Create, Consult, Control
News & commentary on intellectual property issues.
Apr292009 | Steve O'Donnell
What does it cost to get a patent?
That is the first question most first time inventors ask and the answer depends on a number of factors.
In trying to budget for a patent prosecution, the inventor and the prosecuting attorney need to estimate the fees that the patent office will require and what legal fees the attorney will require. The patent office fees can be found on the PTO's site here (effective May 1, 2009). The patent office is, of course, a governmental body and, like all other government bodies, feeds itself off of fees. Over the course of a utility patent's life, between the filing fee, examination fee, search fee, issue fee and maintenance fees, one can expect to pay over $10,000 to the patent office. For “small entities,” essentially independent inventors and small businesses, those fees, for the most part, are halved. Those fees also don't all have to be paid up front. The issue fee isn't due until the patent is ready to issue and maintenance fees are due at 3.5, 7.5 and 11.5 years after issuance. For a qualifying “small entity,” the upfront fees can be under $500.
Other than that, there are the legal fees that your attorney will require. Those can vary greatly depending on the subject matter of the patent. Those can range from a few thousand for a simple invention to well over $20,000 for a very complex invention.
The legal fees will also vary depending on the attorney you hire. A solo practitioner or small firm will have less overhead than a large firm paying a number of employees and maintaining an office occupying a few floors of prime real estate.
The effective cost of obtaining a patent will also depend on your tax situation.
Another thing to consider is the cost of not obtaining a patent. Without a patent, your invention could be poached by another to make money off of your hard work.
Consulting a patent attorney about protecting your inventions, as early as possible, is the best way of protecting yourself.
Apr222009 | Steve O'Donnell
Are patent expenses tax deductible?
This post would have been better suited for a few weeks ago, but I'm fairly sure that we'll have another tax day next year. With that in mind, planning early makes the most sense. I am not a tax lawyer, and every situation is different, so the only way to get an answer you can rely on is to talk to your tax advisor. With that out of the way, generally, the expenses related to obtaining a patent are deductible as a business expense.
The following is only intended to give you a little background for when you speak with your tax professional. If you are a business, then your legal expenses to obtain a patent may be deductible in the year that they are incurred. Under 26 CFR § 1.174-2 the costs associated with obtaining a patent are deductible as a research and experimental expenditure. Further, such research and experimental expenditures can be either deducted in the year they occurred or they can be deferred and amortized. 26 CFR 1.174-1.
Your tax professional will be able to better advise you on the best way of lowering your tax burden and what the effective cost of getting a patent may be.
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