Patents · Ip

Patent filing costs and equity

Kristina Serafim Digital Media

February 9th, 2014

What's the typical cost for filing a patent? Would you give up equity in exchange for the attorney fees, if the attorney is offering this option? How much equity is reasonable for an early stage start-up? Can you recommend a good patent attorney?
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Labhesh Patel Chief Data Scientist at Abzooba Inc.

February 9th, 2014

Hi Kristina,

Patent filing costs vary significantly from firm to firm. I have paid anywhere from $15K to $1.5K for a full patent filing. I should qualify that by saying that in the case when I paid $1.5K, I wrote significant portions of the full patent. I  think a typical range would be $4K-$5K. 

If you are an early stage start up, you might want to consider whether you need a full patent right now. You might be able to get by with a provisional which is significantly cheaper. The provisional will give you one year before the full patent is due - basically you get the priority date of the filing day of the provisional. In one year, you get a lot of clarity around product which is way more important than the actual patent. And this is coming from someone who has filed 175 patents and has 120 issued patents from the USPTO. :)


Nadia Shalaby Entrepreneur

February 9th, 2014

hi Kristina, i had a company where i had written most of the patent "spec" myself, and got "consulting" help for "Draftsmanship" since the figures (especially in mechanical and physical engineering and sciences) need to adhere to a very specific drawing style, and there are people who do this for a living. Having said that, in another company, because the scale of our envisioned product and market size was in the billions, we were able to obtain a deferred fees arrangement with our attorney firm of choice (all the ones we interviewed had given us this offer, deferred fees to up to $20,000). So I would not recommend discussing any equity arrangements, but rather a clean deferred fees arrangement. It worked out well, and everything was paid retroactively after the conclusion of the first institutional round of funding. 

Also note that when there is a limit on the spending, the attorneys are more motivated to do things inexpensively, file provisional, keep the number of claims to the standard number prescribed by the USPTO, etc. 

George Arison Making car buying, selling, and ownership a delightful experience

February 9th, 2014

Check out https://www.upcounsel.com/, pretty easy to find great attorneys at reasonable costs there.

John Duffield

February 9th, 2014

Sam herting is an IP attorney in silicon beach. Great and affordable. Happy to make personal intro. I use him for my business. Sent from my iPhone

Anonymous

February 17th, 2014

I recently did a pretty in-depth search for a patent attorney and learned some things (which may be well-known to more experienced IP wranglers):

 - When you search for attorneys, you are looking for "patent prosecution" or "patent counseling" services. Prosecution sounds like lawsuits, right? In this case it doesn't involve lawsuits; it means helping you prepare your patent application and shepherd it through the process.

 - There are about a billion patent attorneys out there and they vary widely in their activities and subject matter expertise. My innovation involves a sort of social interaction online. It was important to find someone who understood why this is potentially patentable and could expertly search for prior patents that might be related. In my search, I found a lot of expertise in areas like semiconductors, chemistry, consumer products, biomedical...and really not much expertise in Internet innovations. I ended up finding a firm on the west coast that I feel is a great fit. Read the attorney bios. Also don't be shy about calling one and having a conversation. I cold-called three and all were happy to have an initial conversation.

 - Some searching tips. On USPTO.gov, go to the advanced patent search. You can look up patents assigned to companies you like or who are doing similar things, and then find out who represents them. For example:
  • AN/apple
AN = assignee name. This will find all patents assigned to Apple. Look at some individual patents and on an individual patent page, search for "attorney". You'll find out what law firm advised the company. Big companies may use a variety of different firms, and these may or may not be right for your situation.

You can also find the patents that a law firm filed, to see what their expertise is:
  • LREP/Orrick
  • LREP/Orrick and ABST/geolocation
The first will find all the patents in which the firm Orrick was the legal representation. The second will find all the patents represented by Orrick which refer to "geolocation" in the abstract.

Good luck! If you want more information you can message me.

