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Designing a Patent-Incentive Program?
Posted by
timothy
on Sat Sep 27, 2008 04:40 PM
from the to-the-degree-that-patents-are-good dept.
from the to-the-degree-that-patents-are-good dept.
SoulMaster writes "The company I work for (we are a one-year-old start-up) has recently started filing patents to protect some of its intellectual property. At the onset of the patent process, one of the executives drafted a very basic Patent Incentive Program (PIP) which is now under full review to ensure that it is both accurate and fair. The basics of our original PIP are that inventors receive (or co-inventors share): $500 for each provisional filing, $1500 for an actual patent filing (with full claim-sets defined), and $5000 for any patent that is granted by the USPTO. While the current program seems fair to our staff, we have been unable to find anything to compare it to. Moreover, the revamp of the program is likely to grant an equity stake in the company (via an Options grant) rather than cash payouts. I've scoured Google for information, but because internally documented PIPs aren't generally public knowledge, the results are limited. Thus, I have decided to ask Slashdot users: How does the company you work for handle Patent incentives? Do they have them at all? Are they cash or equity based?"
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I have a very effective program at my company... (Score:5, Funny)
Stanford's patent policy. (Score:5, Informative)
Here's the patent policy of Stanford University [stanford.edu]. This has worked out very well for Stanford.
Re: (Score:3, Insightful)
That is a good patent policy for a university, but I don't see how it could work for a company. For example, at Stanford (and most other universities), the inventors have the right to place inventions in the public domain. I don't see how ANY company could let individual employees make that important a decision on what is potentially a core technology for their business.
Universities almost never want to implement the IP themselves - instead they are searching for licensees that will take the invention and m
Re: (Score:2, Insightful)
It would be nice if there was a "-1, irrelevant" downmoderation possible for responses like this.
The poster didn't ask "should I help in filing patents?" or "what are the ethical questions involved in patents?" -- you're response is roughly as helpful as offering a good recipe for barbecue (ie, potentially interesting but ultimately irrelevant).
Re:Stanford's patent policy. (Score:4, Funny)
It would be nice if there was a "-1, irrelevant" downmoderation possible for responses like this.
It would be nice if there was a "-1, recursive" downmoderation possible for responses like this.
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Re: (Score:3, Insightful)
While I generally agree with you that patents are nearly useless and certainly don't perform the task that they are designed to encourage (aka... promote the development of useful ideas), the issue here is:
If an employer decides to give you some sort of compensation for developing patentable ideas, how much should you be getting for that idea?
Not everybody views the patent system to be as corrupt as you do. Even if it may be broken and a horrible idea on the whole, it is the way business is done today... a
Re: (Score:3, Interesting)
The problem is that there should not be a patent at all. Because patents are just slack for the economy as every economist will tell you. The only leftover the free trade revolution failed to kill in the last century.
Patents for software are in particular dangerous. [stopsoftwarepatents.org]
The fact with patents is that registering a patent is like registering a trade mark. Hire more patent attorneys and you get more patents. And no one asks whether they will produce any return on investment.
An innovative company will bail the lawyers out, invest in real R&D and lobby for patent reform to overcome the madness. Research institutions should not patent at all.
I do not see why your post was moderated flamebait, it seems perfectly well reasoned.
Re:Stanford's patent policy. (Score:5, Insightful)
This is incorrect, to my knowledge. Universities and other institutions engaged in what is essentially publicly funded research do not keep control of the patents that result from research: rather it's the individual researchers themselves who retain control of such patents.
What do you suppose they do with those patents? They start an outside company not affiliated with the university to capitalize on the patent(s) and reap personal profit from it. The university basically doesn't get - or isn't legally entitled to - a dime of that profit. This has been happening for decades.
Frankly, such patentable innovations discovered by virtue of public funding should be registered to The Public Domain (or Public Trust), rather than to individual researchers or even universities. If it's bragging rights they want, they can still proclaim their involvement. If public resources, taxes or the equivalent, made the research possible in the first place, though, then no individual person or institution should be able to claim any exclusive legal ownership of that little piece of knowledge.
