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Build a Company Around Patent(s), Or Just Sit Back and License?

Build a Company Around Patent(s)!

Many share the dream: “I’ll get the patent, license it to a company, sit on a beach, and collect royalty checks.” While that does happen occasionally, it is a very rare exception.

Relying solely on that dream can waste valuable time and shorten your effective patent monopoly. Companies are notoriously risk-averse; they rarely buy or license an untested idea on a piece of paper. Proof of concept is the modern standard.

A far better way to maximize the financial value of your patent portfolio is to roll up your sleeves: start your company, sell the product, and build a market presence that entreats, “Acquire us.”

Rather than trying to sell an abstract patented concept, with this approach you are creating tangible products that generate real sales. Here is why and how this strategy commands top dollar in the market:

1. Market Validation (Proving the Concept) – Build a Company on Sales

There are numerous excellent patents currently relegated to trash collections. A legal monopoly alone is insufficient. True value is established when a granted patent’s inventions generate actual profits. Real market demand and substantial sales figures, provide the critical evidence that piques an acquirer’s interest.

2. A Young Company’s Greatest Asset is Patent Rights – Build a Company on the Monopoly

Patent rights give you legal “teeth” that can generate serious financial pain for a larger company if they cross over your monopoly’s boundary. IP insurance can even help lower the financial burden of litigation if court becomes necessary. When a nimble startup becomes a persistent thorn, the giant often realizes the most cost-effective route is simply to buy the young company.

3. Do Companies with IP Command Higher Acquisition Multiples? Build a Company around an IP Portfolio

When Mergers & Acquisitions (M&A) teams evaluate a business, they look at earnings, revenue, and assets. A company with proprietary, patented technology almost always receives a higher valuation multiple than a company selling a generic product. The buyer isn’t just buying your current cash flow; they are buying a protected monopoly that prevents future competitors from entering the field.

The Ultimate Tangible Result

Starting a business is hard work. Those who have built a company understand.  It requires navigating supply chains, marketing, regulatory hurdles, and customer service. The company uses the intangible patent claims and turns them into:

  • Active product sales revenue
  • A scalable, resilient business structure
  • A highly attractive acquisition target

One of our beloved clients (a CEO who passed away a few years ago) always reminded us: “I don’t have to always be right, I just can’t make a decision that kills the company.” His company built a strong IP portfolio, drove real product sales, and was ultimately acquired for over 400 million Euros.

His exit was better than any “golden parachute”—and it all started by turning an intangible patent into a tangible, operating business.

So Build a Company!

Ask Us Anything… about Intellectual Property!

Business Patent Law, PLLC is headquartered between Louisville and Lexington, Kentucky, serving a diverse range of clients—from innovative startups to successful companies of several decades whose business interests mean BPL’s practice spans across seventeen time zones.

If you have a topic or question you would like our editorial staff to address, please contact us. Business Patent Law, PLLC provides intellectual property and business counsel. If you need assistance, reach out to us today.

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Prepared by the Business Patent Law, PLLC, editorial staff.

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Science Fiction Has Turned Into Medicine: How Ingestible and Injectable Digital Tech is Changing Healthcare

At first glance, it reads like the plot of a classic sci-fi movie or a big-screen blockbuster: micro-technology inside the human body.

Well, the future has arrived.

Computers no larger than a pill are now being designed for the human body. These digital devices can map the gut’s microbiome, track pharmaceutical delivery in real time, stream wireless telemetry to a doctor’s mobile phone, and—at the precise right moment—completely dissolve.

Here is a look at how ingestible and injectable medical computers are currently being deployed, along with some intellectual property strategies for the innovators building them.

Current Real-World Ingestible & Injectable Medical Computers

  1. Diagnostic Imaging & Sensing Capsules

Ingestible camera capsules now traverse the gastrointestinal tract to capture high-resolution imagery where traditional endoscopes cannot easily reach. Next-generation capsules—such as gas-sensing and hydrogel-sampling pills—measure internal pH, hydrogen, and methane levels to map the gut microbiome without invasive procedures.

  1. Digital Medicine & Adherence Tracking

Ingestible sensor systems utilize microchips made of food-grade minerals. Activated by stomach acid, the chip broadcasts a brief signal confirming the exact time a patient ingested their medication. In the “bullpen” are bioresorbable RFID capsules that track drug adherence and then biodegrade completely.

