Designing a Patent-Incentive Program?

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?"

Comments

I have a very effective program at my company...

[wronskyMan]

but I patented the idea so it looks like you're out of luck!

Stanford's patent policy.

[Animats]

Here's the patent policy of Stanford University. This has worked out very well for Stanford.

Re:Stanford's patent policy.

[mad.frog]

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.

[ceejayoz]

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.

Re:Stanford's patent policy.

[arotenbe]

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.

Re:Stanford's patent policy.

[NeilTheStupidHead]

No, the general public could make use of a good barbeque recipe.

Re:Stanford's patent policy.

[Daniel Phillips]

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.

[eggnoglatte]

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.

[Elektroschock]

Well, it is very topical! Don't do what is wrong. Don't spread the cancer.

Why would you even want to make a scheme for employees to file more patents?

He asks how he should worship the devil. I say, there is no devil.

The patent system is useless slack. Therefore my incentive system would be that for each patent your institution has to apply for (because there is a patent system) you invest 10% of the legal costs in patent reform or abolishment. Same for all patent lawsuits and royalties you have to pay. The patent system would implode in no time and make way to a free market.

Re:Stanford's patent policy.

[Elektroschock]

Public research is public and needs public financing.

Private research is private and needs private financing.

Turning a public institution into a patent troll is damaging for the economy.

Patents have nothing to do with research. You get more patents when you hire more lawyers to write them. There is no free lunch. You cannot create "property" by assigning rights.

As of a company keep your house clean. Don't create incentives to do what is wrong in the first place. Don't buy the snake oil from the patent attorney.

Re:Stanford's patent policy.

[macraig]

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:Stanford's patent policy.

[Barryke]

I agree,
yet other companies' socalled "useless slack" has to be fighted with something ..

Re:Stanford's patent policy.

[Raenex]

I do not see why your post was moderated flamebait, it seems perfectly well reasoned.

Because somebody complained that it should be, and because the original poster didn't play the Slashdot game of defiantly declaring how he doesn't care how he'll be down-modded.

Re:Stanford's patent policy.

[Hognoxious]

It doesn't follow that because wrong patents get granted, patents are wrong per se. The word "baby" and "bathwater" spring to mind.

Re:Stanford's patent policy.

[Hognoxious]

Because patents are just slack for the economy as every economist will tell you.

[citation required]

Not only is it a ridiculous statement in the first place, it's absolutely preposterous to suggest that there's anything economists agree on.

Re:Stanford's patent policy.

[Naturalis Philosopho]

Fundamental research gets done at those institutions... research which would not get done otherwise. Two points: First, the "profitable" research of which you speak is a vanishingly small part of the research that gets done. Ever see that report on how tumbled strings get tied in knots? No idea how to make a profit from that fundamental research, but someone may be able to build on it some day since someone was able to do the research and get it published. Second, the profitable, patentable research which is done is often of great value to society. By spinning off a researcher with a patent that can do something like give a 10x increase in solar panel efficiency then the researcher who can now profit has the incentive to actually get an invention like that developed. If tech like that gets used, then society profits inestimably.

I, too, despise patent trolls, but the baby is still good here. What ever happened to the debate about forcing patents (and maybe copyrights) licensable at government regulated fees? It's the huge hurtles to other people actually using patented tech in their products that makes patents so bad, IMO.

Re:Stanford's patent policy.

[Enter the Shoggoth]

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.

Technically you are correct.

However, you will generally find that when enrolling for a research degree the application form will require you to sign over intellectual property rights arising from your research to the university (or more likely an institution within the university which just happens to also be a registered company wholly owned by the university).

If you don't sign they either don't enroll you, or expect you to pay the full value of the tuition fee (if you're in a country where government provided tuition scholarships are managed by the university).

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:Stanford's patent policy.

[Elektroschock]

These bad patents are not mistakes but sure there is middle ground for patent reform. If certain markets are used to patenting, fine.

Re:Stanford's patent policy.

[Elektroschock]

That is funny, sure economists don't have to agree with each other.

But honestly take the literature about patent law from the left to the right and you will find no advocacy for the patent system despite some patent economics modeling which assumes that the system works without examination of that matter.

If you view the patent system as an incentive system, an intervention in the market, a kind of Game for market players you have to provide economic evidence that the market with a patent system is "better" than without. You won't find such a normative theory. There is an old study of Machlup but it still represents the state of the art, despite that they didn't have soft and business methods patents back then.

Re:Stanford's patent policy.

[Teancum]

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.

Re:Stanford's patent policy.

[pnosker]

I've got two patents through work I did at Rutgers University and the university keeps a huge portion of the profit. One of the licensing things that happens is that the University gets stock from the upstarts or licensees. Rutgers gets 25-32% of the total patent royalties. See: http://ocltt.rutgers.edu/documents/patentpolicy.pdf

Re:Stanford's patent policy.

[Teancum]

There are private universities and private sources of funding for research... and frankly I don't have a problem with a private university with a private grant taking some research and trying to make a profit from it in some way. Universities are by definition where you can find a concentration of incredibly bright people and talent that often has untapped potential.

In other words, such a situation merely is another way to establish an R&D department for a well-run corporation... and will also benefit the students of those professors (and often many students themselves) to participate in ground-breaking research.

The problem does come with public universities, and even more so when tax dollars that were confiscated at gunpoint from widows and orphans (try to convince me taxes are anything other than oppressive... I dare you) are used to fund research that is then used to make the researcher who benefited from that money the sole controller of that knowledge. Publicly funded research ought to belong to the public at large... and those who help to finance the work should also get the benefits from that research. On this point I completely agree... and placing such knowledge in the public domain is one of the ways that can and should happen.

I'm not entirely sure myself of what private research happening at public universities should be as open or not. It can be prudent policy to encourage private donors and benefactors to even such public institutions to help defray some of the costs of running those organizations. If there is such private donations, there ought to be a strong accounting wall set up to separate those "private" activities from the publicly funded activities (such as educational instruction and academic development). Better-run public universities do indeed have these fiscal barriers in place, but it is something that needs to be worked on... and watched for.

Re:Stanford's patent policy.

[Anonymous Coward]

When working for an employer, you (the individual) do not own the patent. If you get a paycheck, it is considered a "work for hire" and is owned, 100% by the employer. The employer can be a university of a company.

Oh, and trying to circumvent your employer and publishing it on your own rarely works.

Re:Stanford's patent policy.

[Anonymous Coward]

That you compare patents and trademarks shows your ignorance. Please, this is Slashdot. I thought we were geeks trying to learn something? I don't care how much one hates patents, there's no reason to hate trademarks. They're a completely different animal. They've existed in some form for hundreds, maybe even over a thousand years.

As for research institutions not patenting ... uhm, how will they get anything out of what they do? Benevolent investors who don't want anything back? A grateful public? Are you stupid, or do you just play a stupid commenter on Slashdot?

Re:Stanford's patent policy.

[Elektroschock]

Exactly. The risk associated with defensive patents is proliferation. Your competitor gets bankrupt, they have some assets as patents. A troll buys them. Problem. (*)

Most patents are passive, they don't get licensed at all and deterr competitors or force them into cross-licensing. Cross-licensing compares to the group of nuclear powers. You have mutual assured destruction, so no one, under the premise of beeing rational can enforce it. With atom bombs you get the nuke peace. With cross-licensing you get the patent peace.

But don't make the equation without the terrorist or the patent troll.

(*) also consider a SCO scenario.

Re:Stanford's patent policy.

[StefanSavage]

Sorry, but this is generally incorrect. The Baye-Dole act (with us since 1980) gives universities to rights to patents funded with Federal $$$. To make this situation more clear, many universities have faculty sign IP agreements explaining how such rights will be considered in various contexts. Indeed, most universities will claim patent rights on inventions made during your period of employment even if not funded by the government. Patent revenue is generally shared, but precisely how varies quite a bit among institutions. Faculty-founded startups directly based on university patented research almost always license those patents from the university. There are pro/con arguments about whether or not this is all good policy, but this is what actually happens.

Re:Stanford's patent policy.

[macraig]

Thanks for clarifying the state of affairs. I had no idea it was like that (even less idealistic than I had expected).

Re:Stanford's patent policy.

[Anonymous Coward]

Um, did you read the policy from the parent comment? Stanford absolutely retains control over the patents, as have all of the academic institutions where I've worked (MIT & Harvard). I can't rule out that there are institutions out there that are more lax, but my general impression is that these policies are mostly the same everywhere.

As for the public funding issue, the Bayh-Dole act gave university the rights to control the patents, even though public money went into funding the discoveries. I think for the most part, this has been a very good thing, since it ensures that discoveries find their way into the market, rather than sitting on the shelf, as it were. For the most part, inventions aren't quite ready for prime time when they come out of academic labs (this really isn't what such labs are about), and universities having a coherent IP strategy lets companies take over the later stages of development (to make something actually product-worthy), with some protection of that investment (without which the investment might not happen in the first plce), and with some mechanism to send money back to the source of the innovation, the university.

Re:Stanford's patent policy.

[backwardMechanic]

In the UK at least, if you are employed by the university they own your work, including any patents coming from it. Thirty+ years ago universities weren't much interested in patents but the world has changed since then. Universities see spin-out companies as good for profit and good for image. Hence they are willing (usually keen) to license out patents to spin-offs founded by the original inventors.

Re:Stanford's patent policy.

[Anonymous Coward]

You are incorrect. Universities have rights over intellectual property generated using their resources. Most have a Technology Transfter Office to handle licensing and spin-out companies.

I agree with your sentiment, but you are spreading incorrect information.

Re:Stanford's patent policy.

[Anonymous Coward]

I am not sure where you obtained your information. University research is typically owned by the University. When a researcher starts a company, the researcher's company takes a license to the IP from the university. When the government funds the research, the government is automatically provided with license rights under the patent statutes. A number of universities generate significant license revenue from their patent portfolios. The revenues are typically fed back into performing more basic research.

Both

[eln]

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.

Re:Both

[MrZaius]

On a related note, do you generally incentivize the review board with cash bonuses for patents cleanly shot down, or do they end up mixed in with the same pool of people that are making the submissions (as they themselves presumably require some level of subject-matter expertise) and signing off on nearly everything that crosses their desks? Curious how this process actually works out.

Re:Both

[wild_berry]

May I suggest:

For patent review, have a standard Invention Disclosure form for your employees to fill in. Make sure it tells you (i) what the background to the invention is, (ii) what makes the invention new and non-obvious and (iii) any prior art that the inventor is aware of (which may be a legal requirement in your jurisdiction).

Split the reviewed invention disclosure into four categories: needs more work / apply for patent / trade secret / unpatentable but published. The last one should ensure that, if you can't make money from the monopoly provided by the patent, no-one else can either, and you get known for your contribution to the state of the art.

I wouldn't pay people to file provisional applications, because they're only a year in duration and expire unless converted upwards. Effectively, your system pays people to file twice and develop the idea in the year of the provisional application. You may wish to give people the incentive for filing the provisional application when it's converted into a full application.

(I'm not a patent attorney. Yet.)

What price your integrity?

[Daniel Phillips]

You should quietly smile at whatever they come up with and fail to participate in it. Patents, and particularly software patents, are a huge drain on tech industry and a net drain on society. Be part of the solution, not the problem.

Re:What price your integrity?

[eln]

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.

Re:What price your integrity?

[lysergic.acid]

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.

Re:What price your integrity?

[lysergic.acid]

oops, the second paragraph should say "patents on real & innovative inventions" not "are real & innovative inventions..."

Re:What price your integrity?

[harlows_monkeys]

Patents, and particularly software patents, are a huge drain on tech industry and a net drain on society.

The vast majority of published research on this disagrees with you.

Re:What price your integrity?

[spazdor]

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?

Re:What price your integrity?

[barzok]

Where did he say it's a tech or software company? There still are plenty of good, valid places to use patents.

Re:What price your integrity?

[harlows_monkeys]

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.

Re:What price your integrity?

[timholman]

You should quietly smile at whatever they come up with and fail to participate in it. Patents, and particularly software patents, are a huge drain on tech industry and a net drain on society. Be part of the solution, not the problem.

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:What price your integrity?

