Jump on Your Intellectual Property Rights

If you are a startup business looking for financing, you should already have (1) acquired your IP rights (patents, trademarks, and copyrights) and (2) cleared your business of any IP infringement. Investors and competitors respect the value of patent and trademarks and applications for them. Investors should not invest in a startup, unless they are assured that its product or service is not infringing another’s IP rights.

There is a saying in the law, “don’t sleep on your rights.” If you do not affirmatively acquire what could become your patent and trademark rights, you will lose the opportunity to do so. To often today a startup is shut down because it is infringing another’s patent or trademark rights. That shut down could have been avoided with appropriate foresight. The infringed patent or trademark is one that the startup could have obtained for itself by applying for those IP rights, — if it had acted early enough. Alternatively, an early due diligence search could have identified another’s IP rights that covered the proposed product or service, thereby providing time for a design around and negotiations for a license to the problem IP rights.

Patents provide a limited monopoly on your company’s new product or process. Monopoly translates into high profit margins due to a lack of competition. Patents can be obtained on almost any product or process that is useful, novel, and non-obvious. Under prevailing case law, usefulness extends to any method of calculating a number that has real world utility, including business methods, and the novelty and non-obviousness requirements are not as high a standard as many people believe.

Trademarks (and service marks) indicate the source or origin of a product or service. Source or origin means that a consumer can identify your product or service in the marketplace, and thereby avoid using another’s similar product or service.

United States patents and trademarks are obtained by filing an application for them in the United States Patent and Trademark Office (USPTO). The USPTO then examines the application for compliance with all statutory requirements, and eventually issues complying applications and rejects noncomplying applications. Obtaining these IP rights is expensive, primarily due to the amount of high hourly rate attorney time required to prepare an application and guide it through the USPTO. For patents, part of that cost can be deferred by initially filing a relatively simple provisional patent application the filing date of which is prima facie proof of the date of invention. A provisional patent application protects for one year the right to pursue patent protection on the novel aspects of a product or process at a very low cost, and it is accorded respect by inventors and competitors. However, to get a patent, a provisional application must be followed within one year of its filing, by filing a more formal US application and any foreign applications to obtain the benefit of the filing date of the provisional application.

Substantial information on patents and trademarks is provided at the USPTO’s website at http://www.uspto.gov.

Copyright Richard A. Neifeld.

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