  1. Injectable & Bioresorbable Implants

While some of these computing devices are still in the development stage (like a trip to Mars) their widespread arrival is inevitable. Examples include injectable bioresorbable electronic devices (such as temporary cardiac pacemakers), nerve stimulators for chronic pain relief, and tissue-oxygen sensors. By utilizing micro/nano-technology silicon membranes and magnesium interconnects, these devices dissolve after a predetermined clinical window—eliminating the need for surgical removal.

Strategic Patent & Legal Takeaways for MedTech Innovators

  • File Early—Separate Patent Timelines from FDA Timelines: Patent rights depend on technological novelty, not regulatory approval. You can secure patent protection for an ingestible device years before entering human clinical trials.
  • Document Human Contributions: Maintain rigorous laboratory engineering records that log human modifications, testing, and iteration—particularly if AI tools assisted in early design phases.
  • Build a Multi-Layered Portfolio: Protect the entire ecosystem by drafting separate claim sets for the physical capsule architecture, the chemical bioresorbable substrate, and the operational methods for internal data transmission.
  • Prioritize Regulatory Compliance Early: FDA certification is necessary to commercialize your device. Start the process as soon as possible, as regulatory clearance will likely require more time than securing your first patent grant.
  • Understand the “Distance from the Patient” Rule: In medical IP, a general rule of thumb applies: the farther away from the patient a medical invention is, the less economic value the patent tends to command. (And, of course, the closer a medical patent gets to its expiration date, the less value it retains.)

Ask Us Anything… About Intellectual Property!

Business Patent Law, PLLC is headquartered between Louisville and Lexington, Kentucky, serving a diverse range of clients—from innovative startups to successful companies with decades of market presence whose business interests span across seventeen time zones.

If you have a topic or legal question you would like our editorial staff to address in an upcoming feature, please contact us. Business Patent Law, PLLC provides comprehensive intellectual property and business counsel to safeguard your technological breakthroughs.

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What is This Intangible to Tangible Thing About Patents?

  • Tangible can be defined as, “a physical thing.”
  • Intangible can be defined as, “something without physical substance.”

A fundamental paradox at the heart of intellectual property law is that part of it is controlled by the physical laws of the natural world, while another part exists purely in an invisible space.

Intellectual property is much more than just an abstract idea floating around in that invisible space.

For a patent to be granted, that ethereal idea must be transformed into enforceable “metes and bounds.” Like it or not, an inventor usually needs a lawyer to stand up in federal court and argue that someone is trespassing on those invisible boundaries (the alleged infringement). This unique combination of the abstract and the concrete creates one of the cornerstones that ultimately benefits “We the People.”

The Limited Patent Monopoly

The limited patent monopoly gives the first to market an upper hand on the competition. Without patent rights, technological advancement would grind to a halt. Many argue against the patent system, but do we really want to go back to riding horses and bathing once every few months? Most people would think that stinks!

Currently, the United States of America is a semi-regulated capitalistic country. It must be this way; unregulated capitalism historically results in a very few owning almost everything while everyone else is left poor. Our history from the 19th and early 20th centuries showed us exactly what happens without smart regulations. Patents are a key part of that balanced framework.

Rights Become Tangible When Enforced

When a third party creates a physical product or process that too closely resembles your patent claims, a judge or jury will determine if there is an infringement. Armed with a successful judgment, you can legally stop that third party from:

  • Manufacturing your invention
  • Selling or offering it for sale
  • Using it in commerce
  • Importing it into the United States

The power to stop an infringer, paired with the payment of damages, can be the biggest dog in the room for advancing your company to the next level. A court-ordered injunction and cash settlement are real, physical results flowing directly from an intangible patent.

The Tangible Value of the Patent Outside the Courtroom

You don’t always have to go to court to feel the physical power of a patent. In the daily business world, that intangible asset creates tangible value in three distinct ways:

  1. The License

Upfront fees, milestones, and royalties are just a few of the financial perks. They can be sliced and diced however the parties agree. With or without your own manufacturing or distribution facility, a patent allows you to create a very real, very physical revenue stream.

  1. Investment Capital

In return for selling equity to investors, hard capital is deposited directly into your corporate treasury in exchange for shares—without a bank collecting interest on a loan. However, your Securities and Exchange Commission (SEC) filings must be pristine. Without one or more patents defending your market position, it is highly unlikely sophisticated investors will back the future of your company.

