Patent filing strategies for startups

Each new startup begins with an idea - but what is the best way to protect that idea? For many mechanical and medical device startups, that idea may be protected using patents. But where do you start? For most startups, the first step should be determining what percentage of the startups budget is going to be allocated to creating an intellectual property and/or patent portfolio. Once the budget is determined, the startup should decide on an intellectual property and/or patent strategy. ----- Patent strategy types One patent strategy involves filing patent applications that are directed to the startup's core technology and/or commercial products; we'll call this the bronze strategy. This strategy obtains patent protection for exactly what the startup anticipates selling and nothing more. By focusing directly on the startup's intended commercial products, the patenting costs may be lower since the startups will forgo patenting inventions that they do not anticipate pursuing as commercial products or inventions that are outside of their core technology. Another patent strategy to consider consists of filing patents directed not only to the startups core technologies and/or commercial products, but also to alternative embodiments or design arounds. We'll call this the silver strategy. The silver patent strategy is broader than the bronze patent strategy, and assists startups in keeping potential competitors out of the market and creating a competitive advantage for the startup. Obviously, the silver strategy is going to result in more patent filings than the bronze strategy, which will be more costly to the startup. Yet another patent strategy includes filing patent applications to prevent competitors from suing the startup and to try to avoid infringing another companies patents; we'll call this the gold strategy. The gold strategy may include filing patent applications for any invention that is created by the startup that has potential value to the startup, even if the invention is not directed to the startup's commercial products. This strategy allows the startup to use patent applications that are not directed to commercial products or core technologies as potential alternative revenue sources through licensing and/or selling the non-commercial product technologies. In addition, these patent applications may act as bargaining tools if the startup is ever sued for infringement. When financially feasible, startups should consider moving from the bronze strategy to the silver strategy and finally, to the gold strategy to provide the most comprehensive patent protection for their startup. After the startup chooses its patent strategy, next they must decide what type of patent to file, where to file and when to file. ----- Types of patents In the United States a startup may decide to start with filing a provisional patent application. A provisional application is a one-year placeholder gives the startup an earlier priority date for the subject matter disclosed in the application; it also allows the startup to complete development and/or testing of the product, as well as to explore the commercial market for the product before filing a nonprovisional application. However, the provisional application is never examined and will never become a patent. In the past, provisional applications could be filed at a lower cost than nonprovisional applications because they did not have to be as thorough. Over the last few years, however, this has started to shift. The shift resulted after patent filers lost entitlement to their earlier provisional filing date due to the provisional application lacking complete support for the invention claimed in the nonprovisional application. Thus, it is now important to ensure the provisional application includes a fully enabled disclosure, often with a full claim set. In light of this shift, provisional applications should now be written in the same detail as nonprovisional applications. Thus, although there will be some cost savings in patent filing fees by filing provisional applications, the attorney fees for drafting the provisional applications are unlikely to be much less than for drafting nonprovisional applications. A nonprovisional patent application is a patent application directed to the utility or function of a product. Unlike provisional applications, nonprovisional applications are fully examined by the Patent Office. Thus, nonprovisional applications should make sure to describe the invention in as much detail as possible and ensure that the new and non-obvious features are fully described. Hopefully, the nonprovisional applications will result in one or more patents being granted that are directed to the inventions of the startup's commercial products. Once a patent issues, it will have a term of 20 years from the earliest nonprovisional filing date as long as the necessary maintenance fees are paid during that 20-year period. The rights granted to the startup when they receive a nonprovisional patent include the right for the startup to exclude others from making, using, selling or distributing their invention. Thus, it is important to note that if a startup obtains a patent it does not mean the startup has the right to make, use or sell the patented invention without infringing others. Whether the startup can actually practice its invention requires an additional search and analysis called a freedom to operate, but we will leave that discussion for another day. Unlike provisional and nonprovisional applications, design patent applications are directed to the aesthetic appearance of a product. Thus, a design patent application is different than provisional and nonprovisional applications because the application focuses on the appearance of the product and contains more drawings of the invention than words describing it. Design patent applications are also examined by the Patent Office; for a design patent, the Patent Office will determine if the ornamentation, appearance, design or shape of the product is new, non-obvious and non-functional. Once the design patent issues it will have a term of 15 years from the date the patent was granted. Thus, if the startup has a product with an interesting appearance that is not directly tied to the products function, the startup may consider filing a design patent application in addition to the nonprovisional application. Since design patents are examined faster than nonprovisional applications and generally less costly, they can help to cost effectively add value to the startup. ----- Where and when to file Finally, the startup must consider whether to file only in the United States or to file abroad as well. Obviously the budget will play a primary role in this decision, but other considerations include where the product will be manufactured and sold, as well as the potential value in the ability to expand to foreign markets. One option available to startups is filing a Patent Cooperation Treaty (PCT) application, which reserves the startup's rights to file in any member country for at least 30 months from the earliest filing date. Therefore, a startup may consider filing a PCT application to reserve the option of foreign filing, while also delaying the potential costs of those foreign filings. For many mechanical and medical device startups hoping to eventually be acquired by another company, having foreign filings increases the potential value of the startup, so careful consideration should be placed on whether or not to file for foreign patent protection. If a startup is considering filing for foreign patent protection, they must remember that most foreign countries require absolute novelty; in other words, a patent application must be filed before the invention is disclosed or the startup cannot obtain patent protection in many foreign countries. So every startup should remember the following about patent filing strategies: (1) make sure your intellectual property and/or patent strategy aligns with your business strategy, (2) file patent applications before disclosing your invention, and (3) you get what you pay for. ----- Jacquelyn A. Graff an attorney with the law firm of Heslin Rothenberg Farley & Mesiti P.C. She can be reached via email at jacquelyn.graff@hrfmlaw.com, or at (518) 452-5600. Published: Thu, Jul 26, 2018