This is #6 in our series of chapter excerpts from the book The 30 Minute Patent MBA by TurboPatent CEO Jim Billmaier. Want to get the full ebook for free? Grab it here.
What Are the Best Patent Practices For Early Stage Companies?
Best practices start with the executive team modeling a behavior demonstrating the importance of protecting the company’s inventions with patents or trade secrets from the outset of the conception and planning of your products and services. We call this “Inventioneering.” Great leadership teams and their companies (such as Apple, Google, Amazon, and Microsoft, to name a few), take IP very seriously. You should too, and with Inventioneering you can exceed the IP practices of each of these companies.
Summary of Best Practices
• Understand your company’s motivations for protecting IP.
• Leaders regularly message these motivations to the company.
• Legal review of employee/contractor agreements.
• NDAs for interviews, partnerships, and other discussions.
• Capture inventive concepts at the outset of product and roadmap planning.
• Set regular (monthly or quarterly) meetings purposely targeted at identifying and
• Executives attend IP meetings, both to emphasize their importance and to offer their own contributions. The best CEOs are also inventors.
• Use technology to identify and capture invention and create appropriate documents.
• Engage a patent professional with appropriate experience and domain expertise. Request proof and references. Make sure you’re not getting into a “bait and switch” scenario. Use technology to evaluate patent document drafts.
• Begin with a provisional patent application. Make sure it is adequately reviewed by inventor(s) prior to submission. Be sure to get assignment from all inventors at the point of each filing. Prioritize the production of a comprehensive, quality application. First to File wins the race!
• Convert provisional patent applications to non-provisional applications well ahead of the 12-month deadline. Determine Track One or standard process depending upon company goal. File a broad specification and narrow claims. Review to make sure claims faithfully capture the invention. Check the box to keep your filing confidential throughout the examination process (unless you intend to file outside of the U.S.).
• Stay involved during examination, making sure important claims do not drift away from company goals. Use technology to help monitor claims throughout the examination process.
• File a continuation before or after allowance (but a must-file before grant!). Always keep a continuation open on each family.
• Utilize an employee recognition program. Recognition awards are typically more effective than cash awards.
Understand your company’s motivations for protecting IP
We know that early-stage companies typically face tough budgetary and time constraints. It’s difficult for a startup CEO to choose between spending more money on developing a product or service and legally protecting the innovations encapsulated in those products. So before you start down the patent path, have a really good grasp on why you and your company are doing so. We covered 11 good reasons to pursue the protection of your company’s IP earlier in this document, but there may also be others. While there is not a single motive for all companies, having worked with hundreds of startups, we can say there are several common reasons shared by entrepreneurs pursuing patents, including:
• Defense against copycats and fast followers
• Improving odds of getting VC or strategic funding
• Improving valuation of funding or exit
• Demonstration of management professionalism and discipline
• Using the process to clearly understand differentiation for product development and market development purposes
• Establishing “Patent Pending” or “Patented” for marketing purposes
• Enhancing employee (inventor) morale
• Freedom to disclose and have deeper discussions with other parties, especially those unable or unwilling to sign NDAs
Leaders continuously message these motivations to the company
Best patent practices start at the top of the organization. If the CEO consistently communicates the importance of protecting the company’s intellectual assets, then it becomes part of the culture and priorities of the company.
Legal review of employee/contractor agreements
It is critical that each employee and contractor sign an agreement that makes it clear that any intellectual property that is related to the company business or created using company time and/or equipment is the property of the company. By law, inventions are 100% owned by each inventor. If even one inventor does not assign the invention to the company, then the company does not have sole ownership of the IP.
NDAs for interviews, partnerships and other discussion
Non-disclosure agreements (NDAs) should be signed by every employee, contractor, vendor who has knowledge of the company’s IP, interviewee who will see proprietary inventive material during the hiring process, and anyone having a discussion with the company regarding its IP. NDAs are not a substitute for having patents filed on your inventions, but they are better than having no protection. It is also the case that larger companies will insist that you sign their NDA. The problem, however, is that many of these NDAs have clauses (see residual clause) that make them very weak when it comes to protecting IP.
