STARTUP FOUNDERS NEED A SMACKDOWN!!

Now it’s understandable that you are a staunch believer in the Lean Methodology. You want to consolidate your core team, quickly build your MVP (Minimum Viable Product), and ship it as soon as possible. Once shipped you learn from your mistakes, review, iterate, rinse, and repeat till you’ve optimized your product offering. Your approach is surely wise and admirable.

In all this, you’ve also been advised by all to keep your running costs low and be very frugal when it comes to your expenses. You’ve been told to invest only in what is necessary and an absolute must. Again, this is sound advice for anyone planning to startup.

And I’m wishing you’ll even find some customers/users and some decent initial success if you’ve followed all these guidelines to the T. BUT, NO ONE EVER TELLS YOU HOW IMPORTANT YOUR IDEA IS. Execution, they say, is everything.

Yes, execution matters, but your idea matters too.

Do you want to build something that anyone with basic technical skills could mockup over a weekend? Do you want those smart asses to simply take your work and call it their own? Worse, what would happen if their stolen work becomes more successful than your own? Would that make you happy?

Nope, absolutely not.

So before you decide to buy a dedicated server, machinery or whatever that it is, decide to invest in your idea first. It doesn’t cost “that” much to protect the one thing that matters most to your startup – your big idea.

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Time and again, we’ve seen startup Founders complain about how expensive and difficult it is to protect their idea here. Yet, it’s surprising that they have enough money to incorporate their company in the US, buy a yearly subscription for a dedicated server, hire employees at random, and throw money at sales/marketing. For this alone, Startup Founders – You need a SMACK ON YOUR HEAD! Phat!

You’ve got all your priorities screwed up. Protect your idea first. You don’t want some hillbilly with a Legal Patent/Copyright/Trademark to come up later (when /if you become super successful) to sue you for millions or worse stop you from doing what you love the most. The best way to protect your idea is by filing for a Patent.

Patents: If your idea is technical, hasn’t been done before, uses software tied to machine components, is manufacturable, and exhibits significant improvement over any existing solutions, then you file a patent application.

Since you’re a startup with cost limitations, consider filing a Provisional Patent Application first.

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A Provisional Patent Application is like saying “Okay, we’ve come with this awesome idea first. If you try doing something similar or if this idea struck you much later, tough luck! We own this now!”

The application itself doesn’t have to be too fancy. You need to write about your idea in detail, fill some basic forms, and file it at the Patent Office, that’s all. Of course, a Patent Lawyer can cover a whole lot of information about your invention/idea (including some you’ve hadn’t even thought about) and add whole new dimension to your idea. We are gifted that way and we aren’t boasting.

Pay your lawyer well. Get the Provisional Application filed. You’ll be glad you did. You don’t have to be frugal here. It’s YOUR IDEA we’re talking about.

Once your Provisional Application is filed, forget about it for 9 months. Build your startup, grow your startup, and start seeking investments for your startup. Interestingly, most investors are keen to know if you have any Intellectual property of your own. If you’ve filed a Patent Application, it’s half the battle won! 9 months is also good enough time to gauge if your idea is profitable and shows promise. Your idea might even change 180 degree during this time.

With investments and thorough validation of your idea, you can then consider filing a more comprehensive Complete/Non provisional Patent Application with the Patent Office for your idea. You’ll surely need the help of a Patent Lawyer this time to formalize your previously filed Provisional Application, add legal jargons, and refine your application with added claims, drawings, and detailed description.

However, if you feel that your idea is no longer viable or profitable, you can simply choose to abandon your previously filed Provisional Patent Application. Not much lost but a lot gained.

Since filing your patent application, you can officially call yourself an INVENTOR. We know that’s who you really are, but the patent application only gives you a Legal badge to say so. So Invent and Patent. Don’t be stingy here, Uncle Scrooge!

 

About the Author

The author, Chethan Kamath advises Startups on all IP related matters.

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Startups and Intellectual Property

So you want to start a start-up. You believe that you have the next big idea in you. The idea that would take you into the leagues of other legendary men who had brilliant ideas like Steve Jobs, Mark Zuckerberg and Sergey Brin. So what next?

The most important step you take at this stage towards sustainable development would be keeping your idea sealed unless it is protected by an efficient non-disclosure agreement. That’s right, that one big idea should stay in your head before you protect it. Do not disclose it to anyone.

There are chiefly three types of intellectual property that you should consider before getting into your business:

  • Trademarks
  • Copyrights
  • Patents

Trademarks:

       Trademark is often regarded as the oldest and yet most ambiguous form of intellectual property and quite rightly so. For example trademark issues could potentially arise between a company named “bar space” and a company named “space bar” because of their names, though they sound differently. So it is highly advised to consult a professional with expertise in the field of trademarks before trademarking your product.

        Trademarks include crucial aspects of your company like company name, brand name, logo design, taglines, among other things.

Copyrights:

         Copyrighting your content is also a nice way to ensure that your work won’t be blatantly copied by others. As much as copyrights help you, they could prove a hazard unless you are careful not to infringe others copyrights. Cases of start-ups made to pay penalties for infringing copyrights occur occasionally.

         Your website design, content in your brochure, layout, etc all come under the domain of copyrights.

Patents:

         A right to stop anyone from making, using, and selling your invention, sometimes patents don the role of the game-changer, sometimes of an expensive wallflower. Depending on the practise areas covered by your start-up, patents could well be the most critical factor in achieving market success.

