Podcast Transcript - Patents: Fuelling the fire of genius

Host: Michael Mancini

It’s no surprise that Chester Carlson, the inventor of the photocopier, struck it rich at Xerox. The same was true for Conrad Weiser, who was paid big bucks by Proctor and Gamble for inventing fabric softener laundry sheets, which he developed at home in his own clothes dryer. What do these inventors have in common? Well, in addition to eventually becoming rich, they had patents working for them. While these inventors got rich, we know from reading the financial pages that this is not always the case. The business headlines are filled with companies whose stocks are taking a pounding over patent disputes. So before you run out and patent your incredible invention, you might want to hear what my next guest has to say. I’m Michael Mancini, editor-in-chief of CanadExport, the magazine of the Canadian Trade Commissioner Service for entrepreneurs who want to trade, invest and prosper in the global marketplace.Look for our magazine at canadexport.gc.ca.

My guest for this podcast is Mr. David French, an intellectual property lawyer with Miltons LLP in Ottawa. Thanks for speaking with me today, David.

David French: Hello, nice to be here. I’m looking forward to this conversation.

Michael Mancini: So, first of all David, can you briefly define intellectual property for our listeners.

David French: Well, intellectual property means the rights created by governments which allow a person to control a specific activity. Examples are inventions, patents for inventions, trademarks, copyrights and designs. And in every case the owner has a monopoly over specific subject matter.

Michael Mancini: Okay, now let’s delve into the world of patents a little more. What’s a patent?

David French: A patent is a document that gives the owner the right to prevent others from exploiting a specific invention for a limited number of years. The typical duration now is 20 years from the date of filing. You have to get patents on a country by country basis. They’re not easy to obtain, and are highly specific as to what can be controlled. There are three kinds of patents. There’s an actual monopoly patent that controls and protects you from competition. The second kind of patent is not a bad patent, but it’s not a monopoly patent, it’s a publicity patent. Your sales department asks, “Let’s get a patent on this so we can get a distributor over in Europe.” And then the third kind of patent which is unfortunately the most common, it’s a vanity patent, or an inertia patent. A vanity patent because the president thought of the idea and you just carried through and got the patent. Or an inertia patent because you filed, you spent all the money, the examiner found something really significant, and all that’s left is some small feature, and you say, “Well let’s finish it off so that we won’t have wasted our money”. So this is what you have to do when you go into the patenting business, you have to understand what you’re getting for your money.

Michael Mancini: So, who should be looking to get patents?

David French: Well, if you’ve made a good invention that people want to buy, and which you can produce at a price that would be acceptable, then if you get a patent you should do so. The patent will not help your invention succeed. But if the product is really good, if you have success with your product, having a patent will enhance your profits.

Michael Mancini: So now, as I understand it, patents don’t apply to for example a bike, but rather a part of a bike that makes it work better, is that right?

David French: That’s a specific feature of a patent. A lot of people have the conception that a patent is on the general object or article. The patent is always on a specific feature. The Wright Brother’s aeroplane, they had a specific feature on their aeroplane that was being patented, the warping of the wings. They didn’t get a patent on the aeroplane. You always get a patent on a specific feature.

Michael Mancini: Okay, now I can just hear my readers and listeners wonder out loud about the costs associated with patents. How much of a financial investment should firms plan to make.

David French: Well, I used to say that patents are going to cost $4000, or $5000, or $6000 to prepare and file and maybe another few thousand dollars to complete a few years later. But now I tell people that patents cost $10-20 thousand. However, even the simplest invention can run into complications when you’re preparing and prosecuting a patent application before a patent office, so you should be prepared for the possibility that the costs will rise.

Michael Mancini: Can you give me an example of a kind of complication that you’ve seen happen?

David French: The worst complication is that the patent examiner finds a piece of prior art and you realize that you’ve written a patent addressed to a specific feature, and that you realize now that you’re going to have to choose another feature. Well, at that stage, you’re stuck with the story in the original patent, and you have to sit down and spend time discussing it with the examiner on the phone and with the inventor and you can even have an interview with the examiner, but taking an interview with an examiner is an example of something that would raise the cost.

Michael Mancini: Now how much time is required to figure out if you need a patent, and once you’ve figured that out how much time is required to get a patent done right?

