- 5 Intellectual Property Considerations Startups Oftentimes Overlook - October 21, 2020
Many contestants on ABC’s hit show “Shark Tank” answer “yes” when asked if they have a patent, illustrating that startups may generally appreciate the importance of filing a patent application early to protect their innovations. However, there are a variety of options available when developing a company’s strategy for protecting its Intellectual Property (IP).
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Below are five often-overlooked considerations for startups when developing an intellectual property strategy:
- Patents are not the only IP asset that should be protected early
A key component of a startup’s IP strategy typically involves the early filing of at least one patent application; however, the early protection of other forms of IP may be beneficial for a startup to consider, including:
The early federal registration of a trademark at the United States Patent and Trademark Office can prevent future disagreements, and potentially expensive litigation, about first use and territorial rights.
In addition, early registration of a trademark in foreign jurisdictions, when possible, can prevent squatters in a first-to-file jurisdiction, such as China, from registering the mark of a successful U.S. startup and then demanding payment from the startup to transfer the mark.
This type of behavior forms the basis of a shadow industry where successfully opposing the registration of a mark by such a squatter can be a difficult, lengthy, and expensive process. Thus, by filing for trademark registrations in desired jurisdictions as early as possible, these potential pitfalls may be avoided.
If a startup plans to protect certain information or technology as a trade secret, measures must immediately be taken to maintain the secret. Such measures include putting the proper procedures/policies in place within and outside of your company early enough that unwanted disclosure of the material is prevented.
Once the material is no longer secret, trade secret protection is not possible. Unlike other types of IP, trade secret protection is enforceable as long as the subject material is kept secret. Accordingly, trade secrets can be extremely valuable and planning to maintain them should be undertaken as early as possible.
- You have a patent – now what?
Contrary to a common belief, the grant of a patent does not grant the right to the patent owner to practice the subject matter claimed in the patent. Rather, a patent grants the right to the patent owner to exclude others from making, selling, using or importing the subject matter claimed in the patent. Further, the grant of a patent does not automatically equate to the formation of a successful business. While some inventors are able to successfully develop and expand a business based on a technology covered by one or more patents, many inventors are ill-equipped to successfully transform a patent grant into a successful startup.
There are a variety of resources available to help inventors formulate a successful business plan. For example, business incubators and accelerators may provide resources (i.e. training, workspace, mentoring, connections, etc.) to a startup to help grow the business.
- Filing in as many jurisdictions as possible may not be the best approach
Most startups have limited resources and must selectively limit its filings.
A good rule of thumb is to file for protection, in order of importance, in:
- Jurisdictions where the startup is operating,
- Jurisdictions where the startup’s customers are located, and
- Jurisdictions where the startup’s competitors are operating.
While there may be value in obtaining patent protection in a jurisdiction where enforcement by the startup is unlikely, eliminating jurisdictions where enforcement is not feasible may be one way for a startup to reduce desired filing jurisdictions.
- Take advantage of available USPTO programs
A first action from the USPTO in response to a newly filed application may take two or more years to receive. The total time from filing to grant can exceed three years. For a startup that needs to show immediate results to push for more funding, such a delay can be harmful. Fortunately, the USPTO has a variety of programs and procedures that may be successfully used to speed up the patent grant process.
Track One Prioritized Examination
The goal of the Track One Prioritized Examination program is to reach a final disposition in an application in one year. This is substantially faster than what the normal work-flow at the USPTO typically provides. The drawbacks of the program are a relatively high fee for requesting entry into the program, restrictions on the number and type of claims, and the requirement that extensions of time will not be taken during prosecution of the application. However, combining a Track One Prioritized Examination request with a focused approach that directs the claims of the application to a specific, useful (albeit narrower) embodiment, can be a very successful strategy to achieve a valuable patent grant in a relatively short period of time.
- Broad does not always mean better
A long-standing philosophy in patent law has been to claim an invention as broadly as possible to prevent as many potential infringers as possible. In theory, this is a good idea; however, in practice, it may not be the most efficient approach for a startup with limited resources.
Instead, it may be more practical to focus the claims on a specific embodiment of the invention closely tied to an actual product or process being practiced or envisioned by the startup. By focusing the claims in this way, an Examiner’s search and consideration will be limited to art related to the claimed embodiment and not irrelevant art arguably reading on overly broad claims.
As a result, a valuable patent having claims focused on the actual activity or product of the startup may be granted more quickly. Subsequent continuation applications may be used to broaden the scope of the claims to cover more embodiments, but at least the startup will be able to restrict others from making, selling, using or importing a system or process that closely matches their own. Such a patent focused on a specific activity or product of the startup, issued relatively quickly, can also be a valuable marketing chip for the startup with respect to investors and customers.
By taking a holistic approach to developing an IP strategy, and considering the items identified above, amongst others, with the help of a seasoned practitioner, a startup can develop a thoughtful strategy that protects their valuable IP rights while avoiding potentially harmful legal situations.