When asked if they have a patent, many participants on ABC’s hit show Shark Tank say “yes”, demonstrating that businesses understand the value of filing a patent application early to protect their discoveries. When developing a company’s plan for preserving its intellectual property, however, a variety of solutions are available (IP). When it comes to building an IP strategy, five factors are frequently disregarded by businesses, particularly start-ups.
- Patents aren’t the only intellectual property asset that should be safeguarded early on: The early filing of at least one patent application is often a critical component of a startup’s IP strategy; however, the early protection of other kinds of IP may be useful for a firm to explore.
Trademarks: Early federal registration of a trademark at the United States Patent and Trademark Office can help avoid future disputes about first use and territorial rights, as well as potentially costly litigation. Furthermore, when possible, early registration of a trademark in a foreign jurisdiction might prevent squatters in a first-to-file jurisdiction, such as China, from registering a successful U.S. firm’s mark and then demanding payment from the business to transfer the mark. This type of action gives rise to a shadow sector in which effectively contesting a squatter’s registration of a mark can be a complex, time-consuming, and costly process. These potential hazards can be avoided by applying for trademark registrations in desirable jurisdictions as soon as possible.
Trade Secret: If a startup wants to keep a piece of information or technology as a trade secret, it must take quick steps to safeguard it. Putting adequate procedures/policies in place within and outside of your firm early enough to prevent unintended disclosure of the material is one of these steps. Trade secret protection is no longer practicable once the material is no longer secret. Trade secret protection, unlike other types of IP, is enforceable as long as the subject content is kept secret. As a result, trade secrets can be quite important, and preserving them should be planned as soon as feasible.
- You have a patent – now what?: Contrary to belief, a patent does not give the patent owner the right to practice the subject matter described in the patent. Rather, a patent gives the patent owner the right to prevent others from creating, selling, using, or importing the claimed subject matter. Furthermore, obtaining a patent does not guarantee the establishment of a profitable firm. While some inventors/founders can build and expand a firm based on technologies covered by one or more patents, many inventors are ill-equipped to turn a patent grant into a profitable startup.
A range of resources is available to assist innovators in developing a successful business plan. Business incubators and accelerators, for example, may provide resources (such as training, workspace, mentoring, connections, and so on) to a startup to help it expand.
There are also governmental/pseudo-governmental groups dedicated to assisting startups/businesses in achieving a specific aim. On a federal level, the United States Department of Commerce, through several programs such as the United States Commercial Service and SelectUSA, assists enterprises in either expanding outside of the United States or entering the United States market. On a local level, there are several state/regional agencies, such as the Massachusetts Office of International Trade and Investment (MOITI), the Maine International Trade Center, and the Economic Development Corporation of Kansas City, whose mission is to assist businesses in expanding into or growing in a specific state or region.
- Likely, filing in as many jurisdictions as possible isn’t the optimal strategy: Filing IP internationally may be a simple way for a firm with infinite resources to cover present and future activity; however, most startups have limited resources and must strategically limit their filings. A decent rule of thumb is to file for protection in the following sequence, from most important to least important:
- 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 getting patent protection in a jurisdiction where enforcement by the company is doubtful, a startup may be able to minimize desired filing jurisdictions by eliminating jurisdictions where enforcement is not possible.
In a similar vein, entrepreneurs frequently file Patent Cooperation Treaty (PCT) applications to obtain provisional protection in the Patent Cooperation Treaty’s 153 contracting states (PCT Contracting States). A PCT application has the advantage of giving the applicant additional time to decide where patent protection is desired before submitting to individual jurisdictions. However, if the company already knows it will be filing in a small number of countries/regions (e.g., two or three), the additional expenses of filing the PCT application are often not worth it, and filing directly in the desired countries/regions is likely a more cost-effective method.
- Take advantage of USPTO programs that are available: The USPTO’s initial action in response to a freshly submitted application could take two or more years. Add on the time spent arguing with an Examiner, the time it takes from filing to grant can easily exceed three years. Such a delay might be detrimental to a business that wants to show fast results to secure additional funding. Fortunately, the United States Patent and Trademark Office (USPTO) has several programs and methods that can be employed to expedite the patent award process.
Track 1 Prioritized Examination: The purpose of the Track 1 Prioritized Examination program is to complete an application in one year. This is far faster than the standard workflow at the USPTO. The program’s disadvantages include a relatively costly application fee, limitations on the number and type of claims that can be filed, and the stipulation that no extensions of time be granted during the application process. Combining a Track 1 Prioritized Examination request with a focused approach that directs the application’s claims to a specific, practical (albeit restricted) embodiment can be a very effective method for obtaining a lucrative patent grant in a short amount of time.
In-Person Interviews: A phone interview with the Examiner is usually held during the prosecution of a patent application to review pending rejections and come to a resolution concerning the claims. At the applicant’s request, these interviews may be done in person at the USPTO in Alexandria, Virginia. While having a face-to-face appointment with an Examiner, maybe demoing the invention for the Examiner, and having a more candid discussion than is generally held remotely, might dramatically enhance the results of the interview and result in a notice of permission rather than additional office action. When it’s tough to discuss an idea without a physical model or representation, this method can be quite useful.
- Broad does not always mean better: Patent law has long held the belief that claiming an invention as broadly as feasible prevents as many potential infringers as possible. In theory, this is a fine idea; nevertheless, for a startup with limited resources, it may not be the most efficient strategy. Instead, it might be more practical to concentrate the claims on a specific embodiment of the invention that is directly linked to a product/process that the startup is currently using or envisioning. By narrowing the claims in this way, an Examiner’s search and examination will be confined to art that is relevant to the claimed embodiment, rather than irrelevant art that could be interpreted as reading on unduly broad claims. As a result, a valuable patent with claims that are specific to the startup’s real activity or product may be granted more swiftly. Following continuation applications may be utilized to widen the claims’ reach to cover further embodiments, but at the very least, the startup will be able to prevent others from creating, selling, using, or importing a system/process that substantially resembles theirs. A patent that is focused on a specific activity or product of the firm and is issued relatively fast might be a great marketing tool for investors and customers.
A company can establish a comprehensive IP strategy that protects their important IP rights while avoiding potentially negative legal circumstances by taking a holistic approach to developing an IP strategy and examining the points listed above, among others, with the support of a seasoned practitioner.