(Frankly no one should be able to claim exclusive legal ownership of any bit of knowledge, IMO, but I'm throwing the dissenters a bone here.)
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Re: (Score:3, Interesting)
I haven't read the study, but even if it's valid, it doesn't mean that the total absence of patents is the best overall solution - just that it's better than a specific (albeit real) bad one.
Is that patents as implemented now, or as a general principle? And if you mean the latter - on what evidence?
Both (Score:4, Insightful)
Give a cash bonus plus stock, but make sure you have some sort of review process to make sure the patents being filed are not clearly derivative or otherwise not likely to be granted a patent.
The cash bonus gives people an immediate reward for their work. The stock bonus gives people a sense that they are working on something that will benefit them, and not just their employer, over the long term. The review board keeps people from abusing the system by flooding you with patent applications that are highly unlikely to be accepted.
Just remember, if you make the rewards too small, no one will take the program seriously and no one will put forth any real effort to invent patentable stuff.
patent incentives (Score:4, Insightful)
The review board keeps people from abusing the system by flooding you with patent applications that are highly unlikely to be accepted.
The way to help prevent abuse is to only give incentives for patents that are granted. A cash incentive can be given as soon as the application is approved, then stocks or stock options can be issues periodically. Say if it's 100 stocks after a year 25 stocks are given, after 2 years another 25 stocks are given, and so on. That way if a patent is contested after approval while the person will get something, the employer doesn't have to pay it all out.
Falcon
Parent
Re: (Score:3, Interesting)
The problem with that approach is that the potential payoff is too far into the future to be a real motivating factor. Patents take about 3 years to get through the system and be accepted. Especially for young startups, you can't even rely on the company still being around after that time, never mind being able to honor a long-term commitment after a merger or takeover.
A good policy thus provides a small immediate payoff, combined with a more substantial long-term benefit. As the GP suggests, you of course
Re: (Score:3, Informative)
At our company, all patent disclosures are reviewed by other technical experts to determine their suitability to file. After all, it isn't free to file patents. Thus, there's a scale: Small bonus for decision to file to encourage disclosures, larger bonus for the patent issuing, and a variable bonus some years later on review as I talk about here [slashdot.org].
The technical guy isn't the one that would be flooding the patent office with bogus disclosures in an attempt to write himself an endless stream of bonus checks
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Where I work, we do regular reviews of our issued patents to determine which were valuable and which were not. The valuable ones win the inventors an incentive award. And, since it's a company full of engineers, yes, we do have fancy schmancy formulas that drive the process, and determine the amount
Sorry... (Score:2)
I am pretty sure the discussing that would be a violation of NDA.
The basic premise of the policy is flawed (Score:5, Insightful)
Because more patents are not necessarily better [cnet.com].
Additionally, certain patent acquirement strategies significantly increasethe risk of being the target of patent lawsuits [m-cam.com], because they paint a bullseye on your company's strategic development, enabling patent trolls to predict it, patent "alongside" your development and sue you based on that.
And then there's still this whole patent bubble [huffingtonpost.com] that's still forming, fairly similar to how the whole credit crisis came to be. In time, the value of patents is going to come crashing down just as spectacularly, regardless of how many times you repeat the holy yet hollow mantra "but our intellectual property must be protected!"
Re:The basic premise of the policy is flawed (Score:4, Insightful)
"the fact remains that patents are what drives most research and technological progress in the world"
Which shows that you have no clue about the economic research on the patent system.
Sure, statistic research which measures 'innovation' of a nation by the number of patents granted (or "applied for" as we don't have good data on granting, it takes 4-5 years to examine a patent) will find that more patents mean more innovation but the fact is that the patent system is based on economic voodoo. It is a belief system with the assumption that you can create property.
As it is an incentive system we don't know if an economy is better off with a patent system than without. Therefore a patent system is not "justified". At least in the field of software and business methods and other service sectors the system is very damaging [stopsoftwarepatents.org] as it was not made for these markets.