  1. Collateral for Corporate Growth

Sometimes, the “just right” patent portfolio is sufficient collateral to secure a major loan. Public bankers, private bankers, investment bankers, and even insurance companies generate loans backed by intellectual property. Without the patent(s), this type of cash influx is often impossible.

  1. Sale

The patent’s intangible rights can be sold to a third party. This also generates tangible cash in the hand of the former owner.

The Takeaway

In the business world, things we cannot see, touch, hear, taste, or smell can become extremely valuable. Of course, they may not—it all depends on how you protect them.

From our experience, when companies are acquired, those with robust Intellectual Property portfolios realize significantly more cash than those without. That very tangible increase in cash for the seller is the direct result of those intangible patent claims.

Ask Us Anything… about Intellectual Property!

Business Patent Law, PLLC is headquartered between Louisville and Lexington, Kentucky, serving a diverse range of clients—from innovative startups to successful companies of several decades whose business interests cause BPL’s practice to span across seventeen time zones.

If you have a topic or question you would like our editorial staff to address, please send us an email. Business Patent Law, PLLC provides intellectual property and business counsel. If you need assistance, contact us today.

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I Invented a Box Containing Hot Air: Shoot the Moon or File 13?

I Invented a Box Containing Hot Air: Shoot the Moon or File 13?

Similar to the public’s verdict about 1800s’ snake oil salesmen, the colloquialism “selling hot air” generally voices a negative connotation. But until Congress changes Title 35 of the U.S. Code, the ultimate arbiters of patentability are statutory requirements—not public opinion.

To understand how the United States Patent and Trademark Office (USPTO) evaluates an invention, let’s look at four different examples of “a box” to see what lands in the trash can (File 13) and what gets a shot at a patent (Shoot the Moon).

  1. The Unpatentable Box

The Setup: A sealed cardboard box containing nothing other than ambient air at 100 degrees Fahrenheit.

The Verdict: High probability of File 13.

Standard cardboard boxes have been available for hundreds of years, and the statutes dictate that Natural Phenomena—such as ambient air—are not patentable. Simply trapping hot air in a standard container doesn’t cut it.

  1. The “Something Different” 

The Setup: An open-close box containing air, a cushion liner on the inside of the box, and a location tracker.

The Verdict: Possible, but likely File 13.

Under some narrow circumstances, this might be patentable if it features a brand-new location tracker that measures travel speed and position connected to the Cloud. However, there are already numerous tracking devices used by international carriers to move boxes around the globe. Without an additional search of the prior art, this one faces a steep uphill battle.

  1. The Box with Internal Climate Control

The Setup: On the outside, it looks like a standard cardboard box that can be opened, closed, and sealed (cardboard is a cheap insulator). On the inside, the ambient air is actively controlled by a thermal heating and cooling system built into the inner liner. Along with a small vent, the box includes a microcontroller/processor, a mini-heat pump, a voltage supply, a temperature sensor, and tracking module circuitry with a transceiver connected to the Cloud.

The Verdict: High probability of Shoot the Moon!

It’s an integrated system. You aren’t patenting the air or the cardboard; you are potential a novel, man-made utility system that manipulates the internal environment.

  1.  A Very Soft Malleable Blanket

The Setup: On the outside, a durable, protective shell capable of absorbing extreme external shock. On the inside is a harvested donor heart traveling 400-plus miles to a waiting patient. The heart rests in a sterilized, malleable blanket that conforms to its exact shape, preventing it from contacting anything else. The box’s vent includes a microfilter to block pathogens. Alongside the processor, mini-heat pump, voltage supply, and Cloud transceiver, the box includes a supply of saline, a mini-fluid pump, and a layer of graphene contacting each millimeter of the heart’s external surface area.

The Verdict: Ultimate Shoot the Moon!

This is a highly sophisticated, life-saving apparatus with clear, markedly different structural and functional characteristics from anything found in nature. (Note: While highly patentable, you will definitely need FDA certification before introducing it into commerce!)

The Takeaway

Never assume your idea is too simple or too strange to be patentable. As humans, we often lean toward keeping the old rather than embracing the new. We weren’t there, but based on human nature, when the first person put a wheel on a peg, his peers likely laughed at him.

Ironically, we recently watched a documentary about the ten greatest inventions in human history. The wheel did not make the top 10. Something doesn’t seem quite right about that!

At the end of the day, some of the most valuable innovations look like “hot air” to the public until a granted patent proves otherwise.