         The sum total of all the intellectual property rights make up the IP portfolio of your company. A good IP portfolio is critical for success in today’s IP driven economy. The foundation for a good IP portfolio is laid during the earliest stages of a start-up company. The first few patents and trademarks filed for a company goes a long way. Take for example, US patent US6285999, or more famously, the first patent by google. The patent “Method for node ranking in a linked database” lists Google co-founder Lawrence Page as inventor. However, the patent was assigned to Stanford University. Google licensed the patent from Stanford for a 2% stake in the company. In 2004, Stanford University cashed its stake in the company for a sum of 337 million dollars. The single patent served as the cornerstone for what was to become Google’s mighty IP portfolio.

         As far as semiconductor and bio-technology start-ups are concerned, the IP portfolio, especially the patent portfolio of the company is of vital importance, and not without reason:

                  1. Strategically placed patents ensures competitive advantage for the company. A strategic patent is one which ensures that the competition cannot operate within the market space without infringement.

                  2. A good patent portfolio convinces the customers and prospective investors that you take matters related to your technology seriously.  It convinces them that you invest in your technology and your company is strong from the inside.

                  3.  It garners respect for your organization from the big corporates. Patents enable you to compete with people who have deeper pockets. Good, strategically placed patents inhibit others from operating in your space and as a result, add value to your business.

                  4.  It provides venture capitalists confidence to fund you. Especially, because of the potential revenue stream received through licensing. The venture capitalists have the confidence that even if your company fails, they can make the leased amount by licensing the patent. Some even go to the extent of seeking the help of patent trolls to gain back the money leased.

                  5.  Patents also enhance the bargaining power of your company, especially in cases where your company is in the process of cross licensing patents with another company. A good patent portfolio provides leverage in such circumstances.

                  6. The number of potential revenue sources has increased in the past decade. Patents are monetised in a number of ways such as securitization and auctions.

         Building an efficient patent portfolio requires vision. Necessity for vision arises from the fact that there is no such thing as a global patent. Patents are subject to jurisdictions, and as a result, the first step towards building a patent portfolio would be to decide the number of jurisdictions you would want to practise the invention. In any case, to file a patent abroad, you would require filing a domestic patent first. So naturally, the next step would be to file a domestic patent in your respective jurisdiction.

         Filing a domestic patent would provide you the exclusive right to practise the invention within your jurisdiction, and would further provide you with a limited period of time to file the patent in other countries.

         Filing a patent in another country, in the case it has already been filed domestically is called national phase entry. Depending on the mode for performing national phase entry, the time and expense varies. Moreover, various nuances of the patent law are different in different counties. So you are advised to select the countries where you would like to file the patent carefully.

         The first step towards patenting an invention should be to consider the following questions:

  1.  Is my invention patentable?
  2.  How much could I afford to patent the invention?

         The first question, about patentability, can be answered by understanding the four concepts for patentability:

  1.  Novelty
  2.  Non-obviousness
  3.  Usefulness
  4. Patentability issues that are subject to jurisdictions.

        Novelty and obviousness of an invention can be determined by searching in various paid and public databases. Patent consultancies offer prior art searches that serve the same purpose.

        Usefulness of an invention generally refers to industrial applicability, as in the invention can be made or used in an industry for commercial purposes.

         Patentability largely refers to whether the inventions that is deemed to be patentable according to the patent law of the jurisdiction. For example, inventions relating to atomic energy, food materials and agricultural practises are non-patentable in India.

         The answer to the second question determines the number of patents you will be filing and the patent attorney you will be hiring for the purpose. Selecting a patent attorney is a tricky process. One of the most common mistakes that start-ups make is that they overvalue their patents and overspend for patent drafting. Always remember that your chief concern must be executing your idea rather than protecting it. Moreover, spending money for a patent makes sense only if you make more money from the patent than what you have spent for it.

            So, money spent for the patents should be kept at an optimal level. Ideally, the selected patent attorney must charge well within the budget allocated yet should be able to deliver with required amount of correctness. So you are advised to do a lot of groundwork before selecting your patent attorney. One method of reducing the cost would be to outsource to places which are reputed to perform, yet are affordable.

             Once after the patent attorney has been selected, the patent attorney most likely would take an invention disclosure interview with you. After a few days after the invention disclosure, the patent attorney sends you the first draft of the drafted patent. The patent attorney files your patent after he considers all your opinions about the first draft.

             If you want to buy more time before filing the patent, you are advised to file a provisional and then file the complete specification at least one year later.

             Once the patent has been filed, comes the long and arduous process of patent prosecution. In India, the specification is published after eighteen months of filing the patent. After this, the patent office accepts opposition to the grant of patents. Further, the applicant should request the examiner to examine the application.

              On average, a patent takes 2 to 5 years to get granted based on the jurisdiction. Once granted, the patent provides the owners 20 years of monopoly for practising the invention. The twenty years of monopoly is a fitting reward for the strenuous effort of coming up with the patentable idea and further, patenting the idea.

              It is significant that the patent right is a negative right. Patent right is a sword, not a shield. It does not protect you from infringement. However, it does provide you with the right to take legal action against people who infringe your product. The patent right helps you to stop others from making, using or selling your invention. Moreover, it enables you to obtain an injunction against other people who are already using your invention and even acquire money from infringers as compensation.

            Inventions result from investments of considerable amount of time, energy and money. Patents provide a channel for the inventors and the enterprises backing them to obtain high returns for the time, energy and money invested on their part. Intellectual property rights is what keeps world innovating. As Abraham Lincoln rightly said, ”Intellectual property feeds fuel of interest to the fire of genius.”

Author, Leo Paul Johnson is a patent engineer at IP ASTRA