David French: Well, if you think you have a good idea, you should investigate whether the idea is new. That means ordering a patent novelty search. You would normally do that through a patent agent or a search firm, and the turn around time can range from 2-4 weeks. You review this search and if it appears that you’ve got a feature that hasn’t been located in the search, then you would start the process of drafting a patent application. There’s a give and take, back and forth, between the examiner and the patent agent, and that could take 4, 6, 8 weeks depending on how quickly they act. And then finally you would file your application at the patent office; in fact, you only have to file in one patent office. If you file in one patent office, that reserves your right to file a complete patent application one year later around the world. Your first filing sets a kind of priority deadline. You have to complete subsequent patent applications within one year, and then generally patent offices take as much as 2 and 3 years to process your application.

Michael Mancini: Okay, now let me just be clear. You did mention that you have to file applications on a country by country basis. Are you saying that the first time you file an application, it is valid as of that date, and you then have a year to apply that patent in the different countries?

David French: That’s right. This is a principal that was established under the Paris Convention in 1883. If you file an application in one country, everything that you’ve explained in that document will be taken as being entitled to the filing date of that first application. Now if you’re going to go to other countries and claim the benefit of that priority filing date, you have to do so within one year. An advantage of this is that when you go to the other countries a year later, you can upgrade the story. So when you do go to your multiple countries, you can improve the story, and that’s an enormous advantage because once you enter the patent system proper of any country, your story is frozen. You can’t change what you’ve described; you can pick a different feature but you can’t change the story.

Michael Mancini: So what are the consequences of not acting? What are the consequences of not getting a patent?

David French: Well if you don’t file for a patent, then anyone else is entitled to use the invention. A patent is the right to stop other people. You don’t need a patent to manufacture yourself, a patent isn’t a certificate entitling you to go into business, it’s the right to stop others. So if you don’t get a patent you’re going to be faced with the risk of competitors. You know, there’s a saying that “If you build it, they will buy it”. I don’t know if that’s entirely true, but I will say this: If they buy it, somebody else will try to make it. That’s where your patent becomes relevant. If you don’t have a patent, you have to put up with competition.

Michael Mancini: Now we often hear that even inventors who create things and get patents, even that doesn’t necessarily mean that you’re entirely safe. Is that right? I mean we read about this all the time.

David French: You only get a patent on the feature, and when you sit down and draft a patent, you should do some really careful thinking about what it is you’re going to try to patent. You can end up patenting a feature and find out later on that there’s other ways to do it. So you actually never know how powerful your patent is until the market has matured and you see what other people are able to accomplish. If yours is the only way to achieve a valuable result, then you’ve got a valuable patent.

Michael Mancini: So how challenging is it then to handle markets where the enforcement of IP, or patent laws, are lax or unreliable?

David French: It’s true, there are many countries where the court system is not as, shall we say, honourable as we have in our western developed democracies. But increasingly in countries like Japan and in India, you can enforce a patent in these countries. The truth is that wherever you try to enforce a patent it’s going to cost you a great deal of money, and if you’re going to enforce a patent in the United States you’re going to spend many hundreds of thousands of dollars, sometimes passing a million dollars, on ordinary patent litigation, and that’s the low end.

Michael Mancini: So then, this would be particularly challenging for SMEs.

David French: Well it’s almost impossible. And one of the things that you can do is that you can consider finding a licensee or somebody to partner with you and they can manage the litigation. Now I would say, by far and away, the greater part of patent disputes are settled without going to court.

Michael Mancini: I’d like to touch on something you just said, and that is about finding a licensee and a partner. How should Canadian companies, especially SMEs, go about finding a licensee and a partner to find that patent, to get that patent?

David French: First of all, you’re going to look for a licensee if you’ve obtained a patent in a foreign market. Now I’ll give you an example. Let’s say that you’re going to go to Europe, and your market’s going to be United Kingdom, France and Germany. It would be a very good thing to have a patent in those three countries if you’re going to look for a distributor. Distributors would feel comforted to know that if they spend money and develop the market, someone else isn’t going to come in with a product from Japan and take advantage of the promotion. But if it’s a product that can’t be shipped from Canada, for instance something made of heavy steel or concrete then you would want to locate someone in those foreign markets who would manufacture your product under license.

