Why Should Startups Think About Patents?
Intellectual Property (IP) is inherently difficult to define because it relates to something which is conceived in a person’s mind and hence can be considered their legal property. Things grow more complicated when IP is embodied in a more physical way, either online or in the “real world,” through things like artistic works, design developments, symbol, logos, names & images.
Patents help foster innovation
Patents have an important role when it comes to startups or businesses. They are the gold standard of IP protection and can be used to ring-fence a technique or product that brings a new / inventive way of doing something. It is one of the most effective means of fostering continuous innovation and development of products, processes, and services by ensuring that innovators are recognised for their efforts.
Patents are valid for up to 20 years (if renewed regularly), during which time the patent owner has complete control over who can and cannot commercially exploit their protected innovation, product, or process. Patent holders can also sell licenses that allow for controlled use of their patented innovation, or they can sell the patent to another person or organization, giving up all rights to future ownership and profits.
Patents can help attract investors
Many startups are searching for money from investors who can help them advance to the point where the investor can ‘exit.’ Typically, this will entail a buyout from a larger corporation. Investors or potential buyers will be interested in the startup’s strategy for protecting its IP, so it is important that you consider this issue early on.
A good strategy for protecting your inventions via patents should focus on patentability/validity and ownership.
You should consider filing patent applications in relevant countries that adequately cover your invention(s). However, this can be expensive and time consuming.
Many startup companies have very limited funds which means that it may not be possible to file a patent application before communicating with potential investors. In such cases, it is important to keep your inventions confidential as any oral or written public disclosure of the invention can invalidate a later-filed patent application. Make sure that any negotiations with investors are conducted under the protection of a confidentiality agreement. If you want to discuss your ideas in a public venue in order to generate interest in your invention, make sure to portray components of your innovation in such a way that it is impossible to figure out how it works.
It is critical to determine whether or not your startup has the rights to the invention. If it doesn’t or if there are any issues about whether it does, this may turn off investors or possible buyers. For example, a common occurrence for startups is that at least some aspects of the invention were made whilst one or more inventors were employed by a university. In such circumstances, it is necessary to get legal advice to determine who owns the IP and, if necessary, to ensure any IP is assigned to the startup. Joint ownership of patent rights is not always ideal because it can be limiting. In the United Kingdom, for example, joint owners cannot assign or license patent rights without the approval of the other party or parties. In general, joint ownership may not be appealing to investors because it is generally easier to deal only with one person.
To sum up, patent is a legal mechanism by which you can prevent unauthorized use of your product by others. A patented invention becomes the inventor’s property, just like other business-related goods that can be bought and sold, rented. As a rule, patents give rise to rights for the countries in which they were obtained. However, patents are official documents with international validity. They make it possible to transfer technology across borders. Entrepreneurs whose ideas are documented in this way can open up to global markets and developing countries can access this new information through licensing. However, since the process of obtaining a patent can be daunting, working with a patent attorney is the best solution to avoid problems in the future. Until this time, do not neglect to keep your invention a secret and share it with others within the scope of confidentiality agreements.
For further details about how to protect your patents, take a look at this qLegal toolkit on Protecting your Invention.
qLegal provides pro bono legal advice to start-ups and entrepreneurs on intellectual property, data protection, corporate and commercial law. See the qLegal website for more details and to book your appointment now. Follow us on Twitter and LinkedIn for regular updates on issues relevant to your business.