Parent
And a percentage of ownership of any patent (Score:3, Insightful)
Re:And a percentage of ownership of any patent (Score:4, Insightful)
I think that what offends employees is when a company pays a pittance to an employee for filing the patent, but years later make a huge windfall profit out of suing others. Partial ownership of any such profits or partial ownership in any profits made through selling the patent to someone else would take away this issue. As long as there is no cash gain from the patent, the partial owner does not gain from it.
The scheme would take a couple of other provisions: a royalty free, perpetual license granted to the employer (for us of the patent in its products), valid unless there was a change of control of the company. This would also the company to use the patent, and would allow the employee to profit should the patent become so valuable that the company was bought to get control of the patent.
It the company does successfully use the patent defensively, the employee should get some kind of bonus out of it. The patent may have just saved the company from shutting down, so why not some kind of bonus?
Parent
Err? (Score:5, Insightful)
The entire idea of a "patent incentive program" seems preposterous to me. Why on earth would a company want to incentivize employees to churn out patents? Patents are usually worthless. The vast majority of patents (like 99%) have absolutely no value. Most patents will not yield enough money to recover the $5000 spent on incentivizing the employee, to say nothing about the many thousands spent on patent attorneys.
Generating valuable intellectual property is enormously more difficult, and far more valuable, than patenting things. I could come up with 10 patentable ideas off the top of my head (and I have patents from various employers).
I would also have grave concerns about any company that focused on patents. In almost every such company I've dealt with, they did not have any intellectual property worth patenting. It is an absurd presumption for any company that they will turn out discovery after discovery which warrants protection, or that they will turn out discovery after discovery if they institute an incentive to do so. Instead of worrying about patents, their concern should be having one discovery or one program that is worth anything at all. If they manage that, then they'll be ahead of 90% of startups. But if they concern themselves with protecting intellectual property rather than generating it then they're in big trouble.
However, if the company is insistent on offering incentives for patents, then it should offer incentives based upon how much money others will pay to license the intellectual property and use the patent. If the amount others are willing to pay for a given patent is "$0" (most likely) then the incentive to employees should be nothing.
In other words, if they offer a monetary incentive per patent, then the employee is paid to produce any kind of patent. The idea is absurd. Happily, the USPTO no longer accepts patents for perpetual motion machines, otherwise I as an employee would generate 20 patents just for that.
Re: (Score:3, Insightful)
These systems are not typically run to create an incentive for employees to churn out patents. The employee has already done the invention as part of his/her work and, generally, the company already has the right to patent it without the employee's further involvement. Often, though, the right folks at the company don't know about an invention. So, the program is there to create an incentive for those who know about the inventions to tell the appropriate people in the company.
The incentive has to be larg
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The vast majority of patents (like 99%) have absolutely no value
A lot software patents end up being defensive, so that when Company A threatens Company B with patent violations, Company B can respond in kind. Case in point, from 2002:
http://www.theregister.co.uk/2002/05/13/macromedia_wins_4_9m/ [theregister.co.uk]
Macromedia Inc yesterday said that it won a patent infringement lawsuit it is fighting with rival Adobe Systems Inc, and has been awarded $4.9m damages by the jury, almost twice as much as Adobe was awarded in a relat
Re: (Score:3, Interesting)
Err... they don't. They churn out inventions. The incentive is to get them to talk to the IP group at the company before publication. What the company decides to patent is its own business.
Most patents will not yield enough money to recover the $5000 spent on incentivizing the employee, to say nothing about the many thousands spent on patent attorneys.
1) The utility ratio ("useful" patent out of the total number of patents
Re: (Score:3, Insightful)
Thus far I have never encountered a single company that "churns out" significant inventions. Even companies that invest massively in R&D, like IBM and google, only come up with meaningful inventions once in awhile. However, the original poster did not claim that he works for google or IBM. He claimed that he works for a "one-ye
When you get more/biigger (Score:3, Interesting)
Hold a fancy formal dinner each year. So that the wife/so can get dressed up and party. Have previous years winners also attend.
The company I did some work for, does this, and it is looked forward to all year by the engineering crowd, the usual recepients. Of course, being a large fortune 500 firm, they had lots of patents and people involved.
