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3 IP tips for start-ups 05.05.2017

New ventures often have a vague idea that they should consider intellectual property (IP), at least to the extent of having a trademark for their business. For tech start-ups where the business is built on either a new technology or an innovative application of an existing technology, the topic of patents often comes up as well.

To avoid mistakes early on, here are 3 things that start-ups should know about IP generally, and in particular about patents. 


1. Get advice 

What does the law say?

Too much, and it’s all pretty complicated.

What does that mean for me?

  • Most attorneys will have a first meeting with you free of charge, and provide you with a basic idea of what you can and can’t do, and what that entails. Do yourself a favour and at least have that first meeting where you can learn what you need to about patents, designs, trademarks, trade secrets, patenting software, costs, and anything else you’re concerned about.
  • If you're planning on using a trademark, you really should get a clearance search done professionally: it's not a given that you are free to use your business name as your trademark!
  • Definitely don’t try and patent something yourself. It’s almost guaranteed to be a total waste of time and money. You can get an idea about your chances of success from this easy-to-read-and-understand article. Referring to the efficacy of Australian patent applications filed by small, self-represented, applicants, I quote:

at least 90% of all provisional applications, 77% of all standard patent applications and 95% of all innovation patent applications ultimately [result] in absolutely no enforceable rights whatsoever.”1


2. Keep it secret 

What does the law say?

The first person to invent and file a patent application for a new invention has the right to patent it. To be able to show that you’re the first person, it means that the invention must not be publicly known before the date that the patent application is filed at the Patent Office.

What does that mean for me?

  • Do not let your website go live before you’ve spoken to a patent attorney. If your website shows your product, then you can’t file a patent application for it without (sometimes serious) complications.
  • Do not put anything in writing or talk to anyone without making it clear that the information is confidential. You can have a non-disclosure agreement (NDA), or at least put in writing in an email that the information provided is confidential. Keep it secret until the patent application is filed.


3. A patent won't make you rich

What does the law say?

Patents are meant to reward an inventor for the time, effort and money invested into coming up with a good product by providing them with a head start in the market. The monopoly right that a patent grants an inventor gives the patent owner the opportunity to get that head start, and recoup some of the money invested to come up with the original idea. It’s a pretty good head start too: 20 years for a standard patent, and 8 years for an innovation patent.

What does that mean for me?

  • Filing a patent application will not result in a million dollars in your bank account. Those stories that we read about a guy who wrote some code in his bedroom and then sold the patent rights to Google for a billion dollars are in the news because they are newsworthy. These are unusual occurrences.
  • The reality is that a patent costs money, and is a specific kind of investment in your business. With the initial patent application it’s an investment for having a pending patent that can be commercially valuable for funding rounds, or for creating risks for competitors. And once a patent is granted, it’s an investment for a monopoly right: the cost of getting that 8 or 20 year head start so that you can make money from running your business before the competition can catch up.

Patents can be a very good business tool, especially in a competitive market where your invention is likely to give you an edge. And even pending patents (i.e. applications that haven’t been granted yet) can be commercially valuable, e.g. when trying to secure investment, or to discourage competitors.

Of course, in some circumstances formally protecting your IP may not be for you, and you might be better off investing the money that you would have spent on e.g. a patent, trademark or design in another aspect of your business. Having said that, it costs nothing to have a discussion with an attorney to at least understand what your options are. Feel free to contact me for that discussion!

 1 http://blog.patentology.com.au/2017/02/what-ip-australia-does-not-tell-you-if.html

Special thanks to the author Ronelle Geldenhuys, Associate at FB Rice - Patent & Trade Mark Attorneys

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