Designing a Patent-Incentive Program? 221
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?"
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.
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:What price your integrity? (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 society if patents are enforced the way they were meant to (with a hard time limit). none of that disney crap where their stolen characters/stories remain copyrighted as long as the company exists, which is a lot longer than the human lifespan and not what the copyright & patent system was designed for.
And a percentage of ownership of any patent (Score:3, Insightful)
Re:Ummm.... (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 good chance that equity ain't worth squat. All cash or cash plus equity.
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?
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:What price your integrity? (Score:3, Insightful)
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 nothing but fresh meat to every sleazy lawyer looking to make a quick buck. If you don't bother to patent your own IP, you can rest assured that some patent troll will do it for you.
Your "solution" will do nothing but drag your employer through needless litigation, and quite possibly cost you your job if a multimillion dollar judgment is issued against the company. If you really want to be part of the solution, lobby Congress to reform the patent process itself. But until that happens, play the game the way it needs to be played.
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.
Re:Err? (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 large enough to make it worth the employee's time to pick up the phone and do the legwork to describe it, but not so large that it motivates the employee to stop doing his/her job and start focusing on inventing.
Royalties are better. (Score:1, Insightful)
Then, the employee feels they are being treated a bit more fairly as apposed to some little bonus. And why not? If a company makes millions of dollars off of an employees creativity why shouldn't they partake. Whenever I hear about the Westinghouse genius grants or whatever; I want to go and shit on George Westinhhouse's grave in the memory of Tesla.
Re:Stanford's patent policy. (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:2, Insightful)
Research institutions should not patent at all.
If you want to get rid of research institutions, this is a good plan. Otherwise, it's a completely fucking stupid plan.
Many research institutions are able to do their research because their being able to patent their innovations ensures a revenue stream to pay for new research projects.
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
Re:Patent Programs-- (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 slowness of the process as an excuse for not paying for value received? Aside from that, there's often additional paperwork to be done later on. People who feel ripped off might just not feel like signing assignment forms, which has the potential to cost you a whole lot more than the cash bonus would have.
Re:Stanford's patent policy. (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 make the additional investments necessary to turn an idea or prototype into a product. Companies clearly work differently, and thus need to treat their IP differently.
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.)
Re:Err? (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-year old startup". My point is this: if a one-year-old startup thinks they're "churning out" inventions, then they're probably sadly deluded. The chances of them having even one invention worth patenting is probably close to zero. A one-year-old company should focus their scarce money on generating intellectual property and should have at most one or two patents; and those patents were probably created by the founders. But the businesspeople who run that company may just think they'll just hire some programmers, pay them $5000 per major invention, then suddenly have tons of breakthrough innovations. They're probably kidding themselves and wasting their money.
I recently spent a long time reviewing the hundreds of patents related to compression. Compression is one of the areas of software which has significant patent activity. Nevertheless, almost all the patents were farcical, absurd, or provably wrong. In fact, there was exactly one company (IBM) that had generated any patents in the last 20 years of any value at all. The other patents were from small companies who believed that their 3-4 silly programmers were churning out brilliant ideas worth millions.
Drug patents are not analogous to software patents. Drug patents cost hundreds of millions of dollars to develop and bring to market, so they are worth protecting. The amount of money invested per drug patent is immense, so a patent is reasonable.
Drugs are generated by professional scientists who spend years or decades on one drug or condition, plus thousands of employees that run clinical trials. Drugs are not generated by lone drug scientists who cavalierly spit out major drug discoveries rapidly by themselves at 1-year-old startups because they're paid $5000 every time they do so.
I agree with you that most companies don't try to sell their patents. I also agree that it's difficult to put a dollar value on their R&D. However, it has been my experience that almost all one-year-old startups vastly exaggerate the value of their intellectual portfolio. Many founders of small companies have the conceit that any idea of theirs or their programmers will be important or even revolutionary. As a result, many of them end up wasting lots of money on patent attorneys.
Re:Stanford's patent policy. (Score:3, Insightful)
Re:Stanford's patent policy. (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... and unfortunately we do have to work within the system even if we want to get rid of it eventually.
I look at the compensation of the employee in this case as peanuts... on the notion that successfully pushing through an idea to become a patent is going to be paying far more in legal fees than the paltry $5k that is being offered. Why not at least offer the same amount of money that will be going to the patent attorney + filing fees (unless it is an in-house corporate attorney with experience in patent law).
Most patents that are filed in current business practice are defensive patents anyway. They don't intend to actually make money off of them, but they do intend to use them if a lawsuit is dumped in their direction and they can burn their opponent first. What that says about American business practices and business tort law is something best deserved for a whole other thread/article.