Protect Your Most Valuable Business Assets
Picture a hard-driving businessman in New York City, who in rushing to work leaves his wallet on the sidewalk, loaded with cash and credit cards, before entering his office. That’s essentially what many startup entrepreneurs do. Obsessed with building a successful enterprise, they leave their most valuable asset, intellectual property, unprotected and available for the taking.
In the early stages of creating an enterprise, a company’s most valuable property is the big idea, invention or innovation that it's built around. Just as you should guard tangible possessions like a wallet, you need to protect that innovation, your intellectual property.
Yet most startups fail to file for patents in a timely manner. This can leave the entrepreneur exposed not only to the danger that his or her intellectual property could be stolen but also to multiple business risks, such as missing opportunities for funding, failing to have potential investors fairly value the enterprise, losing control of the company or passing up a chance to profit from a lucrative buyout offer.
While entrepreneurs are focused on generating a revenue stream, they often miss another critical pathway to value by failing to file for patents. Indeed patents themselves create value. When evaluating a fledgling business, venture capitalists are far more likely to invest in it when the entrepreneur is holding valid patents for truly innovative ideas.
In other words, as much pressure as there may be to focus on the immediate need to get the business off the ground, it pays for an entrepreneur to think long term. This is especially important since it can take five years to have a patent filing approved.
It’s unlikely that you have ample, spare cash to spend on patent attorneys during the startup phase. Still, if your business depends upon innovations that should be protected, place a patent filing near the top of your to-do list. The process need not be hugely expensive. Here’s how to be smart about spending while still getting the job done:
1. Invest in a patent attorney to do the work.
Your brilliant engineer, who may have played a key role in your company’s innovation, is the wrong person to write up the patent application. The engineer knows how to solve problems and generate creative solutions not make bureaucratic intellectual property requests.
Even so, some startups have engineers fill out provisional applications to gain an early effective filing date for patents. Engineers will make nonfixable errors because of their lack of knowledge of how the patent system works. Hire a patent attorney from the start.
2. Bigger isn’t always better.
Investing in a patent attorney doesn’t mean you need to hire a team of attorneys from a big, fancy law firm whose partners will charge upwards of $800 per billable hour. Smaller, boutique firms can do just as good a job for a fraction of the price. Expect to initially spend about $5,000 on patent attorney fees for protecting one innovation.
3. Be involved in the process.
Once you’ve hired a lawyer, don’t toss all the work on his or her desk and simply sit back and pay the bills. Help your lawyer. You know your intellectual property best, so sit with the lawyer and explain the company’s innovations, their significance and use. This will be time well spent because it will allow the attorney to draft the most accurate and precise language for the patent filing. A well-written application can be critical to winning a patent and will protect your company against copycats or unfair competition.
4. Strike a balance.
While the patent request should be as broad as possible, the application itself should be focused, with no more than 10 claims. Not only is a well-targeted application more convincing than a rambling one. It also can hold down attorney fees. More significant from a financial perspective, by using an application that's been kept to a reasonable length, you can save significant sums when filing for international patents by minimizing translation expenses.
5. Think globally.
When seeking international patents, the best way to start off is by filing an international application through the Patent Cooperation Treaty (preserving the ability to file for patent protection in nearly 150 countries and regions) or one or more individual regional filings, through the European Patent Office. This permits you to initiate patent protection in numerous countries with a single application. It also allows you to delay for 30 months an international patent application or years with a European or unitary patent application the expense of paying for the translation and completion of full patent applications for individual countries.
A good patent application will be money well spent, particularly because filing for intellectual property protection is more than a purely legalistic process. It’s an important business exercise that will help you define precisely your innovations and their potential value to you or potential investors and clarify the prospects for your company.
Article Credit: Entrepreneur