[harlows_monkeys]

I was referring to the first claim (patents in general).

Re:What price your integrity?

[Daniel Phillips]

until that happens, play the game the way it needs to be played

Your logical fallacy is called a false dilemma. 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:What price your integrity?

[mad.frog]

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?

Re:What price your integrity?

[falconwolf]

If you don't bother to patent your own IP, you can rest assured that some patent troll will do it for you.

You can release an invention into the public domain. While patent trolls can still sue, they have to prove they came up with the invention first. On the other hand having a patent portfolio can be used as a weapon against others threat to sue. "You using our patent so unless you license this patent of yours we'll sue." A better solution to all this BS is to get rid of patents. If there are no patents then nobody has to be concerned about infringing on a patent or patent trolls.

Falcon

Re:What price your integrity?

[falconwolf]

Patents, and particularly software patents, are a huge drain on tech industry and a net drain on society.

The vast majority of published research on this disagrees with you.

The vast majority? Have any references? Since I've asked you to provide some I'll provides some as well. Research on the MacroEconomic Effects of Patents lists about 40 studies. Some, like the first one, are about software patent specifically and it says "Software patents are serving as cheap alternatives to real innovation". Another says "firms may have plenty of incentive to innovate without patents and patents may constrict complementary innovation."

Falcon

Re:What price your integrity?

[timholman]

You can release an invention into the public domain. While patent trolls can still sue, they have to prove they came up with the invention first.

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 product open source will protect you from litigation - quite the contrary.

On the other hand having a patent portfolio can be used as a weapon against others threat to sue. "You using our patent so unless you license this patent of yours we'll sue."

Exactly. One strategy is make a competitor back off is to threaten to countersue with your own portfolio. Or, if a patent troll threatens you, you can point to your own patent and say "We're not violating your patent. This is an implementation of our own patent." Then the shoe is on the other foot, and the patent troll must invalidate your patent. Hopefully, the added cost of litigation will make the troll back off.

A better solution to all this BS is to get rid of patents.

As far as business method patents and software patents are concerned, I'm in complete agreement. However, I realize that my wishes and desires do not change the reality that such patents exist, are granted weekly by the USPTO, and must be dealt with rather than ignored in the business world.

Re:What price your integrity?

[JoeMerchant]

This is a very lucrative program for those who participate ($7,000 per patent grant) - not participating simply means that the $7,000 will be going to other employees - if this company is anything like those I have experience with, there is a (stupid, arbitrary) fixed number of patents they will file each quarter.

At least by participating, you can attempt to craft patents of true value, instead of crap that looks good to the CEO.

I disagree that patents are a net drain on society - it's the lawyers that are the net drain. Patents in and of themselves are actually a good idea that has been perverted in the last 20 years to a self-perpetuating advocacy and litigation fest.

Re:What price your integrity?

[j0nb0y]

It's true that patent applications have to be filed for an inventor... but a company that owns an invention is allowed to file a patent application on behalf of a *hostile* inventor. A non participating inventor is not going to stop a company that wants a patent.

Re:What price your integrity?

[j0nb0y]

"We're not violating your patent. This is an implementation of our own patent." Then the shoe is on the other foot, and the patent troll must invalidate your patent.

A patent does not give you the right to implement an invention. A patent only gives you the right to exclude others from using your invention. If the invention in one patent covers an improvement over the invention of another patent, neither patent holder can utilize the invention without a license from the other. In this situation there is said to be "blocking patents."

Re:What price your integrity?

[Mr Z]

Don't think that making your product open source will protect you from litigation - quite the contrary.

If you release your invention to the public domain, if someone subsequently tries to patent it, the patent won't be granted (or will be invalidated on a re-review if it slips through) on the basis of prior art. This is, of course, if you do actually invent something before someone else does.

Releasing your invention to the public domain when you weren't actually the first to invent it does not absolve you of liability to another inventor's patent, if they invented it before you. In that case, if their patent is invalid, then you need to find someone else's prior art, or find some other grounds to illustrate that the patent is invalid.

On the other hand having a patent portfolio can be used as a weapon against others threat to sue. "You using our patent so unless you license this patent of yours we'll sue."

Exactly. One strategy is make a competitor back off is to threaten to countersue with your own portfolio. Or, if a patent troll threatens you, you can point to your own patent and say "We're not violating your patent. This is an implementation of our own patent." Then the shoe is on the other foot, and the patent troll must invalidate your patent. Hopefully, the added cost of litigation will make the troll back off.

Pure patent trolls have the annoying property of not actually having any product that might infringe on something in a company's stack of patents. That's what makes them so potent, dangerous and effective. They've got nothing to lose and everything to gain. And since their lawsuits tend to end in settlements, rather than judgments, the validity of the patent doesn't get a chance to be tested in court.

My big problem with the stack-o-patents is that it makes it really hard for the little guy to get into the business. This is true even with pure hardware inventions. Competing Megacorps A and B know to not sue each other without very good reason because they both have huge piles of IP, and who knows where one or the other may have accidentally infringed on the others' patent. Startup C, on the other hand, doesn't have this parity. Megacorp A or Megacorp B could decide to sue Startup C whenever they like, because it has far fewer resources for defending itself, and not much of a portfolio if anything. This is but one way patents stifle innovation.

Personally, I wouldn't mind if patents were modified to be less strictly exclusive. That is, disclose your invention and have exclusive rights for a very short period (say, 3-5 years from the date of filing), and for the remainder of the term open it up for compulsory licensing. That'd poke a hole in the patent troll's bubble (since they seem to collect patents from failing concerns near the end of the patent's lifetime), and it'd lessen the impact of the stack-o-patents mutually assured destruction effect. It would also protect the initial product development time frame and initial time in the market, to provide a little kick to the first-mover advantage, without scuttling long term support of products by patent-blocking interoperability.

I think if you remove the "You Won The 20 Year Exclusive Right To Charge What You Wish Lottery" aspect from patents, then a lot of the frivolous bets people place will disappear, since you just switched out PowerBall for Pick-4. People will still play, but the payout will be much less, and you won't get the rush of people angling for that $300M jackpot that arises from time to time.

--Joe

Re:What price your integrity?

[Mr Z]

If you release your invention to the public domain...

I want to be clear on this, since there's a notable difference between copyright and patent here: If you publish the details of your invention without having first filed for a patent on it, then the invention is effectively in the public domain. It's a bit like losing trade secret privilege. Once an idea is known, it can't become unknown.

Now, aspects of how you implement your invention might be copyrightable, such as source code. You could have a completely proprietary application under full copyright protection. If you publish its techniques and protocols without filing patent disclosures first, then those techniques and protocols are no longer patentable. But, the actual code that implements the techniques and protocols is still protected under copyright. So, the invention is effectively in the public domain, but your specific implementation is not.

An example of this might be the SMB protocol that Microsoft uses for sharing files over a network. Portions of the protocol may be protected by patents. Had they instead chosen to document the protocol without filing for protection, then these aspects would become unpatentable, and everyone could implement the protocol without getting granted special exemptions. In either case, though, Microsoft retains the copyright to its Windows implementation.

I wanted to make this clarification, since copyrights and patents so often get confused.

(And then there's chips with their "mask work" protection...)

--Joe

Re:What price your integrity?

[Anonymous Coward]

The incentive isn't to get the employee to play by the rules, it is to have them try to come up with the invention in the first place and go to all the trouble of filing.

The alternative isn't cheating the system, the alternative is "just" doing your job.

Re:What price your integrity?

[Daniel Phillips]

You should quietly smile at whatever they come up with and fail to participate in it. Patents, and particularly software patents, are a huge drain on tech industry and a net drain on society. Be part of the solution, not the problem.

and beware lawyers with mod points.

five hundred bucks, and a nice dinner

[Anonymous Coward]

We are a research driven company and a really fun place to work.
A patent gets you an invite to a very yummy annual dinner, with a nice talk by the CEO.
Oh, five hundred bucks cash, too, not to mention one of those spiffy patent plaques.
Some of the heavy hitters have rows of them in their offices.
Journal papers get you the same treatment. Conference papers get you nothing, alas, since plenty of the researchers crank them out.

But right now your humble AC just wishes he could get another conference paper published, dinner or no dinner...

Sorry...

[naoursla]

I am pretty sure the discussing that would be a violation of NDA.

Re:Sorry...

[Anonymous Coward]

I am pretty sure the discussing that would be a violation of NDA.

that's what the anonymous coward button is for.

The basic premise of the policy is flawed

[Halo1]

Because more patents are not necessarily better.

Additionally, certain patent acquirement strategies significantly increasethe risk of being the target of patent lawsuits, 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 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

[Anonymous Coward]

But unfortunately this does not answer the question, and I'm sure that the person asking this question is well aware of many slashdotter's personal views regarding patents. Regardless of how many times you repeat your holy mantra "patents are evil", the fact remains that patents are what drives most research and technological progress in the world.

Re:The basic premise of the policy is flawed

[Elektroschock]

"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 as it was not made for these markets.

Re:The basic premise of the policy is flawed

[techno-vampire]

It is a belief system with the assumption that you can create property.

And what makes you think you can't? That's what manufacturing is about, you know, creating property and selling it. For that matter, that's what agriculture is all about once you get past the subsistence stage.

Re:The basic premise of the policy is flawed

[Elektroschock]

A patent is a "right".

Cole writes "...these rights do not arise from the scarcity of the appropriated objects; rather, their purpose is to create scarcity, thereby generating a monopoly rent for holders of such rights. In such case, the law does not protect property over a scarce good, since the law itself created the scarcity, and this artificial scarcity generates the monopoly rents that confer value upon those rights. The big difference between patents and copyrights on the one hand, and tangible goods on the other, is that the latter will be scarce even if there are no welldefined property rights; in the case of patents and copyrights, the scarcity arises only after the property right is defined"

If you can create property by granting rights why doesn't the government grant even more rights and monopoly privileges. What does the legal sphere "create"?

Re:The basic premise of the policy is flawed

[the eric conspiracy]

Poppy cock. The purpose of a patent is to encourage the inventor to share his invention. The return for that is the ability to prevent others from practicing that invention for the period of the patent. It does not create a shortage; the concept is utter non-sense. There is no shortage, in fact the process of creating a patent guarantees that MORE will be available by encouraging the inventor to disclose his idea in return for the patent grant. Prior to the existence of patents inventors used trade secrets, non-disclosure contracts and various means of technical obfuscation to hide their inventions greatly impeding the advance of technologies.

I don't know who this Cole guy is but from this writing he seems to not understand what a patent is or why patents came into existence. At all.

Re:The basic premise of the policy is flawed

[steelfood]

The software and business method patent fiasco is a good case study on how patents actually reduce innovation in todays markets. The technological boom of the 70's-90's was entirely made possible by the inability for people to patent their software and business method ideas. We wouldn't have Windows and MacOS if PARC had patented the GUI. Likewise for the internet. Software would have been set back at least fifty years with software patents. There wouldn't be a WWW right now, and this entire idea of the 21st century being the dawn of the "information age" wouldn't happen until at least the 22nd century. If you can extend this to every other industry, then patents aren't doing any good for any industry today.

Some people use the "reveal trade secrets for a limited monopoly" excuse for having patents. That might have applied back then (but then again, things were so much easier to reverse-engineer back then maybe not), but it certainly doesn't apply now. Things that don't need to be revealed to the public are still kept as trade secrets whenever possible e.g. Google's search algorithms. And with laws against revealing trade secrets (or laws that enforce contracts that prevent revealing trade secrets), there's no incentive for companies to patent things they don't have to reveal to the public anymore.

Some argue that they protect the small business from being stillborn, or later outcompeted by large companies. But anticompetition laws already take care of those, and a strengthening of those laws would suffice to protect small businesses. Instead, it is now forcing small businesses to waste resources entering an arms race just for self defense.

So in reality, patents serve no purpose for society as a whole. However, I would never advocate for their complete dissolution. It would be a major shock to the system, and economies will collapse. Instead, increasing the threshold for patentability, weakening patent law by limiting damages to or outright invalidating the patents of companies holding patents but have no demonstrable products in progress, would be a great start. Striking down the DMCA so that reverse-engineering is not illegal again would also help promote innovation and progress.