It was like another mark of achievement, making it into the patent ball.
Patent Programs-- (Score:5, Interesting)
This isn't legal advice -- these are my opinions -- if you want legal advice, go buy some.
It is common to condition payment of filing awards on the signing of the declaration, oath, and assignment by the inventor -- the company doesn't pay until the inventor has signed.
Some also condition payment on being an employee at the time of the event -- filing the patent, issue date of the patent. That way you don't have the obligation to pay departed employees. But having said that, whoever is running the scheme should have the discretion to pay out equal amounts to ex- and non- employees when named on filed and/or issued patents. You get more interest and attention that way.
Another common approach is to pay $N per inventor for up to 4 named inventors, and for N>4 to pay each inventor $4N/k where k is the number of inventors.
Some places pay on disclosure submission. If you decide to do that, pay on *accepted* disclosures, not everything that gets thrown over the wall. While you want lots of disclosures, you don't want a lot of crap.
Decide at the outset *when* you're going to pay inventors -- some pay and present quarterly with great fanfare. My opinion is that significantly decouples the desired behaviour from reward. I much prefer having a system where things get filed, I send a note to payroll, and the $$ automagically appears in people's next paychecks. That system also minimizes the chances of people dropping through the cracks over a quarter. Yeah, have quarterly or annual beer bashes where you honor inventors as well, but don't hold up the money!
Oh, as part of that whole deal, work out with your finance types which department pays for awards -- my feeling is that it should follow who pays for filing, prosecution, issuance, and maintenance costs. If the division/group (hardware, let's say) pays for filing and prosecution, they should pay for awards. On the other hand, if filing and prosecution gets billed to G&A (corporate overhead) then awards should follow. Doing it that way puts awards costs into the entire life-cycle costs of a patent filing.
Re: (Score:3, Insightful)
(IANAL, but I've been involved in this stuff a good few times...)
Some also condition payment on being an employee at the time of the event -- filing the patent, issue date of the patent. That way you don't have the obligation to pay departed employees.
Be careful when considering this. Given the time taken for a patent to work its way through the system, making payment conditional on continued employment can be regarded badly by employees - after all, you got the work and the patent, why are you using the
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Seems common based on annual reports (Score:3, Informative)
Cash patent bonus programs appear to be common. Public companies will mention them in their 10-K filings as it is often part of executive compensation (generally not limited to just executives, it just gets mentioned with executive compensation because they have to report on executive compensation.) Just google '"annual report" "patent bonus"' and '10-k "patent bonus"' and '"executive compensation" "patent bonus"'.
You must be new here... (Score:2)
Hard to imagine a more anti-patent site than Slashdot. Most of your answers are likely to be "Patents are evil."
But since you asked...
Cash bonuses are nice. Equity is good too if likely to be comparable.
But don't stop at money -- make a big deal of it, make sure they get recognition among their peers. The current software patent system in the US may be... suboptimal, in terms of bad patents that get thru, but it *shouldn't* be -- in theory, getting a patent granted should be a Big Deal and something that so
Common info (Score:3, Interesting)
We developed a disclosure program with a more practical twist: financial rewards were based on the successful commercialization of the technology, with a 40% share of royalties going to the inventors (to be split among them.) We also ran many non-financial recognition programs - plaques for implemented ideas, annual recognition dinners for anyone with a submitted idea, etc.
This arrangement had several advantages over the bonus-upon-filing/issuance arrangement:
Some other thoughts:
Good luck! - David Stein
Here's how two of my employers have done it... (Score:3, Interesting)
old employer:
- cash bonus when your invention is accepted into the program
- cash bonus when your application is filed
- cash bonus and shiny plaque when your patent is granted
current employer:
- cash bonus and shiny plaque when your patent is granted
all employers, as far as I know
- general policy is cash payment, no royalty sharing
- if you have a big-deal patent, they may work out a deal with you
- you assign all rights to them
- if you leave the company during the process, you don't get any more payments
Here's [uspto.gov]
one of my patents so you can know I'm not making this up.