Ask Us Anything… about Intellectual Property!

Business Patent Law, PLLC is headquartered between Louisville and Lexington, Kentucky, serving a diverse range of clients—from innovative startups to successful companies of several decades whose business interests cause BPL’s practice to span across seventeen time zones.

If you have a topic or question you would like our editorial staff to address, please send us an email. Business Patent Law, PLLC provides intellectual property and business counsel. If you need assistance, contact us today.

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Stay Ahead of the Curve: Stay up-to-date with news that impacts your business and intellectual property—sign up for Business Patent Law’s Monthly Mailer™ newsletter today.

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Divisional: How One Filing Can Create Two Expiration Dates

Really? Two Expiration Dates? Yes.

The Usual Sequence

The patent examiner declares in the First Office Action that there is more than a single invention disclosed in the parent patent application which allows the filing of a divisional. Before further examination, the examiner requires that the Applicant select a first invention for examination. This is known as a Restriction Requirement.

The Statutory Combo: 35 U.S.C. § 154(b) (PTA) + the § 121 Divisional Safe Harbor

This combination of statutory law allows the extension of a divisional patent application’s term beyond the parent’s twenty-year legal monopoly.

  • 35 U.S.C. § 154(b): Governs Patent Term Adjustment (PTA). As a result of USPTO delays in examination that exceed three years, the PTA adds “bonus life” to the patent term. (Note: Over the years, Business Patent Law, PLLC has seen extensions of four years or more.)
  • 35 U.S.C. § 121: This provides the “Safe Harbor” for divisional applications. It states that a divisional application filed because of a restriction requirement cannot be rejected based on the parent patent for double patenting.

How PTA Calculations Work

The PTA is calculated independently for each application. Depending on the USPTO’s specific delays, the parent and the divisional patent applications are eligible for different PTAs. Upon filing a divisional, its own PTA clock begins.

When a divisional application is filed because the examiner issued a restriction requirement, the USPTO cannot use the parent patent as a reference to reject the divisional for double patenting (and vice-versa). Since you aren’t forced to file a Terminal Disclaimer, every single day of PTA belongs to the owner of the divisional patent.

Turning a Restriction into an Enhanced Asset

  • Multiple Monopolies: In the IP world, distinct but similar inventions are a preferred way of doing business.
  • Stepped Expirations: Staggered expiration dates provided by a divisional make it much more difficult for competitors to “design around” or wait out your protection.
  • Mutually Beneficial: When innovation and engineering are symbiotic, we can precisely select which inventions should be maximized by the PTA and include several of those into the parent application to trigger the divisional process.
  • Too Much Of A Good Thing: Being overzealous can be detrimental if there are too many inventions flowing from the parent application.
  • Management’s Wisdom: Just because you can, does not mean you should. The “good ole days” of “submarine patents” are a vapor in time, but the divisional patent PTA is the law of the land today.

Business Patent Law, PLLC can assist your company with the strategic architecture of parent and divisional patent applications.

Ask Us Anything… about Intellectual Property!

Headquartered between Louisville and Lexington, Kentucky, Business Patent Law, PLLC serves a diverse range of clients—from innovative startups to successful clients of several decades. Our clients’ business interests means BPL’s practice spans across seventeen time zones.

Business Patent Law, PLLC provides intellectual property and business counsel. If you need assistance, please contact us today.

Stay up-to-date with news that impacts your business and intellectual property—sign up for Business Patent Law’s Monthly Mailer™ newsletter. If you have a topic or question you would like the editorial staff to address, please reach out.

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Should I Have a Holding Company for Intellectual Property?

A holding company is created to hold something, and it’s a business decision that depends on your preferences.

In the Intellectual Property world, these companies (LLC or Corporation) own patents, trademarks, and copyrights. The holding company owns legal monopoly rights. A third party pays the holding company for the rights to practice those monopolies, or the third party can buy the assets outright.

Holding Company Advantages

  • Asset Protection: If your operating company is commercializing the rights of the IP and is sued for infringement, the IP is held safely by your holding company. To own the IP is not an infringement. Likewise, if a defective product suit is the alleged reason for a lawsuit, the owner of the IP is not typically a party to the negligence claim. Additionally, the holding company’s assets are shielded from the operating company’s creditors.
  • Centralized Licensing: If your holding company owns multiple intellectual properties licensed with third parties, it collects all milestones and royalties in one place. This can reduce the paperwork for licensors/licensees.
  • Succession and Sale: Most of the time, it is easier to sell one or more intellectual properties when they are owned by a holding company. Without a clear title, most sales never occur; having the holding company as the sole owner is one of the easiest ways to maintain that clear title. The same principle works when the holding company itself is acquired.
  • Tax Efficiency: I am not a tax attorney, but according to my understanding, in select jurisdictions, a holding company can provide tax advantages.