But patents have been great as a club for the US to hold over developing countries' heads to keep them from becoming superpowers, so we're not going to see it go away or get any weaker any time soon.

Re:The basic premise of the policy is flawed

[jamesh]

In time, the value of patents is going to come crashing down just as spectacularly,

This may be bad for companies whose entire business plan is 'buy patents and sell them', 'patent things and then sue people', or 'buy patents and sue people', but not necessarily bad for companies whose business plan is 'invest billions of dollars on research and then patent the invention to recoup the investment (and the investment on research that didn't work out) so we can invest in more research', so I don't see a problem :)

Re:The basic premise of the policy is flawed

[Anonymous Coward]

Pick your poison - you can either go the patent route - disclosure in exchange for exclusive control and royalties - or you can go the trade secret route where you risk the equivalent of Fermat's last theorem and risk losing a technology completely if the inventor dies before implementation or the innovation is kept to artificially localized use to keep it a secret. The problem with patents is that they are being granted for too little innovation or too broadly. This is similar to ambulance chasing lawsuits motivating a rejection of all malpractice suits.

Re:The basic premise of the policy is flawed

[Elektroschock]

That is the so called disclosure teaching. The idea is that without patents inventions would not be disclosed. It is a rather strong one but assumes that the patent is of technical value for a professional, that is in most of the cases not true.

"Prior to the existence of patents inventors used trade secrets, non-disclosure contracts and various means of technical obfuscation to hide their inventions greatly impeding the advance of technologies."

An example for that is porcellaine but it was under a monopoly anyway. As patents are territorial rights they won't help to improve the situation.

I was trying to answer the property related question.

Re:The basic premise of the policy is flawed

[Halo1]

This may be bad for companies whose entire business plan is 'buy patents and sell them', 'patent things and then sue people', or 'buy patents and sue people', but not necessarily bad for companies whose business plan is 'invest billions of dollars on research and then patent the invention to recoup the investment (and the investment on research that didn't work out) so we can invest in more research', so I don't see a problem :)

Yes, just like banks that did not invest so much in junk bonds, or indeed, the entire world economy at large, are completely unaffected by the current credit crisis. Also, the purpose for which you get patents is irrelevant, it's the nature of the patents and number of the patents you get that counts.

Do you really think that those companies that actually need patents to recoup their investments won't care that the general valuation of patents suddenly implodes due to the overvaluation of the massive amounts of junk patents that have been granted over the years?

Re:The basic premise of the policy is flawed

[Halo1]

But unfortunately this does not answer the question

Not if he can't look beyond patents, no. Concrete example of an alternative: we have a Ford factory in Genk, Belgium. Every year, it gives a prize to any employee of the factory who came u with the idea that saved the most money without having an impact on the quality of the production. It gives them great PR, people are happily and actively helping to improve the production processes, used materials etc, and they immediately get concrete results rather than that they are paying to obtain a bunch of "rights" that hopefully, at one time in the future, will pay for themselves.

Re:The basic premise of the policy is flawed

[Halo1]

Pick your poison - you can either go the patent route - disclosure in exchange for exclusive control and royalties - or you can go the trade secret route where you risk the equivalent of Fermat's last theorem and risk losing a technology completely if the inventor dies before implementation or the innovation is kept to artificially localized use to keep it a secret.

Given that so many people argue that they need patents because otherwise their competitors would immediate "steal their inventions", the above very much sounds like a false dichotimy.

Re:I have a very effective program at my company..

[Anonymous Coward]

Oh yeah? I got a patent for dehydrated ice. Gotta sneak the margaritas aboard the cruise ship somehow.

And a percentage of ownership of any patent

[whoever57]

Some companies have made huge amounts of money off a single patent. Perhaps companies could offer employees the option to take some ownership stake in the patent (5%?), provided that they grant the company full rights to use the patent -- with the intent that, if the company makes a large sum of money by selling or licensing the patent, the employee will also benefit from this.

Re:And a percentage of ownership of any patent

[Anonymous Coward]

At the company where I work, most of the patents are only used defensively (to counter-sue another company if they try to sue us over patents), so you don't see any direct revenue generated by the patent. It certainly has the potential to save the company a lot of money, but it's difficult to calculate the value of a patent since the idea is to obtain a settlement or cross-licensing agreement, probably for several patents at once.

Re:And a percentage of ownership of any patent

[whoever57]

At the company where I work, most of the patents are only used defensively

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?

Re:And a percentage of ownership of any patent

[Nursie]

I know of a company that does this - employees get a very small percentage of licensing revenue for the patent, and every so often (annually?) get a payment from the company on those things.

Re:And a percentage of ownership of any patent

[JoeMerchant]

Employees are paid a small sum so that the company can make a larger one- this is universally true of profitable enterprises.

This is justified by the idea that employees are given a small, but reliable, salary while the employer invests capital up front and takes on the risk of feast and famine in the marketplace.

Offensive? To the employee it certainly is when you look at the ratios between salary and what the company makes in profit per employee. It's even more offensive in the "New Bush Economy" where job stability at any salary level is increasingly hard to come by.

However, if you happen to be on the "employer" side of the coin (and, this includes those who do not actually "employ" a staff, but have sufficient means that they do not "need" to work), you're going to do everything in your power to ensure that you, and likely your heirs, don't end up on the "employee" side of the equation... ever.

So, if there's a chance that an employee is going to come up with something that's worth $100M per year for the next 15 years, do you give that, or even a seemingly insignificant 1% of that, to the employee, or do you hold it for yourself?

This is all justifiable in terms of risking investment capital, development costs, etc... at least to those with the capital.

Re:And a percentage of ownership of any patent

[whoever57]

So, if there's a chance that an employee is going to come up with something that's worth $100M per year for the next 15 years, do you give that, or even a seemingly insignificant 1% of that, to the employee, or do you hold it for yourself?

Employees have options. They can work for someone else. They may be able to set up their own company. So, let me re-phrase your question differently:
As an employer, would you prefer to keep 99% of $100M or 0%?
Giving away an insignificant amount may be the smart move in the long term.

Re:And a percentage of ownership of any patent

[Anonymous Coward]

The employee does not own the patent, so they have no right to license anything. Since they are an employee all of there patentable work is a "work for hire" and is owned by the company.

Re:And a percentage of ownership of any patent

[Anonymous Coward]

Employees have options. They can work for someone else. They may be able to set up their own company.

I'm pretty tired of this position. Yes, employees do have options. However, when it comes to negotiations, employers are in a vastly superior position -- while an individual employee -needs- a job to *survive*, a well-managed employer is simply not reliant on any individual employee.

When I've fired people I can promise you it hurt the fired individual a helluva lot more than it hurt the company.

Re:And a percentage of ownership of any patent

[JoeMerchant]

As a highly specialized tech-employee, there are only a handful of places I can work within reasonable travel time of my home (telecommuting has not yet become a reality in my niche.) Having lived in 3 major markets now, I have never had the choice of working for a firm which shared their IP spoils so generously. Best I have ever experienced personally is $2000 per patent, most places promise $1 on paper and don't even deliver that.

I did work for a place that had a "standard" employee stock purchase program that amounted to more or less an average 15% extra income - depending on market conditions. That program was arbitrarily terminated just as capriciously as the $2K patent awards were instated. I did leave in response to those conditions, but changing jobs takes several months, at best - and if I would feel foolish to move across the country to chase a promise of patent equity sharing, which can be terminated at a whim - or more likely administered in such a fashion as to not reward the true inventors, which will probably take you more than a year to determine after you start working there.

As an employer, if you've got a superstar who's likely to jump ship, you might try to entice them to stay with a big carrot - but I'd be shocked to see this implemented as "policy," and the superstar might jump ship anyway when a competitor offers a bigger "signing carrot." In my experience, the signing carrots are almost always more attractive than the retention carrots.

you've got it backwards

[Anonymous Coward]

Think about what it is you are trying to encourage. Preparing a patent for filing is a pain in the butt and takes a lot of time. Consider putting the bulk of the award for filing the patent and give another smaller bonus if it's granted. Also, consider grossing up the award so it doesn't get eaten up by taxes and other withholdings.

Funny, a company I'd worked for in the past used the term PIP as well but it meant "Performance Improvement Plan" aka preparing a paper trail to fire your non-performing butt.

Re:you've got it backwards

[Dachannien]

All that does is encourage people to file lots of crapplications that will never stand a chance of being issued.

Re:you've got it backwards

[KPU]

Indeed. The scary part is they still get issued.

Re:you've got it backwards

[the eric conspiracy]

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.

Re:you've got it backwards

[Anonymous Coward]

And besides meeting a real live astronaut or Nobel Laureate is way cool.

Lucky. We only get to meet dead Nobel Laureates at our company.

Re:you've got it backwards

[the eric conspiracy]

I've met some of those too, but not at my company, rather in a university cemetery.

Re:you've got it backwards

[bjourne]

I'm surprised you didn't talk to a lawyer as you are potentially eligible to a percentage of the profits your patents generated. Contrary to popular belief, companies does not automatically take ownership of the patents their employees file.

Re:you've got it backwards

[calmofthestorm]

And if the company has lawyers, this can translate into profits for them, and everybody wins! Except the innovators of course, but we are talking about patents here

Re:you've got it backwards

[Alpha830RulZ]

I don't know about where you work, but where I work we signed an intellectual property assignment agreement as part of the hiring process, where inventions we arrived at through our employment are assigned to the company. This is pretty standard in the software/technology industry here in the US, and I have no reason to believe that these are invalid agreements.

Mod parent up

[willyhill]

This captures the essence of what I would have said to the submitter. Patents are a double-edged sword and they hurt more than they help, in the long run.

typical bonus amounts

[Anonymous Coward]

$500 for the initial writeup is about average.

$2000 for the filing is about average.

The bonus for having the patent granted is all over the place, but not a very good incentive because it takes many years to happen -- and a lot of people move on by then.

They're cash, not equity, and there's usually a limit on the total bonus per patent -- if you many inventors on the same patent, then the limit kicks in. For example: $2000 per inventor per filing, or $6000 total divided across all the inventors, whichever is less.

Don't ask how I know all this...

Ummm....

[martinQblank]

Why does asking this question on /. seem a lot like walking into a biker bar wearing a feather boa and asking for a virgin Tom Collins?

Son, you might be in the wrong bar...

Re:Ummm....

[russotto]

Why does asking this question on /. seem a lot like walking into a biker bar wearing a feather boa and asking for a virgin Tom Collins?

Son, you might be in the wrong bar...

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.

Err?

[cartman]

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:Err?

[cfulmer]

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.

Re:Err?

[mad.frog]

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/

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 related case two weeks ago.

Re:Err?

[QuantumG]

The company won't pursue patents that are of little value. You'd have a pretty hard time convincing legal that they should waste their budget on filing stupid patents.

Re:Err?

[tambo]

Why on earth would a company want to incentivize employees to churn out patents?

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) depends on how good the IP group is at identifying inventions worth pursuing. Yes, a company that tries to patent everything will get socked with a mountain of fees in exchange for very little valuable IP. But a good triage process can greatly extend the value of the IP dollar.

2) Most companies that produce products aren't trying to sell their patents - they're trying to protect the value of their R&D. It's practically impossible to put a dollar figure on that, but any MBA will tell you that these are incredibly important assets for any company that does research and develops products. Instead of worrying about patents, their concern should be having one discovery or one program that is worth anything at all.

How about drug companies that are simultaneously researching therapeutic agents for dozens or hundreds of diseases? I think they probably generate a steady stream of patentable remedies.

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.

I agree with you - IF the company wants to license its IP. If (like most product-producing companies) it's more interested in protecting its R&D, that's a whole different ballgame.

- David Stein

Re:Err?

[martin-boundary]

How the hell would legal know the value of a patent? Technical innovation isn't their field of expertise, otherwise the company could simply get rid of all their engineers and hire more lawyers.

We've seen how that worked out for SCO.

Re:Err?

[QuantumG]

hint: stereotypes are not real.

Re:Err?

[martin-boundary]

What stereotypes? Nontechnical people make up their views on the value of an invention based on talking with technical people. Perhaps you live in a different world?

