05/10/2010 04:57 pm ET Updated Aug 09, 2011

Patents: 5 Things You Need To Know

On July 31, 1790, President George Washington awarded the first U.S. patent to Vermont resident Samuel Hopkins for his process of making potash, a fertilizer ingredient. There have been some 6 million patents issued since, according to the U.S. Patent and Trademark Office, including one for an animal toy that looks a lot like a stick. While there is a lot of prestige attached to earning a patent, and often a bit of controversy for seemingly silly applications, there are also quite a few misconceptions about what rights a patent actually affords you, according to Ralph Eckhardt, co-founder of 3LP Advisors, an intellectual property investment firm based in Boston. "If you're a small business, IP protection can be expensive, especially patents," Eckhardt says. "That's why it's so important to know what your strategy is in terms of what you're trying to accomplish as a business." So what can a patent really do for you? Here are five things you need to know.

1. You don't need a patent to start producing your invention.
Rather, "a patent gives you the right to stop people from making, using, importing, or selling an invention that resembles yours," says Alexander Poltorak, founder, chairman, and CEO of General Patent Corporation, an intellectual property management company based in Suffern, N.Y. In other words, "a patent is simply the right to bring an infringement lawsuit against someone else." At the same time, approximately 97 of all patents are commercial flops, says Bob Barton, a Massachusetts inventor with several patents to his name. "What seems to be of great value to the inventor may have no value to anyone else," Barton says. So before you even begin the process of filing for a patent, make sure you try and answer the question, "What problem does it solve?"

2. A patent is a national right.
"You only get protection in the countries where you file," Eckhardt says. "It's expensive to file everywhere, so you need to choose where to file." That means you need to ask yourself some important questions -- Where could I potentially sell my product? Who else might be interested in selling it for me? Just because you aren't going to operate in a particular country doesn't mean you shouldn't file there, since you may be able to generate income by selling or licensing your patent rights in those countries without having to make a product or set up operations there.

3. Timing matters.
If you publish your invention or offer it for sale before filing for a patent, you may lose your ability to patent it. In the United States, there is a one-year grace period where you can still file for patent protection. For the rest of the world, though, if you publish or offer your invention for sale prior to applying for a patent, you lose the right to protection. At the same time, a patent is a wasting asset, in that it expires exactly 20 years after you submit your application. "People call me up all the time asking for help in getting an extension," Poltorak says. "You can't get one."

4. Get to know the ropes.
The standard for getting a patent is that it must be useful (not much of a standard -- patents rarely ever get rejected for non-usefulness), novel (you were the first person to invent it anywhere in the world), and non-obvious (it must not be obvious to a person who is skilled in the particular area of technology at the time the invention was conceived), according to Eckhardt. As part of the examination process, the patent office will search to see whether the invention has ever been disclosed before. If it has, you won't get your patent. Your patent also needs to stand up in court. Since only 29 percent of lawsuits filed by patent holders are successful, you should employ the help of a skilled patent attorney when filing your application. "Writing a patent application is more art than science," Poltorak says. "You should take advantage of the experts who spend years practicing their craft."

5. You don't have to actually use your patent to get value out of it.
A patent is an intangible asset, which means that even if it exists solely on paper, it can still have substantial value. "Most people know that patents can be sold or licensed," Eckhardt says, "but fewer people know that patents can be used to attract financing, induce partnerships and improve your exit strategy by making you more attractive for a potential acquirer or for an IPO."

The original version of this article appeared on AOL Small Business on 5/10/10.