The early stages of a new business can be a whirlwind. Building the team, structuring the company, attracting investment and developing the product, key partnerships, sales channels and marketing plans are typically all-consuming tasks for the founders. Amid all this essential activity, intellectual property (IP) sometimes takes a back seat.
Three relevant types of intellectual property that startups should understand are:
At Antrapreneur The Business incubator we assist the innovator to file for Patents,trademark and copyrights to protect their innovations and brand.
It is extremely important for startups to understand the different types of patents and how they fit into their business.
- Utility patents are available for processes, machines, articles of manufacture, or compositions of matter that are deemed new, useful and non-obvious. The traditional subject matter of patents covers tangible, technical inventions, such as improvements to client-server systems, motors, radios, computer chips and various technical product features. For example, Boeing’s US Patent No. 6,227,447 is a patent that relates to methods of remotely controlling a vehicle. Patents can also be directed at new product features and functions. For example, Facebook’s US Patent No. 8,171,128, titled “Communicating a newsfeed of media content based on a member’s interactions in a social network environment,” protects its News Feed feature.
- Patents are also available for business methods, extending the significance of patent protection into many diverse fields. Many industries that did not traditionally seek patent protection, such as financial services firms, have lately found themselves focusing their energies on building patent portfolios. For example, First USA Bank’s US Patent No. 6,227,447 is directed to a method for completing a credit card transaction without the need for the physical presence of the credit card.
- Finally, a separate category of patent, the design patent, may be sought to protect ornamental (non-functional) designs. Recent notable design patents include Apple’s D 604,305 covering the design of its iPhone interface and Lululemon’s design patent covering its yoga gear.
The role of patents
Not every startup business will be best-served by investing its resources in building a patent portfolio, but the question of whether to pursue patent protection warrants a hard and early look. Knowledge of the role of patents is critical for two reasons:
- To protect your own business and inventions from your competitors
- To avoid the risk of being exposed to assertions of patent infringement by competitors and other third parties
Although patents are the most expensive and time-consuming type of intellectual property to obtain, they also provide the best scope of protection. A patent provides its holder with the exclusive right to make, use or sell an invention, meaning that it can exclude a competitor from making or selling the patented invention, irrespective of whether the competitor copied the invention or even previously knew of the patent.
The benefits for a young business
Patents may provide a number of benefits to young businesses. For example, a robust patent portfolio or a key patent can help attract investors, since it may serve as an entry barrier against competitors. Furthermore, the filing of a patent application will enable the company to advertise “patent pending” along with its product or service.
In addition to potentially attracting investors, the “patented” or “patent pending” labels may also help deter would-be competitors, or force those competitors to adopt different designs and technologies.
As indicated above, issued patents may be used to stop competitors from entering the field and to recover damages for any infringement that occurred. Finally, patents can also further help the finances of a business by providing an additional opportunity to generate revenue from licensing. For example, a company called Paice LLC licenses its patents covering hybrid cars to both Toyota and Ford.
How to file a patent application
A patent is obtained by filing an application with the Patent and Trademark Office. The application includes a description of the invention accompanied by drawings, followed by a list of the elements that form the invention, called the patent claims. The patent claims set out the metes and bounds of the invention; third-party products or services that practice the elements of the claim infringe the patent.
When a patent application is first filed, an examiner is assigned to it. The examiner will reject or allow claims based on an assessment of their patentability, and the patent applicant will have an opportunity to respond to the examiner’s decisions. This back-and-forth with the Patent Office, known as prosecution, can take a number of years and is best done by an experienced patent attorney or registered patent agent who understands the procedures, the legal requirements and the art of drafting strong patent claims.
Avoiding infringement of other patents
The second important aspect that startups should consider with respect to patents is a defensive one, i.e., avoiding infringement of the patents held by others. As a matter of practice, startups should conduct a patent search to verify that their intended industry and application is free of patents that could be asserted against them. The up-front cost of performing this search is rendered worthwhile by the potential for huge savings, both in terms of litigation costs and wasted investment in an infringing idea. The cautionary tale of Vlingo underscores this point.