As we start 2015, this the final of three posts (read Part 2 here) on the worst mistakes I have seen made in 2014. Of course there is the usual tie to intellectual property (IP) and money or valuation of the venture.
Misunderstanding and waiting on patents
Does this sound familiar: "Get that minimum viable product out there in the hands of customers! Hurry up and finish that prototype! Get that crowdfunding campaign up!" Speed to market is often heralded as paramount. However, showing too much about how your product works in a public way can drastically impact your ability to patent. In turn, it could become an IP mistake you wish you wouldn't have made.
No full disclosure
Patents are not for every company, but in some cases spending time and money on a provisional patent is the correct IP strategy. A provisional patent is a fraction of the cost of a design or utility patent. Think of the provisional as a stake in the ground allowing you to move forward with some protection for 12 months.
However, if you are thinking of operating in countries other than the US, first remember that all the patents, trademarks, and copyrights protected and filed in the US only protects your company in the US.
Second, you need to consider if you are planning to operate outside the US. If the answer is yes, that changes what and when you disclose your IP. If you reveal too much about your invention, you can potentially bar yourself from obtaining patents in other countries because of the different patent systems. In all cases we recommend seeking professional help for patent work and decisions.
Patent is not a right to make
Patents are often misunderstood as the right to make or manufacture whatever has been patented. Simplified, a patent is the right to exclude others from making, creating, or manufacturing. So if Company X patents a component of a machine, they can only stop others from making that same component. Company X cannot make the machine because there are likely other patents on the other components of the machine. However, Company X can license the right to make its’ component.
Provisional patents are still valuable
A fellow entrepreneur recently asked whether or not I thought patents were worthless for startups. The notion was that a startup cannot afford a patent let alone the cost to defend infringement on their patents.
I disagree for a couple of reasons. First, filing a provisional is much less expensive than a patent. We have links to providers that can help at a reduced cost – LegalZoom or Power Patent. Several of our Traklight users identified potential patents with ID your IP and had not realized that a provisional was a cost-effective first step in an IP strategy.
Second, many potential investors wish to see some protection and that the due diligence has been done researching patentability of the product. In other words, doing an analysis of the market, a products’ competitive advantage, and differentiating characteristics—all necessary before filing a patent—should help with business planning and pitch preparation.
What about patent trolls?
Patent trolls are a challenge for startups because if they receive a cease and desist or pay-up-now letter, it often means the end of their business or a big payout. Traklight's new partner—Unified Patents—wants to help startups when they receive these types of letter. You can read more here.
Dates are important
Another ongoing topic of discussion surrounds the misconception that once the US changed from “first to invent” to “first inventor to file,” dates have become irrelevant. This is simply untrue. Keeping track of your inventors’ notebook and dates are still important for a number of reasons, including proof of inventorship and keeping good records. Additionally, keeping track of your inventions and your filings is also important. Be careful not to miss that one year deadline for your provisional patents! Avoiding or accidentally making IP mistakes can make or break a business.