One of the primary needs of a startup or small business is to secure funding, often in the form of meeting with venture capitalists to present the business’s core ideas and differentiators. In a perfect world, a startup CEO would be able to count on the protection of an NDA for these kinds of meetings, but the fact is that most potential investors won’t sign them, leaving the startup disclosing its “secret sauce” without any protection. Filing patents on core ideas prior to disclosing ideas to potential investors allows the savvy startup CEO to protect the value of the company proactively, without relying on VCs to keep the startup’s plans under wraps.
Capture inventive concepts at the outset of product and roadmap planning
The time to capture the patentable concepts is at the very beginning of the productization process. Waiting until a week before launching the product produces bad results.
The patenting process can help startups develop a superior product and better value proposition. Because the patent process requires engineering and management teams to introspect about their products/services, the exercise of writing a patent often reveals a company’s strongest value proposition. Patents can also help motivate team members, whether through an increased sense of ownership in the product, a feeling of accomplishment, or incentive-based competitions (more on this later).
Set regular (monthly or quarterly) meetings purposely targeted at identifying and capturing IP
Consistent with building invention protection into your culture, you should take a bit of time on a regular basis to inspect your products and roadmaps for patentable material. You should also encourage the team to think out several years to imagine the path and intersection of the industry and your roadmap. Some of your very best IP will be for products or features that will not arrive for several years.
Executives attend meetings, both to emphasize their importance and to offer their own contributions. The best CEOs are also inventors.
Members of the management team, especially the CEO, should attend as many of the invention brainstorming sessions as possible, which reinforces the importance of invention to the company. It should also be noted that the best tech CEOs have been inventors: Steve Jobs, Bill Gates, Paul Allen, Elon Musk, Jeff Bezos, Mark Zuckerberg, Larry Page, Sergey Brin—the list goes on.All are inventors who attended such meetings.
Use technology to identify and capture invention and create appropriate documents
One frequent question we hear is “How do we know if we have a patentable invention?” AI technology exists that allows a product team to drop a product spec or description into a system that will then provide guidance on the patentability of the technology. Additionally, this technology can help the team extract the inventive concepts in more detail to facilitate a faithful capture of the true and intended invention. Available products include Idea Journaling, Invention Discovery, Invention Capture, and the automation of the preparation and prosecution of patent applications.
Engage a patent professional with appropriate experience and domain expertise. Request proof and references. Make sure you’re not getting into a “bait and switch” scenario. Use technology to evaluate patent document drafts.
It is a frequent practice of large law firms to have inexperienced associates work on the patent matters of smaller entities. Quite bluntly, your business is not critical to the larger firm so they use your material as training fodder for their junior people.And although patent professionals require a technology degree to become certified by the US Patent and Trademark Office (USPTO), any registered patent professional can practice in any domain, which means someone with a Bachelor of Science degree in biology could be assigned to write a patent on your machine learning breakthrough—a clear domain mismatch. The lesson here: make sure the person helping you has deep experience in your subject matter. Finally, in addition to the fact that the best professionals will proactively show proof of the quality of their work, there are also AI tools that can automatically evaluate the technical proficiency of previous applications written by the person in charge of your case.
Begin with provisional patent application. Make sure it is adequately reviewed by inventors(s) prior to submission. Be sure to get assignment from all inventors at the point of each filing. Prioritize the production of a comprehensive, quality application. First to File wins the race!
As of 2013, the United States is a “first-to-file” nation. That means the first person or entity to file a patent application on the inventive material has priority over anyone else who attempts to file after that. Therefore, it is very important to get your inventions filed as applications as soon as possible. Because it is faster and cheaper to file a provisional application, do that first.
Once you’ve filed, you can refer to your invention as “PATENT PENDING.” Also, by going the provisional route you add up to a year of additional protection (for a total of up to 21 years) for your invention. The provisional patent application gives you up to 12 months to file the non-provisional application. While speed is one of the goals of the provisional filing, it’s critical to do a complete job in describing your invention in this application. Claims and drawings are not required for a provisional filing but they are highly recommended. Not recommended: “skinny provisionals,” which contain little description and no claims or drawings; they are, in fact, a bad idea.
