Innovations Ignite Rise In Patent Filings
Patents are big money.
In December 2010, a federal court in Texas awarded SynQor, a Boxborough-based power converter manufacturer, $95 million in a suit the company brought against 11 separate businesses for infringing on five patents. The company later got an additional $17 million related to the suit.
In 2010, Boston Scientific, the Natick-based medical device manufacturer, sent $1.7 billion to rival Johnson & Johnson to resolve three patent disputes. A decade earlier, the company paid $324 million to settle a patent dispute with the same company.
Not only are patents costly, they’re becoming more common. There have been more applications for patents filed annually in each of the last three years compared to the year before. There are more patents in the market, and analysts say more businesses are exercising their rights to protect their patents through litigation.
Caliper Life Sciences in Hopkinton, for example, sued a New York company, Carestream, for allegedly infringing on Caliper patents. Months later, Carestream issued its own suit against Caliper. The two companies recently agreed to dismiss both cases.
So, have we become a patent-happy nation?
Insider’s View
Those involved in the industry say patents are important for many companies to protect their intellectual property and justify spending money on patent-protected products. Without patent protection, it can be a risk to invest in a technology if a competitor can claim patent rights to it.
“In the last 10 or 12 years, innovation as a business strategy has become an increasingly competitive tool,” said Rakesh Kapoor, director of research and development at Saint-Gobain’s Northborough facility. “If you’re innovating, you have to protect your investments.”
And that’s exactly the strategy Saint-Gobain has taken. The company has more than 400 patent families—meaning a patent for a type of product that may have various offshoots, and the same product being protected in multiple countries. In the last two years, the company has acquired 117 patents in North America alone.
For Saint-Gobain, the investment in patents is paying off.
The percentage of the company’s sales that have come from products that are less than five years old has been steadily increasing, representing almost a third of company revenues, Kapoor said.
“It’s been an excellent payback from our investment in innovation,” he said.
Those in the patent industry defend the system, saying it’s a tool that allows new products to be made.
“Our patent system really does foster innovation,” said Catherine Rajwani, an IP lawyer for The Harbor Law Group in Northborough. “There have been so many great technology advances that have happened because of patent protection.”
Still, the process to get a patent is long and potentially expensive.
Patents must be for useful, novel and nonobvious new technologies. If David Rouille, a patent attorney at Chapin Intellectual Property Law in Westborough, has any advice, it’s to start the process early.
It can take one to three years to secure a patent from the government, sometimes longer. And the cost can run between $6,000 and $15,000 to get the patent, plus ongoing maintenance fees to hold it, he said.
But, they’re incredibly important for some businesses.
Kevin Hrusovsky, president and CEO of Caliper Life Sciences in Hopkinton—which recently agreed to be sold to Waltham-based PerkinElmer—said it can be a risk to launch a product that significant research and development resources have been poured into if it’s not patent protected.
“(Patents) give you a unique opportunity to really make a technology and be able to justify further investments around that technology,” he said.
In the past few years, Hrusovsky said Caliper, through acquisitions and organic growth, has increased the percentage of company revenues that are patent-protected from near zero to almost 75 percent.
“You wouldn’t be able to grow a company like this without patents,” he said. “They are really very core to our strategy and have led us to be a profitable company.”
And there could be significant changes in patent law on the way. Earlier this month, President Obama signed the America Invents Act, which includes some of the most sweeping reforms to the U.S. patent system since 1952.
The biggest change is moving from a “first to invent” to a “first to file” system, meaning that the United States Patent and Trademark Office will award patents based on which companies file the first applications, not necessarily who first invented the products. The move, according to IP lawyers Rajwani and Rouille, will bring the U.S. up to par with international IP standards. The legislation also gives businesses a fast-track option, which, for an extra fee, guarantees the patent application will be reviewed within one year.
While patents are important for businesses, the level of their importance varies from company to company.
Take Qteros, the Marlborough-based next-generation ethanol technology firm. It was recently awarded a new broad-based patent that covers its core technology: a microbe that can convert biomass into ethanol.
Patent protection was important for Qteros to guard the technology, but President and CEO John McCarthy said what’s even more important than patent protection for the company right now is market penetration.
“Getting in with the right partners, building facilities and having our product out in the market is more important than intellectual property acquisition at this time,” he said.
But a good first step before going feet first into the market is to have some patent protection, which is exactly what Qteros did. While market penetration may be more important than building a patent treasure chest, patents are still important to the company, which is why Qteros spent the money to get the patent in the first place.
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