What Innovators Need to Know about IP Protection: A Business-Focused Approach

Jackie Hutter, MS, JDJackie@TheHutterGroup.com

• 20 years as IP professional– Law firm

• Prosecution and counseling• Litigation

– Corporation• Legal and innovation counsel

• Last 8 years as “IP Strategist”– Put business issues before legal issues– “Validate your business, not just mine”– Truth telling, not risk mitigation

• Research scientist/inventor– Insights from the trenches

– Also an entrepreneur– I’ve made mistakes about lawyers, too

Copyright 2015

My Perspective

 

Protectable IP? Must Understand What “IP” Means

Your Business’ Intangible

Asset Value

Patentable Inventions

Trademarks

Brand Equity

Goodwill

Business Processes

Customer/Suppliers

Employees

Others Specific to Business

Model

Copyright 2015

Is It Worth It to Protect Your IP?

• IP is only relevant when you demonstrate that customers exist for what you want to sell– No reason to protect

something that no one wants!

• Must validate business model before thinking about IP protection– Customer discovery is

key

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THE PATENT PROTECTION PROCESS

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Patent Types

1. Utility Patent:Patents on inventions which function in a new way or to provide a new result

2. Design Patent:Patents on the non-functional or ornamentation of something that already exists

3. Plant Patent:Patents on types of plants that may be reproduced by grafts and cuttings

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U.S. Utility Patent Applications provisional application

Allow filling without any formal patent claims, oath or declaration or any information disclosure statementLess costlyNo real protection“Saves place in line”

non-provisional applicationContains at least a specification, all the drawing figures and at least one claim.Goes through examinationCan be filed multiple times

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Where Can You Obtain a Patent?

• USPTO• State Intellectual Property Office of

China• Japan Patent Office…

National Patent Office

• International patent application office• headquartered in Geneva,

Switzerland• Still must apply nationally

WIPO

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US Utility Patent Application Process

Invention Identified and

Vetted for Filing Expense

Application Drafted and Filed

by Attorney$5,000-$50,000

Application Published18 months

Office Action12-36 months

Response by Attorney

Amendment of Claims

$3000-$10,000

Final Rejection

Allowance$1500

Maintenance Fees3.5, 7.0, 11.5 Years

$900, $2300, $3800

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What Patents Are (and Aren’t)

• Given by government for useful, new and unobvious inventions

• Recognition that invention meets the legal requirements for patentability– Checklist of statutory

obligations for both invention and way patent is written

• Only market determines business value of invention Copyright 2015

Utility Patent Features Exclusivity • One patent per invention

– Can be slight variations between patents

• Without patent holder permission no one can make, market, use, import, etc the patented invention– Otherwise, regarded as

patent infringementTerritory• Patent limited to certain

country• No effect in other countries• No such thing as an

“International Patent”Time• Term of a patent is limited• 20 years from earliest non-

provisional filing date

Copyright: The Hutter Group 2015

Patents as a Property Right

• Not a monopoly• A right to exclude– Broader

• Can use• Not use• Keep others from doing

what they would otherwise be free to do

• No right to practice the invention claimed– Owner can be blocked

by other’s patent rights• Must ensure “freedom to

operate”Copyright 2015

• Can obtain patent < 1 year

• More expensive up front but – Total process less

expensive– Issued patent could

increase startup valuation

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Important New US Option: “TrackOne”

Licensing/Monetization• Perception that licensing/monetization

viable outcome for protected IP– “IP has value just because it exists”

• In reality, IP value is rare– Patents cover novel and unobvious

ideas– People buy right to practice

validated business models– If the idea protected by the patent

has no customers, then patent has no value

• Think of in context of exit value– If customers protected by IP, then

your IP has value independently of value of the business itself• “Must have”

– If have customers, but IP doesn’t prevent those customers from being acquired, has less value• “Nice to have”

– If IP has nothing to do with customers, IP not valuable• “No asset value”

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Enforcement of IP• IP litigation expense prohibitive

for startups– “If you’re thinking about

litigation, you’ve lost.”– Litigation is not a viable

business model for startups.• Even if money not concern,

enforcement still difficult in some countries– Use protection in local

country to leverage knock-offs in foreign countries

• Combine other forms IP/intangible asset protection to reduce possibility that competitors will be able to provide same value to customers– Make yourself the “go to”

for customers

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Common “Do’s and Don’ts” for IPDon’ts• “Don’t believe the hype”

– The only person who needs a patent is a patent attorney

– Investors often “check boxes”

• File too early– Validate business

models first• File too late

– Beware of public disclosures and offers for sale

• File too narrowly– Focus on why customer

cares vs. how you solve the problem

• Outsource process to patent attorney– Legal vs. business

Do’s• Understand how IP can

and will create value– “Make it cheaper to go

through you than around you”

– Learn to explain to investors etc.

• File as soon as possible after validation of business model– Balance risks

• Abandon IP that no longer aligns with business model

• Understand IP protection is process, not an event– Become IP strategist or

integrate one onto teamCopyright 2015

QUESTIONS?

Jackie@TheHutterGroup.com

http://ipassetmaximizerblog.c

om7770.580.0360Copyright: The Hutter Group 2015