In IP, it’s the endgame that matters most of all, and that’s where a patent matters most. Whether you plan on eventually selling your company, buying up competitors yourself, or continuing to operate it for decades, it is critical to make sure the state of your intellectual property supports what comes next.
IP often dictates what you can and can’t do with your idea. That’s because what you ultimately want to do with your innovation can greatly affect the specific steps you take to protect your innovative idea.
For example, knowing why you want or need a patent can help you decide what’s most important in terms of your IP. Here are some scenarios to consider as to why any founder would want to patent their idea.
You want the self-satisfaction of having your name on a patent.
There’s absolutely nothing wrong with this approach. Not everyone has truly innovative ideas, so celebrating your accomplishments in public by patenting them is totally natural.
Depending on your budget, you can try your own hand at patent prosecution as the pro se inventor applicant. There are online and paper publications that can help, or talk with a patent professional to identify ways to get a patent as quickly and as economically as you can. The USPTO has a lot of nice resources, including this webinar.
You want to create new products based on your idea.
This is where the rubber starts to hit the road in terms of IP.
If you want to create new products based on your idea, start by taking a look at the product ecosystem around your innovation. Are there existing, competing products? Are there established competitors? How have the competitors protected their products from upstarts? Are your suppliers/vendors pursuing IP? What IP do your potential customers hold? What is the IP landscape around your innovative idea? Do your competitors have any intellectual property that might be infringed by your proposed new product? Are there ways to engineer your product around the competitor IP?
Also consider how you might be able to define and protect your competitive edge.
How does your product differ from the known competing products? What value-add does your product offering provide? Are these value-add features protectable by trade secret or patents? How easy would it be for a competitor to reverse engineer or copy the value-add features?
You want to make sure you can sell your product without stepping on other people’s IP, and simultaneously be assured that your innovative ideas can be protected to provide a sustainable competitive advantage. You’ll need to take much greater care in creating an IP strategy and crafting any IP filings, so be sure to consult an IP professional, such as a patent attorney or patent agent before going down this path.
You want to partner with others to create an improved version of an existing product.
Before talking to the potential partner, be sure you have a plan in place for your own IP and how it will relate to their existing products and patents. Also, make sure you can document ownership of your innovative idea — in particular how it is different / unique from what’s already out there.
In this scenario, you are essentially trying to position your innovation to be as attractive as possible to your potential partner. At the same time, you are making sure that, even if a product development partnership doesn’t work out, you would be able to maintain ownership of your innovative idea.
These considerations are particularly important if the potential partner is a large, well-established company.
You want to start a product company around your innovative idea as well as future innovations.
If you are going to be investing the time and energy required to start a company, proceed with caution, mindfully evaluating the risks.
Make sure you have established the appropriate framework, taking into consideration corporate hygiene issues like equity distribution among the founders (a complex topic for future post), as well as carefully examined the question of to patent or not to patent.
Again, make sure that you have documentation clearly showing that your company owns the IP. Making conscious decisions to ensure alignment of your business goals, product development path, and IP strategy will be a key factor in building your business.
You are positioning your company for an exit event and would like to boost your IP portfolio and, hopefully, your company’s valuation.
This situation is a bit specialized in that, really, the exit event is your true endgame for your company. However, your endgame for your IP portfolio (since you’ll likely soon be transferring it to an acquirer) is to maximize its value such that your company valuation is as high as possible. There are a number of things you can do to increase the actual and perceived value of your IP portfolio.
One easy action you can take is to know the status of every IP asset, including patents, trademarks, copyrights, and trade secrets. Make sure all of these assets are in good standing, with up-to-date maintenance fee payments as needed, and with a clear chain of ownership. For pending applications, make sure any required office action responses have been addressed and/or will be filed in a timely manner. Here’s a detailed checklist, for example.
Another possible action, specifically for patents, if you already have issued patents, having one or more pending patent applications in the same patent family is a good thing, as a savvy acquirer would know pending applications can give the prospective new owners a lot of options as to how they might shape the patent portfolio to shape their needs. So, file that Continuation/Divisional/Continuation-in-Part. Not familiar with CONs/DIVs/CIPs? Be sure to talk with your friendly patent professional, either a patent attorney or patent agent.
You would like to license your innovative idea to an existing company.
First, know that this path is not an easy one. It’s easy to get labeled as a “patent troll” if you don’t intend to develop a product based on your innovative idea.
Essentially, a patent grants to its owner a legally enforceable right to exclude others from practicing the invention described and claimed in the document, and it is a form of property, such that the rights symbolized by a patent can be inherited, sold, rented, mortgaged and even taxed. Nowhere in the patent laws is it required that the inventor actually produce even a prototype of his or her innovative idea in order to be granted a patent. However, if you even approach a third party about taking a license to your innovative idea, then you need to be cognizant of any “anti-troll” statutes that may be applicable. These statutes vary state-by-state.
Patent licensing/enforcement is a complex and litigious business, and mistakes can be costly.
In the end, your IP endgame is a highly personal matter, depending on your ambitions, time frame, and risk tolerance. Be sure to discuss the pros and cons of the different scenarios with someone with legal knowledge who can examine your business goals as well as your technical savvy and appetite for risk.
Ready to get started? Contact us today to learn more about the patent process and what it can mean for your business.