Holding Company Disadvantages

  • Maintaining the Corporate Veil: This must be done or the advantages, such as shielding from personal liability, are lost. You need clear and distinct business operations and documents for each company. Separate officers or managing members must sign for the company and not for themselves. Not doing so can cause massive heartache.
  • Administrative Overhead: There are more books and more government filings. You are now managing two sets of books, two sets of tax filings, and formal “inter-company” licensing agreements.
  • Government Fees & Forms: Corporations and LLCs are a matter of state law. Each state has its annual fees, forms, and taxes; some states are much more expensive than others. For example, Delaware requires the use of Delaware law firms or organizations to file documents with the state government. For startups, these costs can trump the immediate benefits.
  • The “Arm’s Length” Requirement: Do not commingle the holding company’s and the operating company’s accounts, business agreements, capital, or other funds. The IRS may disregard the entities and “dump” it all into your lap—a mess that is difficult, if not impossible, to fix. Further, in an adversarial proceeding, opposing counsel will want to pierce the corporate veil so that all of your assets are available for judgment.
  • Initial Complexity: Setting this up correctly requires tight coordination between your patent attorney and your tax advisor. A poorly drafted license agreement between your own companies can lead to legal headaches down the road.

Whether to “hold ‘em or fold ‘em” is dependent on your risk-reward tolerance.

Ask Us Anything… about Intellectual Property!

Business Patent Law, PLLC is headquartered between Louisville and Lexington, Kentucky, serving a diverse range of clients—from innovative startups to successful clients of several decades whose business interests cause BPL’s practice to span across seventeen time zones.

If you have a topic or question you would like the editorial staff to address, please send us an email.

Business Patent Law, PLLC provides intellectual property and business counsel. If you need assistance, please contact us today.

Stay up-to-date with news that impacts your business and intellectual property—sign up for Business Patent Law’s Monthly Mailer™ newsletter.

Prepared by the Business Patent Law, PLLC, editorial staff.

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I Know It’s Worth A Million!

I Know It’s Worth A Million!

Occasionally, a first-time inventor sits down with Business Patent Law, PLLC (BPL) to discuss a new mechanical or electromechanical invention. Before the hour ends, the excitement usually peaks: “Let me tell you, it’s worth a million!”

It’s an inspiring sentiment, but as a firm that has spent decades in the trenches of intellectual property, a million-dollar idea is only the first brick. To turn that “worth” into “wealth,” you need a foundation that can hold the weight of a business.

The Legal Foundation: The Patent

Before any money is made from your invention, there must be a patent.

  • The Industry Standard: The USPTO’s current allowance rate for mechanical-type applications is approximately 65-70%.
  • The BPL Advantage: Fortunately, BPL’s clients consistently maintain a higher allowance rate than the national average.

However, a granted patent is not a check; it is a legal monopoly right – it means you hold the exclusive rights to make, use or sell. To be “in the money,” the patent must be used in a manner that creates value that can be reduced to cash.

The Million?: Sales vs. Licensing

Once you have the patent, you have two primary paths to your “million”:

  1. Licensing or Selling: This is the path where you rent or sell your rights to a third party. In my 38 years as a patent attorney, only three times, have I seen a third party offer to buy a mechanical invention based solely on the patent only. And, to my knowledge, none of those resulted in a viable commercial deal.
  2. Building the Business: The clients who created truly valuable patents were generally persistent ones. They didn’t wait for a buyer; they started an LLC and began selling the device themselves.

The most successful inventors didn’t just invent a product; they built a customer base. When an LLC reaches a “magic number” in annual sales—proving the market exists—that is when an acquiring company steps in to pay an impressive Return on Investment (ROI).

“Born to Invent”: The 1.5%

Why is the invention path so difficult? Because the innovation “gene” is a rare human trait. Statistics suggest that roughly 1.5% of the population creates the vast majority of inventions. These individuals are a necessary cylinder of our economic engine, but they often face lopsided odds.

