Patent Strategies for Startups

Patent Strategies for Startups: A Patent is a monopoly right that is granted to a person who is the inventor of a new and applicable article or has improved an existing article or a new method of creation of an article. In simpler words it gives the inventor a right to take legal actions against those who try to make use of the invention without inventor’s approval.

A patent application is made up of abstract, patent specification, drawings and claims. The basic building block of a patent application is the Claims. Unlike any other patent application, Claims is the part that defines what the patent can do or cannot.

While considering the scenario for a start-up, they should be apt with changes related to policy and IP guidelines.

Why Start-ups should think about filing patents?

The cost of patenting is high and generally quite higher than the cost of acquiring other IP rights such as trade mark and industrial design rights. The high level of financial investment involved in patent filing may obstruct startups from developing a comprehensive IP strategy. This includes filing of patents at the developmental stage. However, startups with a cohesive patent strategy that aligns with their business can benefit from gaining a strong competitive advantage in the market. Having a patent filing strategy can also mitigate litigation risks from competitors.

Below is a checklist to find out if the technology is worth patenting: Fundamental Patent Strategies for Startups

  • Novelty: The invention should not be known to public that is prior disclosing of invention would question the novelty of the invention.
  • Usefulness: Invention should be economically viable.
  • Expansion: Whether the invention can be implemented in other fields of science and technology.

Using Offensive IP Strategy in Patents

The purpose of an offensive patent filing strategy is to strategically block one’s IP technology. This further helps in generating royalties by enforcing patent rights. The company obtains patents for each and every invention similar to its product, and thus prohibits others from practicing the original invention of a company or an invention which the company is aiming to practice. This entire process is done very fast.

Patent as a Money Maker

Patents are an immense source of revenue generating tools. This can be done by selling or licensing a patent that the start-up owns. This also generates increased valuation during funding and acquisition conversations which in turn is helpful for collaborative opportunities. Start-ups in India are gradually gaining awareness of the fact that patents can add great value in terms of market and fund-raising perspectives.

Using Defensive IP Strategy in Patents

While filing patents defensively, a company files patents with a vision to ensure that they are capable of using their own innovations without the risk of competitors patenting that technology. With a defensive patent strategy, the overall cost incurred is comparatively lower as there is lesser number of patents filed. Also, there are less opportunities to generate licensing revenue due to the smaller number of patents filed. The purpose of filing a defensive patent is to defend the company against future patent infringement lawsuits.

In scenario, where a startup faces a patent infringement the start-ups can use their patents defensively as a controlling factor for negotiations.  It is inclusive of:

  • using the start-up’s patent portfolio to negotiate a quick settlement
  • countersue using patents from its portfolio
  • cross-licensing of patents as a form of settlement

File Patents-When and Where?

The answer to ‘when to file a patent’ would be ‘sooner the better’.  If a technology or product is disclosed to the public directly (by means of publication through journals or research articles) or indirectly (which can be through marketing) it would no longer be patent worthy a sit loses its strong features. Thus for any start-ups it would be a wise to decision to file the patent early. Another import factor while determining novelty of an invention is the Priority Date of the patent application.

Now let’s focus on where to file patents? Patents are territory bound and to gain protection over a broad geographical area would cost quite significant bucks. It is thus important for startups to understand where their market can lie and address those geographies for patent coverage and protection. A PCT application is a helpful tool for those start-ups who wish to expand their patent coverage. It facilitates the start-ups by giving them 30 months to choose in which geographical domains they would like to obtain the patent. While making patent-related decisions, startups should keep in mind that a patent term is generally for 20 years. Accordingly, the decisions should be made keeping in mind the long term view of the technology and its commercial potential.

A quick check-list to determine patent terms

Geographical coverage

Often it is difficult for start-ups to determine the countries where they wish to obtain patent protection. For them who wish to gain patent protection in multiple domains should consider the PCT route which would give them a time of 30 months from the priority date for additional filings in other multiple geographical locations. This time span would help a start up to better understand their position in the market.

Disclosure to Public

A Startup must be aware that their idea, technology, and product in any form before the patent filing date should not be publicly disclosed. If it happens, then that technology or idea can become a Prior-Art thus behaving as an obstacle to obtain patent.

Patent Laws

Start-ups are required to be aware of the legal aspects of the patent in their respective domiciles where they would commercially make use of their patent. In different countries this law varies in terms of scope, timing and enforcement. So it is important to take help of a good local advisor for corresponding locations.

NDA Agreement and Confidentiality Terms

In early stages, start-ups often disclose their ideas or innovations to third parties without paying sincere heed to Non-Disclosure and Confidentiality Agreements (this may be purely unintentional) because of poorly defined terms in the agreement. This in future would question the patentability of an invention.

Early or Late Filing

An optimal time should be fixed by a start-up to file for their patent. It must not be too early or too late so that it would hamper in obtaining a patent.

Inventor or Applicant

Start-ups should clearly understand who the inventor is and who would be the applicant, In India, the ‘first owner’ is the inventor himself until and unless he assigns another entity clearly. Whatever be the scenario, necessary documentation is absolutely important.

Patent Term

The term for validity of a patent differs in different jurisdictions. Hence, timely renewal of a patent is mandatory for a smooth process.