Background
Last week, I had a welcome break in my patent law practice. A client told me about his idea for a mobile app – an application that runs on a mobile device (e.g., a smartphone or IPad). Apps are potentially big business. No guarantees, but there’s money to be made if your app idea is new and protectable.
The client’s idea relates to cost-efficient ways to manage medical needs through a smart phone.
Listening carefully, I offered advice about the difficulty, under today’s law, of patenting an app that includes software. We talked about patenting procedure, timing, costs and the real-world differences between patentability and marketability. Undeterred, he said that he wanted to proceed with patenting.
So I did a preliminary patent search, reviewed the results with him and drafted a patent application which is now filed in the U.S. Patent Office. We’ll soon file internationally.
My client called a few nights ago. He reported that a buyer had surfaced and asked me to draft “the appropriate paperwork”. My interest piqued, and in preparation for drafting a memorandum of understanding (“MoU”), I asked about the deal terms. The buyer offered to pay a price that was the eight-figure range and a double digit annual royalty rate! With baited breath, we await the next steps . . .
Discussion
This recent and vivid experience evokes some observations. First, you never know how much money you will make on your app idea. Second, as an app developer, if you are serious, you must define the idea and act quickly to file at least one patent application, preferably with the help of patent counsel.
One key inquiry, at least from a patent attorney’s viewpoint is: can the app be patented? Relatedly, does the app have patent-eligible subject matter – i.e., is it more than an abstract idea? Arguably, “yes” if it has software that runs on a mobile device which connects to a server. (The server probably contains data that the server stores and processes, communicates back to the mobile device and makes the mobile device work in a desired manner.)
However, the software code that runs the smart device probably cannot be patented. But you may be able to protect it under copyright laws. And don’t forget to consider using suitable confidentiality and non-compete agreements.
But the analysis doesn’t end there. Other questions include: has the invention already been patented? Is it publicly known? If so, the chance to get a patent may be lost. A patent and literature (“prior art”) search may shed some light.
It’s usually wise to do the prior art search early. First, if someone already has a patent on the app, you might be able to design around it, and save time, money and disappointment by recognizing the problem at an early, rather than a later stage. Second, there can be severe consequences if you knew about the patent and egregiously infringed. In a nutshell, the prior art search is one of your normal due diligence steps. Due diligence is wise – look before you leap!
These days, the inventor who files first gets the patent. So if you have an invention that may be worth patenting, remember that he who hesitates may be lost.
Your decision about patenting involves legal and business judgments. For many early-stage entrepreneurs, the costs associated with getting a patent may loom large. The key is to do your homework and get appropriate advice. Who knows, your patent attorney may be able to help you find investment capital and offer alternatives and advice on ways to reduce your out-of-pocket legal costs. Good luck!
Click here to learn more about the author.
