Small Business

To Patent or Not to Patent?


First, evaluate whether or not you need one. Then check for existing patent landmines during the early stages of product development

Intellectual property law is notoriously confusing. That's because there are three main types of intellectual property protection and a swirl of myths surrounding each (see BusinessWeek.com, 8/11/05, (see BusinessWeek.com, 8/11/05, "Whose Idea Is It Anyway?"). The United States Patent & Trademark Office (USPTO) (http://www.uspto.gov/main/patents.htm) offers a good primer on the differences between patents, trademarks, and copyrights.

A patent is the grant of a property right to an inventor by the USPTO—typically for 20 years from the date of application. A patent gives the holder the legal right to exclude others from making, using, or selling the invention in the U.S. So the idea becomes like a piece of land, and patenting the idea before someone else does is like buying that land.

U.S. patent law allows an individual or business to patent "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." This means new products, methods, or steps to perform a task.

While the vast majority of patents are improvements, you still have to be making something new—not something that already exists. But it's acceptable to combine mixtures of existing ingredients and chemical compounds to create something new.

For inventors and founders of startups, whose future is tied to the success and failure of a new invention, or an improvement to an existing invention, a patent can be a company's most valuable asset. It provides you protection from a competitor duplicating your ideas. For example, if you invent a new type of zipper that every dress designer wants to use, you are entitled to collect a royalty on every garment that ends up with your design.

A "Waste of Time?"

Still, patents are usually worth less than the paper they are printed on. Most patents are obscure inventions with little real world relevance and aren't filed in a way that they provide any protection. JiNan Glasgow, a patent lawyer and CEO of patent search firm Neopatents, urges you to ensure a patent you are considering filing fits within your business strategy. She says patents that do not directly support your core business are usually a waste of time and money.

And it is a tedious and lengthy process to file a patent. When you are struggling to launch a product and build your business, intellectual property issues are often the last things on your mind. Yet protecting your ideas and inventions, and making sure that you haven't infringed the rights of others, could make or break you in the long term.

One example of a patent success story is Amazon's "one click" technology. Amazon (AMZN) was able to patent an online system for customers to enter their credit card number and address information just once, so that on follow-up visits all it took to make a purchase was a single mouse click.

This encouraged customers to finalize the purchase before they had a chance to think twice and change their minds. Barnes & Noble (BKS) developed a similar system they called their "express lane". Amazon was successful in taking legal action to force Barnes & Noble to remove this feature from their Web site. This gave Amazon an early advantage.

Protect Yourself

Keep in mind that it is not easy to enforce your patent once you do it get it. There are no patent police, so it's up to you to watch your space. You may have to initiate lawsuits to prove that you really were the first with such an idea and that someone is infringing on it. Unless you have deep pockets like Amazon and the stakes are high, this is often not practical.

It could also be that someone else patented a similar but different idea before you did, and you have to prove that your idea wasn't simply an extension of theirs. Blackberry maker Research In Motion (RIMM) had to spend more than $600 million to settle a lawsuit with Virginia holding company NTP over technology that delivers e-mail to mobile devices. NTP claimed that that RIM’s device had a combination of features described in NTP's patents. RIM's business was so severely disrupted by NTP's claims that it had to settle, even though it had developed a work-around technology.

The lesson from all this? Carefully evaluate whether or not you need a patent. Then check for existing landmines while you are still in the early stages of product development.

To see a Tip Sheet with essential advice for entrepreneurs considering filing patents, click here.

Wadhwa is Wertheim Fellow at the Harvard Law School and executive in residence at Duke University. He is a tech entrepreneur who founded two technology companies. His research can be found at www.globalizationresearch.com .

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