Is your company patenting its patentable inventions? If not, others can file patent applications right on top of your core innovations and potentially block your company from using them.
The U.S. changed from a "first-to-invent" jurisdiction to a "first-inventor-to-file" jurisdiction with the 2011 America Invents Act. This aligned the U.S. with the rest of the world, but it poses risks for those with unpatented inventions.
You can launch what I call an "invention capture" program to learn whether you are creating patentable inventions and, if so, to then protect them. There are six steps:
Approve and create an invention capture team and appoint a leader.
Train the team on what is patentable and what their team will do.
Hold meetings with company creators, builders, and solvers.
Teach the team how to fill out an invention capture form.
Work with counsel to decide what patents to pursue and in what order.
Work with counsel to file and "prosecute" patent applications.
This could also be called a patent or patenting program. Since I also use it to identify trade secrets, I prefer invention capture.
Why Have an Invention Capture Program?
Confidence/Freedom to Operate. In addition to reducing the risk that someone else might actually patent your inventions first, patenting core innovations might be a step toward creating a patent portfolio that tells investors, customers, and potentially even acquirors, that you have "freedom to operate" - i.e., the ability to conduct business without fear of infringement claims.
Here's an earlier article I wrote, Advanced Patent Strategies for Startups, that describes tactics, strategies, and advantages of more advanced programs.
Trade Secrets. A peripheral benefit of any patenting program is that it forces the question of which innovations should just remain trade secrets.
This raises the issue of the Patent/Trade Secret Dichotomy. Key to the dichotomy is that patents require public disclosure, while trade secrets require secrecy.
I share this slide with my Counseling Startups law students. These are the pros and cons of trade secret protection. Some of them are opposites to the corresponding pros and cons of patents.
Having a confidential catalog of company trade secrets can help a company focus on how best to protect them.
Have We Even Invented Anything New? Many companies decide not to pursue patents because they doubt they are inventing anything patentable.
And often that is true. Patentable inventions might be less common in businesses selling commoditized products or services.
But almost every business encounters problems to solve. Every new and useful solution to a problem is potentially patentable.
By U.S. statute, “… any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” is patentable.
Between the 1990s and the 2010s there was a flood of what are called "business method patents." Often lacking innovative substance, they were commonly used by beasts called "patent trolls" to menace companies in every industry.
As an example of the garbage that got through, here's a link to the widely mocked patent aptly captioned "Method of Exercising a Cat," the method being a simple stick and string manipulated playfully by a user:
A lot of the nonsense stopped in 2014 when the U.S. Supreme Court clarified a lineage of case law in the Alice case, holding that the above statutory definition of what is patentable “contains an implicit exception for laws of nature, natural phenomena, and abstract ideas.”
This doomed many business method patents, as they were said to constitute "abstract ideas" - an extremely vague concept that even patent lawyers struggle to explain. The cat patent would now be rejected, though, as an abstract idea, if not rejected under currently tighter notions of what's novel or obvious.
We have learned from cases after Alice that the abstract idea barrier can be skirted by showing that an invention improves the functioning of a computer, machine, or any other technology.
This concept is surprisingly broad and has served several of my companies well.
Given the stakes and the complexities, it seems best to seek advice from one or more competent patent counsel on whether and to what extent an invention capture program makes sense. Many patent attorneys will offer initial discussions for free or at low cost.
When to Launch?
Cost. Cost usually tops the list of factors dictating whether and when to implement a patent program. Investments in products and marketing usually take priority, and often for good reasons.
It is safe to assume that even a modest invention capture program will cost between $20,000 and $50,000 over the first couple of years. In that range, I can usually get two or three strong patent applications filed.
Filing Window. While every company has its own resource allocation issues, an inflexible consideration that applies to everyone is the one-year window to file a patent application in the U.S. after an invention has been disclosed. And that includes any product launch that effectively discloses the invention.
In the rest of the world, the patent filing window shuts the minute an invention is publicly disclosed.
Launching an Invention Capture Program
The following six steps have consistently produced robust invention capture programs for my companies.
Step One - Authorize the Program, Create the Team, and Appoint a Leader
Once we have decided that one or more core innovations might be patentable and that we have a budget to explore the merits of filing some applications, we will authorize the program and brainstorm about who should be on the invention capture team.
Teams often range between five and twelve members. Ideal members are those designing, building, and launching new products and services, plus anyone performing problem-solving roles in support of those products and services.
Once the initial team members have been identified, it's important to pick a team leader. The ideal person for this role is both a likely inventor and also a strong project manager.
