Conserve Your Patents, Trademarks, and Cash
by Intellectual Property Attorney Bill Honaker, the IP Guy
Don’t Give Up Your IP During this Crisis
Don’t lose valuable IP rights due to the coronavirus. We’ve heard the rallying cry, “defeat the invisible enemy”? No, the other one, “Conserve the cash.” Businesses of all sizes are trying to conserve their cash during this crisis. But don’t do it at the expense of your intellectual property. Take these steps to delay the need to make payments, and protect your most valuable assets for the future.
The focus will be on patents and trademarks, since both of these have specific deadlines that require legal and government fees to obtain and maintain them.
In the US, you obtain trademark rights by using your trademark. They’re called common law rights. They’re limited, and not as valuable as registered trademarks. But they are still valuable. If you’re really pressed for cash, wait to file for federal trademark registration and rely on your common law rights.
If you have a trademark application on file and received an office action, you have six months to respond. Tell your counsel to hold off until closer to the deadline to respond.
Registered trademarks have to be renewed between the fifth and sixth years, and every ten-year anniversary, but there is a six-month grace period. Take advantage of it in these tough times.
If you have a new invention, file a provisional application. They’re much less expensive, and are good for one year. You will have to file a non-provisional application within that year to get a patent, but you have pushed this expense out twelve months and still protected your invention.
Foreign filing decisions can be extended up to 30 months from your US filing date by filing a PCT application within one year of your US filing. This can be a huge cost savings.
Patent office actions must be answered within set times or your patent application will be abandoned. However, you have three months from the mailing date, and you can buy three months more, for a total of six months. These additional months are not cheap, but they extend your time and only need to be paid if you decide to respond. If the alternative is giving up, just hold off. Get through the crisis and then make your decision.
If you received a notice of allowance, you don’t have to pay it immediately. You have three months. Hold off and conserve the cash.
US patents must be maintained by the payment of maintenance fees at 3 1/2, 7 1/2 and 11 1/2 years. But there is a grace period of six months as well. If need be, take advantage of this grace period to avoid losing the intellectual property rights.
Annual annuities have to be paid in countries other than the US. However, many of these countries now allow these fees to be delayed due to the coronavirus. Check with your legal counsel and see if these can be deferred as well.
The USPTO’s Recent Gift of Time?
The USPTO recently decided to offer a 30 day extension for responding to certain patent and trademark responses due to the coronavirus. But don’t get too excited! You have to file a statement that the delay “materially interfered with the timely filing or payment.” What does that mean? Alas, the government didn’t provide a definition. They do remind everyone that they are open and accepting filings as usual. Is that a warning about what is meant by “materially interfered”? We are able to work, why can’t you?
The other problem with this gift of 30 days is what happens if the USPTO determines you didn’t meet the “materially interfered” standard.
Although available this should be a last resort in my opinion.
Another way to conserve cash is to review your portfolio. Many companies do not regularly review their portfolio to determine if there are any cost savings. They just pay fees and don’t question the value of the IP. Sometimes it is just easier to pay than make the hard decision to drop.
By using the Harmony System, these decisions are made quarterly so management knows what they’re paying, and can make informed decisions about what is no longer valuable to the business. The system also insures that you will not be surprised by a lawsuit, which would be an uncontrolled drain on cash. To learn more about the Harmony System, please see my website IP guy.com.
There are several ways to kick the can down the road and still save your IP. In these troubling times, do not make decisions entirely on cash flow. Explore the alternatives to delay payments. Once we’re through this crisis, you will be happy you didn’t lose assets in order to save cash.
About the Author:
Bill Honaker, “The IP Guy” is a former USPTO Examiner, a partner with Dickinson-Wright, and author of the forthcoming book, Invisible Assets – How to Maximize the Hidden Value in Your Business. To download a sample chapter, click here.