First published in Haaretz Cyber Magazine
Cybersecurity experts recently shared their security predictions for 2016, warning of likely cyber antics surrounding the upcoming U.S. presidential election; new risks of cybercriminals pickpocketing phone wallets; and an increase in vulnerabilities from the aging Internet, among other security challenges.
These challenges pose great opportunity in Israel, with its abundance of cyber security expertise. But just as poor cyber security measures can leave a company vulnerable, inadequate IP protection can leave your business subject to a different type of risk: that competitors will copy your great ideas, stealing profits that rightfully belong to you. Even for young cybertech companies who are not yet on the radar of copyists, inadequate IP protection may impede the company’s ability to obtain sufficient financing. Venture capitalists are not likely to invest in companies if there is a perceived risk that others will be able to offer a similar solution.
Imagine a scenario where a company developed a new innovation that greatly improves cybersecurity for critical infrastructure. This software innovation can be incorporated into many platforms and components, offering superior protection against breaches, infiltrations, sniffing, and other security threats. The company is excited about the potential of its breakthrough technology, but is concerned about whether others might offer a similar solution and undermine the company’s value.
This article seeks to answer core questions about IP asked by executives of the company in this scenario.
How do we protect our inventions?
There are two primary ways to protect a new security component—patents and trade secrets. Patents are powerful because a competitor who uses your patented invention can be liable for patent infringement even if it didn’t know about your patent. But there are risks with patents. First, they need to be carefully crafted. It’s all about the semantics. One wrong word and the patent can be worthless. Also, patents are granted by one branch of the government and enforced in another branch. The rules are not always the same, and if a patent does not comply with court rules, it may be worthless. For this reason, it is important to develop your patents using lawyers who spend time enforcing patents in court and are familiar with literally hundreds of court-imposed rules.
Another risk with patents is that they are public documents and there are some details that your company may not want to disclose publically. For these details, trade secrets may offer the best protection, so long as a competitor will be unable to independently discover your secrets.
The best protection for most cybertech companies is a balance of patent protection and trade secret protection. Companies should patent important innovations that others will be able to figure out on their own, and treat as trade secrets those innovations that others are not likely to independently discover.
Which innovations should we patent?
Cybertech companies regularly struggle with the question of whether to patent core algorithms. If those algorithms are discoverable by anyone who examines your product, patent protection is the way to go. Also, your products contain many sub-features. Consider patenting only those aspects that will drive product sales. While most people think of patents as technical documents, really, they are business tools. A patent is only valuable if crafted in a way that prevents others from interfering with your business objectives. Therefore, it is best to strategically consider your innovations by asking: "How necessary is this feature to my prospective competitor?" You should patent only those features that provide strategic advantage to the company.
How many patent applications should we file?
Just like one stone in the road is unlikely to stop traffic, a single patent is usually insufficient to stop competitors. Most companies serious about patents will develop a patent portfolio. For a typical start up cybertech company in its first two years of life, it is often beneficial to file five or six patent applications covering important nuances that others will need in order to effectively compete. But when it comes to patents, quality is more important than quantity. Six strategically designed patents can be more powerful than 100 patents that are technically well-written, but that miss the mark from a blocking perspective.
Where should we file for patents?
Patents are territorial. While a U.S. patent provides no value other than in the U.S., because the U.S. is a critical market, it is common for cybertech companies to file first in the U.S. International (PCT) applications permit companies to defer international filing costs. Ultimately, the countries that you choose for patent protection should parallel where you expect to do most of your business.
How long does patenting take?
In many countries, including the U.S. the patenting process often takes about three years. In the U.S., the process can be shortened using a fast track procedure for which an additional government fee is charged. Cybertech companies eager to impress investors may find the fast track process helpful.
When should we file?
Another important consideration is when to file for patents—early or only after commercial value is more certain. Each option has its own risks. If you wait too long, you may find that someone else beat you to the patent office. If you file too early, you may end up protecting ideas that never commercially materialize. One middle ground position is to file provisional patent applications, which allow you to file invention disclosures at a low cost and wait up to a year to file regular applications.
Should we search in advance?
Since you can’t get a patent on something that is already known, it is often beneficial to obtain an understanding of the “prior art” before patenting. As a general rule, the more you know in advance about what has been done before, the stronger your ultimate patent protection will be.