As a start-up in the smart manufacturing space, the subject of intellectual property has no doubt already come up. One of your most valuable assets as a start-up is your innovation and ideas – so it makes sense to protect them and ensure you can commercialise them.
Given the importance of IP to a start-up, it’s wise to think about how you’re protecting your IP from the start of your business journey – if you haven’t yet, we recommend you give it some thought now.
IP protection doesn’t just protect you against theft and replication by third parties, it’s also likely to enhance the commercial value of your business and therefore make it more attractive to external investors and potential acquirers.
“Businesses that develop technical and scientific innovations, such as Tesla, Apple, and Novartis, as well as start-ups, spend enormous sums of time and capital developing the next big thing,” says Steven Saunders, Chair of the IP Group at Nutter McClennen & Fish LLP and mentor for Sixth Sense
“These companies directly capitalise on that innovation. Ideally, nobody other than the entrepreneur who developed that innovation can commercialise it, giving the entrepreneur the exclusive right to own and potentially build the protected market/product.”
How does it work?
Firstly, you need to identify the IP in your business. This may seem obvious but there could be something valuable that you haven’t considered. Things like database contacts, customer lists, content on packaging, photography and brand slogans could be considered IP. Next, there are a number of ways to protect your IP, depending on what kind of asset it is.
For most start-ups in the innovation space, you’ll be thinking about patents. Patents protect new inventions. A patent gives the patent owner the ability to prevent others from using the invention without permission. A third party might have to obtain a licence from the patent owner, enabling that third party to use the patented technology.
“The typical patent process begins with preparation of a carefully crafted, customised patent application focused on the innovation and, hopefully, how it is going to be applied to your business,” explains Saunders.
“Effective patent coverage requires careful and primary attention to business. This demands many questions: What is the business model? How do you plan on commercialising this technology? Who are your customers? What are your business goals?”
Once you’ve filed the patent application, there will very likely be some back and forth between the examining office and your patent lawyer before you get the green light.
Note: A provisional patent is not a patent. It’s the early part of the process and shouldn’t be considered as a given. “A provisional application gives its owner a first date of filing for the technology, and the right to try to obtain their patent rights within one year of that first date. That’s all. The technology still must undergo the rigour of the complete patent process,” adds Saunders.
Copyright is another important type of IP in our space. Copyright protects original works of authorships – things like software, content and imagery. Other potentially relevant protections are trademarks, which are generally used to protect brands. Database rights may also play a role – protecting, you guessed it, databases. Trade secrets project information that is valuable to a company, such as formulas and processes of making things.
Why go to the trouble of patenting?
Start-ups are busy building businesses. Sometimes they don’t always have an eye on protecting it too. It’s important to consider why you might want a patent in the future as well as in the moment.
“You may well say you’re a start-up and you can’t afford to sue an infringer anyway,” says Saunders. “The reality is you may grow to the point where you can have the resources, or find outside resources, to protect your position by asserting your patents. In many instances, however, the value of the IP for a start-up is realised upon acquisition—a larger company with resources to enforce the patents will buy the company and therefore own the patent portfolio.“
You may not need to use the patent to bring a case against someone. It acts as a deterrent as much as anything else.
“Even if you do not sue an infringer, just the mere fact that you have the patent may require competitors to design an inferior product to get around your patent—ensuring that the patent owner has a better product to commercialise,” says Saunders.
Nutter McClennen & Fish LLP is one of Sixth Sense’s partners and Steven Saunders coaches the cohort on all things IP
Further reading and listening
Read: How startups and SMEs should think about IP: an investor’s perspective
Read: 10 Intellectual Property Strategies For Technology Startups
Watch: IP strategies to enable scale-ups
Listen: How to protect your startup Intellectual Property (IP), with Trevor Schmidt
Listen: What Does it Mean to Win with Patents and IP?