While some look to Venture Capitalists (VCs) to bridge the gap, the numbers are sobering. Only about 5-10% of VC deals generate a worthwhile ROI for both the founder and the VC, especially in the high-cost manufacturing world of tangible consumer devices.

The One In A Million Longshot

For a first-time inventor, the “million-dollar” dream is, statistically, a longshot. But world-changing technologies generally start that way. In its earliest days, few people were interested in cell phones—they were bulky, expensive, and lacked the clarity of a landline.

Success requires more than a better idea; it requires serendipity and a legal team you are comfortable with. BPL can write the patent application, suggest architecture for your business, and answer your questions when they arise.

Ask Us Anything… about Intellectual Property!

Business Patent Law, PLLC is headquartered in Nicholasville, Kentucky, serving a diverse range of clients from innovative startups in Lexington and established industry leaders in Louisville, to businesses across the United States and the world.

If you have a topic or question you would like the editorial staff to address, please send us an email.

Business Patent Law, PLLC provides intellectual property and business counsel. If you need assistance, please contact us today.

Stay up-to-date with news that impacts your business and intellectual property—sign up for Business Patent Law’s Monthly Mailer™ newsletter.

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Energy Is Neither Created Nor Destroyed, It Merely Changes Form

“Energy is neither created nor destroyed, it merely changes form.”

— First Law of Thermodynamics

The Energy Footprint of a 90-Page Patent Application

Applications are written in a plethora of forms. Some are better than others. But what is the true “cost” of preparing a 60-page Specification with 30 pages of Drawing sheets?

In the United States, we instinctively think of energy in terms of the grid: atomic, electrical, gas, oil, water, and wind. These are the literal fuels of the Digital Infrastructure. The workstations, servers, Cloud Computing, AI, and CAD software required to render 30 sheets of technical drawings consume significantly more energy than a common household appliance.

Cognitive Energy Burn

The human brain is an energy-hungry organ, consuming about 20% of the body’s daily fuel. During the “Deep Work” of drafting complex claims, glucose consumption spikes. A patent attorney may spend 40–80 hours in this high-intensity state.

The draftsman, likewise, expends massive number of calories transforming rudimentary sketches into a technical masterpiece. Behind it all, the inventors expend countless hours of physical and mental energy.

Energy Type Source Estimated Output/Use
Metabolic Attorney/Draftsman/Inventor ~12,000–20,000 Calories (15–25 or more days of food energy)
Electrical Hardware, AI & IT Infrastructure ~15–25 kWh (Running a modern fridge for a week)

The Hidden Grid

This “Hidden Grid” is the invisible foundation that supports your Patent Application. It encompasses a massive web of societal energy:

  • The Providers: Water suppliers, farmers, and breeders who fuel the people doing the work.
  • The Infrastructure: Transportation networks (railroad, trucks, ships) and the energy companies maintaining the lines.
  • The Protectors & Administrators: Government workers—including the USPTO examiners who review your claims and the police who protect our commerce.
  • The Support System: The educators who train the next generation of innovators and the healthcare systems keeping the workforce healthy.

More likely than not, the total synergy costs of the world around us are much greater than any specific cost to prepare and file your Patent. When viewed from this perspective, a U.S. Patent Application is a real bargain to potentially procure a limited monopoly.

The New Paradigm: Synergy is neither created nor destroyed; it merely changes form.

Ask Us Anything…about Intellectual Property!

Business Patent Law, PLLC is headquartered in Nicholasville, Kentucky, serving a diverse range of clients from innovative startups in Lexington and established industry leaders in Louisville, to businesses across the United States and the world.

If you have a topic or question you would like the editorial staff to address, please send us an email.

Business Patent Law, PLLC provides intellectual property and business counsel. If you need assistance, please contact us today.

Stay up-to-date with news that impacts your business and intellectual property—sign up for Business Patent Law’s Monthly Mailer™ newsletter.

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Inventions: Artificial Intelligence and Patents

Human Conception not Artificial Intelligence

Following the landmark Thaler v. Vidal ruling and the Revised Inventorship Guidance issued in late 2025, the USPTO has clarified that AI systems—no matter how autonomous—cannot be named as inventors. The law recognizes AI as an instrument of innovation, analogous to a microscope or a CAD program, rather than a “natural person” capable of conception.

The Threshold: Human Conception not AI

To secure a patent, at least one human must have made a significant contribution to the invention’s conception. Under the current framework, “conception” is the “touchstone of inventorship.” It requires a definite and permanent idea of the complete and operative invention in a human mind.

