It may come as a surprise but small businesses hold more patents per employee than larger businesses. According to a 2008 study sponsored by the U.S. Small Business Administration, the greatest number of patents per employee is held by the smallest firms – those with fewer than 25 staff members. The study also found that patents held by small firms tended to be more significant in their impact and originality and were cited more in other patent applications.

So how can a patent help your small business?

A patent is a document that secures to an inventor the exclusive right to sell, make, or otherwise use his or her invention for a specified number of years. The document details the terms under which the government has granted the inventor full possession of the invention. These terms of possession or "intellectual property right" include specifications designed to exclude all others from making, using, or selling the invention in the United States for the life of the patent. The patent also provides rightful patent holders with specific legal steps that can be taken to stop (or be compensated for) instances in which others have infringed on the patent.

Patented inventions have spawned thousands of small businesses over the years. Not all of these businesses have succeeded, of course; some were predicated on new products or designs that were fundamentally flawed, while others faded because of operational problems, economic trends, or personal frailties. But countless successful entrepreneurs have launched their businesses on the strength of a single invention, and patents continue to stand as among the most valuable assets of thousands of small business owners across the nation.

The pages below will detail how to tell whether your invention qualifies for patent protection, the different types of patents that are available, and how to decide if filing for a patent is worth the time and expense.

Determine if Your Invention Qualifies

Although millions of patents have been granted in the United States and other countries over the years, there are many things that are not eligible to receive patent protection. These include general business ideas and strategies, printed material, scientific theories, mathematical formulas, and obvious changes to existing items, although some of the above can be legally protected in other ways. Printed material, for instance, can be protected through copyrights.

Here's how to determine whether your invention can qualify for patent protection.

1. Understand Patent Law

According to the U.S. Patent and Trademark Office (PTO), inventions don't qualify for patent protection in the following circumstances:

  • "The invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent."
  • "The invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country more than one year prior to the application for patent in the United States."

2. Make Sure Your Invention Is Different

Patent law also requires that your invention be different than anyone else's invention, new, novel, and non-obvious in order to qualify for protection. You'll have to do a patent search to make sure no one else already holds a patent for your concept -- referred to in legalese as doing a search of "prior art." But even if a search turns up no "prior art" for your exact invention and your concept has one or more differences than existing patents – for example, changes in color or size -- you may still be turned down. In order to grant a patent, the law requires that there must be sufficient differences between your invention and what has been described or put in use before -- so much so that the distinctions should be obvious to a person with ordinary knowledge of the subject, according to the PTO.

3. Your Invention Must Be Useful

Patent law also specifies that the subject matter of your patent application must be "useful." The PTO defines this term as that "the subject matter has a useful purpose and also includes operativeness, that is, a machine which will not operate to perform the intended purpose would not be called useful, and therefore would not be granted a patent."

Types of Patents

Inventors may apply for patents on a wide variety of types of inventions, from the appearance of a product to a new chemical composition to a new-fangled pen. Therefore, there are different types of patents. The three major categories are as follows:

Utility Patents

Utility Patents are the most common kind of patents. They are granted to inventors who, according to the PTO, invent or discover any new and useful process, machine, manufacture, or compositions of matter (mixtures of ingredients, chemical compounds), or any new and useful variations of existing products, processes, or compositions. The legal definition of "process" in this instance includes new industrial or technical methods. Utility patents are the most complex of the three kinds of patents, for they require the patent applicant to provide a full description of the invention's functional and/or structural features (often including detailed drawings) as well as the inventor's explanation of what he or she feels is "patentable." Inventors filing utility patents subsequently are more likely to secure legal help in making certain that all details of the patent are adequately addressed. In recent years, the greatest increase in this kind of patent application has been seen in Internet-related business methodologies and innovations. In 2007, 456,154 Utility Patent applications were filed with the PTO. In 2008, there were 157,772 of these patents issued.

Design Patents

Inventors can also obtain patents on the appearance of a product, provided that it is a new and original design. As Richard C. Levy notes in his Inventor's Desktop Companion, "if you've invented any new, original, and ornamental designs for an article of manufacture, a design patent may be appropriate. A design patent protects only the appearance of an article and not its structure or utilitarian features." Thomas Field, author of the Small Business Administration's Avoiding Patent, Trademark and Copyright Problems, points out that both design patents and utility patents "do more than prevent copying; they forbid the making, using or selling of an invention similar to or the same as the protected invention," even in situations where the second invention was independently created. In 2007, 27,752 Design Patent applications were filed with the PTO. In 2008, there were 25,565 of these patents issued.

Plant Patents

This kind of patent is granted to anyone who invents or discovers and asexually reproduces any distinct and new variety of plant, including cultivated sports, mutants, hybrids, and newly found seedlings. The PTO does not grant plant patents, however, for tuber-propagated plants or plants found in an uncultivated state. Asexually propagated plants, notes Levy, are those that are reproduced by means other than from seeds, such as rooting of cuttings, layering, budding, grafting, and inarching. Plant patents comprise only a small minority of the total number of patents that have been bestowed by the PTO. In 2007, 1,049 Plant Patent applications were filed with the PTO. In 2008, 1,240 of these patents were issued.

Determine Marketability of Invention

Before going through the considerable effort -- and sometimes expense -- of filing an application for patent protection, you need to address a fundamental question: Is there a market for your invention? The National Inventor Fraud Center advises that one way to determine the marketability of your invention is to determine whether other companies would be able to profit from your invention -- either right now or at some point in the future. If there's no market, then the question about whether you need a patent is moot. If there is a market for your invention, then you want your business to be able to capitalize on that marketability and, therefore, you should file for patent protection so that the other companies have to license those patent rights from your business.

Resources

The U.S. Patent and Trademark Office (PTO) maintains a website with answers to frequently asked questions about what qualifies for patent protection and what's involved in the patent process at uspto.gov.

The PTO also maintains a website with patent information geared specifically for small businesses at uspto.gov/smallbusiness.

National Inventor Fraud Center is located at inventorfraud.com.

Levy, Richard C. The Inventor's Desktop Companion. Visible Ink Press, 1995.

A report that Thomas Field wrote for the U.S. Small Business Administration, Avoiding Patent, Trademark and Copyright Problems, is available on the website of the Franklin Peirce Law Center, where he is now a professor of law.

The U.S. Small Business Administration's sponsored report on small business patents, An Analysis of Small Business Patents by Industry and Firm Size, issued in November 2008, is available at sba.gov/advo/research.