Re:Err?

[the eric conspiracy]

Where I have worked the decision to proceed with a patent application has been made by a review committee including legal, business and scientific representatives. And the cost was borne by the business requesting the application.

Re:Err?

[the eric conspiracy]

Nontechnical people generally make up their minds on the potential value of a patent based on information from multiple sources.

Re:Err?

[martin-boundary]

Where I have worked the decision to proceed with a patent application has been made by a review committee including legal, business and scientific representatives. And the cost was borne by the business requesting the application.

With the crucial point being that the scientific representatives are trusted to explain the potential value of the invention, yes? If so, then a positive decision to pursue a patent hinges not on the actual value of it, but rather on the communication skills of the scientific staff. Conversely, the legal and business representatives have an essentially negative role to play, ie to point out difficulties and complications, etc.

Re:Err?

[martin-boundary]

Of course, yet when an invention claims to be something entirely new, what other comparable sources on the subject are there? Don't forget that the difference between new and merely trivial modifications of prior art are often very small.

Re:Err?

[cartman]

You'd have a pretty hard time convincing legal that they should waste their budget on filing stupid patents.

Were I have worked, the legal department of a company is not involved in the patent process. That's because the legal department only has attorneys that specialize in corporate law, not patent law.

Where I have worked, the company trying to acquire a patent will bypass its legal department and will hire an outside law firm with attorneys who specialize in patent law. The patent attorneys charge something like $450/hr. They do not offer advice on whether the patent is worthwhile. If they did offer advice on whether the patent is worthwhile, they would alienate most of their clients.

Re:Err?

[QuantumG]

Your company sounds like a bunch of idiots, get out now.

Re:Err?

[the eric conspiracy]

That does not prevent an economic and market evaluation of the potential for the idea. Of course the accuracy of those evaluations may be poor but that is where businesses either fail or succeed in earning their pay.

Re:Err?

[the eric conspiracy]

Nope, not at all. The value of the invention should be and usually is determined by market studies and financial analysis. Quite often there is a cost engineer involved who will translate lab results into operational cost and manufacturing estimates. Some times a professional economist will help by providing information on things like projected costs of the commodities that go into the product, and the growth potential of the market during the life of the product.

The sales skill of the scientific staff comes into the picture much earlier - getting the funding to conduct the R&D in the first place.

Re:Err?

[cartman]

[Companies] 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.

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.

1) The utility ratio ("useful" patent out of the total number of patents) depends on how good the IP group is at identifying inventions worth pursuing. Yes, a company that tries to patent everything will get socked with a mountain of fees in exchange for very little valuable IP. But a good triage process can greatly extend the value of the IP dollar.

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.

How about drug companies that are simultaneously researching therapeutic agents for dozens or hundreds of diseases? I think they probably generate a steady stream of patentable remedies.

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.

2) Most companies that produce products aren't trying to sell their patents - they're trying to protect the value of their R&D. It's practically impossible to put a dollar figure on that,

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:Err?

[martin-boundary]

I wonder if we are talking about the same thing here?

The company won't pursue patents that are of little value. You'd have a pretty hard time convincing legal that they should waste their budget on filing stupid patents.

Unless you're arguing for things like business method patents, the value of the patent is in the technical innovation, surely? A new drilling head, a new chemical process, etc. The manufacturing costs and market projections are certainly important to the business as well, but have no relevance to the prevention of frivolous filings. Does the patent office take market projections into account when granting a patent?

To judge the patentability, a company is either dependent on in house expertise, or must pay independent experts who will have to sign a nondisclosure agreement. In both cases, there is a pecuniary relationship involved, and the decision to pursue a patent is ultimately a matter of trust, rather than of direct evaluation.

Re:Err?

[JoeMerchant]

One of my ex-CEO's was an ex-quarterback. He summed it up thusly:

How many patents did the competition file last year? 30? How many did we file? 2? You know what that means, Tim? (Tim is the patent attorney) We're 28 behind. Now get on it!

He then left the room and went off to appear on CNN and do some semi-pro race car driving. I'm sure the details would have been more than he could handle, anyway.

Re:Err?

[the eric conspiracy]

The patent office doesn't take market projections into account when evaluating a patent, but the company sure does when it decides to apply or not.

The value of a patent is in the innovation for sure. But quantifying that value requires a market and economic analysis. This analysis has a technical component, but mostly it is profit and cost calculation, and perhaps a strategic assessment as well. That analysis is part of what a company takes in when it decides to proceed with a patent. Few if any companies will reveal their research results unless they feel that a patent will be of some value.

Patentability is a separate issue altogether. That is governed by law and prior art. A good patent lawyer also has technical training in the field he is working in - dual law and science degrees, PhDs are frequently found in the field of patent law. Working with the researcher the lawyer makes an assessment as to the patentability of the invention. Usually patentability assessments are made pretty early in the research process and may even result in changes to the research plan, or outright project cancellations.

There is another choice as well - the invention may give better economic value to the company if it is not patented at all, rather kept as a trade secret. A patent if obtained may turn out to be impossible to enforce, or reveal more than the company thinks appropriate for the value returned. Or it may be that contractual agreements would provide better return than a patent.

Re:Err?

[martin-boundary]

Well said.

Re:Err?

[ameline]

I'll begin with an aside/rant: I wonder what companies can do to *demotivate* the verbizing of perfectly fine nouns like "incentive" -- perhaps a nice cock-punch for each use of the word "incentivize" would be appropriate. (Ok, that feels better :-)

Reasonable companies motivate people to file patents by providing them with a variety of incentives -- ranging from stock options to cash, and sometimes gift certificates at local stores.

Usually the process begins with someone filing a record of invention with the intellectual property department -- they then send it to their internal patent review board (made up of various experts) to determine if the invention is patentable and relevant to the company business and worth the 20 to 30 thousand it costs to get a patent. Many companies provide a token gift at this point in the process -- kind of like a ribbon for participating -- not high value. Once a patent is filed, another incentive is given, and a third when it is issued. Some companies give more on filing (I prefer this as behaviour and reward are closer together, and thus more effective at motivating the actions you are looking for.), some give more when issued. The problem is that it can take 2 to 4 years from filing to issue. A previous employer gave 2000 at filing, 500 at issue. My current one gives stock options at filing, and 2000 at issue.

The program described by the original parent sounds quite generous to me.

What few people recognize is that *individual* patents are seldom that valuable -- each one can be seen as a picket in a fence that defines some intellectual real-estate -- a single picket is generally worthless and your competition can usually just walk around it -- but many pickets will creat a fence that encloses some worthwhile territory. Thus what is valuable to a company is the entire portfolio of patents.

Companies that produce things (software, machines etc) rarely use their patent portfolio offensively -- they generally use them defensively to head off lawsuits -- think of cross licencing like trading baseball cards. The true evil arises when you get a patent holding company (aka patent troll) that produces nothing, and is therefore not interested in cross licencing -- they're just highway-men engaged in armed robbery of whomever seems a convenient victim at the time.

Re:Err?

[cartman]

Your company sounds like a bunch of idiots, get out now.

For better or for worse, it wasn't just my company--it was the norm. Outsourcing patent legal issues was happening everywhere. I never encountered a company with fewer than 50 employees that had even one dedicated patent attorney on staff as part of their legal department. I presume your experience was with larger companies where that might have been the case and they may have been patent attorneys. However I doubt that a smallish company could justify having patent attorneys on staff.

Re:Err?

[cartman]

I'll begin with an aside/rant: I wonder what companies can do to *demotivate* the verbizing of perfectly fine nouns like "incentive" -- perhaps a nice cock-punch for each use of the word "incentivize" would be appropriate.

What a silly rant. Just so you know, the word "incentivize" is legitimate English usage, whereas the term "cock-punch" is not.

There are thousands of cases in English where the suffix "-ize" is used to create a verb. Some common examples are: "summarize" and "realize." Of course it can be taken too far. But the word "incentivize" was added to various dictionaries in the 1960s after it had been in common usage for years. If you wanted to protest it then you're a bit late now.

Usually the process begins with someone filing a record of invention with the intellectual property department -- they then send it to their internal patent review board (made up of various experts) to determine if the invention is patentable and relevant to the company business and worth the 20 to 30 thousand it costs to get a patent... but many pickets will create a fence that encloses some worthwhile territory.

The original poster works for a one year-old startup that I doubt has an intellectual property department or would be able to use a portfolio of patents to fend off legal attacks. I see your point when it comes to large corporations but I doubt his company could assemble enough patents in one domain to fence off anything.

Re:Err?

[Anonymous Coward]

"Patents are usually worthless. The vast majority of patents (like 99%) have absolutely no value." ... and your evidence of this comes from exactly where?

At least this meets the usual slashdot "patent ingorance" threshold requirement that's become the laughingstock of the legal/IP profession over the years.

Alas I've been involved in IP for about 15 years now and seen many patents used for straight out litigation, licensing, technology transfer, etc etc etc. Your comment isn't worth paper it isn't written on.

"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."

Here's a real life example which is inconveniently for you derived from an actual commercial context.

The company I work for spends around 2.5bn on R&D/year. We are one of two main participants in our area with an extremely competitive technology-based competition in the marketplace. In fact, it's a frothing-at-the-mouth tech area where advances can kill a competing product. It has long lead/design cycle times, stringent certification and potentally huge cost benefits to our customers if we get it right.

The value of our products depends directly on preventing our competitors from copying our innovation. Using IP rights helps us retain the value we spend on our own research by preventing freeriders copying our innovation. It's simple, we spend a shedload of money on engineers, scientists, etc etc to help make the business successful. Even incremental advantages in technology can be the difference between getting an order and not.

We defend our IP rights. If we don't our engineers, scientists etc are out of jobs because our company will be less successful.

Under employment law in most of the countries we operate in, transfer of IP is a condition of employment (this is pretty usual - we employ people to be innovative). We have a well-running patent incentive scheme which also allows for extraordinary payment for signficant innovations.

To answer the original poster, we pay a small amount on invention disclosure, a larger amount on the filing of any priority-establishing application then an further amount when/if the innovation is commercialised in a product.

Leaving aside the infantile anti-patent rhetoric, a well constructed incentive scheme is, amonst many other things, important if you are to help cultivate a good innovation environment which works for IP capture.

My 2c.

Re:Err?

[tambo]

Thus far I have never encountered a single company that "churns out" significant inventions.

Hey, "churn out" was your phrase, not mine. I was correcting your misstatement - the product of an inventor's effort is not a patent, but an invention.

But as for your new comment about the rate of innovation - "significant" is not a prerequisite to getting a patent, for at least three reasons:

• "Significance" is impossible to define. It's impossible to specify a line or a standard, and it would be impossible to determine (objectively and consistently) how well any invention meets that standard. Go ahead - try it - let's see how well you do.
• "Significance" is entirely subjective. Maybe only the inventor appreciates the significance. Maybe the significance is groundbreaking, but won't be apparent for a few years. The internet wasn't widely adopted on day one, nor was the worldwide web.
• By and large, science and technology are incremental. In between the great paradigm shifts are long periods of small improvements. Patent systems similarly promote both types of innovations - there is no utilitarian argument for promoting one kind, but leaving the other to the dogs.

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".

But your post was not specific to the original post, or even to the field of startups. You wrote: "I would also have grave concerns about any company that focused on patents. In almost every such company..." If you write in generalities, expect generalized responses.

Drug patents are not analogous to software patents.

Again, look at your post before criticizing my response. The OP did not indicate the tech area of his startup. You made some sweeping comments about "every company" and "any company." I responded with a specific example.

I'd love to get into the differences of software development vs. drug development (because I think you're wrong, based on what I've seen in years of IP work in both industries.) But we're already far afield of the principle question here ("how do I set up a patent incentivization program?"), so we'll leave it for another thread.

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.

A patent takes about $10,000 to draft and about $10,000 to prosecute through issuance. Do you know how trivial a sum that is to the budget of a typical startup? Even if the start goes hog-wild and files ten applications, you're talking about $200,000 - spread over a period of six years or more! - whereas startups are usually valued well into the millions.