Depending on how many persons in a company might need to be listed as "inventors" on a company's patents, a large invention capture kickoff meeting might be in order. Employees are always excited about the possibility of being listed as an inventor on a patent.
Broad awareness of the program can result in more good ideas coming forward.
Some of my companies even pay small bonuses to employees who submit invention capture forms that result in filed applications and even larger bonuses if they result in granted patents.
Step Two - Train the Team
Once the team is formed, it's time to educate them about what is patentable, the team's role, and how to work with the invention capture form. A lot of this can be accomplished in an initial meeting co-led by patent counsel.
The team should be instructed to meet monthly and to have patent counsel attend all meetings. The team should also be instructed to immediately set up meetings between patent counsel and key inventor groups.
The following are some of the key questions on the invention capture form I currently use, created largely by and in cooperation with my primary patent counsel, Kevin Jablonski:
NAME OF THE INVENTION (please limit to ten words):
PROBLEM TO BE SOLVED BY THE INVENTION
What is the problem or need for your invention?
How long has it been a problem?
What solutions exist now and why are they inadequate?
DETAILED DESCRIPTION OF THE INVENTION
Describe the invention in detail, including its operation.
Describe any acronyms, industry standards, or industry terms.
Include supporting documents, drawings, sketches or exhibits.
In what product (if any) will the invention be used?
How does this solve the problem or fulfill the need in a new way?
List several keywords describing the invention for searching purposes.
CONCEPTION AND DEVELOPMENT
Date of conception of idea:
Specs first completed on:
Beta version (or prototype/sample) first tested on:
Invention will become publicly available (or released for sale) on:
Step Three - Investigative/Exploratory Meetings
One of the first substantive steps is to hold somewhat larger meetings with larger groups of inventors throughout the company and to educate them about the program, its importance, and how they can participate and possibly become "inventors."
Other agenda items could be:
any financial incentives for participating in the program
guidance on what's patentable
initial brainstorming on potentially patentable inventions
how to submit invention descriptions via the invention capture form
the role of the invention capture team to advise and support
Step Four - Submit Invention Capture Forms to Counsel
After the team has been formed and a round of meetings has been held with inventor teams, it is likely one or more ideas will surface for patent applications.
Patent counsel must take the lead in helping inventors fill out invention capture forms, at least at first. Ask patent counsel to work closely with the team so that anyone who needs help gets it. Patent law is complex and anachronistic. Encourage everyone to ask for help until they are more confident.
Step Five - Decide What to Pursue and in What Order
The team should engage with counsel and come to agreement on which patent applications to file and in what order.
Any broad application covering a company's core innovation should be patent application number one. That's not always one of the options.
Prioritizing patent applications is highly fact-specific.
How big is the opportunity represented by the invention?
How likely is it to be granted?
How easy would it be to legally circumvent the specific claims?
What is the invention's anticipated market/sales life?
Step Six - Work with Counsel to File and Prosecute Patent Applications
Patent counsel takes the lead in drafting applications and shares them with the company for feedback. Each application can take several weeks to get into shape for filing.
The USPTO has labored under a significant backlog of patent applications for years due to ever-increasing patent filings. Count on waiting a year and a half or two before receiving a first office action from the assigned examiner.
Every application review is different, but examiners usually try to narrow the scope of the patent claims and company patent counsel usually pushes back. This happens in a series of at least two or three USPTO office actions and official responses by company counsel.
It seems the average time from the filing to the granting of a patent is between 2.5 and 3 years, but longer times are very common.
Get Started!
One way to get started with invention capture is to first identify any core innovations. If you have none, offramp.
If you identify one or more core innovations, consider whether they are better protected as trade secrets or not. If so, offramp.
If one or more patents seem worth pursuing and you have the budget and internal support, launch an invention capture program, pick an invention capture team, hold some brainstorming meetings, and start filling out invention capture forms and possibly even some patent applications.
And I'm sure my favorite patent lawyer Kevin Jablonski would be happy to answer any questions you have about your inventions. You can email him at kevin.jablonski@fisherbroyles.com.
Paul Swegle, editor of the StartupGC Blog, serves as in-house chief legal officer/general counsel to numerous tech companies and has advised countless others. He has completed $18+ billion of financings and M&A deals, including growing and selling startups to public companies ING, Capital One, Nortek, and Abbott. Paul teaches entrepreneurship law at Gonzaga Law and Seattle University School of Law and speaks regularly at other top law schools and MBA schools where his popular business law books are widely used in courses focused on entrepreneurship and business law.
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