Patent Strategies for Startup Companies

I often have the pleasure of working with entrepreneurs and scientists that start companies to commercialize their great ideas. Usually, such founders want patents and to have a “patent strategy,” but what exactly does that mean? The answer is not simple, is different for every company, and is highly fact-specific. To help you understand the process, this blawg discusses some important patent strategy factors and a diagram of how those factors relate.

Often, but not always, inventive ideas are born before the companies are founded. In some scenarios, they are born while the founders are at academic institutions. This can set two events in motion: (1) the institutions file patent applications, and (2) companies are founded to commercialize the ideas. Make no mistake, these are two separate events. While it may be important that the new companies obtain “licenses” to the applications, they usually don’t own or control them.

At some point, new companies will likely file their own patent applications. This is a tricky, yet critical juncture. New patent applications should be as complete and detailed as possible to secure early priority dates for the information that they disclose. Early priority dates are important because they may prevent certain public disclosures from becoming limiting prior art. Prior art may come in a variety of forms that include the earlier institutional patent applications, inventor publications, offers for sale, grant applications, conference talks, posters, investor pitches, and other third party patents or publications. Thus, early filing dates and knowledge of the prior art make for better patent filings.

A sound patent strategy should also take into account the company’s business needs. For instance, drug development may last many years before a marketable drug is approved. Those drugs, however, may be marketed in many regions around the world. Thus, drug developers may adopt wide filing strategies that encompass the major markets for the drugs but prosecute the patent applications at a measured pace to spread costs out over time. In contrast, companies developing consumer products or devices that reach the market quickly may target patent applications to particular markets and seek fast allowance. Other considerations may include obtaining patents to use against aggressive competitors or to showcase the company for potential investors.

Often, companies overlook “patent landscaping” and “freedom to operate” analyses. Patent landscaping refers to searching the public patent databases for relevant patents. The searches tend to be broad. They help companies identify other companies in their space, their patent filings, and their risks. They also identify potential licensing opportunities and enforcement activities. Freedom to operate or “FTO” analyses take a much closer look at particular patent portfolios and the risks that they represent to the companies. I believe the term “FTO” is a misnomer. “Freedom” to operate is rare. What is important is that the decision-makers understand the risks so that they can make informed business decisions. I
strongly recommend that attorneys conduct or supervise patent landscaping and FTO analyses. These are complicated analyses and legal training is critical. Also, if litigation breaks out, working with an attorney provides some protection against discovery under the attorney client privilege.

Legal services are expensive. Often, companies walking through the funding “valley of death” struggle to find money for legal services. Early patent counseling, however, may help attract investors and prevent big, expensive problems down the road. Thus, early counseling may be worth costs.

Startup IP Diagram.pdf

Startup IP Diagram

comments powered by Disqus

blog comments powered by Disqus