Tuesday, December 17, 2013

Can I Get Licensee to Pay Patent Fees?

Dear Rich: I am currently waiting for an evaluation from Lambert and Lambert Inc., a well respected licensing company that works on contingency. However, they do not pay filing fees for patents and being on a limited budget I have been brainstorming on how to get past this hurdle. From provisionals, utility, design patents and the price of patent attorneys come a myriad of expenses that add up quickly. Hence I have been considering, if L&L are interested, to get the prospective company to sign a confidentiality agreement, in order to review the invention and if interested either pay for filing fees or forego the patent all together and simply go to market with it. So my questions are these, how hard is it to get a big company to sign such an agreement? You're correct that Lambert & Lambert enjoys credibility among independent inventor groups. Good luck with that; if they take on your case, it could be an indicator of your invention's potential commercial appeal. We're not familiar with the agreement that L&L presents to inventors so we can't address whether you are permitted to negotiate or discuss contract terms with potential licensees. In some cases, a licensing agent has control over the paperwork and negotiation, and the licensor (you) can only accept or reject the choice of licensee or the key terms of the deal.
That Said Dept. What you're seeking -- to have the licensee pay the patent fees -- is not unusual. In some exclusive licensing arrangements, the licensee pays for the patent application processing and fees. These expenses, including attorney fees, are then usually deducted from the inventor's future royalties (although that's a subject of negotiation -- the parties may split the cost, or the licensee may pay it all). Why would the licensee pay the patent costs? Because it's usually in an exclusive licensee's best interest to have patent rights. On the other hand, you want these costs to be reasonable (good luck with soaring patent attorney fees) and sometimes these patent fee provisions include a cap on your total patent expenses.
Confidentiality. It's in your best interest as an inventor to have disclosures about your invention made under the terms of a confidentiality arrangement. Back in the old days (prior to March 16, 2013), you had a year of sales or public disclosures, before you had to file a patent. That one-year window is now closed with one exception for inventor-made disclosures.

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