Start-Ups: Do You Need a Patent?

Successful startup rocket. Business style vector concept illustration

In the pre-funding stage, start-up companies are often working on shoe-string budgets and based solely on the experience of their founders and advisory boards. It may be tempting to push legal intellectual property protections off until your project is funded and capital begins to flow. But in many cases, you may need a patent to satisfy venture capitalists’ concerns, raise funding, and prepare your business for market. The question for your next board meeting should be: does your start-up need a patent?

What a Patent Means for Your Business

In a legal sense, patents give inventors and business owners legal protection against people trying to steal their ideas or profit from their products and processes. A patent gives you an exclusive right to prevent others from making, using, selling or importing the technology claimed in the patent application for a set period of time.

From a practical perspective, a patent gives your technology start-up a competitive edge with a unique business offering. You can use your patent (or even the application while it is pending) to show investors and potential customers that they will not find your specific offering anywhere else.

What Can You Patent?

Patents are one of several types of intellectual property protections available to start-up businesses, along with trademarks and copyrights. The lines between these various forms of intellectual property can be a little complicated. However, as shorthand, remember that patents cover physical items or processes, trademarks apply to marketing and branding, and copyrights cover creative works.

Within the world of patent applications, the U.S. generally grants protections for inventions that fall within one of these categories:

• Utility Patents cover inventions of new devices or processes improving on existing technology. They can also cover concrete business processes and software. Examples include everything from a windshield wiper to a firmware integration program. They last for 20 years.
• Design Patents cover the ornamental design of a manufactured product. This is similar to trademarks and can provide overlapping protection to the covered product design. Examples include the aesthetic aspects of a new gaming console or the layout for a search engine website. They last for 15 years.

How Can You Decide Whether to Apply for a Patent?

All the benefits of filing for a patent come with a cost. Completing a successful patent application takes time, money, and effort. You and your intellectual property attorney will need to work with the U.S. Patent and Trademark Office (USPTO), to define the product and the scope of protection. This process can take months, or even years to complete, and having a patent is no guarantee that the invention will be profitable.

That is why you should consult with an experienced intellectual property attorney early in the development process. A well-researched patentability opinion can guide you to see the value of patenting your inventions and processes, and keep your business from spending valuable start-up capital on an invention that won’t bring a return on that investment.

Where Should You Patent Your International Product?

Intellectual property protection is especially important if your business plan includes competing in international markets. There is no such thing as a global patent. Instead, you will need to apply for protection in each country where you plan on doing business. The process and the protections granted in each country may be different as well.

If international sales are part of your corporate development model, it is essential that you discuss that strategy with your intellectual property attorney while you are still in the start-up phase of your business. Many countries will honor your U.S. patent application in determining the priority of your claim against your competitors, but only if you file in that jurisdiction within one year of your initial U.S. patent. This means that you may need to complete your international patent applications long before you are ready to go to market in those countries.

Can You Benefit from a Patent Application Before it is Approved?

The good news for start-ups is that the benefits of filing a patent application start as soon as that application is filed. Having a patent pending entitles you to many of the same protections as a fully approved patent. By labeling products with the patent number, you can put competitors on notice that you are taking steps to protect your intellectual property rights. If someone tries to beat you to market, you can go to court once your patent issues and claim damages from a prior date that the infringer had actual notice of your published patent application.

Having a patent pending can also help you secure venture capital and business financing. It shows deal makers that you have something unique and valuable, and demonstrates that your company is taking its product seriously.

Developing a Patent Strategy for Your Start-up Technology Company

Entrepreneurs and inventors are often quick to open start-up technology companies, but slow to bring in an intellectual property attorney to help them protect what they have built. By putting off filing patent applications in the U.S. and overseas, you run the risk that someone will see what you are doing and beat you to market. Don’t make the mistake of walking the tightrope of start-up life without a net. Talk to an experienced intellectual property attorney early in your start-up’s development to develop a patent strategy to protect your inventions and your funders’ investments now, before it is too late.

CHIP LAW GROUP is an intellectual property firm with offices in Chicago, Illinois and Tokyo, Japan. With decades of patent experience as attorneys and inventors, our team can help your start-up protect its intellectual property interests and guide your future IP decisions. Contact us today to consult with one of our experienced IP and patent law attorneys.