This post is written by Dilip , Founder at Inolyst ,an IP consulting and IP monetizing firm. In this post (published in two parts), Dilip demystifies the entire patenting process and what does it mean for startups.

A Perspective on Patents for startups

Basics of Patenting

• Patents : Protect an invention in any area of technology which is new, useful, capable of industrial application, and represents an innovative and non-obvious advance.
  New plant variety registration (similar to patent) protects a plant variety which is new, possesses uniform and stable basic qualities that remain unchanged after reproduction
• Trademarks 
  Protect a distinctive mark composed of words, images and other signs (as well as sounds and odors in some countries) which indicate the origin of goods or services.
• Designs 
  Protect new or original industrial design (outline, shape, model or ornament – such as shoes, bricks, carriage etc.) of a product.
• Copyright 
  Protects literary, dramatic, musical and artistic works – including computer software.

What rights grants a patents?

A patent in a territory grants its holder the exclusive right

• to make use of an invention in the territory for a limited time
• by stopping others from the unauthorized
  • production,
  • use,
  • selling or
  • importing

• of the invention

IPR : Registration and Protection

• Patents
  • Registration (Patent Office) required
  • Protection – 20 years of full monopoly over the patented invention
  • For new plant variety – registration in Plant Breeders Register -15 years of monopoly
• Trademarks
  • Registration (Trademark Office) required for full protection of exclusive use
  • Protection – (since 2003) 10 years, renewable indefinitely for 14-year periods
• Designs
  • Registration (Patent Office) required for full protection of exclusive use
  • Protection – 5 years (extendable by 10 years)
• Copyright
  • No registration
  • Protection from unauthorized copying for author’s lifetime plus 70 years (for phonograms, 50 years)
• Know-how / Proprietary Information (Trade secrets)
  • No registration
  • Protection by tort legislation not limited in time

Importance of IP for startups

IP as Asset for Potential Investors Due Diligence Perspective

A potential investor will examine:

• the Company’s registered patents, filed patent applications, other registered or unregistered IP assets
• the value of the Company’s IP assets
• the extent of patent protection
• the risk that such patents may be cancelled by court
• the chance of patent applications to succeed
• the Company’s infringement of third-party IP rights

The Company’s Technology and Goodwill

• Technology
• Protection currently available for the technology
• What patent applications / registered patents currently protect the technology?
• Which patents are most important and which, if any, considerably “block” other companies?
• Does the Company’s technology infringe the IP rights of competing companies?
• Possibility that competing technologies be licensed to the Company
• Procedure of documenting the Company’s know-how upon development – the risks inherent in concentrating all know-how with an individual founder

Goodwill

• Are the Company’s trademarks and domain names in use and therefore adequately protected?
• What are the chances for the Company’s trademarks to be registered abroad in jurisdictions in which it is not yet operating?
• Do customers in the target markets associate the Company’s product with the Company?

Evaluate the competitiveness of your technology

• What impediments to the market entry of your technology exist?
• Competition:
  • Who are your competitors?
  • What are the competitive technologies?
  • What impact does your invention have on the competitor and the other technologies?
  • Will new technologies leapfrog yours?
• Blocking technology of competitors:
  • Are you free in your design around the IPR portfolio of your competitors?
  • Can you license or buy the necessary technology?
  • What is your strategy in case of a law suite with a competitor who owns a blocking patent?

Innovation evaluation – value proposition

• What are the opportunities in foreign markets?
  • In which countries do you need to protect your technology?
  • Dealing with EU and US patents essentially differs!
• How can you monitor infringements?
  • What are the monitoring costs?
• What is the value of your invention?
  • Check your business model
  • Estimate the size of the market affected by the invention
  • Contemplate costs of the patent application and patent and compare them to the estimated revenue of product sales/licenses
  • Consider higher initial costs in favor of a higher quality of the patent

Markets for Ideas

• Traditional models of innovation: competition
  • Start-ups innovate for entry into product markets and displace incumbents
• New models of innovation: cooperation
  • Start-ups have options to engage in cooperative commercialization (e.g., licensing, acquisitions) rather than compete in product markets
  • Advantages in saving on duplicative complementary assets or softening of product market competition

Recap: Points to Remember

Your idea or invention should be:

• Novel
• Non-obvious
• Enables
• Written Description
• Clear Claims
• Best Mode

In the next post, the patenting process is detailed.

Dilip Kumar | Founder | Inolyst | www.inolyst.com | info@inolyst.com