Take steps to conserve patents, trademarks, and cash (MAGAZINE)

Businesses of all sizes are trying to conserve their cash during the global crisis resulting from the coronavirus, but don’t do it at the expense of intellectual property (IP). There are ways to delay making payments while protecting your valuable trademarks and patents for the future.

In the United States, you obtain trademark rights by using your trademark under common law rights. These rights are limited and not as valuable as registered trademarks, but they still hold value. 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 must be renewed between the fifth and sixth years, and at every ten-year anniversary, but there is a six-month grace period. Take advantage of it in these tough times.

For a new invention, file a provisional application, which is much less expensive and is 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 Patent Cooperation Treaty (PCT) application within one year of your US filing, which can also save money.

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, so hold off and conserve funds.

US patents must be maintained with 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 IP 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 US Patent & Trademark Office (USPTO) recently decided to offer a 30-day extension for responding to certain patent and trademark responses due to the coronavirus. But you must 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. The concern with this 30-days’ grace period is what happens if the USPTO determines you didn’t meet the “materially interfered” standard. So, 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. There are services by which you can manage such decisions, such as the Harmony System, and review IP expenses on a scheduled basis to determine what is no longer valuable to the business and assist in avoiding legal action. More information is available at ipguy.com.

These tips offer 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 make it through this particular crisis, you will be happy you didn’t lose assets in order to save cash, and you will be armed with useful strategies for navigating any future financial difficulties.

Get to know our expert

BILL HONAKER, an intellectual property lawyer and author (ipguy.com), has been helping businesses ranging from Fortune 100 firms to individual entrepreneurs to protect their patents, trademarks, and copyrights. A former Patent Office Examiner, he is a partner with Dickinson Wright, PLLC and the author of Turn Your Ideas into Gold: The Business Owner’s Guide to Intellectual Property.

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