Sure, it's entirely possible to make bad choices. If you hire a New York boutique for your IP strategizing, you're going to be paying millions in fees. But that's just bad business sense, not a flaw in the patent system.

- David Stein

When you get more/biigger

[jhines]

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--

[sillivalley]

I'm a patent attorney in Silicon Valley, and have worked with, under, and around a number of different schemes.

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:Patent Programs--

[UncleFluffy]

(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:Patent Programs--

[sillivalley]

...And that's why in the next breath I said the administrator of the program should have the discretionary ability to pay out awards to non- or ex- employees!

Re:Patent Programs--

[stephanruby]

People like Edward Demings, or companies like Toyota, recommend that you don't use individual incentive programs. They claim that individual incentive programs create strife and promote distrust between employees. And they also claim that gaining the approval of your colleagues, or getting a boost to your ego, or working for your team, can be far more effective incentives in the long run than just getting some individual monetary reward.

I don't remember all the incentives Toyota used for inventions, but one was paint color for instance. All the devices invented by their engineers were painted with one strip of one color. And all the devices invented by their floor factory workers were painted with a stripe of green (for instance, the factory workers made themselves chairs that looked much more like an amusement park ride than factory chairs, they were suspended from tracks, that allowed them to work at different elevations and to move quickly from car to car).

Long-term compensation

[paladin217]

One important fact to remember is that patent prosecution takes a considerable amount of time. Assuming one files a provisional application, waits the allotted year, then files the non-provisional application, you are looking at 3-4 years before a patent examiner even touches the case. With further legal wrangling, it could be many more years before the patent is issued.

So, this leaves the question: is the company going to keep tabs on people who leave the company who are also listed as inventors on an application to pay them? Is it going to be on the named-inventor to make sure he gets paid?

God help me, but..

[Anonymous Coward]

IBM has a similarly tiered structure. I am not 100% correct here, but IIRC they pay $1,500 for the first one, $750 for each thereafter, plus $1,200 for each of group of 4 as you make you way through so-called "plateaus". Each inventor receives max payout when a disclosure has up to 4 inventors, but everyone splits the max payout when there are five or more inventors. The payouts above are just for the acceptance by the company's review board. I believe there is an additional payout if/when your submission is granted a payout, but none of mine have made it that far yet. There are no rules or guidance as to what types of patents may be submitted, although business process patents are not well-received.

I also worked for a company that will accept any patent application, and they only have one payout - $3,000 if they like your idea. There's an interesting twist, though, in that the second company forbids inventors from looking for prior art, while IBM encourages it. The other company's counsel claims that if you perform any search, you *must* become fully aware of *all* prior art that could possibly compete. IBM's counsel disagrees and appreciates the guidance on what to look for when we submit ideas as they may otherwise not know where to start.

I've already said too much.

Re:God help me, but..

[Anonymous Coward]

The second company sounds very much like Silverbrook Research

Even if I could help I wouldn't

[thetoadwarrior]

I'm more interested in seeing an end to software patents which is why if I was going come up with something worthy of a patent I would do the work outside of my job so it's mine completely and can't be claimed by my company.

Luckily my employer isn't a software company so it's easier to do this.

Seems common based on annual reports

[eison]

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"'.

A personal touch

[Anonymous Coward]

eBay has something along the lines of what you mentioned, however one nice touch that they have is that upon the filing of the actual patent you get a jacket that says "eBay Inventor's Club". The jackets come in 3 varieties and gives a bit of a personal touch.

You must be new here...

[mad.frog]

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 someone can really be proud of. Make sure you treat it that way.

Carrots with no stick.

[wiresquire]

That's fine if you want to end up just having as many patents as possible. But you are not creating quality patents for true innovation.

How about a more balanced approach. As well as your incentives above, include:

1. $500 fine for any patent rejected by the USPTO
2. $1500 fine for anything that has prior art
3. $5000 fine for anyone submitting a frivolous patent

After all, if you expect everyone to know what can be patented, you should also expect them to know what can not be patented.

ws

Re:Carrots with no stick.

[mad.frog]

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. This is why people lament various semi-questionable patents; they're just as valid as the world-changing patents are.

Re:Carrots with no stick.

[EmagGeek]

"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."

Have you ever actually gone through the patent application process? (sorry, I had to correct your teenage chatspeak grammar) A good patent attorney will try to include things that are pertinent to the invention in a way that makes the patent as solid as possible without including a bunch of frivolous claims that, while increasing the possibility of predatory or intimidating lawsuits against small fish, only serve in the end to weaken the patent to anyone who actually challenges its validity. That's what a *good* patent attorney does.

A patent attorney who writes the patents in such away as to allow the owner to sue as many small fish as possible to generate settlement funds is not a good patent attorney.

I've applied for numerous patents and each time the attorney spends weeks working with me, weeding out any claim that is weak, questionable, or unnecessary to adequately protect the underlying invention.

Re:Carrots with no stick.

[mad.frog]

Have you ever actually gone through the patent application process?

three patents granted... one ended up winning my company a $4 million settlement in a patent violation lawsuit. does that count? :-)

I never said anything about frivolous claims. Of course you don't want your patent to include "weak, questionable, or unnecessary" claims... but you do want it to be as broad as possible within the primary scope of the patentable claim.

Royalties are better.

[Anonymous Coward]

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:Royalties are better.

[Mr Z]

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.

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 of the award. (There are also fixed awards for "decision to file" and "patent issued.")

Assigning specific patent royalty amounts rarely makes sense. Sometimes you can point to specific licensing actions that generate revenue associated with a specific patent, but most often you can't. Many patents are cross licensed to other companies through bulk cross licensing agreements. Others just form a "mutually assured destruction" sort of bulwark against other companies. (This latter property doesn't work so well against patent trolls, since trolls don't make anything--they just have their patent(s) that they chase people with.) Thus, we tend to look at how much revenue was associated with products that use the patent (whether the revenue was ours or someone else's) and go from there.

As for my background: I'm a member of one of our internal committees that reviews disclosures to determine what to file. At the very least, that acts as a quality filter internally. I've also filed several patent disclosures of my own, and have even had a few patents issue. Some have even gotten incentive awards in those periodic reviews. :-) I'm not a big fan of the patent system, but as long as it's there, I figure I may as well use it and let it die under its own weight.

Equity Options? Don't fall for that

[Anonymous Coward]

Cash is cash, stock options are mostly worthless paper. Statistically speaking 9 out of 10 companies either go out of business, or their stock never gains significant value. That being the case, it would take a $50,000 stock incentive to be equal to $5000 cash.

Unfortunately, anyone who raises this issue with management is accused of not believing in the company. It's a Catch-22: Don't complain, and have a 90% chance of getting nothing, or point out the inequity between cash and options, and risk getting fired or losing management's confidence.

I once had over $1,000,000 in "paper value" of stock options. In less than a year, the same options were worth exactly $0.

Cash, Stock and Time

[mgooderum]

I'm going to avoid the topic of the relative goodness/badness of patents and address the question at hand.

Bonuses in my experience have been in the range of $1k-$2k for filing and $2k-$5k for granted. As noted above a big issues is what is the policy for patents granted to former employee inventors. I have missed out on all of my granted bonuses because all of my patents have been granted after I had moved on.

I would definitely have a cash component to the bounus - most of us have gotten savvy enough about the real odds on options payoff so it isn't necessarily a reward. At this point I view options as a quid pro quo for risk but not a substitute for fair salary and at least semi-reasonable workload.

The keeping in touch factor is a real issue - successful patents often involve one or more refilings and access to the inventor can be very helpful in adjusting claims or clarifying details. One former employer had the typical policy of not paying bounus for employees after they left. They had gotten back in touch with me about taking time to review a redone application which would have involved several hours of work. Given the lack of any reward compenent I requested a basic consulting rate for my time and they refused to I pretty much told them they were on their own.

A more recent former employer has a policy of paying bonuses to former employees if the employee can be reached within two years of the bonus event and providing they were cooperative in assisting any follow up reviews. Given that I have been cooperative and helpful with a couple of review and clarifications along the way.

Last but not least some places give a bonus premium on the "primary" versus additional inventors.

So in developing your policy pick amounts and make sure you are explicit either way about the bonus disposition for departed employees. The bonus progam can be an incentive for the innovators in the company as well as a tool to help get cooperation on the followup even if they have moved on.
--
Mark

Bell Labs

[Dr.Pete]

Back before the ass fell out of Bell Labs, they paid their researchers $1K per provisional filed. Yes, that's "provisional". As a side note, in the lobby of the Murry Hill facility, they had a patent clock. When I visited a few years ago, the clock was up to over 26,000 (I forget the exact #) and had ticked over by a few by the end of my three hour lab tour. I heard numerous stories about people (during the hey-day) putting their kids through college exclusively on patent rewards. Might be part of why they're French and closed and now...

patent incentives

[falconwolf]

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 incentives

[eggnoglatte]

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 have to guard against abuse.

Re:patent incentives

[conlaw]

If your employer is, or has plans to be, a publicly traded company, I'd suggest talking to transactional attorney before setting up a program involving stock options. IIRC the federal securities laws have some fairly strict provisions as to which employees may be granted stock options, along with pricing issues, holding periods and other arcane issues.

Re:patent incentives

[Mr Z]

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.

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. There's always at least one layer that could catch the bogons: the patent attorney that drafts the patent and works all the procedural issues. I suggest an additional layer of technical review to sort good from bad and to prioritize among the good so the most important ones get filed first.

Common info

[tambo]

I spent several years as in-house patent counsel for a hospital with a large research institute. We had a very interesting population of potential inventors - basic researchers, doctors of all stripes, and the entire range of healthcare workers.

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:

• We didn't get hit with a flood of bad disclosures from employees who were just trying to cash in.
• Our inventors were encouraged (both literally and through the fee structure) to remain actively involved in the technology - not just the patent process, but also the marketing and licensing deals.

Some other thoughts:

• Intra-organization advertising was key. The biggest reason why inventors weren't participating was simply that they didn't know our group existed. And due to employee turnover and short memory spans, the population needed frequent notices of our program, so this was just an ongoing mission.
• One step up the line from education is a triage process. Be sure to have a solid team of broadly trained individuals who can review disclosures, do some market and patentability research, and thresh the wheat from the chaff.
• On the whole, our inventors were excellent: creative, eager to explain and show, willing to learn about the IP process and to devote time to doing their part. Best of all, very few of them were motivated by money - most just wanted to see their inventions turned into products.
• As for distribution of royalties among inventors - the easiest and fairest way to handle this is to have the inventors agree, UP FRONT (i.e., on the disclosure form), as to their respective contributions to the invention. Let them work it out among themselves, and get it documented ASAP. Waiting until royalties actually materialize is a recipe for disaster.
• As a last observation - I think the reward strategy you've set out is a little unusual in two aspects: (1) The rewards are comparatively VERY large. $5k for an issued patent? Seriously? I don't think such high fees are going to promote innovation - they'll probably promote get-rich-quick thinking among the employees. (2) It's a little odd to have several inventor rewards for various stops along the patenting process. Usually, the inventor only participates in the *patent* process through filing... seems odd to reward them further based on work by your IP counsel.

Good luck! - David Stein

Apple has a bonus program.

[jcr]

IIRC, Apple pays $5K to anyone listed on a patent. They also get a plaque when the patent issues.

-jcr

My company

[EmagGeek]

My company pays $100 for an invention disclosure (regardless of whether they elect to pursue a patent... I make it a point to dream up at least one of these every day)

$1500 if they decide to file a patent application.

And nothing beyond that...

More than we get!

[youthoftoday]

I work for a software company that you have probably heard of. AFAI can remember we get £500 for a patent that sticks. Not sure of the details though (thankfully our government doesn't allow software patents yet).

Thank you /. readers

[SoulMaster]

and mad.frog especially,

I really didn't want to rekindle the debate about whether patents (or software patents) are a good or bad thing. I've been a /. reader (responder) for quite a while and understand the general consensus about patents here.

I really am only trying to understand what people who have been involved in these programs have seen before. My overall goal of this research is to help develop a program management will accept before anyone says "you work for us, we own the patents anyway" and does away with PIPs all together. Most of the people I work with (including me) love our jobs and I are just trying to get a fair result.

