SIX KILLERS OF BUSINESS

Mistakes and misunderstandings that could undermine intellectual property endeavours – Merilee Kern

It’s 374,006 – that’s the total number of patents, which Statista.com says were granted by the US Patent and Trademark Office (USPTO) in the fiscal year 2021, up from 352,066 in 2020. This is despite the COVID-19 pandemic’s adverse impacts on the global economy.

“The filing and issuing of patents continues to rise because companies and organisations are better understanding the significance of patents on value and valuation, for their businesses,” says patent attorney and intellectual property (IP) authority JiNan Glasgow George. She adds: “Indeed, crafting an efficient IP portfolio is vital to high valuation, making companies attractive to investors.”

According to her, understanding patent trends can drastically protect existing intellectual property and increase valuation as businesses develop that which is new. However, she cautions that there are a few specific “business killing” myths and mistakes to be aware and wary of. Here are her top contenders.

FILING Business owners who learn about IP for the first time often experience the pendulum effect: ‘Let’s file for everything!’ You might have felt that when you picked up a book on IP strategy. By virtue of your reading this article, you probably have excellent ideas that do warrant patents. However, don’t try to patent everything in your idea or prototype cache as it’s not all worth patenting.

It’s imperative to first discern where your best chance of ROI exists. While a cliché, it’s true in the IP realm also, that quality beats quantity. It is better to have one huge filing with lots of detail, data and cases rather than a dozen failed filings of only 5-10 pages each.

Minimum filing requirements aren’t needed to secure a patent. Even if you manage to secure a patent or trademark with a 5-10 page filing, you may learn too late it doesn’t cover what you’d hoped for in terms of exclusivity, your business valuation, enforce­ment and other mission critical benchmarks.

So do this instead: Triage what you believe to be a patent worthy IP and file judiciously based on ROI modelling. What you initially think may be a most valuable IP might reveal itself to be one of lesser monetisation value than other ideas in your cache.

DELAYING Make no mistake – IP filing is a race. The first person to file and get accepted wins, and can shut others down… even those who had the idea in the first place. Waiting too long to file usually means the patent won’t be gained.

Too many businesses hedge and needlessly suffer this opportunity loss. In most cases, it’s not too late to file the patent for your new idea – unless you’ve gone to market – as anything that’s already been bought and sold is ineligible for a patent.

However, not receiving a patent doesn’t have to be the end. Chances are you already have new IP candidates related to the initial concept. Asking yourself questions such as ‘What’s the next generation of my idea?’ and ‘What new features and functions have been planned but not deployed?’ can spur fresh IP contenders.

Do this instead: Get all of your ducks in a row and file as soon as possible. This is to avoid the competition and better navigate unforeseen obstacles that can delay or entirely derail an approval. If investor funding is relevant to the project, note that you carry a fiduciary responsibility to be prudent.

So secure apt representation! Hiring a lawyer with extreme process knowledge can save you time, money and thwart avoidable opportunity loss.

OWNING Who owns your IP? It seems reasonable to assume that if you create it, you should own it. But what if you hire someone such as an employee, contractor or vendor who also works on your invention prototype? Who built your app? And who designed your business website?

Assuming IP is inherently ‘yours’ may land you in a sticky situation. This happened to a high-tech life science data organisation that reached out to me for assistance. The enterprise had developed testing protocols and algorithms unique to its business, and the technology served to automate the way they did things: streamlining employee workflow; improving productivity; and as a result, increasing revenue and profit.

The organisation hired a third party to develop the necessary software but failed to ask an IP attorney to review the contract since the executive team assumed that by paying for the software development, the business owned the deliverable.

Unfortunately, once the software was finished and deployed, the outfit heard a rumour that its vendor had tried to license the software to a competitor. In reviewing the development contract, I found that it had failed to include an ‘assignment clause.’

Though the enterprise had conceived it and built it from scratch, the client had – in writing – simply agreed to purchase a licence for the finished software it had commissioned. All the business got was a licence.

While some would regard this as sneaky and unscrupulous on the developer’s part, it’s also a failure on the part of the enterprise that contracted the work not to ensure due diligence. All terms must be read and wholly understood before signing on the dotted line. Otherwise, what’s ‘yours’ may become ‘theirs’ – even if you have conceived and paid for it.

So do extreme diligence on contract reviews and optimally seek legal assistance to vet agreement provisions. Making assumptions on what may seem to be a commonsense engagement can prove to be fatally flawed thinking and a legally binding mandate related thereto.

According to JiNan, one of the most significant areas of opportunity loss for inventors, entrepreneurs and corporate executives is a lack of understanding of patent filing strategy and dynamics. Since patents are often the highest value IP assets, she asserts that taking a measured, professionally advised and risk averse track is best.

Said to serve as ‘the lifeblood of innovation,’ aptly procured patents can proffer a remarkable return on investment especially when facilitating market, category or process exclusivity. Heeding these warnings above can be a powerfully effective means towards this end.