Intellectual Property Tips From An Expert
I recently had a conversation with Doug Grady, a partner at Black Lowe & Graham – a Seattle based intellectual property boutique. In full disclosure, Mpire uses this firm for advisement in IP matters (and I highly recommend them to Startup WhispererTM readers). One of Doug’s specialties is designing intellectual property protection strategies for startups; he was recently named a “Rising Star” by Washington Law and Politics magazine. Here’s some interesting insights:
Question: what is the appropriate strategy and stance that startups should take on protecting their intellectual property?
Doug: Startups typically have limited resources and therefore must be careful about how they spend their money. In the short run, intellectual property is an expense that won’t generate sales, so there is a natural desire to limit intellectual property investment. At the same time, a startup must recognize that intellectual property can create an entry barrier that prevents others from doing the same thing. A startup is often in a fragile position competitively, and a strong foundation in intellectual property can sometimes make the difference between success and failure. Fundraising is also critical for most startups, and investors typically want to know that there is a competitive advantage that protects their investment. They also like to see company assets, and patents or other intellectual property are sometimes the only assets a startup might have in order to attract investors. The best strategy strikes a balance between the need to develop products and generate sales with the need to protect a competitive advantage.
Question: what are some of the common mistakes that startups make with regard to patent strategy?
Doug: There are a lot of mistakes to be made, so I’ll touch on a few of them. An initial mistake occurs early, long before the patent application is even filed. Many startups don’t appreciate that a patent application must be filed within a year of the time that it is shown publicly or offered for sale in the U.S., and that in foreign countries any sale before the application is filed can prevent a patent from issuing. Another issue we see is the decision not to file patent applications based on the belief that the invention is not patentable. That decision can be quite complicated, but many individuals reach that conclusion without really doing much homework. Those who do file patent applications in a timely way sometimes go overboard, filing too many applications. Probably the most common over-investment is made in foreign filings. At the startup phase, many companies dream big and imagine worldwide success. Though some companies actually achieve that level of success, most young companies spend far more on foreign applications than they’ll ever recover. Considering the expense associated with translating and filing applications in other countries, startups should be especially picky about which applications and which countries to pursue. In the end, it’s about business, and startups should follow a strategy that will build a stronger business.
Question: what are some new trends that you are seeing in intellectual property?
Doug: There are a handful of recent developments that are noteworthy. In recent court decisions, electronic signals such as radio waves and software when divorced from a computer have been considered not to be patentable. These decisions really shouldn’t affect new applications going forward because it will be relatively easy for savvy patent attorneys to prepare applications in a way that is still acceptable. Certain patents issued in recent years, however, may be susceptible to challenge. Design patents have also captured the courts’ attention recently, with a significant decision that should strengthen the scope of design patents. We expect to see an increase in the number of design patent applications that are filed as a result. We are also seeing increased trademark litigation related to online environments, and expect this trend will continue until we receive more decisions. On the whole, intellectual property continues to get more attention as tech companies become a larger part of the economy.
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