Patents: When to partner, when to go solo

Got a brilliant new idea for a patented product? Here’s how to get your idea to the market, legally.

Joseph, Houston, Texas
I have a business idea that is based on a different application of a patented product already on the market. Is it best to proceed by taking my ideas to the company itself, or pursing them independently while contracting to the original patent holder?

By Paul Roberts, Fortune Small Business contributor
If the product you want to use is already patented, but you see a way to build a new business around a new application of it, you’re almost certainly going to need to do business with the company that owns the patent, says Bill Barrett, a patent counsel at Advanced Liquid Logic in North Carolina and author of the book iProperty: Profiting from Ideas in an Age of Global Innovation.

However, before you approach the company, Barrett recommends that you – and perhaps a trained patent attorney – take a hard look at the patent that has been issued. The initial description of a patent might make you think that the owners have received a broad license. However, the meat is often further down, where the applicant makes specific claims about what the patent covers. Those claims limit the patent. Your application of the patented technology could constitute a patentable idea in its own right, Barrett says.

“A lot of people read more into a patent than is really there,” Barrett says.

With the help of a licensed patent attorney, you can also look into the history of the patent, including communications between the applicant and patent officers in the U.S. Patent and Trademark Office. That will give you an idea of what the government’s examiners see as the limits of the patent grant, rather than what the patent holder understands them to be, Barrett says.

If you think there’s the possibility that your idea for applying this product is patentable, file a patent application of your own before contacting the company. “A lot of people are under the misconception that filing a patent application is in itself [patent] infringement, and it’s not,” Barrett says. Having a patent application filed will keep you from having your good idea snatched away from you by the company, should it have merit.

Once you’re ready to approach the company, you should do it anonymously, through an attorney and under the auspices of a non-compete and non-disclosure agreement, recommends Edward Fenno of Fenno Law Firm in Charleston, S.C. Such forms are easy and inexpensive to have drafted, and they protect your ideas from being copied by the organizations or individuals with whom you’re negotiating.

After all that due diligence, striking a deal with the patent holder depends on your negotiating skills and business acumen. At the very least, you will need to convince them that you’re serious and have the financing and skills to make your business idea a success.

Fenno warns that many large companies spend millions on product research and may have already considered, and rejected, the application you’re proposing. But Barrett says that companies may well be open to licensing their product if you’re proposing an application for it that is outside their core market.

You’ll need to be persistent, he warns: “I’ve seen licensing negotiations that last years, unless there’s someone there that’s really pushing it along.”

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