## Patents and how they work in North Carolina Patents protect **inventions** — useful new ideas. Like copyright and trademarks, patents are entirely federal — granted by the U.S. Patent and Trademark Office (USPTO) and litigated in federal court. ### Federal courts covering North Carolina U.S. District Courts for the Eastern, Middle, and Western Districts of North Carolina. ## Three types of patents **1. Utility patent.** The most common type. Protects new, useful machines, processes, compositions of matter, and improvements. Lasts 20 years from filing date. Covers things like medical devices, software innovations, mechanical inventions, chemical formulations. **2. Design patent.** Protects ornamental design of a functional item. Lasts 15 years from issuance. Covers product appearance — Apple's iPhone shape, Coca-Cola bottle, designer chairs, jewelry designs. **3. Plant patent.** Protects new varieties of asexually-reproduced plants. Lasts 20 years from filing. ## Patentability requirements To get a utility patent, the invention must be: **1. Patentable subject matter** (35 U.S.C. § 101) — process, machine, manufacture, or composition of matter: - NOT abstract ideas - NOT laws of nature - NOT natural phenomena - NOT mental processes - Software is patentable but only when tied to specific technical improvements (Alice Corp. v. CLS Bank, 2014) - Business methods generally rejected post-Alice **2. Useful** (§ 101) — must have a specific, substantial, credible utility **3. Novel** (§ 102) — not previously disclosed, sold, or used publicly anywhere in the world **4. Non-obvious** (§ 103) — not obvious to someone of ordinary skill in the relevant field at the time of invention **5. Adequately disclosed** (§ 112) — written description that enables someone in the field to make and use the invention ## The America Invents Act (AIA, 2011) AIA shifted the U.S. from "first-to-invent" to "first-inventor-to-file": - Whoever files first generally wins, even if they invented later - 1-year grace period from inventor's own public disclosure - Provisional applications still preserve priority - Created **Inter Partes Review (IPR)** at PTAB — a cheaper way to challenge patent validity ## Patent application process **1. Provisional application** (optional but common): - Cheaper, less formal - Preserves priority date for 12 months - Buys time to refine the invention or seek funding - Don't have to publish - Doesn't itself become a patent — must file non-provisional within 12 months **2. Non-provisional application:** - Full patent application with claims, specification, drawings - Examined by USPTO patent examiner - Office actions back-and-forth typically take 1.5-3 years - ~50% of applications eventually issue **3. Issuance:** - Patent fees due - Public on issue date - Maintenance fees due at 3.5, 7.5, and 11.5 years ## Costs Approximate costs for a typical software / mechanical patent: - **Provisional application:** $1,500-$5,000 (DIY possible but risky) - **Non-provisional drafting:** $7,500-$15,000+ - **USPTO fees** (small entity): ~$1,860 application + ~$1,200 issue + maintenance fees - **Office action responses:** $2,000-$8,000 each - **Total to issuance:** typically $15,000-$30,000+ Costs scale with technology complexity, claim count, prosecution complexity. Biotech and pharmaceutical patents commonly cost $50K-$100K+. ## Patent infringement Three types: **Direct infringement** — making, using, selling, or importing the patented invention without authorization. **Induced infringement** — actively encouraging another to infringe. **Contributory infringement** — supplying components knowing they'll be used to infringe. ## Defenses to infringement - **Non-infringement** — accused product doesn't match the claims - **Invalidity** — patent shouldn't have issued (no novelty, obvious, lack of enablement) - **Inequitable conduct** — applicant misled the patent office - **Patent exhaustion** — sale by patentee or licensee exhausts further patent rights - **License / authorized use** - **Statute of limitations** — 6 years for infringement damages - **Repair vs reconstruction** — repairing a patented item is OK; reconstructing is not ## Damages - **Reasonable royalty** — at minimum - **Lost profits** — if patentee can prove - **Enhanced damages** (up to 3x) for willful infringement - **Attorney's fees** in exceptional cases - **Injunction** — to stop further infringement (post-eBay v. MercExchange, harder to get) ## Patent Trial and Appeal Board (PTAB) USPTO administrative tribunal that handles: - **Inter Partes Review (IPR)** — challenge validity based on prior art - **Post-Grant Review (PGR)** — broader validity challenge in first 9 months - **Covered Business Method Review (CBM)** — phased out for new petitions - **Derivation proceedings** — disputes over who invented first (rare under AIA) PTAB challenges are MUCH cheaper than federal court litigation — typical cost $300K-$700K vs $3M-$5M for full district-court trial. ## What's NOT patentable - Abstract ideas (mathematical formulas, basic algorithms) - Laws of nature - Natural phenomena - Inventions disclosed publicly more than 1 year before filing (in U.S.) - Inventions you didn't actually invent - Pure software claims without technical improvement (post-Alice) - Methods of organizing human activity (often rejected as abstract) - Pure financial / business methods (often rejected) ## When patents make sense - **Hardware / mechanical** — generally good fit - **Pharmaceutical / biotech** — almost essential to commercial success - **Medical devices** — essential - **Industrial processes** — when novel - **Consumer electronics** — for specific innovations, not aesthetic features (use design patents) - **Software** — increasingly hard post-Alice; consider trade secrets instead When patents DON'T make sense: - Pure software / business methods (often unpatentable; trade secrets often better) - Inventions you'd struggle to detect / enforce - Limited commercial timeline (won't outlast prosecution) - Bootstrapped startups with limited budget ## What you should do Patents are highly technical and one of the most-specialized legal areas. Hire a registered **patent attorney or patent agent** (most have engineering / science backgrounds + USPTO registration). DO NOT try to file a non-provisional yourself unless you're a registered patent attorney. North Carolina patent attorneys typically charge flat fees for application drafting and hourly for prosecution + litigation. Most offer paid initial consultations. --- *This guide is general information about U.S. federal patent law as of early 2026 and is not legal advice. Patent law has many edge cases and depends heavily on the specific invention. Talk to a registered patent attorney about your specific situation.*