If you think there are a hundred things you need to worry about as a startup, make it 101; you must not forget about intellectual property infringement. Unfortunately the environment surrounding intellectual property is complex and fraught with dangers for the unwary. Imagine a scenario where you come up with a great idea, spend thousands of hours developing it into a viable product, spend thousands of more hours attracting and retaining customers, only to find out years later that you have infringed someone’s patent and now owe them monetary compensation for the use of the same and potentially punitive damages for willful infringement. Obviously this is not a desirable scenario and therefore it’s worth doing a little bit of homework upfront to try and avoid that outcome.
Our first piece of advice is to seek legal counsel early; pay a little money to an attorney and get some peace of mind. Don’t just read a blog, even ours, and think you can go it alone. Educate yourself but seek experts when needed.
Types of Intellectual Property
A top priority should be to avoid infringing someone else’s ideas and the first step to accomplishing this is to understand the three types of intellectual property: patents, trademarks, and copyrights. These are all governed by federal law.
Copyrights are granted to people for any expressed form of an idea or information that is substantive and discrete. Under the Berne Convention copyright is automatic even without application once it is produced in a “fixed medium”, such as a drawing, document, or electronic file. Copyrights are issued by the U.S. Copyright Office. One of the limitations of the copyright protection is “fair use”, the definition of which is not always clear but allows the use of your work by others for such things as parodies and news.
Trademarks are protect words, names, symbols, sounds, or colors that distinguish goods and services from those manufactured or sold by others. Trademarks are issued by the Trademark Office of the U.S. Patent and Trademark Office (PTO). Unlike patents, trademarks can be renewed forever as long as they are being used in commerce.
Patents grant the receiver exclusive rights to the invention and are granted through the U.S. Patent and Trademark Office (PTO). The length of protection is currently 14 years from date of filing for design patents and 20 years for all other. Design patents protect the unique appearance of items that can be manufactured but not their function, such as furniture. The five primary requirements for an idea to be patentable are:
- Patentable subject matter – The subject matter must be such that the federal legislature and judicial branches have determined to allow and includes machines, processes/methods, compositions of matter, and improvements of those. Algorithms and laws of nature (e.g. E=mc2) are examples of subject matter than cannot be patented.
- Utility – The idea must serve a use or purpose.
- Novelty – The idea must be new and not known by others.
- Nonobviousness – The idea must not be obvious to someone practiced and working in the field of the matter. For example if the idea involves a method of producing chocolate candy, the idea must not be obvious to an experienced chocolatier.
- Enablement – Within the patent application the idea must be described in sufficient detail as to enable someone to make use of it.
The next step in protecting your startup is to do some research. Use tools such as the Google’s patent search or the search engine at the PTO site to look for patents and applications that are close to your idea. If there are patents that appear to be close to your idea change your idea, design, and implementation now. If you think there could be any doubt call in an expert, someone very experienced in the field and with the relevant patents, or call a patent attorney to receive a legal opinion.
Patent vs Trade Secret
Once your sure you’re not infringing the next decision is how to protect your own intellectual property. Copyrights and trademarks are usually pretty straightforward decisions. Things get murky when deciding between a patent and a trade secret. Trade secrets are intellectual property that is not widely known outside of the company. This can take the form of formulas, processes, or methodologies. A great example of a trade secret is the formula for Coca-cola. The reason this can be a difficult decision is that as soon as a patent is filed it becomes public record and your competitors will gain insight into your business. If you are eventually awarded the patent you gain the sole right to use your idea. If you keep your idea a trade secret but your competition determines how to reverse engineer your product and begins using your idea, you have no recourse.
Once you decide to proceed with a patent the application process can be very long often taking years to complete. The process of receiving a patent starts with an application that includes a specification, a summary of the invention, all claims being made, and a declaration of invention. This application along with the filing fees initiates the process. A reviewer from the PTO studies the application and investigates prior art. The reviewer can issue a patent or reject some or all the claims. If any or all of the claims are rejected the applicant can resubmit the same or modified application. If rejected a second time there is an appeal process that includes the Board of Patent Appeals and Interferences and eventually the US Federal Circuit Court of Appeals.
If you’re unfamiliar with intellectual property this may all seem a bit overwhelming. The two critical things to take away are 1) spend the time upfront to educate yourself and your team and 2) seek expert help when confused or you arrive at a critical decision. The investment in both will be well worth it in the end.