If your provisional does not fully describe your invention then you will not be allowed to claim the priority date. Worse yet, you may not discover this until your patent is tested in the courts via litigation, sale of your patent, or some other event that occurs after the patent has been granted. The more descriptive and complete the provisional, the better served you will be in supporting the conversion to the non-provisional. At this point you should have each inventor named on the application sign an assignment agreement. I know their employment or contractor documents indicate that their inventions are owned by the company, but do it anyway. “Belts and suspenders!” Disputes of patent ownership are way too common to take any chances.
Convert provisional patent applications to non-provisional applications well ahead of the 12-month deadline. Determine Track One or standard process depending upon company goal. File a broad specification and narrow claims. Review to make sure claims faithfully capture the invention. Check the box to keep your filing confidential throughout the examination process (unless you intend to file outside of the U.S.).
Target to convert your provisional to a non-provisional aroundthe six- toeight-month time frame, or even sooner. Bad things can easily happen when you are fighting a deadline. Depending upon your strategy, determine if filing Track One is right for your situation. Track One patent applications have a high allowance rate and are granted with fewer office actions. In general, you get better results with Track One, and our overall experience is that it is cheaper in the long run, even though it costs $2,000 more to start with. This is true because there is less back and forth with the patent office, resulting in lower overall prosecution costs.
Make sure the inventors have engaged in a meaningful review of the application. If you are patenting something other than what your team intended, then you have protected something that has little or even no relevance to your business goals. This is one of the biggest problems we run across in the patent industry. Straying from a faithful representation of the invention happens when the inventors are too busy or too important to be bothered, leaving the practitioner (most often someone minimal domain expertise) to rely on his or her own creative juices to put something down on paper.
There is a filing option (a box to check) that allows you to keep your application from being published until it is allowed as a granted patent. If the USPTO denies your application, it is never made public.
It’s also time to have all the inventors sign another assignment agreement.
Stay involved during examination, making sure important claims do not drift away from company goals. Use technology to help monitor throughout the examination process.
The next step is to receive an office action from the patent office. This will happen within months under the Track One scenario and in about two years using the standard path. It is most common that the examiner will find some rationale to test your application with what is known as a rejection (and which usually turns out to be multiple rejections).
Your practitioner will need to respond to these rejections with well thought out arguments. This is a point where the intended claims of your invention can “drift” or “rot.” Once again, if your inventors are not engaged properly, the practitioner will do his or her the best to respond, often in a way that goes astray of the true invention. In large companies this dysfunction is more common than not. If you pay attention, this is where your smaller company has an advantage.
File a continuation before or after allowance (but a must-file before grant!). Always keep a continuation open on each family.
This is an advanced and nuanced part of patent strategy, but very powerful. With the provisional you wrote a broad specification with many drawings. You converted that into the non-provisional, adding material that was consistent with the material described in the provisional so you have good support for our priority date granted by the provisional application.
Now for the advanced stuff. You file a very narrow set of claims describing very specifically the invention contained in the improvement to your product. This narrow claim set allows for a more efficient examination process, lowering the cost and time of prosecution. Good enough; you rapidly get an allowance from your examiner establishing a relationship and positive precedent.
Part of the patent process allows for filing more claims against the non-provisional application as long as the new claims are supported in the specification of the original patent application. This is known as a “continuation.”
You can file a continuation any time prior to paying the grant fees on the previous application. It can even be years later. This future claiming process allows you to observe what has happened in the market and with your competitor’s products and then steer the new claims towards those products. The claims must be supported from the original broad specification but can also take advantage of the knowledge gleaned from years of industry progress —all while still enjoying the filing date of the original provisional application. It’s like being able to jump into a time machine!
Utilize an employee recognition program. Recognition awards are typically more effective than cash awards.
Employee patent reward and recognition programs work! That said, it’s my observation that the recognition part works more than the reward part.
Some companies give cash bonuses for inventor contributions. A set amount split among the inventors of a provisional, with more money for a non-provisional and even more for a granted patent. Other tech companies give inventors something to display on their desk or in their office. I have seen stackable engraved acetate blocks (such as the one pictured below) proudly displayed by brilliant engineers.
This has been an excerpt from the book The 30 Minute Patent MBA by Jim Billmaier. Used by permission of the author. Want to get the full ebook for free? Grab it here.
TURBOPATENT 105 S Main St. - Suite 240
Seattle, WA 98104, United States