Startup Administrivia: Intellectual Property

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Intellectual Property: Example US Patent
Example US Patent

This multi-part post is for first time founders. Anyone who has done it before will already know all this.

Once the company is incorporated, basic administrative stuff is set up and the landing page is up, you would want to look at your intellectual property position.

When people talk about intellectual property (IP), they can mean any one of these three things:

  • Patents (Utility or Design)
  • Trademarks
  • Copyrights

I am going to talk only about patents in this post.

DISCLAIMER! I am neither a patent attorney nor a registered patent agent. This article reflects my experience as an engineering and product development executive who has managed mid sized patent portfolios for several startups.  If you have any questions on any of this: work with your patent attorney to get an answer.  Also, if you find errors in my post, I would greatly appreciate it if you will drop me a note so I can correct it promptly.

Why file patents?

  • To stake a claim in your area of expertise, to prevent other people from entering your space.
  • To protect your freedom of practice by preventing other people from filing a patent in your space and crowding you out.
  • To increase the valuation of your company during fundraising rounds.
  • To support an IP licensing business model where others pay a fee to develop products using technologies depicted in your issued patents.

What is the difference between a utility patent and a design patent?

  • A full-on patent application for a US utility patent covers the actual invention of a system or method to do something novel. It includes the following distinct sections:
    • Description
    • Diagrams
    • References depicting a prior art search
    • A set of claims
  • A design patent protects the esthetic design of a device, and nothing else.  Design patents are fully defined with line drawings depicting the device with 7 views: 3D/isometric, top, front, left, right, bottom, back.

What is the difference between a full-on patent application and a provisional patent?

  • A full-on patent application for a US utility patent can cost over $10-15k incurred over a span of 2-3 years to get from patent application to patent issuance. It includes the following distinct sections:
    • Description
    • Diagrams
    • References depicting a prior art search
    • Claims
  • A provisional patent has everything listed above except for the claims. It costs significantly less to prepare and file (usually under $5k) and preserves your priority filing date, while buying you up to 12 months to convert it into a full patent application.
  • While the provisional patent is a good route for cash conservation, my personal position is that if you have any choice at all, you should go for the full patent application. This is because the description is what gets you the priority date. All claims must derive from material included in the description. Therefore, if you have not done your claim construction work at the time of filing (which is what happens during a provisional patent filing) there is a fairly good chance that by the time you get to filing the real patent, you will be constrained on what you can put in the claims due to inadvertent omissions in the description. The cost differential between filing a provisional versus a full patent is only a few thousand dollars, as you won’t incur the full cost in the first year, but in my mind, it is a worthwhile expenditure as it preserves the most freedom of movement later on in the game.

What do I need to do to get ready to file a utility patent?

  • prior art search, to see if the exact thing you want to patent has been done before.  Anyone can do a preliminary prior art search – it is always worth a few hours of time to check on Google.  A patent attorney can help you do a deep prior art search via a service who specializes in this activity.
  • An invention disclosure form, where the core idea and its potential application areas are described. This is the most important part of the patent application for the purpose of establishing a priority date.  If an idea is alluded to in the description, you can file additional patents which are continuations and continuations-in-part based on the parent patent.
  • An initial set of claims. This is the most critical part in terms of the value of the patent, because whatever is in the claims constitutes what you are able to protect.  I always advocate doing claim construction with a seasoned patent attorney, who can ask smart questions and help to construct a set of initial claims that fulfills the intention of protecting the invention at hand.

Should I do it myself or work with a patent attorney?

  • Without a doubt: work with a patent attorney. Patent law changes frequently and a patent attorney is best equipped to inform you of the latest in rules and regulations. Good patent attorneys usually have good relationships with patent examiners in their areas of expertise, which can really, really help when you have moved past the initial filing phase and into office action interactions.

How do I handle international filings?

  • The general rule of thumb is that you want to file patents in the country your product is made OR sold. (The exception is China, where the patent law is virtually unenforceable, so it’s likely not worth spending the money there.)
  • If you file a US patent application, and you desire worldwide protection, you typically would file a single PCT application which gets you your priority date with 180 countries. However, to get protection in member countries you still must file for the patent and pay fees country by country.

My engineers and I are way too busy inventing to worry about paperwork. Can I hire someone to write patent applications for me?

  • Technically, yes – you can engage a registered patent agent or hire an in house patent attorney (full time or on contract) with expertise in your field to interview your engineers, obtain written descriptions, and help write a patent application for them.
  • Realistically, in my personal experience, for a startup, it almost never pays to do it that way, since everything is so new and in such a state of flux that it will take far longer for the engineering team to explain what they have invented than to write the descriptions themselves and send them on to a patent attorney.
  • Therefore, while patent application development is a big pain and a time sink, my personal preference is to have the engineers write their own invention disclosure forms using a streamlined process co-developed with your patent attorney, and then have the patent attorney work with a senior member of technical staff to develop the overall patent strategy and to help screen for inventions worth patenting, select patents to file, do claim construction work on a patent by patent basis, and to project manage the filing process (and subsequently the “patent prosecution” process – which is the back and forth interactions with the patent office to negotiate language and scope of allowable claims up until the patent is issued.)
  • Of course, your mileage may vary (and of course, all big companies have in house patent staff – I just don’t think it is good value to outsource patent application writing for a pre-funding, seed or A round startup.

More questions?

  • The American Intellectual Law Association has a description on US IP law
  • The WIPO has a lot of information on patent law that is not US centric

Complete list of posts in this series:

 

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