intellectual property patent

What new businesses need to know about intellectual property, part 2

Thought Leadership on Intellectual Property Protection presented by Nath, Goldberg & Meyer.

In part 1 of this series, I began the discussion of certain intellectual property issues any business owner could face. Hopefully, this information was helpful, thought provoking and assisted you in regaining some of your countless hours of lost sleep worrying about your business. As promised, here in part 2, I address additional issues specific to technology-driven companies.

Intellectual property concerns for technology companies: How to protect your innovations

One of the most common misconceptions the general public has about patents is the belief that they entitle you to conduct your business. This is simply not true; rather than convey a positive right, patents convey a negative right, or, the ability to stop others from practicing your invention. The only thing patent ownership entitles you to do is stop others from competing with you in your space. Accordingly, patents remain valuable assets for any technology-driven company, as well as an important factor to consider when looking at the competition and potential barriers to entry to a new market.

Patent ownership: Can you keep others from competing with you?

As a technology-driven company, your chief assets are your technology, knowledge and know-how. Any other company in possession of these assets would likely be able to compete with you, likely on favorable terms, as they could eliminate the significant startup and development costs you had. The best way for you to protect these assets and stop others from competing with you based on your own technology is to patent your own innovations.

The first thing you and your patent attorney need to do is conduct an invention audit of your company. That is, look at the products you have under development or are hoping to sell, and determine the new inventions associated with these products. This will give you your initial to-do list and will identify what innovations should be patented to protect your product markets.

In this regard, there are two relevant markets to keep in mind-the product market and the geographic market.

1. Product market. Each individual product you plan to sell will hopefully be in its own space. The question is, what protection exists for each product to ensure it faces a minimum of market competition?Your patent attorney should work with your scientists and innovators to fully understand the critical aspects and features of your intended product, especially how they represent improvements over what is already known and has been done before. Once these defining features have been identified, your patent attorney can do a brief search to identify any already existing patents for similar technologies that might place limits on the size of your intellectual property you are able to protect. Once this search and identification is completed, your patent attorney will work with you on preparing, filing, and eventually obtaining the critical patents you need to protect your products.

It is important to note that multiple patents, each of a varying scope, can be obtained for any single product, and that a single product might have multiple different patent features. For example, a simple pen possesses potentially hundreds of different aspects that were inventions at one point in time, from the composition of the ink, the technology used to keep the ink from drying while being stored, the size and shape of the pen body, the mechanism used for conveying the ink to a piece of paper, the different pieces used to make up the pen, and so on. Similarly, any of your products might similarly involve multiple inventions that can each be independently patented, and each of which would provide multiple layers of protection for your product.

Another key point is that, even for the same inventive aspect, it is possible to obtain different levels of protection, each of a varying scope. For example, it is important to protect the exact critical features of your product to ensure nobody else can sell an exact replica of your product. Likewise, it is also important to extend the boundaries of protection to keep other similar but different products off the market, to the extent possible. Having different scopes of protection also provides the advantage that narrow protection, directed to your exact product, is often easier to defend, while broader protection will provide the ability to keep a greater number of products off the market. Of course, the ability to protect aspects of the technology beyond exactly what you are doing may be constrained both by what has been done before by others, as well as what a patent examiner might consider to be a reasonable extrapolation from what you can demonstrate actually works. Your patent attorney can work with you to take all steps possible to meet your needs.

2. Geographic market. In addition to the product market, it is also important to keep in mind the worldwide markets where you might want to actually sell your product. Should you obtain a US patent, this will provide you with the ability to keep competitors out of the U.S. market. However, it will not give you patent rights in any other countries. The seeming easy answer would be to file your patent application in every country around the world. However, this would be an extremely expensive proposition, and would take valuable funds away from other, critical aspects of your business.

Instead, the best strategy is to select the most important three to eight countries for your product, and do what you can to obtain protection in those markets. Very often, 90-95% of a product’s revenue will come from these handful of countries. Seeking to obtain a patent beyond this small list of countries is likely to be, at best, a waste of critical resources, funds, and time.

In addition, there are a number of ways to delay some of the expenses involved with filing your patent application in multiple countries. This delay is important to providing you with additional time for developing, refining, and introducing your product, and to identify those critical aspects most in need of protection. Your patent attorney should be happy to discuss such strategies with you.

Third party patents: Potential barriers to entry

It is important to monitor what your competition is doing, not only to determine what competing products they may have, but also to see what patents they may be obtaining to protect such patents. Just like you want to obtain patents to keep your competitors away from your market, your competitors are likely doing the exact same thing. Any such blocking patents will impact whether or not it is worthwhile to move ahead with development and launch of your product.

In addition, once your product is ready to enter the market, you should have your patent attorney conduct a “freedom to operate”, or FTO, search and analysis. The object of this analysis is to determine if there are any third party patents that cover your product, and that could potentially damage or harm your ability to sell your product. While it may still be possible for you to proceed with your product even should such a blocking patent exist, this is likely to have a great impact on the revenue and/or profits you can obtain from your sales. It may be necessary to obtain a license to any such blocking patent, which if course will consume some of your profits. Likewise, you might have to set aside substantial funds for a protracted patent litigation with the patent holder, which may continue for numerous years and which will have an uncertain outcome. It is best to avoid these issues as much as possible, and your patent attorney should be able to help you in this regard.

We have helped numerous companies, startups and individuals successfully navigate this process, and stand ready to help guide you as well. Please feel free to contact me to discuss any aspect of the patent process in more detail.

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