Entrepreneurs in tech startups often wear many hats: inventor, developer, salesperson, fundraiser, administrator and manager. It can be difficult to master, or even gain real competency in, the skills required to wear all of those hats. One area that may seem daunting is securing patent protection.
Navigating the world of patents can be vital to the success of an early-stage tech-based startup. A patent gives its owner the right to exclude others from making, using, selling, offering to sell or importing a patented invention. This exclusive right, and the competitive advantages that come with it, can give the patent owner a significant leg up in the marketplace.
Here are some tips entrepreneurs should keep in mind regarding patents.
Think and Plan Strategically
Entrepreneurs should strive to develop a plan for any patent-related activities. Offensively, entrepreneurs should consider how to best protect the technology being developed. This may include identifying which technology or invention being developed is most important to protect, where (geographically speaking) that protection should be pursued and what kind of budget should be allocated to try to secure the desired protection.
Defensively, entrepreneurs should at least consider the possibility that a competitor patent could be poised to block or at least complicate the path forward to commercialization. Entrepreneurs should survey the existing patent landscape and review specific competitor patents in detail to assess and manage infringement risk. The potential value of these kinds of investigations should be weighed against its cost.
Be Mindful of Timing
Depending on timing, some activities that entrepreneurs regularly engage in (such as fundraising, public presentations, interacting with potential business partners and investors, marketing and selling, or even offering to sell) can have a negative effect on an entrepreneur’s ability to secure valid patent protection. Filing patent applications in a timely manner is critical.
Capture Patenting Opportunity
Innovation happens all the time; and it can happen quickly. If an entrepreneur is not paying close enough attention to the innovative work of his or her employees, it is possible that some opportunities to secure valuable patent protection could slip away inadvertently.
Entrepreneurs should be deliberate and diligent about capturing these opportunities and should encourage employees to flag any opportunities to secure patent protection. The entrepreneurs should consider each of these opportunities in detail and try to make reasoned business decisions about whether to seek patent protection for each potential opportunity, taking into consideration available resources and the company’s overall business strategies.
It may be surprising to learn that a company doesn’t necessarily own all of the inventions that its own employees or contractors create. In fact, in the United States, absent an agreement to the contrary, inventions are usually owned by whoever thought of the invention.
Entrepreneurs should take the necessary steps to ensure that the company owns any and all of the patents necessary to ensure the company’s success. Uncertainties about a company’s ownership interest in an invention or patent can be difficult and costly to fix. Entrepreneurs should use clear employee and contractor agreements, confirm the assignment of any patent-related rights with written, notarized documentation and promptly record any assignments of patent rights in the U.S. Patent & Trademark Office assignment database.
Manage Infringement Risk
Anytime a company makes, uses, sells, offers to sell or imports a product, it exposes itself to the risk that it might be infringing the patent rights of another.
How and when should an entrepreneur address this risk? If the infringement risk is only theoretical (there is no specific patent that the entrepreneur is concerned about infringing), it can be difficult to determine how much, if any, resources should be devoted to discovering and analyzing potential infringement risks.
However, if the risk is more concrete (there is a specific patent or patents the entrepreneur is concerned about infringing), proactive and prompt steps can be important to appropriately address that risk. These steps may include checking to see whether there are any good reasons to think that the product does not actually infringe the patent, considering whether the patent might actually be invalid, exploring design modifications to the product that might avoid infringement and seeking a license from the patent holder.
Ultimately, any risk assessment and mitigation strategies should be aligned with the company’s overall business strategies.
Don’t be intimidated by patents. Keep an open mind and be curious. Ask questions and talk to your patent attorney—a lot. Things can get complex. But often, at a high level, there are basic (and quite interesting) concepts at play. The more you learn about patents, the better situated you’ll be to help your patent attorney help you.
William P. O’Sullivan is an attorney at the Sheehan Phinney law firm in Manchester and is a member of the firm’s intellectual property group. He can be reached at firstname.lastname@example.org or 603-627-8186.