What Does NOT Count as Human Inventorship:

  • Simple Prompting: Asking an AI to “design a more efficient battery” is considered identifying a problem, not conceiving a solution.
  • Ownership: Simply owning the AI or the data it was trained on does not grant you inventorship rights over its outputs.
  • Verification: Merely recognizing that an AI output is “clever” or “useful” (without further modification) is generally insufficient.

How to Protect AI-Assisted Innovations

To ensure your IP stands up to USPTO scrutiny and future litigation, businesses should adopt three “Safe Harbor” practices:

  1. Document the Prompt Engineering: Maintain logs of the specific, technical constraints and iterative instructions provided to the AI. This demonstrates that a human was “steering” the creative process.
  2. Focus on Human Refinement: The strongest patent claims often come from what a human does after the AI provides an output—testing, modifying, and integrating that output into a practical application.
  3. Audit Your Disclosures: Ensure your patent counsel understands exactly where the AI’s work ended and the human’s work began. Misstating inventorship can lead to the total invalidation of a patent down the road.

Human Conception not AI

Artificial Intelligence can accelerate your speed-to-market, but it cannot hold legal rights. At Business Patent Law, PLLC, we help companies navigate these new boundaries.

Ask Us Anything…about Intellectual Property!

If you or your business are in the greater Cincinnati, Indianapolis, Lexington, or Louisville standard metropolitan statistical areas and have a topic or question you would like Business Patent Law, PLLC to address in the blog, please send us an email.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

If you would like to stay up-to-date with news that impacts your business and intellectual property, sign up for Business Patent Law’s Monthly Mailer™ newsletter.

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Patent Applications Unlock Innovation

💡 Patent Applications Unlock Innovation

Patent applications unlock innovation and are one of the most crucial steps an innovator can take to protect an invention and secure its commercial future. It’s more than just paperwork; it’s a strategic business asset that offers significant advantages to individuals and companies alike.

🛡️ Patent Applications Unlock Future Exclusionary Rights

The primary and most powerful benefit of a patent is the exclusive right it grants to the inventor/owner for a limited time. In the United States, that time is 20 years from the first nonprovisional patent application.

  • Preventing Infringement: A granted patent allows you to stop others from making, using, selling, offering for sale, or importing the invention without your permission. This legal monopoly is the bedrock for successful commercialization.
  • Controlling the Market: You gain the power to set prices and control the supply of your patented product or process in the marketplace, which can lead to substantial financial returns.

💰 Patent Applications Unlock Potential Value

A patent transforms an idea into a tangible, valuable business asset that can be leveraged for growth. Some patent applications are exceptional and have value before the patent is granted. Multiple patent applications can unlock the next generation of assets.

  • Licensing and Royalties: You can license the patent to others, generating a steady stream of royalty income without having to manufacture or market the product yourself.
  • Attracting Investment: Patents signal to investors and venture capitalists that your technology is novel and legally protected, making your company a safer and more attractive investment opportunity.
  • Standalone Sale: The owner of the patent can sell to patent to the highest bidder.
  • Increased Company Valuation: For startups and established firms, a robust patent portfolio increases the company’s net worth and provides a stronger position during mergers and acquisitions (M&A).

🚀 Strategic and Competitive Edge

Beyond immediate financial gain, a patent provides a vital competitive advantage in the business landscape.

  • Competitive Deterrent: The existence of the patent can deter competitors from entering your market space, saving costs and headaches of future litigation.
  • Defensive Protection: Patents can also be used defensively. If a competitor sues for infringement, your company’s patents can be used as counter-leverage in negotiations.
  • Public Recognition: The patent document provides public recognition of inventorship, enhancing your company’s reputation as a leader in innovation and technology.

The Takeaway

Don’t leave valuable innovation exposed! Filing a patent application is an essential investment that secures enforceable rights, enhances financial prospects, and a businesses potential for long-term success.  And exceptional patent applications unlock royalty streams before the patent issues.

Ask Us Anything…about Intellectual Property!

If you or your business are in the greater Cincinnati, Indianapolis, Lexington, or Louisville standard metropolitan statistical areas and have a topic or question you would like Business Patent Law, PLLC to address in the blog, please send us an email.

Business Patent Law, PLLC provides intellectual property and business counsel for businesses and companies.  If you need assistance, please contact Business Patent Law, PLLC.

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