Why Your Company Should Develop an IP Strategy
In a previous article, I addressed some of the most frequently asked questions about intellectual property (IP) that businesses and entrepreneurs pose during their early technology development.
For many companies, their IP is the most, or one of the most, valuable company assets. And because IP often involves complex legal rights, every company should have an IP strategy in place to maximize the value of that IP.
In this article, I’ll explore setting an IP strategy and some of the subtleties many companies must consider related to that strategy: patent eligibility, patent versus trade secret protections, timing patent filings, and competitor monitoring.
What Is My Long-Term Patent Strategy?
As you think about your long-term patent strategy, remember that patents are legal instruments that give the owner the right to exclude others (your competitors) from making, using, or selling claimed inventions. You can patent inventions that you commercialize, as well as those you don’t. The former route is the most obvious one, but the latter can be a potent business strategy in its own right.
For example, companies can use patents to exclude competitors. They can also license patentable technologies for economic gain. As a simple hypothetical, imagine that an early cell phone maker invented both a smartphone with a flat touchscreen and a phone that flips open. The company decides that the flip phone is more marketable and shelves the flat touchscreen technology. That company can patent both, even though it chose to not commercialize the flatscreen smartphone. When a competitor comes along and makes flatscreen products, the patent can be licensed or enforced to enjoin the infringing activity.
So, even if you are not ready to immediately commercialize all of the technologies you develop, patenting all of your inventions can provide long-term competitive and cash-generating assets.
Another very common long-term patent strategy is to seek as many patents as possible, both in and outside of the United States. The most common reasons for this decision are:
- To scare away would-be competitors with the sheer number of secured patents.
- To add value to a company for any subsequent purchase with a robust patent portfolio.
If planned appropriately, securing a large number of separate patents does not always require a large number of patent applications. Often, I advise clients (assuming the circumstances are appropriate) to wait to file one omnibus application that incorporates all possible aspects of an invention or technology, or technology family.
Once filed, multiple separate and distinct patents can be obtained from that single omnibus application, through the filing of continuation or continuation-in-part or divisional patent applications. Another benefit to this strategy is that, while that omnibus application remains pending, claims can be drawn to a possibly infringing product of a competitor that comes to market.
These are just some of the strategic options that companies must consider in setting their IP strategy. The most powerful IP programs are those that are fundamentally built on a planned strategy from the start and evolve over time as a company grows and expands.
How Can I Assess Whether My Idea or Technology Is Patentable?
Even patent lawyers and judges often struggle with the question of whether an invention is patent-eligible, especially when the invention principally involves the use of a computer to perform a known, or even a new task, and/or when the invention involves internet-based networking technology. This article cannot possibly address all the nuances of the patent eligibility analysis.
However, in general, the more concrete and tangible your invention, the more likely it is eligible for a patent. The U.S. Patent and Trademark Office (USPTO) also offers a summary of how it makes the eligibility determination that can be very useful and provide guidance for analysis.
Should I File a Patent Application or Maintain My Trade Secret?
If you believe that your invention may not be patent-eligible (I offer guidance on this topic here), you may be able to protect it as a trade secret.
Whether or not it is protectable as a trade secret depends, of course, on whether it remains secret. Trade secret laws protect “information that (a) the owner thereof has taken reasonable measures to keep secret; and (b) derives independent economic value, actual or potential, from not being generally known.” A significant advantage of trade secret protection is that it can last forever, as long as the secret remains secret. Patents have a life of less than 20 years. After a patent expires, the technology disclosed is publicly available to all.
Another very important consideration when choosing between patent and trade secret protection is whether or not, and to what extent, the trade secret may be discoverable or reverse-engineered from any product incorporating it. There is nothing unlawful about reverse-engineering a public product. So, if the trade secret would be easily discovered, it is likely not a good candidate for trade secret protection.
If you are unsure about filing a patent, or maintaining its trade secret status, you may want to consider filing a provisional patent application, which remains secret at the USPTO. Filing a provisional patent application will not jeopardize the secrecy of your invention.
However, remember that non-provisional applications will normally become publicly available 18 months after their earliest possible priority date, unless the applicant requests non-publication at the time of filing (and meets all the requirements). If the non-publication request is granted, the application will remain confidential until any patent issues. So, if you are unsure but believe you may want to retain any trade secret status, you must request non-publication when you file your non-provisional application. By doing so, you can receive an examiner’s analysis of patent eligibility without risking losing the secrecy of your invention.
If an examiner rejects your application as not patent-eligible, then you can withdraw the application and still retain the trade secret status of the invention. But once the application is published, the invention is disclosed, and it is no longer secret and no longer protectable under trade secret laws.
When Should I File My Patent Application?
Clearly, timing matters when it comes to a wide variety of IP strategies. For patent applications, one key timing consideration is the stage of development of a commercial embodiment of the invention.
Because a patent application should fully describe the claimed invention, if you file too soon you may not include relevant functionality that should be included but may not yet have been perfected. If you file too late, you risk the possibility that prior public information may negatively affect the novelty of your invention or risk a second inventor filing first and having superior right to a patent.
There is always this push and pull when determining when to file, so your patent counsel could provide helpful experience. Moreover, it usually takes at least 12 months (often much longer) to get the first substantive communication from a patent examiner, and the average total time for complete examination of patent applications by the USPTO is now about 23 months.
Above all, it is important to remember that you will not have patent rights until the patent issues. So, if you believe a competitor may be infringing, or about to infringe any patent that issues, the sooner you file the better. With all that said, there is no absolute correct time in the product development process to file a patent application. But knowing these data points and considering different strategic options can help your business create maximum value.
How and Why Should I Monitor My Competitors?
Another factor in any IP strategy is to monitor the activities of close competitors. Of course, patent applications of your competitors — and of potential technology partners — will also be published (unless they request non-publication). By monitoring those applications, you can see what others in your field of endeavor may be up to. You can also monitor published applications to see if your competitors may be encroaching on your technology. And you can use those published applications to help avoid wading into your competitors’ territory.
Setting an IP strategy and then dynamically adjusting in an ongoing manner due to marketplace shifts is critical to most businesses — and can help businesses achieve optimal valuations and marketplace impact. The elements above are just some elements to consider. A comprehensive strategy program should be highly customized for each business and will consider a wide variety of factors.