What Innovators Need to Know About IP Protection: A Business-Focused Approach
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This short presentation provides innovators and entrepreneurs with an overview of the basics of patent and IP protection from a business perspective. The aim and goal is to introduce non-patent experts to topics that, when properly introduced into their organizations, can help reduce risk and maximize the return on innovation investment. Some myths are dispelled in the presentation, also.
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What Innovators Need to Know About IP Protection: A Business-Focused Approach
- 1. What Innovators Need to Know about IP Protection: A Business- Focused Approach Jackie Hutter, MS, JD Jackie@TheHutterGroup.com
- 2. • 20 years as IP professional – Law firm • Prosecution and counseling • Litigation – Corporation • Legal and innovation counsel • Last 8 years as “IP Strategist” – Put business issues before legal issues – “Validate your business, not just mine” – Truth telling, not risk mitigation • Research scientist/inventor – Insights from the trenches – Also an entrepreneur – I’ve made mistakes about lawyers, too Copyright 2015 My Perspective
- 3. Protectable IP? Must Understand What “IP” Means Your Business’ Intangible Asset Value Patentable Inventions Trademarks Brand Equity Goodwill Business Processes Customer/ Suppliers Employees Others Specific to Business Model Copyright 2015
- 4. Is It Worth It to Protect Your IP? • IP is only relevant when you demonstrate that customers exist for what you want to sell – No reason to protect something that no one wants! • Must validate business model before thinking about IP protection – Customer discovery is key Copyright 2015
- 6. Patent Types 1. Utility Patent: Patents on inventions which function in a new way or to provide a new result 2. Design Patent: Patents on the non-functional or ornamentation of something that already exists 3. Plant Patent: Patents on types of plants that may be reproduced by grafts and cuttings Copyright 2015
- 7. U.S. Utility Patent Applications provisional application Allow filling without any formal patent claims, oath or declaration or any information disclosure statement Less costly No real protection “Saves place in line” non-provisional application Contains at least a specification, all the drawing figures and at least one claim. Goes through examination Can be filed multiple times Copyright 2015
- 8. Where Can You Obtain a Patent? • USPTO • State Intellectual Property Office of China • Japan Patent Office… National Patent Office • International patent application office • headquartered in Geneva, Switzerland • Still must apply nationally WIPO Copyright 2015
- 9. US Utility Patent Application Process Invention Identified and Vetted for Filing Expense Application Drafted and Filed by Attorney $5,000-$50,000 Application Published 18 months Office Action 12-36 months Response by Attorney Amendment of Claims $3000-$10,000 Final Rejection Allowance $1500 Maintenance Fees 3.5, 7.0, 11.5 Years $900, $2300, $3800 Copyright 2015
- 10. What Patents Are (and Aren’t) • Given by government for useful, new and unobvious inventions • Recognition that invention meets the legal requirements for patentability – Checklist of statutory obligations for both invention and way patent is written • Only market determines business value of invention Copyright 2015
- 11. Utility Patent Features Exclusivity • One patent per invention – Can be slight variations between patents • Without patent holder permission no one can make, market, use, import, etc the patented invention – Otherwise, regarded as patent infringement Territory • Patent limited to certain country • No effect in other countries • No such thing as an “International Patent” Time • Term of a patent is limited • 20 years from earliest non-provisional filing date Copyright: The Hutter Group 2015
- 12. Patents as a Property Right • Not a monopoly • A right to exclude – Broader • Can use • Not use • Keep others from doing what they would otherwise be free to do • No right to practice the invention claimed – Owner can be blocked by other’s patent rights • Must ensure “freedom to operate” Copyright 2015
- 13. • Can obtain patent < 1 year • More expensive up front but – Total process less expensive – Issued patent could increase startup valuation Copyright 2015 Important New US Option: “TrackOne”
- 14. Licensing/Monetization • Perception that licensing/monetization viable outcome for protected IP – “IP has value just because it exists” • In reality, IP value is rare – Patents cover novel and unobvious ideas – People buy right to practice validated business models – If the idea protected by the patent has no customers, then patent has no value • Think of in context of exit value – If customers protected by IP, then your IP has value independently of value of the business itself • “Must have” – If have customers, but IP doesn’t prevent those customers from being acquired, has less value • “Nice to have” – If IP has nothing to do with customers, IP not valuable • “No asset value” Copyright 2015
- 15. Enforcement of IP • IP litigation expense prohibitive for startups – “If you’re thinking about litigation, you’ve lost.” – Litigation is not a viable business model for startups. • Even if money not concern, enforcement still difficult in some countries – Use protection in local country to leverage knock-offs in foreign countries • Combine other forms IP/intangible asset protection to reduce possibility that competitors will be able to provide same value to customers – Make yourself the “go to” for customers Copyright 2015
- 16. Common “Do’s and Don’ts” for IP Don’ts • “Don’t believe the hype” – The only person who needs a patent is a patent attorney – Investors often “check boxes” • File too early – Validate business models first • File too late – Beware of public disclosures and offers for sale • File too narrowly – Focus on why customer cares vs. how you solve the problem • Outsource process to patent attorney – Legal vs. business Do’s • Understand how IP can and will create value – “Make it cheaper to go through you than around you” – Learn to explain to investors etc. • File as soon as possible after validation of business model – Balance risks • Abandon IP that no longer aligns with business model • Understand IP protection is process, not an event – Become IP strategist or integrate one onto team Copyright 2015