Demystifying IP/Patent Process for Startups

Guest post by Dilip of Inolyst, IP consulting and IP monetizing firm. In this post (published in two parts), Dilip demystifies the entire patenting process and what does it mean for startups.

Basics of Patenting

  • Patents : Protect an invention in any area of technology which is new, useful, capable of industrial application, and represents an innovative and non-obvious advance.
    New plant variety registration (similar to patent) protects a plant variety which is new, possesses uniform and stable basic qualities that remain unchanged after reproduction
  • Trademarks
    Protect a distinctive mark composed of words, images and other signs (as well as sounds and odors in some countries) which indicate the origin of goods or services.
  • Designs
    Protect new or original industrial design (outline, shape, model or ornament – such as shoes, bricks, carriage etc.) of a product.
  • Copyright
    Protects literary, dramatic, musical and artistic works – including computer software.

What rights grants a patents?

A patent in a territory grants its holder the exclusive right

  • to make use of an invention in the territory for a limited time
  • by stopping others from the unauthorized
    • production,
    • use,
    • selling or
    • importing
  • of the invention

IPR : Registration and Protection

  • Patents
    • Registration (Patent Office) required
    • Protection – 20 years of full monopoly over the patented invention
    • For new plant variety – registration in Plant Breeders Register -15 years of monopoly
  • Trademarks
    • Registration (Trademark Office) required for full protection of exclusive use
    • Protection – (since 2003) 10 years, renewable indefinitely for 14-year periods
  • Designs
    • Registration (Patent Office) required for full protection of exclusive use
    • Protection – 5 years (extendable by 10 years)
  • Copyright
    • No registration
    • Protection from unauthorized copying for author’s lifetime plus 70 years (for phonograms, 50 years)
  • Know-how / Proprietary Information (Trade secrets)
    • No registration
    • Protection by tort legislation not limited in time

Importance of IP for startups

IP as Asset for Potential Investors Due Diligence Perspective

A potential investor will examine:

  • the Company’s registered patents, filed patent applications, other registered or unregistered IP assets
  • the value of the Company’s IP assets
  • the extent of patent protection
  • the risk that such patents may be cancelled by court
  • the chance of patent applications to succeed
  • the Company’s infringement of third-party IP rights

The Company’s Technology and Goodwill

  • Technology
  • Protection currently available for the technology
  • What patent applications / registered patents currently protect the technology?
  • Which patents are most important and which, if any, considerably “block” other companies?
  • Does the Company’s technology infringe the IP rights of competing companies?
  • Possibility that competing technologies be licensed to the Company
  • Procedure of documenting the Company’s know-how upon development – the risks inherent in concentrating all know-how with an individual founder

Goodwill

  • Are the Company’s trademarks and domain names in use and therefore adequately protected?
  • What are the chances for the Company’s trademarks to be registered abroad in jurisdictions in which it is not yet operating?
  • Do customers in the target markets associate the Company’s product with the Company?

Evaluate the competitiveness of your technology

  • What impediments to the market entry of your technology exist?
  • Competition:
    • Who are your competitors?
    • What are the competitive technologies?
    • What impact does your invention have on the competitor and the other technologies?
    • Will new technologies leapfrog yours?
  • Blocking technology of competitors:
    • Are you free in your design around the IPR portfolio of your competitors?
    • Can you license or buy the necessary technology?
    • What is your strategy in case of a law suite with a competitor who owns a blocking patent?
IPR Strategy Element – and what it involves
Innovation management Harvesting inventions, tapping their full potentials as to the IP strategic goals
IPR Filing Strategy Focus areas for new intellectual property rights (market segment, countries, .)
IPR Portfolio Management Management of intellectual property assets as an investment portfolio
IPR Asset Managment Patent licensing, sale, exchange or pooling
Enforcement and legal strategy

Business strategy

IPR Environment IPR communication strategy; Influencing future IP laws

Innovation evaluation – value proposition

  • What are the opportunities in foreign markets?
    • In which countries do you need to protect your technology?
    • Dealing with EU and US patents essentially differs!
  • How can you monitor infringements?
    • What are the monitoring costs?
  • What is the value of your invention?
    • Check your business model
    • Estimate the size of the market affected by the invention
    • Contemplate costs of the patent application and patent and compare them to the estimated revenue of product sales/licenses
    • Consider higher initial costs in favor of a higher quality of the patent

Markets for Ideas

  • Traditional models of innovation: competition
    • Start-ups innovate for entry into product markets and displace incumbents
  • New models of innovation: cooperation
    • Start-ups have options to engage in cooperative commercialization (e.g., licensing, acquisitions) rather than compete in product markets
    • Advantages in saving on duplicative complementary assets or softening of product market competition

Recap: Points to Remember

Your idea or invention should be:

  • Novel
  • Non-obvious
  • Enables
  • Written Description
  • Clear Claims
  • Best Mode

In the next post (to be published tomorrow), we will look at patenting process.

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