I suppose I should have mentioned that we have a patent/idea review board in place to determine what we would like to spend time on (judge value, creativeness, patentability) before we begin even the provisional process, but I wanted to keep the question simple.

Thank you to all who have chimed in with the various programs you have seen and/or have been involved with.

Thanks again all,

-SoulMaster

Re:Thank you /. readers

[Daniel Phillips]

we have a patent/idea review board in place to determine what we would like to spend time on

How about spending your time on developing a business model that uses some other form of IP protection than patent trolling? Or one that uses no protection at all, other than your own agility and willingness to supply what is best for the customer, faster and better than the next guy?

Re:Thank you /. readers

[Your.Master]

Even if we accept that the patent system is fundamentally and irrevocably flawed, getting patents does not make you a patent troll. TROLLING with those patents makes you a patent troll.

Let's create an analogy with violence. Assume:

1. Guns are bad.
2. There is in the universe exactly one gun.
3. This gun is indestructible.
4. Only the first person to touch that gun can ever use it.

Is the person who takes that gun necessarily bad? I'd say no. I hope I get it, because then I'm pretty sure I'll never get shot (at least not by a gun).

Re:Thank you /. readers

[Mr Z]

My high level inputs here, in case you missed it. (Read both posts--one links to the other.)

I realize I've described my employer's system at a very high level. I don't know to what extent our system has been described outside the company. I do know it has been described outside the company based on comments made by one of the lead patent attorneys that runs the system, since he was relating others' reactions outside the company to what we do. I also don't know the terms under which our scheme was disclosed.

Some additional comments:

The structure of your scheme bears a striking resemblance to ours, which inclines me to believe that this structure is popular and (one hopes) useful. You might want to consider the impact of multiple inventors on a given patent: Do you give each inventor the same award regardless of whether there was 1 inventor or 10? Do you split a fixed award among the inventors (e.g. that $500 gets split 10 ways with 10 inventors)? Do you split the difference at some threshold (e.g. $500/inventor up to $XXX dollars, and $XXX/N above that threshold)?

You might also want to consider the long term impact of the patent. In some sense, giving an equity stake in a company that could grow quickly does tie your incentive to the success of the company and can be the right thing to do. That might make sense in a young startup, but not in an established company whose value on the market can be very starkly disconnected from the activity of any given contributor. Neither one, though, ties incentive to the value of the actual invention. So, perhaps consider having a re-review either at the time the patent issues, or sometime after the patent issues to see how much revenue you can tie to the patent in order to gauge a reward.

I could (and indeed would like to) go into greater depth with the relative merits of the system we use at work, but I don't want to divulge proprietary information. I hope my broader insights are useful.

--Joe

Time vs. money

[Anonymous Coward]

Since patents take so many years to issue, your award on issuance is not much of an incentive, even though it is the largest amount. Not many people are going to work on a patent because they think they might get some money if they happen to be working for the same company five years later. You'd be better off moving more (or all) of the incentive to the filing.

Ronald J Riley

[rjriley]

Without patents large vested interests would simply take all the inventions startup companies produce for their and only their profit.

Slashdot is not the right place to seek advice about these issues because for the most part it is populated by entitlement minded dullards who never have original ideas. I find Slashdot forums rate next to use groups in quality of content.

Most certainly university patent policies are a good place to look for guidance in this matter. There is a forum for university technology transfer named Techno-L which is located at Techno-L.org.

www.InventorEd.org has a forum where you can get advice on this issue named Inventors-L@InvEd.org. I suggest that you could also seek advice there.

The Professional Inventors Alliance www.PIAUSA.org has a forum named PIADiscuss-L@PIAUSA.org where you could talk with other inventors who have launched companies.

You might also find useful information about this issue on the Licensing Executives Society www.LES.org web site.

Ronald J. Riley,

Speaking only on my own behalf.
Affiliations:

President - www.PIAUSA.org - RJR at PIAUSA.org
Executive Director - www.InventorEd.org - RJR at InvEd.org
Senior Fellow - www.patentPolicy.org
President - Alliance for American Innovation
Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
Washington, DC
Direct (202) 318-1595 - 9 am to 9 pm EST.

Re:Ronald J Riley

[Elektroschock]

"Without patents large vested interests would simply take all the inventions startup companies produce for their and only their profit."

The patent system does not work for start-ups. Patenting makes only sense when you can build up a portfolio. You cannot enforce a patent against a large player because in our world of patent madness the larger player has at least x trivial patents you infringe. Remains the patent troll. To become a patent troll you have to be able to finance 400k lawsuits which may last several years. Either you concentrate on your product development or on legal action. Real start ups just have no time for the patent process.

Examination of a patent takes 5 years. Either you are bankrupt before you get the patent or no "startup" anymore.

"Slashdot is not the right place to seek advice about these issues because for the most part it is populated by entitlement minded dullards who never have original ideas. I find Slashdot forums rate next to use groups in quality of content."

At least they know that patent attorneys are perpetrators. Get me the economist who tells that the patent system makes sense. Machlup's conclusions still hold.

I found an interesting article of Cole.

Re:Ronald J Riley

[rjriley]

Patents worked for me. They worked for Dr. Damadian, Gordon Gould, Bob Kearns (Flash of Genius movie coming on 10-3-08), Wilson Greatbatch, and the list goes on and on. Patents will never work for the types of people on Slashdot for two reasons.

1) You have to be able to invent and it is clear that you cannot becuse you are too busy wallowing in self pitty.

2) You have to have the gumption to try, and it is clear that most people here do not have that gumption :)

I have been living the good life with my inventions since the early 1990's.

Ronald J. Riley,

Speaking only on my own behalf.
Affiliations:
President - www.PIAUSA.org - RJR at PIAUSA.org
Executive Director - www.InventorEd.org - RJR at InvEd.org
Senior Fellow - www.patentPolicy.org
President - Alliance for American Innovation
Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
Washington, DC
Direct (202) 318-1595 - 9 am to 9 pm EST.

Re:Ronald J Riley

[JoeMerchant]

This still depends to a large extent on which space you are playing in. If you are trying to be a startup in a field of multi-billion dollar players, sure, you'll lose the patent war, regardless of whether or not you choose to play.

On the other hand, if you are entering a field that represents a small current market with a scattering of small players, the patent could be all it takes to get you some breathing room. In round numbers, it enables a $10M capitalized startup to compete in a field populated by companies with $300M market caps.

Without patent protection, the startup venture would be hopeless, and companies that don't even play in the field would "come take your lunch" just because they could.

Re:Ronald J Riley

[Elektroschock]

That a monopoly grant system(sorry, a "negative monopoly" to exclude others from doing it) does good for you does not mean that it is beneficial for the economy. In fact it cannot be shown it is.

In the language of the patent system inventing means "writing a patent application".

Re:Ronald J Riley

[Anonymous Coward]

Slashdot is not the right place to seek advice about these issues because for the most part it is populated by entitlement minded dullards who never have original ideas.

What, you mean like this guy, who's only contribution is to spew forth the lines of patent trolls?

Why protect it?

[macraig]

Why does your company feel the need to protect its alleged intellectual property?

First of all, how many collective shoulders has your company stood upon in order to "invent" this intellectual property in the first place? How much of what went into it is actually original innovation, and how much is directly due to the collective ingenuity of the heads on all those other shoulders upon which you have been standing?

Second, exactly how long do you suppose it will be before the patent is granted? Is it possible that this intellectual property will become effectively obsolete before the patent is even granted? If the patent is granted, what's the use in having it if the innovation will be superceded and obsoleted long before the patent expires? Does your company intend to become a patent troll, and litigate the patent long after any period of genuine originality?

Knowledge just wants to be free. Trying to keep tabs on who owns which tiny piece of it is just unnecessary (and massive) bookkeeping that creates jobs for people who ought to be doing something constructive instead. The way to create more innovation is to fire all the patent officials and lawyers and engage them in actually creating themselves, rather than tabulating and litigating someone else's creations. I don't care if your next door neighbor happened to come up with The Most Brilliant Idea Ever one week before you did: you're both entitled to the full fruits of that knowledge, regardless who happened to think of it first.

Re:Why protect it?

[Elektroschock]

It boils down to the question if novelty is relevant.

Re:Why protect it?

[JoeMerchant]

Not to the USPTO, in my experience.

Re:Why protect it?

[Elektroschock]

I don't mean in terms of examination. I mean "at all", as a rule for the "game".

Imagine you want to marry a girl and she answers "I would, but x just asked me 4 minutes ago. I have to respect priority."

Imagine you have a restaurant with African dishes, you get bankrupt and out of business. Another person steps in and it becomes a huge success. You say: I was first, it was my idea to serve African dishes. He says: So what?

Imagine you watch documentary about Slashdot and then say: Oh, but I had the idea before to make one. (*)

The existance of independent "reinvention" shows that the object that gets awarded the incentive is special, scarce. Patent infringement doesn't work like: We read the patent and then implement it. Rather, you do your engineering work as usual and someone says: I have a patent on that. A patent says No! You can't do this! I have a right to prevent you from doing this. Copyright is more positive. You copy something. You cannot accidently infringe a copyright and where it happens the sphere of copyright protection is weak and you can expect to win in court.

(*) Does the priority matter? Does the idea matter, is it scarce? ...or the ability to make it happen?

Re:Why protect it?

[JoeMerchant]

Good point, but as the system works right now, novelty is a small part - there's a healthy dose of requiring sufficient assets to do the development and launch built into the way things work in patents and trademarks. It's happening in a semi-uncontrolled way via lax examinations and litigation, but the net effect is that a big company can stake out less than novel turf and defend it 'legally.' The bigger the company, the more sketchy claims they can afford, and the better they can defend them.

I've heard dozens of "I thought of that first" sob stories, complete with valid and legal patents, which are flaunted to various degrees by companies that can actually implement the idea.

Re:Why protect it?

[Elektroschock]

another important issue is: De facto prior art means "prior patent"...

Re:Why protect it?

[JoeMerchant]

Actually, not. When researching prior art for the trolls (attys) they were very interested in academic and trade journal publications, or any other source that revealed prior art. Used this once to justify using EEPROM in our product, a competitor had a patent on it, but prior art invalidating the patent existed, so we went ahead and infringed them. There's a good chance they won't call on the infringement, and if they do we can throw the prior art at them and effectively nullify their ability to sue. Still, finding the patent(s), finding the prior art, having the meetings creating the "case file," and preparing the internal reports cost several hundred man hours in total.

Re:Why protect it?

[Elektroschock]

But patent offices do not research that by default. And patenting has little in common with writing a research paper.

Why patent software

[Anonymous Coward]

I've always viewed software like a book and most people I know do the same. You don't patent a book - you publish it. And get rights that way. The software industry screwed the pooch big time trying to get its products treated like "inventions".

Re:Why patent software

[justinlee37]

I've always viewed software like a book and most people I know do the same. You don't patent a book - you publish it. And get rights that way. The software industry screwed the pooch big time trying to get its products treated like "inventions".

This is a stupid analogy. Yeah, you don't patent books, you copyright them. However you do patent a printing press.

Similarly, if you write something in Microsoft word, and you so desire, you copyright it. However MS Word itself ought to be patented, as it amounts to an electronic printing press.

ReferenceDesk

[ReferenceDesk]

There are a couple of different elements that can influence how well an incentive program works. First, are you compensating for effort, or for perception? If your company actually gets the inventor involved in drafting the patent application, there could be tens of hours of "off the clock" work involved, and thus a significant cash bonus might be in order. If on the other hand the process is "spend an hour being interviewed by the patent lawyer, then sign something," the goal of the incentive is less to compensate for the extra work, and more to promote the idea of inventorship within the company. This ties into the second issue, which is how tightly coupled the timing is between the patent-related work, and the compensation for that work. Issuance of a patent can take years, so that a compensation plan that focuses on a big award at the end may not be much of an incentive to a developer who figures their half-life in any one company is around 18 months. Finally, what's the corporate goal of the incentive program? Putting a bounty on idea submissions may bring a lot of good ideas into the open, but also runs the risk of being "gamed". Focusing on patent applications implies that the company actually plans on paying the legal fees needed to create and file those applications. Are there structures in place to review idea submissions, figure out which are both strategically valuable and likely to survive patent examination, and manage what will be a multi-year process? Also be aware that there's a hidden "gotcha" in these compensation programs -- identifying who to award. Nothing ruins morale more than seeing someone who doesn't deserve kudos being rewarded, while the true innovators are quietly ignored. There's also legal risk, if the actual inventors aren't named on the patent application. Your mileage may vary, but the examples of IP incentive programs I've seen work have combined two elements: a modest cash reward for idea submission, and a larger cash award or stock grant on patent application.

