR Firms: The Nondisclosure Obligation
SBIR Data, on the other hand, involves nondisclosure rights
Federal agency officials (and large firms that subcontract to SBIR firms) are bound by the SBIR clause that must be inserted in all SBIR contracts at any Phase
Both the SBIR statute and the SBA SBIR Policy Directive, which has the force of law, require insertion of the SBIR clause in all SBIR contracts
The SBIR clause protects SBIR Data from nondisclosure
“Nondisclosure” is how Coca Cola protected its formula for years―people cannot copy what they do not know

6. Patenting for SBIR Firms: The Decision to Patent
Decision time: “To patent or not?” is the question
How does an SBIR firm decide whether or not to patent if it can simply rely on the SBIR nondisclosure right for free?
The answer is: “It depends entirely on the SBIR technology.”
The answer may differ from one technology to another
The decision to patent should always be made with the assistance of a patent professional/attorney
This is NOT an area for “can do” or “I’ll do it myself”
Pursue SBIR on your own and with your staff―patent with the help of a patent professional

7. Patenting for SBIR Firms: Four Factors to Consider
How will the patent attorney and I decide whether or not to patent?
Make the decision based on four factors
Is the SBIR invention patentable? (If not skip the other factors)
The SBIR nondisclosure obligation and protection is inadequate
The market is worth the costs of patenting
Costs of patenting, including enforcement, are acceptable
If ALL of these are in place, patenting may make sense
Don’t omit any of these factors in deciding to patent

8. Patenting for SBIR Firms: Patentability
Whether or not an SBIR invention qualifies for a patent is the province and domain of patent attorneys or other professionals
A patent search may be required to determine whether the SBIR invention duplicates prior patented inventions or is so close that it is covered by prior patent claims
This is called a search of “prior art”
A patent cannot protect an “obvious” invention
Patent claims are critical to patentability―careful claims selection can avoid other patents and create and protect a lucrative market―claims choice and careful claims drafting is critical in creating and protecting a market

9. Patenting for SBIR Firms: The Nondisclosure Factor
The SBIR nondisclosure factor:
The nondisclosure obligation may not always help
If the SBIR technology is visible to the naked eye, for instance, the nondisclosure obligation is of no help
Consider the (fictional) SBIR firm that invented the world’s most elegant coffee cup handle―the beautiful shape will become obvious to the public when marketed
Nondisclosure will not apply when the handle is marketed
Software, on the other hand, is almost always assisted, helped, and advanced by the SBIR nondisclosure obligation―software firms are likely to be wary of patenting for that reason

10. Patenting for SBIR Firms: Market Analysis
The market for the SBIR invention is a significant factor
An market extensive, enabled by the invention, and a clear return on investment will justify patent protection
This factor requires the capability on behalf of the SBIR firm owner to understand applications of the invention, the patent claims and which markets they protect, and the potential for return on investment from the market
Not all business owners are capable of this market assessment, and it may require professional assistance
This is particularly true if foreign markets are part of the assessment

11. Patenting for SBIR Firms: Patent Costs
Understand the costs associated with patenting
Some SBIR owners inquire of their attorneys about how much it will cost to file a patent?
Filing costs include patent filing fees, and the costs of your professional/attorney who will assist you
But these are not the only costs of a patent
Enforcement costs can be significant―filing costs can run into the thousands, while litigation defending the patent (before the federal courts, the U.S. International Trade Commission, or foreign courts) can run into millions of dollars if not settled by other means (such as licensing)

12. Patenting for SBIR Firms: Foreign Patents
Filing and enforcing foreign patents can be expensive and determine the outcome of the four part assessment
There are about 200 countries in the world
Even large companies are selective about incurring the cost of filing foreign patents in all or a majority of them
A U.S. patent prevents a foreign company from importing the invention covered by a U.S. patent
That case, if it is litigated, goes before the U.S. International Trade Commission

13. Patenting for SBIR Firms: a Primer on Foreign Patents
With respect to filing foreign patents:
This subject is far to complex to cover thoroughly here
Two foreign agreements cover foreign patenting: the Paris Convention (PC) and the Patent Cooperation Treaty (PCT)
The PC helps to obtain a patent applicable in two or three countries by filing of a certified copy of the U.S. patent application and a translation within one year of the U.S. filing date to preserve the foreign filing
The PCT can be used to file for a patent in all European countries―the cost can be high, depending on the need for translators and other circumstances
Foreign patents can involve translation costs―i.e., these are less for Canada/Australia but more for Korea/Japan/Vietnam, etc.

14. Patenting for SBIR Firms: More on Foreign Patents
The costs of patenting in foreign countries can be higher than patenting in the U.S.
Translation requirements, foreign attorneys and costs of enforcement in foreign tribunals are considerations
For an SBIR firm, these costs risks must be analyzed in terms of the invention, the market, the projected return on investment and possibly other factors
Because the U.S. is a large potential market, many SBIR firms base their market analysis for patenting on the U.S. market alone

15. Patenting for SBIR Firms: Concluding Thoughts
SBIR protections do not protect all SBIR technologies
Inventions that are obvious to the naked eye cannot by definition be protected from nondisclosure
Patenting, therefore, is a vital protection that all SBIR firms need to know about and utilize when necessary
The U.S. market is so large― including the government and private sector―that foreign patenting costs may drive a decision to rely upon the U.S. market alone
However, if foreign patenting makes sense, recognize its complexities and pursue it with professional assistance

16. Twitter: @Metzger20David
David Metzger