Re:What price your integrity? (Score:5, Informative)
If you invent something on company time and/or using company resources, they likely own it anyway. You can either participate or just give them the idea for free, because if you try and go behind their backs and patent it on your own, you're going to be in a legal mess.
Sure, you can just invent things on your own time using your own equipment, but depending on the idea and your own personal resources, that may or may not be possible.
Parent
Re:What price your integrity? (Score:4, Interesting)
Companies cannot be inventors, as far as the patent system is concerned. If the company wants a patent, it has to have the inventors apply, and have the inventors assign the patent to the company.
Parent
Re: (Score:3, Insightful)
if it's a small company in which the employees get some say in the running of the company as some more progressive employers do, then you can offer the suggestion that all company patents be allowed to expire within a reasonable amount of time rather than being renewed indefinitely, or sold to another company who will continually renew it and prevent it from ever being released into public domain.
software patents are inherently stupid, but patents are real & innovative inventions can be beneficial to so
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The vast majority of published research on this disagrees with you.
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the first claim (patents) is a stretch, but the second (particularly software patents) is not so much. Do you have any research concerning the effect upon industry of software patents in particular?
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Where did he say it's a tech or software company? There still are plenty of good, valid places to use patents.
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This is not a helpful response. Regardless of how you personally feel about patents, you can't opt out of the game when the rules are made by Congress and the USPTO. A strong patent portfolio is a necessary legal defense in the modern business world. Without one, you're nothi
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until that happens, play the game the way it needs to be played
Your logical fallacy is called a false dilemma [wikipedia.org]. There are more than two ways to play the game. This would be a fine time to exercise your powers of reason to see what others you can discover.
Re: (Score:3, Interesting)
Unfortunately, it doesn't work that way. If the patent troll sues, you have to countersue to get their patent declared invalid on the basis of prior art. Why should the troll have to validate his patent? The USPTO has already validated it by issuing the patent in the first place. It's up to you to overturn that validation in court. Don't think that making your
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Poster didn't say anything about the patents in question being software patents. Do you really think that the very concept of patents is hopelessly flawed?
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All that does is encourage people to file lots of crapplications that will never stand a chance of being issued.
Re: (Score:2)
Indeed. The scary part is they still get issued.
Re:you've got it backwards (Score:5, Interesting)
I've been employed in 3 companies that have had varying patent incentive programs over the years. During that time I applied for and was granted 38 patents, in the US and in other nations. None of these were software or business process patents.
The various incentives amounted to an attaboy on the low end up to a hundred shares of stock (worth about $100 per share) per granted patent.
The money was nice, and in some cases there was a reception or dinner involved with a famous speaker which was generally fun. Other times there were plaques, or little trophies inscribed with "Excelsior!" or some such.
Did any of it affect my behavior, or make it more likely I would try to patent something? Not really. Did any of it materially affect my company's business? A little, because it made them feel more comfortable about the security of entering a certain area of business. But none of it really provided the company with a monopoly - there were always alternate technologies that could be used to get the same result, but maybe not as efficiently or cleanly.
If I was going to do it I'd choose the recognition ceremony / famous speaker approach. It meant more to me that the senior management of the company took some time out of their schedule and spent it with the R&D people than than the money or stock did. And think this kind of approach is less likely to distort the inventor's decisions as to what is worth pursuing and what is not. And besides meeting a real live astronaut or Nobel Laureate is way cool.
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Re: (Score:3, Insightful)
Considering who has the power in the world, it's more like the other way around -- a biker in full leathers walking into a foofy juice bar asking for a straight Jack Daniels. He still ain't going to get it, but it isn't him in physical danger.
Anyway, if you're a startup, you'd better not make it all equity; your employees know there's a
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Have you ever actually gone thru a patent application process? All of the above are things that are weeded out very early in the process (assuming you have patent attorneys who have any experience whatsoever). It's not the engineer's job to try to exclude things -- in fact, a good patent attorney will try to include as many things as possible in order to have the broadest reach for the resulting patent.
As for "quality" of patents -- well, they aren't rated like bonds, either they are granted or they aren't.