Rob G

February 10th, 2014

Kristina, just to clarify, "filing" a patent application is the easy part. "obtaining a high-quality patent" is harder and much more expensive.  If you do much of the drafting of the application yourself (and i think you should) then the attorney fees to draft claims and file can be $2.5k or less.  understand that the USPTO charges fees and your attorney charges fees.  Your attorney may differ his/her fees or take equity in exchange, but the PTO won't so there are some hard costs you can't avoid.  "how much does a patent costs?" is like asking "how much does a car cost?".  It depends on a lot of things, but quality is the key component.  If you want a run of the mill patent for marketing purposes then you could spend $10-20k.   If you want a high quality patent to defend your market the sky's the limit, but $50-100k is not out of the question.  Like any legal process that involves lawyers and courts (in this case the USPTO) the more 'conflict' the more time it takes and the greater the billable hours you will be expected to pay.   "filing" a patent simply starts the battle.  Understand that the patent examiner's job is to deny your patent, period. Your lawyers' job is to show the examiner he/she was wrong in denying your claims.  That cat and mouse game can last for years and that is typically where the costs escalate.  You need to be prepared to do much of the heavy lifting to prepare your filing.  You will need to do most of this work anyway even if your lawyer drafts the entire application.   i would suggest spending some time on USPTO.gov and studying some patents that may be in a similar space to yours - i.e. a mechanical device, an electronic device, a design patent, a methods patent, etc. so you are familiar with the format and 'language' of patentese.  Find a few good applications made by large companies and follow their format and 'language' (not the words, but they style of wording".  Ask a patent attorney with experience in your field to consult with you to get you started.  Then draft your own application, draft your own drawings, etc. i would not recommend trying to draft your own claims.  When you feel you have a solid application then ask your patent attorney to polish it up and add the claims. You can defer the "real" application for 12 months after filing a provisional application, but understand that there is no flexibility in that deadline.  You must have your 'real' application complete and filed within 12 months.  I'm not sure if the PTO publishes provisional applications or not, i don't believe so, but find out.  

Ronan Levy Entrepreneur, Advisor, Lawyer

February 9th, 2014

I echo Labhesh's comments. Your first question should be: is this actually something worth patenting? Even if you meet all the criteria for a patent (i.e. novelty, non-obviousness, utility), if a patent is not core to your business strategy and competitive differentiation, then it may not be worth the effort and cost of patenting. 

Any lawyer with his or her salt (and there aren't that many who are) should be asking you that question first: does it actually make sense to patent this for your business? If he or she doesn't, then look for a new lawyer as the first one isn't doing you any justice by not truly understanding your needs. 

I can recommend a great patent lawyer in Toronto, if helpful. Otherwise, I'm happy to ask around for recommendations in San Francisco. (FYI, in addition to my entrepreneurial pursuits, I'm still a qualified lawyer.) 

Ronan

Kym McNicholas TV Host, Tech Jounalist, Director of Extreme Tech Challenge, Host of KDOW Radio's NewFocus On Innovation

February 9th, 2014

I love Royse law. 1/4% I think is fair for equity. Sent from my iPhone

Mitchell Portnoy Healthcare Information Executive

February 9th, 2014

You can file a provisional patent for a few thousand dollars, but it could cost you $20,000 or more to file for a utility patent which might not include filling costs in the US or outside the country. Equity is tricky but should in few cases be more than a few percent. Many entrepreneurial law practices will accept equity as payment (but there is a limit), especially in Silicon Valley. Mitchell Portnoy mitchell.portnoy@gmail.com

Ranjit Sawant Product Management and Marketing at Vaayoo Inc

February 9th, 2014

I dont think you should be giving *any* equity to a patent attorney. If you are a early stage start-up, with little money, dont waste it by engaging a patent attorney at this stage. Even if you engage one, you will do most of the work, they will just add legal verbiage. I learnt it the hard way after spending around 20K on patent. My recommendation would be to file a provisional patent using website like LegalZoom. They charge $180.  It will give you 18 months of time before you file the utility patent. Plus your claim and priority date is the one from Provisional.

regards,

Ranjit Sawant
Founder , http://www.vaayoo.com
Got Ideas!! Launch startups with no upfront costs and minimum risk.
cell: 9807225857
ranjits@vaayoo.com