Incentive?

[Anonymous Coward]

At least where I work, the main incentive for getting patents is what they were originally intended for - protection against thieving bastards.
Without that we'd get put out of business by someone with a ripoff product who can undercut us because they spent $0 on R&D, whereas that's the majority of our costs. Keeping a job is a good enough incentive for me.

I could probably get away with not posting this anonymously, but it doesn't hurt to be paranoid once in a while.

The Grade School Primer on Patents

[westlake]

you can offer the suggestion that all company patents be allowed to expire within a reasonable amount of time rather than being renewed indefinitely
.

From the Kids' Pages of the USPTO:

Can you renew a patent after it expires?
No, you can't renew a patent after it expires. However, patents may be extended by a special act of Congress and under certain circumstances certain pharmaceutical patents may be extended to make up the time lost during the Food and Drug Administration's approval process. After the patent expires, the inventor loses exclusive rights to the invention. whenwherehowwhy

Re:The Grade School Primer on Patents

[lysergic.acid]

ah, the innocence of youth... if only the world worked the way that elementary school students are told it does.

remember a drug that came out in the late 80's called fluoxetine, better known as Prozac? Eli Lilly's patent on fluoxetine expired in August, 2001, thus marking the beginning of a flood of generic fluoxetine preparations on the U.S. market. and it's true that, since then, if you wanted to get fluoxetine for depression or anxiety, you can get cheap generics for 1 or 2 cents per pill.

however, just as their Prozac patent was about to expire, Eli Lilly found a new way to extend their patent on fluoxetine by using a legal loophole in pharmaceutical patent law. they created a new fluoxetine brand called Sarafem and marketed it as a new drug to treat "premenstrual dysphoric disorder" (also known as PMS). under U.S. patent law, new uses for old drugs can be granted as separate patents. and it is actually illegal for pharmacists to offer generic substitutions to Sarafem prescriptions, despite there being tons of cheap generic alternatives of the same exact compound.

so in spite of the fact that fluoxetine has existed for almost 4 decades, Eli Lilly has found a way to extend their patent on the same drug and continue to exploit their monopoly free from generic competitors. now, this is just a particularly well-known from the pharmaceutical industry, but i'm sure similar legal loopholes have been used/created for other corporate industries, such as Disney has done for their copyrighted IP.

but i'm not a patent lawyer, so maybe i'm wrong and this kind of patent abuse only happens in pharmaceuticals. however, i have to wonder what happens when one corporation sells their IP to another corporation. does their patent get extended for the new patent-holder? or do they only receive the time remaining on the original patent?

My company's incentive program

[Anonymous Coward]

My company offers $100 for patent applications that make it past our internal committee, $500 for those that make it past our lawyers to be filed with the USPTO, and $1000 for granted patents.

At least in theory. In practice, I don't know of anybody who has actually received the bonus from the cheap, lying bastards. So the next thing I invent is going to get disclosed in a comment on Slashdot.

How GE Global Research Center does it

[k2backhoe]

I have been with GE for > 30 years, almost all of it with Global Research (formerly Corporate Research and Development). I have > 90 issued US patents (latest was last Tuesday), about 35-40 non-US patents, > 20 US patents filed but not granted. Ours is one of the most primitive policies. We get about $275 after taxes for each US patent filed, nothing for non-US, nothing for granted patents. Every inventor gets the same award, whether single author, or 10 inventors (yes, we do have complex projects where 10 people vitally contribute to an invention), each one gets $275. Every 25 patents we get a free dinner at the annual awards, a plaque, and a bound volume of the last 25 patents. The dollar amount is virtually unchanged for last 25 years in dollars, and is steadily decreasing in real dollars. GE values and uses their patent portfolios highly. We have a licensing arm that promotes use of our patents, and sues (and collects from) infringers. Patent portfolios are very valuable in creating joint ventures, partnerships, acquisitions, etc. I have contacts with other research organizations, and have never found one that rewards the inventors as meagerly as ours. Even other GE divisions (medical, aircraft engine, etc) give more. It is pitiful. Your patent numbers are more valuable as a performance metric in getting a decent raise, than they are in providing direct monetary bonus.

Re:How GE Global Research Center does it

[Anonymous Coward]

Interestingly enough, I also work at the same place, and find the patent award system to be a joke. Aside from the token award, often the project is over when the actual patent application is written, so a lot gets done on my own time. The pitiful amount does not begin to compensate me for the extra time that I need to put in when the actual application is written. This is compounded by the fact that about every other patent application I've worked on has been outsourced to some hack of a lawyer who doesn't understand the invention (although this has improved somewhat lately). The two factors above have actually proven to be a disincentive for me to submit disclosures. The highest value of patents are that they look good on my CV/resume.

Please don't answer

[Anonymous Coward]

It is common consensus here on Slashdot that software patents are evil. Yet you ask how your company should go about encouraging employees to get software patentend. I say that your company should not get into the patent game, and should not encourage employees to play that game. And I say that anyone who comes with helpful suggestions here is helping the company to play the patent game, and should think hard about their priorities.

Problem with patents...

[blahplusplus]

... is that the values of patents are in contention with one another, the idea of patents is to:

1) Incentivize people to invent
2) Protect the inventor's investment/hardwork in said ideas so he (potentially/does) see some renumeration for adding value to society
2) Expire patents to give that knowledge back to society so it can be freely used without royalty.

Unfortunately most patents are useless, like patenting language or air. The less a person knows about new or emerging industries the more useless patents become. Any idiot can get a patent on things. They do so by patenting things that should never be patented, and by overstuffing the patent office with applications so that overruns and overtaxes their ability to cull the wheat from the chaff.

The history of patents prove that patents are merely monopoly on knowledge in another form, it would be like trying to patent the equation 1+1 = 2. Everything we do is merely reshaping of old stuff into new patterns, all value was already there. The idea that we "add" value is the illusion, we merely potentialize value that was already inherent to begin with (i.e. you can't make a glass bottle if you don't have any glass).

I say we just do away with the whole thing entirely unless there are good arguments for to keep it only for exceptional cases.

Re:Problem with patents...

[daeg]

It's also bad, in my opinion, to incentivize something that requires brand new ideas. I would prefer to give incentive for producing more with existing products and equipment or even producing more with less.

I am planning on doing something similar with the staff I'm bringing on over the next year. The company is approximately doubling each year and our web user base is growing at about 140% per year. I want to keep the same number of servers (or less). I have the hardware budget set to double each year. Any money in the hardware/software that goes unspent (with performance, requests per second, latency, and uptime remaining the same or better) will get paid back at the end of each quarter as a bonus.

The same applies to help desk and other administrative staff. Find ways to keep our service level the same or better without needing new staff.

(Some of it, anyway. Some of the unspent money will be used to get better equipment, more screens, better hardware, etc for the developers to (a) make them more happy and (b) make them more productive.)

In other words, if my employees help keep my costs down, I'm not going to return all those funds to the company.. they should earn some of the money the company would have spent on outside vendors.

patent deterrent system

[Anonymous Coward]

how about this:
If you want to keep your job, don't patent your work - It hurts the development of new technologies

a long time ago at Nortel...

[Anonymous Coward]

If I recall correctly, back at Nortel when it was BNR, the incentive was $700 for filing, and $1200 once it was granted. All on your pay check as net income (the company was paying the additional income taxes so you'd get the full $700). Maybe other departments had a different incentive plan, it was a big company at the time. This was more than 10 years ago.

MOD PARENT UP

[martin-boundary]

That's an excellent comment.

Quitely get funding on the side and walk.

[tjstork]

Seriously... if you've got a really good idea, you should develop it on the side, very quietly, stash a bit of cash, then walk. Once you walk, file the patent and start looking for VC. Why on earth would you turn over an idea for $1000 when you could make millions off of it yourself? What, do you want to take your one lifetime and waste it on your corporate lord and master? What's the worst that they could do? Sue you? If you make millions, and they sue you, the worst that you do is make some settlement offer to them and you still walk away with more money than the $1000 and a jazzed up name tag.

Worthless patent filter

[Anonymous Coward]

While it is fair to compensate, most programs just encourage worthless piles of paper. The attorneys hear technobuzz and write up verbiage that means next to nothing. More commonly than not the company does not pursue at a business level the new technological idea. Perhaps easy licensing terms to the inventor after they leave the company sharing the profits is the best way to get some of this technology on the market doing something for people.

In an ideal world....

[JoeMerchant]

In an ideal world, I'd look for something on the order of:

• $1K for submitting an invention disclosure that is later developed into a patent submission, paid at time of filing
• $1K for significantly contributing toward a patent submission, either as a named inventor, or any other person who puts forth significant effort outside their "normal duties", also paid at time of filing
• $3K to each named inventor upon patent grant, paid at time of grant, and
• Some sort of downstream recognition such as breaking company revenue down based on IP protection, each patent is deemed to contribute a certain percentage of overall revenue. Named inventors might receive the sum of all their patents' contributions as a percentage bonus on their salary (so, if they are named on all of the company's profit generating patents, they might receive double salary)

Dollar amounts and percentages may be adjusted to taste, but one thing I think makes sense would be to give the recipient an option to take:

• a straight cash award
• for pre-IPO companies, double the cash value in shares
• or, for public companies, double the cash value as long term options at the current market price

Somehow, places I have worked are typically very tight with their shares and options when the engineers come around. It makes a certain amount of sense, most engineers I know understand cash quite well, but wouldn't know how to price a long term option if you gave it to them.

actually seems like a generous plan

[ridgecritter]

in my experience. I'm assuming since you're a startup that employees, particularly those anticipated to generate valuable IP, are also compensated with equity awards as part of their packages. That's the ultimate IP reward package, of course. The cash awards for filing, patent grant, etc., provide incentives for employees to do the grunt work required to get patents filed and successfully prosecuted through the USPTO to issue. Otherwise, this work gets pushed down the priority stack in favor of more pressing work.

A simple system

[khb]

Putting aside questions about the patent system...

I worked for a company which had a similar system for several years. But eventually reformed it.

1) Waiting until patent issuance for the biggest payoff will short change many (it can be years before issuance, people move on. Ex-employees typically don't get bonuses).

2) The bulk of the extra curricular work takes place putting together the patent application.

So I'd suggest a system where:

a) Thumbnail sketch of the idea to be filed internally and reviewed before more time is invested. No reward.

b) Approved ideas make it to preliminary filing. Small reward.

c) Full patent application submission, bulk of reward.

d) At patent issuance, a free plaque, small payment and award ceremony within the company.

What Jet Propulsion Lab does

[Anonymous Coward]

You get $500 (if you're the sole inventor) or $350/body (if multiple) when the disclosure is accepted (ditto for software that's releasable to the public). If it gets published in NASA TechBriefs, you get another $350. If it gets used by someone else, you can apply for a SpaceAct Award which can be fairly big. If it patents, then the inventors get some award + some share of the royalties.

It's not a huge sum, BUT, consider that annual raises run about 2% on the average with a spread between 1% and 3%, so for your $100K/yr person, that $500 is pretty close to the differential between a mediocre and a big raise.

Oh, and you get a certificate for the wall
And, "number of New Technology Reports" features into the annual statistics for each business unit along with "peer reviewed journal articles published", etc.
On the assumption (not always valid) that making your boss look good helps in your annual review, this is a good thing. Particularly if you're in a work unit that actually builds stuff, as opposed to generates journal articles.

Generic Serafem - Prozac - for PMS

[westlake]

it is actually illegal for pharmacists to offer generic substitutions to Sarafem prescriptions, despite there being tons of cheap generic alternatives of the same exact compound.

