A Patent May Not Be Enough IP Protection for your Startup
Sometimes—very rarely—a single patent is enough protection for your startup. Almost always, however, proper protection of your company’s ideas will require additional intellectual property (trademarks and trade dress, copyrights, and trade secrets).
Read on to find out why a single patent may not be enough intellectual property protection for your startup.
A Patent Can Only Stop Others From Doing Something
Once you have a patent for your startup’s tech, you’re cleared to start selling, right?
Sadly, this is one of the most common misconceptions about patents. And it’s a critical one. Let’s see why by comparing patent rights to another type of common property right: real estate deeds.
Say you buy a piece of land on which you’ll one day build a house. At closing, you (or more likely your mortgage lender) will receive a property deed. The deed describes the location and boundaries of the purchased property, so that if an argument ever pops up, someone can figure out exactly where your property stops and your neighbor’s property begins.
Patents work the same way. Essentially, patents are property deeds that describe your (intellectual) property, just like how a property deed describes the location of purchased real estate. If an argument over the boundary between your invention and a competitor’s product or service ever flares up, patents are the tools used to figure out where rights in your invention stops and where someone else’s rights begin.
Here’s the thing about your real estate deed though: it doesn’t give you permission to immediately begin building a house on it. To get permission to build on property, you’ll also need a building permit. Getting a building permit is a separate process from buying the land, and is done through a different governmental agency.
But even if you don’t build on the land you bought, you can use the property deed to stop someone else from building there. This happens all the time—though bricking up your neighbor’s disputed driveway isn’t the best way to leverage that deed.
Patents protect things and processes that are (1) new, (2) useful, and (3) not obvious to people in your field compared to existing technology. But getting one on your new, useful and non-obvious technology does not give you the right to make, use, sell or import that technology. Just like building a house on land you purchased, you need some other permission (like marketing approval from a governmental agency, an import license, or in some cases a license to manufacture a product) in order to do those things. For example, a company that invents a new medicine can’t just start selling it; they need to get separate permissions from the government to make the medicine, sell the medicine, or import the medicine from another country. Even if that company gets a patent on the new medicine.
Just like a property deed, a patent gives you the right to stop someone else from crossing over into your “property.” But here the “building” isn’t construction with concrete and wood, it’s “building” economic value using your patented technology.
More specifically, a patent gives you the right to stop anyone else from (1) making, (2) using, (3) selling or offering to sell, or (4) importing the technology claimed in the patent document.
On the other hand, a patent does not let you stop someone from doing literally anything else, like launching a competing product that includes features not covered by the patent. Or using a similar marketing campaign to promote their own competing products and services. Or improving on your customers’ experience using their own competing technology.
While extremely valuable, as we discussed recently, a patent by itself leaves your competitors with a lot of freedom to build their businesses right on your borders.
A Patent Only Protects Function Or Ornamental Design
In many instances, a patent may represent a cornerstone of a company’s intellectual property portfolio. For example, a company focused on bringing a single retail product to market may find that a patent may be the single most important component of its intellectual property portfolio.
However, other types of intellectual property may complement even a foundational patent for such a company.
There are three basic types of patents. A utility patent can only protect the structural arrangement of an object’s components, the function of an object, or a method of performing some task. A design patent protects the ornamental design of an object but cannot protect the function of that object. Plant patents protect the strain of a new plant, but not uses of that plant or its extracts.
But there are no types of patents that can protect a brand identity, a logo, a slogan, product literature, customer lists, or packaging themes.
The good news: other types of intellectual property protection are specifically designed for each of these types of assets.
Trademarks protect consumers’ association between a good or a service and its provider or manufacturer. Most often, we see trademark law in action protecting a company’s logo. The logo is an overt identifier of a product’s source. That’s why we only rarely see revisions to the most famous retail logos—brand owners generally do whatever is necessary to preserve (here, the opposite of the verb “confuse”) consumers’ recognition of their logos.
But trademark law also protects other expressions of a product’s source. Can you identify the brands associated with the unlabeled packages shown below?
If you guessed Pom, Kikkoman and Coca-Cola from left to right, you can thank those brands’ trademark attorneys. The same federal law that helps you protect your company’s logo also protects product packaging, more broadly referred to as trade dress.
But what about slogans? There are some exceptions (for example, Procter & Gamble owns “quicker picker upper” for use with paper napkins and paper towels), but slogans and tag lines generally aren’t protectable using trademark law.
Instead, protection for slogans and tag lines arises from copyright law. Copyrights are perfect for protecting any expressions (of any length) that are original and fixed in any tangible medium of expression. Slogans—as long as they are original and written down somewhere—fit well within the boundaries of copyright law.
