By: Akriti Dayal
This article aims to present some fundamentals of patents for tech based startups. While a startup should be aware of other forms of intellectual property like copyright, industrial design rights, trademarks, plant variety rights, trade dress, and trade secrets, this article focuses on patents.
What is a patent?
A patent gives you the ability to exclude others from using the invention for a limited period of time. Hence, you get the ability to license the technology and decide how the invention can be used and by whom, during the period of exclusivity. This type of exclusivity needs to be carefully protected, and startups need a good coach who can help them navigate the complexity, including type of patent rights (utility patents, business method patents, and design patents), the procedure for patent applications and prosecution, the rights offered and the requirements in different patent jurisdictions, and most importantly the timing and content.
A patent application consists of several sections – abstract, specifications, drawings, and claims. The meat of the application is the ‘patent claims.’ A claim defines the skeleton around which the technology solution can be built – hence it should be looked as the bare minimum description of your invention that captures patentability requirements – namely novelty, usefulness, and non-obviousness.
Startups should actively sense changes with respect to policy and guideline with respect to IP. For example, US's new (very recent) patent guidelines for the first time declare software patents and business methods patentable, which is of serious significance to startups, they should be cautious from infringement point of view. The exclusivity from the patent office comes at a cost – the patent application with all relevant details is published – this allows others working in the same area to benefit from the current state of the art and continue to build upon it. Does that explain why Coca-Cola hasn’t patented the recipe for its most famous drinks?
Why startups should look to file patents
Patents are expensive and time-consuming, so startups need to understand the trade-off in filing for a patent versus exploring other types of IP or business protection. A patent provides its holder with a legal right to monopoly on use or sale of the invention in the country where the patent rights have been granted. This right can be leveraged to gain competitive advantage and exclusivity, and to avoid the risk of being exposed to assertions of IP infringements from third parties and competitors.
If you are wondering whether your technology is worthy of a patent, here is a quick checklist to guide you:
Novel – the method/material or combination aren’t already known. Also, you shouldn’t have already published or disclosed this in your marketing efforts.
Useful – the technology has commercial potential.
Competitive advantage – monopoly on this will put you ahead of your competitors.
Expansion – this could be used in other fields and applications.
Hide versus publish – it will be difficult to keep and protect this as a trade secret.
If your invention(s) meets one or more of these criteria you should seek legal advice to decide on a patent strategy. Patents can serve many mid-term to long-term goals for a technology company.
Patents as sword: Offensive IP strategy: Patents that are registered with view to enforce them to generate royalties or to exclude competitors is addressed as an offensive IP strategy. Many pharmaceutical companies use offensive patent portfolios to protect new drugs they bring to market to ensure market exclusivity for a time to gain return on their investment, establish market share, and earn profits. (Apple Inc. was able to exclude Samsung products from some markets through court injunctions, etc., as part of an offensive patent strategy.)
Patents as cash cow: collaborative, valuation, licensing opportunities: Patents could be used as revenue generating tools from licensing opportunities, generate increased valuation during funding and acquisition conversations, and could be used for collaborative opportunities. A robust patent portfolio could return 25X of investments in patents during acquisitions. While startups in many countries have typically shied away from patents, there is an increasing awareness of the value patents can bring both from the market and fund-raising perspectives. A ‘patent pending’ tag and a registered trademark for a product name would benefit a startup to attract investors, advertise, and to promote the brand early in the business cycle. Also, a unique product could command a premium market price, having a significant impact on the bottom line.
Read More >> https://www.iipla.org/Blogs-&-News/6357972
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