8145 / How does a taxpayer obtain a patent?

If a decision is made to seek patent protection, a patent application is filed in the U.S. Patent and Trademark Office. At this time, if purchased with a business, the invention is still an amortizable IRC Section 197 intangible. If purchased separately from a business, it is not a Section 197 intangible. The application can be filed before or after actual physical reduction to practice. It is only necessary that the inventor be able to sufficiently convey the invention to the patent attorney for the patent attorney to understand the invention so he or she is able to draft a patent application properly describing and claiming the invention.

After a pendency of approximately two to three years in the U.S. Patent and Trademark Office, during which time the application is being considered by an examiner, an application will normally issue as an issued patent. From 1836 until 1995, the life of a patent, (i.e., its term of protection) was 17 years from its issue date. However, under the patent law enacted in December of 1994, the term of protection of any patent issuing on an application filed after June 7, 1995, will start on the date of issuance of that patent (which will occur after a patent pending stage of approximately one to three years) and end exactly 20 years after its effective filing date.

The effective filing date is the earliest of the actual filing date of that application or the filing date of any earlier U.S. “parent” application from which that application is derived and the benefit of whose date is relied on. Thus, the duration of the term of protection of any such patent is variable, depending on the length of the period of pendency of that application and its earlier “parent” application.¹