Copyrights also provide excellent protection for lengthier works too. For example, instruction manuals, assembly guides, and even the contents of a company’s web page can all be protected by copyright.
A Patent On Your Startup’s Tech May Not Be Possible or Economical
Almost every kind of technology can be protected by a patent, but there are some limits on protection. Here in the U.S., protection is available for all kinds of processes, including methods of doing business. However, methods of reducing tax liabilities cannot be protected by a patent.
Patents on software are also very difficult to obtain here in the U.S. right now, although the landscape is slowly improving. In most of the rest of the world, patents offer strong protection for software innovations.
Innovators featuring only naturally occurring substances in their products will also frequently find obtaining U.S. patents related to the product elusive.
Even if the technology itself is eligible for protection, the innovation must meet all three basic requirements for patentability: the innovation must be (1) new, (2) useful, and (3) not obvious over already-known technologies.
For some technologies, especially in newer fields of endeavor, these hurdles may not represent significant barriers.
For innovations in well-established fields, however, the vast wealth of pre-existing knowledge may prevent you from obtaining a broad, strong patent for your contribution to the field.
A Patent Requires Full Technical Disclosure
I mentioned customer lists just a bit ago. Competitive business data, like customer lists, that you’ve developed yourself are also very valuable. Sometimes, that data represents more valuable than your company’s products. Why not protect those data with a patent too?
In a word: DISCLOSURE.
Getting a patent for your proprietary information requires a full disclosure of all of the relevant details, so that when the patent expires anyone can use the patented information without having to work too hard to figure out how it works.
So if you tried to patent your top secret recipe for The World’s Best Liver and Onions, your patent application must include a full list of all of the ingredients, their relative amounts, and a description—in understandable language—of how to combine and cook them to prepare your meat and veg masterpiece.
That customer list? Same problem. Your patent application would have to include all of the data for each customer.
“So what?” you’re thinking. “Who reads patent applications anyway?”
Well admittedly not many people read patent applications. But (with very few exceptions) all patent applications publish 18 or 30 months after filing. The patent office web site includes a searchable database for all published patent applications and granted patents, so your sensitive customer data would only be a few clicks away from your competitors’ VPs of sales.
But fear not, for decent protection for your top-secret business data is available. And better, it’s nearly free to get and only very rarely requires the help of an attorney!
Trade secret protection does not require any formal application, or particular format. Instead, a reasonable written internal policy that aims to keep the information secret is all you need. As long as you keep the data away from the public’s eyes, your trade secret asset remains intact.
A Patent Is Limited To A Single Aspect Of The Invention
Even if your startup’s tech is ripe for protection by a patent, one may not be enough. Most patent offices, including the U.S., limit the scope of each patent to a single invention. You may have heard experts refer to this as “divisional practice” or “continuation practice.” Those are synonyms for the process of getting multiple patents from a single initial application filing.
Here’s how it works. Let’s say your company’s core technology is a new crash-proof remote control drone. With the help of your favorite patent attorney, you file a robust and complete patent application on the drone, including a series of new shock absorbing components, damage-resistant rotors, sensors for quickly and accurately determining the drone’s altitude, and home-grown software that helps avoid major crashes.
The patent office may make you seek one patent for the structural features that absorb impact stress, another for the chip-resistant rotor blades you developed, yet another for the ultra-sensitive altimeter component your team created, and another patent for the algorithm encoded in the device’s software that helps reduce the frequency of intense collisions.
Sounds like a pain, right?
Maybe. But your portfolio may then include four—or more!—separate patents, each of which wards off different kinds of competitors.
For example, you might be able to use the chip-resistant rotor patent to seek royalties from an aviation company that later develops shred-resistant rotor blades for helicopters, even though you have no intention to ever manufacture blades of that size. Similarly, you may license that ultra-sensitive altimeter patent to a smart watch company. In this way, the seemingly restrictive patent office rules create revenue opportunities you never expected at the outset of your drone development efforts.
Ask your intellectual property lawyer (or contact us for a free assessment) what mix of intellectual property types should be used to protect your company’s business plan. For most companies, a single patent won’t be enough. Trademarks and copyrights often form complementary protections, but don’t forget about other types of protection like trade dress, trade secrets, and employee agreements. Many of those are inexpensive to set up and protect your most valuable assets.
About Incubate IP
Randy Micheletti, an experienced USPTO-registered patent attorney, founded Incubate IP specifically to help startup companies succeed. Contact Incubate IP at 312-600-5412 or through its web site for a free custom intellectual property needs assessment. Yep I’m an attorney. But while this post obviously contains wildly valuable information, it is not legal advice you should act upon. Always sit down for a chat with an attorney before implementing an intellectual property strategy to protect your ideas.