Intellectual Property (IP) is vitally important to start-ups. The Start-Up Genome Project, which aims to map, model and analyze what makes start-ups tick, identified IP as a top source of competitive advantage for start-ups. But start-ups face significant challenges in acquiring, maintaining and enforcing their intellectual property.
Guest author Jeffrey Shieh is a Senior Patent Attorney at inovia, a foreign filing technology platform provider. He is responsible for counseling the company and its clients in all facets of the international patent process. Prior to joining inovia, Shieh was a patent attorney at the law firms of Cooper & Dunham LLP and Amster, Rothstein & Ebenstein LLP.
We hear a lot in the news about patent wars among the tech giants – Nokia vs. Google, Apple’s lawsuits in China, and Facebook vs. Yahoo! International patent protection is clearly a key component to defensive and offensive competitive strategies within large, global organizations. But what about smaller technology players and early stage start-ups that don’t have the resources to hire full-time, international law firms? For cash-strapped start-ups, the cost to file international patents to protect their innovations is often too complex and too costly. This leaves them exposed to competition in other markets and may have a serious impact on their ability to scale long-term.
What can start-ups do to protect their innovations and IP on the world stage during the four lifecycle stages identified by the Start-Up Genome Project: Discovery, validation, efficiency and scale?
Discovery and Validation
The first step is to think globally and act locally. Start-ups should begin by applying for a domestic patent. This will give them an exclusive right to their invention for a set period of time and afford them the opportunity to formulate an international patent filing plan. Because patents are country-specific and are limited to the borders of the issuing country, start-ups need to take a hard look at their financials and come up with a strategy and budget for entering select countries. They also need to keep in mind that after filing for a U.S. patent, there is a limited timeframe available for applying for international patent protection. The worst case scenario would be for a start-up to forgo international patent protection and later realize that it isn’t able to protect their its invention against infringers in other markets.
So while a start-up may operate only in the U.S. today, if there’s a chance that it may somedayt manufacture in Asia, sell in Europe, or compete with a company in Australia, it must act now.
Don’t be discouraged. There are several best practices to foreign patent strategies and obtaining broader patent protection while minimizing costs.
First, start-ups should consider filing a Patent Cooperation Treaty (PCT) application instead of filing direct via the Paris Convention. The PCT provides a unified procedure for filing into the 146 member countries and offers a more cost-effective route if filing into more than just one or two countries. The PCT also offers the advantage of time. After the PCT application is filed, the applicant has up to 18 months before filing into the individual countries where protection is sought (“national stage entry”), providing a start-up with time to refine the invention, research its markets and look for licensees or buyers.
Second, start-ups should select their countries intelligently. Start-ups need to know where their inventions will potentially be sold and where they can be made in the future. Start-ups can then prioritize the countries they want to file into. Additionally, start-ups should know whether a country has patent laws affecting their technology. For example, some countries prohibit the patenting of methods of treatment on human or animal subjects. Other countries make it very difficult to patent business methods or software. For these jurisdictions, start-ups may need to draft the claims in their application specifically to overcome these obstacles.
Third, start-ups must ace the patent application process. With a basic background understanding of the process, start-ups can reduce their filing costs. Knowing when deadlines are approaching and making sure to provide instructions in advance will help applicants avoid unnecessary time extensions or rush charges. Some jurisdictions (including Europe) charge excess claims fees for each claim included in an application over a certain number. If start-ups can reduce their claims, they can avoid or reduce these fees.
Finally, start-ups should explore their options for either bringing IP tasks in house or outsourcing them. Depending on the amount of work a start-up has in its patent portfolio, it may be cost effective to pay the salary for an in-house patent attorney, rather than retain outside counsel. Outsourcing certain services, such as foreign filing or annuity payments, can also help reduce legal fees.
Start-ups must make sure to research their options for foreign filing and run cost comparisons. Many steps of the foreign filing process, such as PCT national stage filing and European validation, are largely administrative and can easily be outsourced. Specialist foreign filing providers can often offer time and cost savings.
Start-ups raise the most funds during stage 4 of their lifecycle: Scale. In this stage, start-ups try to drive growth aggressively and maximize their profits. For many, the key at this stage is their ability to grow in international markets – which could depend on their international patent protection.
Even thought they may be strapped for cash, startups must think long term and protect the future of their business by securing both domestic and international patent protection. They must intelligently weigh large, known upfront costs against an unknown benefit down the road – and that’s a scary prospect. But by employing a few simple best practices, start-ups can maximize their patent protection, cut costs and future-proof their innovations.