This article was published on StartUpNation.com
By: David M. Roccio
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). Below are five often-overlooked considerations for companies, especially startups, when developing an IP strategy.
1. 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
Trademarks: 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.
Trade Secret: If a startup plans to protect certain information/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.
2. 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/founders 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 (e.g., training, workspace, mentoring, connections, etc.) to a startup to help grow the business. For example, Greentown Labs and FORGE, located in Somerville, Massachusetts, are great resources for startups with a working prototype or looking to scale up with manufacturing or understanding the supply chain. Other incubators such as Golden Seeds are committed to female entrepreneurs. Incubators and accelerators are often focused on a specific industry, tied in with the local entrepreneurial community, and can provide key insights to help a startup overcome common, or uncommon, problems.
In addition, there are governmental/pseudo-governmental organizations that are focused on helping startups/businesses achieve a specific goal. On the Federal level, the U.S. Department of Commerce, through different programs including the U.S. Commercial Service and SelectUSA, assist companies to either expand outside of the U.S. or enter the U.S. market, respectively. On the local level, there are numerous state/regional agencies whose goal it is to help companies expand into or grow in a specific state or region, such as the Massachusetts Office of International Trade and Investment (MOITI), the Maine International Trade Center, or the Economic Development Corporation of Kansas City.
3. Filing in as many jurisdictions as possible may not be the best approach – For a startup with unlimited resources, filing their IP worldwide may be an easy way to cover current and future activity; however, most startups have limited resources and must selectively limit their filings. A good rule of thumb is to file for protection, in order of importance, in:
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.
Along similar lines, startups oftentimes file Patent Cooperation Treaty (PCT) applications to gain provisional protection in the 153 contracting states of the Patent Cooperation Treaty (PCT Contracting States). The benefit of a PCT application is that it affords the startup time to make more informed decisions about where patent protection is desired before filing in individual jurisdictions. However, if the startup already knows they will ultimately be filing in a limited number of countries/regions (e.g., two or three), the added costs of filing the PCT application are generally not worth it and it is likely a more cost-effective strategy to file directly in the desired countries/regions.
4. Take advantage of available USPTO programs –A first action from the USPTO in response to a newly filed application may take 2 or more years to receive. Add on the time spent arguing with an Examiner, and the total time from filing to grant can exceed 3 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/procedures that may be successfully used to speed up the patent grant process.
Track 1 Prioritized Examination – The goal of the Track 1 Prioritized Examination program is to reach a final disposition in an application in 1 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 1 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.
In-Person Interviews – During the prosecution of a patent application, a phone interview is typically held with the Examiner to discuss outstanding rejections in an attempt to come to a resolution with respect to the claims. However, these interviews may instead be held in person at the USPTO in Alexandria, VA, upon request of the applicant. While holding an interview in person can add travel expenses to the total cost of the application, the ability to have a face-to-face meeting with an Examiner, potentially demo the invention for the Examiner, and have a more frank discussion than is typically held remotely, can drastically improve the results of the interview and result in a notice of allowance, rather than another office action. Such a strategy can also be very helpful where it is difficult to discuss the invention without a physical representation or model.
5. 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/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/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.