Michael Mancini: So how important is it then to tailor your IP strategy on a country by country basis?

David French: You shouldn’t be spending money on countries that you’re never going to exploit. Your market is where you should be getting your patents, and if you know that there’s a potential manufacturer who could be producing a competing product… let’s give an example. All over the world people use power tongs in the oil industry to rotate pipe. Well, Taiwan and China, particularly China, are now making these kinds of oil tools. So even if you’re not going to sell your oil tools in China, you would maybe take a patent out in China because that’s where an infringing power tong would come from; but you would certainly take patents out in other countries where you know you’re going to sell your power tongs, and that could be United Kingdom, Norway for the north sea, maybe Denmark or some of the other countries, where you know you have potential customers.

Michael Mancini: How challenging is conducting that research you were talking about? That research into the prior art?

David French: You know, it’s possible to do some research yourself. If you go on the internet to United States Patent and Trademark Office, that’s the U.S. Patent and Trademarks Office, they provide an absolutely marvellous searching database. Remember, you’re trying to find your own idea. If you search and search and don’t find it, it doesn’t mean it’s not there. So although you can go to the U.S. Patent Office and do this searching, ultimately you should probably hire a professional searcher.

Michael Mancini: Tell me about some things that Canadian companies can do in house, in their own offices that can help them handle what seems like the increasing need for patent protection.

David French: You’ve got to have someone inside your organization who understands the process. Ideally, you’ve got to have someone there who will alert people to pay attention when they have something that’s prospectively patentable. It has to be a new idea, but then you have to ask the next question: Is this worth patenting? Is this feature a have-to-have-it feature?

Michael Mancini: David, do you find that Canadian companies are able to manage their own patent, or intellectual property requirements?

David French: Large companies have inside patent agents, and inside patent attorneys, but small companies start off with the president doing everything. But when a company has 20 or 30 employees, it’s time to designate someone to take over this role. I have coined the expression “Intellectual Property Coordinator”. This is the person who should be a liaison between the outside professionals—you can’t do without them, patent and trademark agents and lawyers—and the inside people within the corporation. This kind of position doesn’t typically exist in small companies and if a company is going to be intellectual property aware, they’re going to hire or designate someone in their organization to take on this job.

Michael Mancini: Well, we’ve clearly only begun to scratch the surface of patents really. Where can exporters go to learn more about this and the other aspects of intellectual property rights?

David French: Go to the U.S. Patent Office. Go to the Canadian Patent Office. And patent offices in various countries around the world. They all post guidelines on patenting. The amount of literature out there is enormous, and of course you learn by doing. You have an example of an invention, you bring in a patent attorney, you work with the patent attorney and you learn from the experience.

Michael Mancini: Any final words of advice for Canadian firms?

David French: Find out what the level of understanding is in your organization about patents, trademarks, copyright and once you realize that you don’t have a full command, designate someone in the organization to become knowledgeable, bringing in people to speak to your staff. That’s the most important thing to do, is to acquire the knowledge within the corporation so that you can manage intellectual property.

Michael Mancini: Well, thank you very much David. I appreciate the time you’ve taken.

David French: Pleasure. Thank you.

Michael Mancini: I was speaking with David French, an intellectual property lawyer with Miltons LLP. He was speaking to me from his office in Ottawa.

Well, that’s all for this podcast edition of CanadExport. If you’ve found this show interesting, and you’re currently preparing to do business abroad, or if you are already, be sure to give the Canadian Trade Commissioner Service a call. It is Canada’s most comprehensive network of international trade professionals. We can offer expert advice, problem solving skills and a global network of contacts, including good international patent and trademark agents and lawyers. So check us out online at tradecommissioner.gc.ca to learn more about the benefits of the Canadian Trade Commissioner Service. While you’re there, don’t forget to subscribe to CanadExport, our free twice monthly magazine. You can also download our other podcasts at iTunes with the search word CanadExport. We’d like to hear what you think of our podcasts, so write a review on itunes or drop us a line at canad.export@international.gc.ca. Your feedback is appreciated.

I’m Michael Mancini, signing off for now.

To download our other episodes, just go to www.canadexport.gc.ca or go to iTunes and use the searchword “CanadExport.”