.
It would be at the very least - unethical - for a pharmacist to dispense a substitute for any drug without your doctor's consent.

The patent protection on Prozac/Serafem prescribed for PMS expired in 2007.

FDA clears 'generic Prozac' for sale [August 2, 2001], Teva Announces Approval Of Generic Sarafem(R) Pulvules(R) [May 23, 2008]

Re:Generic Serafem - Prozac - for PMS

[lysergic.acid]

i don't think you understand what generic means.

what exactly is unethical about allowing a patient to buy $0.01/pill fluoxetine 10 mg, instead of $3.00/pill brand name fluoxetine 10mg?

Re:Generic Serafem - Prozac - for PMS

[westlake]

what exactly is unethical about allowing a patient to buy $0.01/pill fluoxetine 10 mg, instead of $3.00/pill brand name fluoxetine 10mg?
.

nothing - so long as the script allows the substitution - and you or your HMO are paying the generic price.

but it is not a pharmacist's job to second-guess your doctor.

Hewlett Packard

[narced]

It's been a while since I worked there, but when I did their PIP went like this.

You get $100 for filing a good idea with them. Good or bad, file every idea you can think of. They would kick back 4 out of 5 as bad ideas, but every once in a while you'd get an "idea accepted" email, and $100 at the end of the month. There were plenty of "engineers" who would come up with 10 ideas / day, and ended up working on patent ideas more than on their real jobs. I quote "engineers" because lately HP has a bad habit of granting the title of "engineer" to those who have not been formally trained in engineering.

Then you get $1500 if you idea becomes an actual patent application.

I can't remember how much you get if your patent application gets granted a patent number, and I never made it that far.

Those are good terms!

[mkporwit]

One of my former employees, Oracle, had a $1000/filing + $1000/approval incentive program, so I think the terms offered by your company are very generous.

Re:I have a very effective program at my company..

[Legion_SB]

Sometimes the obvious joke really is the right one.

compares well to ours

[Herve5]

Big international company here, from electronics to satellites etc.; patent policy roughly the same but simpler: get some money when patent applied, get twice more when granted, in a kind of ceremony-for-the-inventors that's supposed to be gratifying (you need some dozen inventors/year to do this ;-D ) Now and then some people groan that accepting the cheque is a trick that'll prevent you to benefit further from possibly miraculous patent income later (in most countries there is a law saying even paid inventors must get a "reasonable share" of the income), but as I always doubted miracle anyway I'm not in trouble. The amounts you mention are close to ours.

The traditional arrangement...

[Gavin Scott]

My understanding is that the usual arrangement (such as for government employees) is that you agree as a term of employment to sell all patent rights to your employer.

The traditional price for this is one dollar per patent.

This is typically awarded at an annual event/dinner thing recognizing those people who were granted patents that year.

The recipients typically save the dollar bills so awarded and are quite proud of them.

I get the feeling that an employment agreement that says all patents will be signed over to the employer without payment are probably invalid as some money has to change hands (the $1) to make the transfer contractually binding. So any company thinking that their typical "we own every thought you have while you work for us" employment agreement / employee handbook may be in for a rude surprise if they're not compensating inventors for their patents.

But as always IANAL(tm).

G.

Here's how two of my employers have done it...

[marhar]

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
one of my patents so you can know I'm not making this up.

Yes, it does not follow, but it's still correct

[LKM]

Yes, it does not follow, but in this particular case, it's probably correct nevertheless. Studies have shown that patents cost more money than they generate in most cases:

Most shockingly, Bessen and Meurer's data suggest that outside of the chemical and pharmaceutical industries, litigation costs for the average public firm actually exceed profits from their patent portfolio by a wide margin

via ars technica.

Patents are bad for the economy because they destroy competition, and throwing out the baby would - in this particular case - improve the situation tremendously for almost everyone involved.

Re:Yes, it does not follow, but it's still correct

[Hognoxious]

litigation costs for the average public firm actually exceed profits from their patent portfolio by a wide margin

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.

Patents are bad for the economy because they destroy competition,

Is that patents as implemented now, or as a general principle? And if you mean the latter - on what evidence?

and throwing out the baby would - in this particular case - improve the situation tremendously for almost everyone involved.

Excluded middle - there are options other than total abolition or the status quo.

Why not throw out the bathwater but keep the baby - reform the system? We can start with requiring a prototype/model/formula and that it has to be an invention not an idea. Then enforce the rule that it has to be useful and non-obvious.

Re:Yes, it does not follow, but it's still correct

[Teancum]

What good does the current patent system really do? Are there really garage tinkerers that actually make some real money off of some cool idea that hasn't been thought of before... and certified by the government? Are you sure?

Supposedly the current system is set up to "protect the little guy" from getting trampled over by a big, evil, rich, and mean mega-corporation that is scheming to steal the ideas from this stalwart and noble but perhaps naive individual inventor, or perhaps even small business. If you know anything about patent law at all, you also know that this is so far from the truth about the system that it hurts to even mention it.

I certainly know some very personal examples of the "lone inventor" who has been screwed over by the legal system... and I've even had employers who were taken to court over patent issues that were total nonsense... where the patent system was the source of the abuse, not the protection from abuse.

I don't think there is even a baby to throw out with the bathwater in this case. If the whole patent system were abolished, normal businesses who actually produce stuff would continue to do so. There would still be trade secret laws to protect ideas from being copied by competitors, and the lone inventor starting his own company to start making the cool device would still happen. Indeed, this lone inventor would be more likely hired at some larger company because of his ability to think and come up with ideas... knowing that there wouldn't have to be the huge legal mess to deal with patent issues.

I seriously don't see any down side to abolishing the patent system entirely, and I have far too many stories of people's lives that have been wrecked by the patent system to consider it actually doing any good at all. This isn't stories from the internet, but close friends and family members... and unfortunately personal experiences having to fight against patents where the patent claim is abusive and possibly illegal.

What good would even a reformed patent system offer?

Re:Yes, it does not follow, but it's still correct

[LKM]

Patents are bad for the economy because they destroy competition,

Is that patents as implemented now, or as a general principle?

As a general principle.

And if you mean the latter - on what evidence?

Destroying competition is the very goal of patents. A patent gives a company the exclusive right to use a certain idea, thus creating an artificial monopoly.

Why not throw out the bathwater but keep the baby - reform the system?

I agree that reforming the system would be a good idea. I am, however, not convinced that there is any actual need for patents. In fact, I'm not convinced that patents are having any kind of positive effect at all - where's the evidence for that?

Patents are just a lot of overhead for all the companies involved. Those who get patents pay in patent fees, time and litigation cost (if they don't get patents solely for defensive purposes, which many companies are forced to do), and those who violate patents (knowingly or unknowingly - it's hardly possible not to violate patents if you do pretty much anything at all) pay in time, risk and - again - litigation costs if they are sued.

It's damned if you do, damned if you don't.

What's an invention, anyways? It's a strange concept. History shows that inventions are nothing special; in fact, most relevant inventions were made by several people at the same time. Why? Because inventions are simply the result of technological advances. As technology progresses, things which used to be unthinkable become common. Preventing all but one company from taking advantage of these new concepts is bad for everyone except this one company who did nothing out of the ordinary other than to first claim ownership to a concept a lot of people would have come up with within a short period of time.

Re:Yes, it does not follow, but it's still correct

[TheLink]

I agree with you. The baby is long dead and rotting if it was ever around.

The real innovators never get rewarded by the patent system since they're usually more than 20 years ahead of their time. Douglas Engelbart, Hedy Lamarr.

Whereas idiocy like "One click" and "Cracking eggs to make an omelette" patents gets rewarded.

So there will be no great loss if inventive patents were abolished.

I also think some of my ideas are brilliant, big deal. People who invent "Cracking eggs to make an omelette" also think their ideas are brilliant too.

Perhaps there should be Prizes for Innovation. You pay a fee and register your invention, and years later you might win a prize if people decide in hindsight your invention is worth something.

You could have two groups of prizes - one by "the people" and one by "experts in the field".

You could also allow for anonymity - the prize goes to inventor hashed ID = 0x10bd8c648ce1f2bd5aba4453938b406e .

scouring google

[DeadlyBattleRobot]

You 'scoured google'. Using google to research a business process or internal product development activity is questionable. You might as well send them an email telling them what you are working on. Does anyone think about the business secrets they give away every day to another company's online search software?

At IBM...

[Anonymous Coward]

At IBM (ten years ago), potential patents were submitted for review. This review decided if the submission was A) not worth doing anything, B) worth publishing but not patenting, or C) worth patenting. We got some money for the published articles, which were just a method of creating prior art so that nobody else could patent the idea. We got more money for the ones that actually got submitted to the USPTO, and even more money if the patent was granted. There were also bonuses for passing certain milestones in numbers of patents granted (4, 10,...).

On top of that, there were certain areas of technology in which the company wanted to incent patent creation, so there were bonuses for patents in that area.

I earned an extra $7,500 my first year out of grad school from a few articles and four granted patents.

Three patent filings before lunch

[mkcmkc]

At $1500 per patent filing, it's clearly in my interest to concentrate on patent filings, because nothing else I do for my employer pays me at this rate. And there's no shortage of stuff I can come up with that's at least as patentable as the stuff I read about--I'm pretty sure that the way I'm holding my hands as I type this is novel and non-obvious...

Case by Case

[zende]

Do you really need that level of bureaucracy in a one-year-old start-up? The reward should be based on the person and the patent. Seeing other people receive an award for their work often creates a better incentive than writing something on paper.

We had a patent incentive program at the company I previously worked, but it changed every year. Not worth writing something down if it going to change anyways.

No incentive

[Anonymous Coward]

Your company's patent incentive is comparable to a Fortune 25 company (bank) I recently worked for. However, nobody I knew was interested in putting their ideas or inventions up to be patented even though there was a big push within the company to do so.

Say the patent saves (or makes) your company $10 million. You get nothing more. And you've restricted yourself from using that technology at the next place you go to work for.

Fundamental Problem

[tom's a-cold]

If your company is pursuing software or business process patents, let me be the first to wish you bankruptcy, failure and ignominy, followed by a new career as a WalMart checker. And those who are posting helpful advice: you're teaching someone how to shit in your lunchbox.

Another data point.

[saccade.com]

Our company [large applications software vendor] does something like $2K on filing and another $3K on issuing. We generally don't file preliminaries. The pot gets sliced up if there's more than two inventors. They used to do restricted stock on issue, but I wasn't too fond of that... you've already waited years (up to four in some cases) for it to issue, why tie up the "reward" even longer?

Profit Sharing

[Szechuan Vanilla]

all very nice, those little prizes, but how about giving the patent inventor a percentage of the profit gained from each patent? And don't tell me it's hard to figure out; insurance actuaries routinely do things like that.

Helpful book

[Anonymous Coward]

There is a rather helpful book for those who are not up to how this stuff works, "inside the patent factory" by Donal O'Connel. Unfortunately, it says nothing on the size of the awards. But of course, from an inventors point of view, the larger, the more often, the better.

Better plan

[Leithauser]

A better plan would be to offer inventors a portion of income resulting from the patents. Your plan encourages the filing of multiple trivial patents or breaking the invention up into small components for patenting justs to get the flat fee, rather than large effective patents. Offering a percentage royalty on the proceeds of sales from the patent would encourage your employees to come up with useful, salable inventions, rather than lots of silly, trival ideas. David Leithauser, LeithauserResearch.com

Inventor HAS to follow the patent, if developed.

[Anonymous Coward]

otherwise it'll just die.

NRC in Canada discovered that.

What they now do is:
Invention? Patent. ( owned by National Research Council )
Inventor wants to persue their invention? They get a leave, up to 2 years, iirc, paid for 6-months.
Buyer wants the patent? do they want the inventor as well?

This way
a) inventions are more likely to continue living, instead of becoming bureaucracy-kill, and
b) researchers are more motivated to discover key stuff, and
c) Canada benefits from the patent ( if some company wants to buy it, they pay, market price for it, researcher is iirc, considered Part of the Package, due to the discovery that bought patents, managed by someone who wasn't involved in the innovation, won't live to market )

( this was approximate: I can't find the original interview, now, of the guy who replaced the previous system... bah. )