Business Law & Compliance
Patent protection: Don't give your ideas away
7 min read
31 August 2012
Market testing innovation ahead of a product launch is popular: it allows entrepreneurs to calculate potential demand. But ensuring that this is a risk-free process requires careful planning.
Testing the market before a product launch is a common process. But entrepreneurs need to be aware that disclosing their ideas can carry risks – even when they’re only being shared internally.
In the UK, discussing ideas or inventions before any patent protection has been applied for requires formal agreement that the information will be treated as confidential. Without adhering to this, any information relayed becomes part of the “prior art”, which may render any subsequent patent for the invention invalid.
From both an internal and external disclosure point of view, knowing what elements of an invention can and can’t be discussed is crucial. For example, whilst it is important to share an invention’s benefits, discussing either the technical make-up that creates these or a provisional brand name is definitely not advisable. It’s important to seek patent protection for the more commercially viable components of an invention at the earliest juncture. Likewise, you should always register a planned trade or brand name prior to significant investment.
When it comes to disclosing information, different rules apply in different geographical territories. In the US, a so-called “grace period” exists, which allows an inventor to disclose his own invention and to then have a period of 12 months in which to file a patent application for it. If the application is filed within this period, then his own disclosure will not count against a requested patent application.
Many businesses use the internet as a primary source of information relating to disclosure and as a result of viewing rules intended solely for those based in the US, they may make the mistake of believing that these apply everywhere. The cardinal rule for UK and EU based businesses, however, is that there is no grace period at all; if you wish to obtain patent protection for an invention, the patent application must be filed before any public disclosure is made.
Selecting the right IP strategy
Meeting strict requirements surrounding disclosure in the UK and Europe, however, is just the first step in protecting the commercial potential of an invention. Consequently, there are a number of relevant models that entrepreneurs can apply and it is vital to select one that fits closely with the characteristics and objectives of the business in question.
One of the more traditional approaches that can benefit entrepreneurs across multiple sectors is the “fortress model”. Specifically, this can work well for businesses that research, design, develop, manufacture and market a product themselves. Applying it involves utilising IP protection to leverage ownership of an invention, meaning that the business in question is the sole enterprise developing products incorporating an invention and bringing the products to market. These products can then be sold at a premium price as a consequence of the lack of competition.
Another popular framework for exploiting inventions and ideas is the “first to market” route, which can avoid registered IP altogether. Although this can generate considerable success over a short period of time, businesses that choose to adopt it only have a small window of opportunity in which to reap the commercial benefits of their inventions. As a result, those that select this route must stay focused on delivery in order to maintain their position as market leader.
Perhaps more successful, therefore, is a combined strategy of first to market and IP protection. By additionally investing in obtaining IP rights, as well as being first to market, a much stronger commercial position can be obtained. The first to market business can race ahead with new products, leaving behind well placed IP obstacles to hinder competitors trying to catch up.
One different approach that applies to the commercial potential of inventions no longer in active use within products or services is the “attic sale model”. This applies to inventions that have seen their first blush of usefulness in the organisation that invented them fade, and which have perhaps been superseded by new developments.
For example, in an R&D led first to market company, an invention may only have a product lifetime of a few years, after which it can be overtaken by something else. However, the invention may still be very useful for lower cost later generation products, perhaps marketed by other companies. Using the attic sale model allows such an invention to be sold to other companies that share an interest in the product or its marketplace, or to licensing firms that make their money by collecting large portfolios of patents and then licensing them in return for royalties.
Of course, a real-life IP strategy is likely to include a number of different elements and the most successful collaborations are rooted in dynamic business partnerships involving a team of inventors, partners and a skilled patent adviser with relevant sector experience.
Don’t rest on your laurels
When exploiting your business idea it is important to keep an open mind and be prepared to tailor your IP strategy as the business develops. This will involve making adjustments as things progress.
Nick Wallin is partner and patent attorney at Withers & Rogers LLP, one of the UK’S leading firms of patent and trade mark experts. Nick is part of the firm’s electronics, computing and physics group.