This article originally was published by Advanced Textiles Source.
Is innovation a key component of your business plan? Will you distinguish yourself with unique product offerings? Whether protecting our men and women in uniform, advancing the treatment of medical conditions, or adding to a more sustainable tomorrow, innovation fuels the growth of textile businesses.
In the U.S., innovation is part of the culture; the ideal of promoting innovation dates back to the writing of the U.S. Constitution, which set the groundwork for modern intellectual property (IP) laws. With a basic understanding of patents and the other available types of intellectual property protection, businesses can become better equipped to identify, protect and profit from their innovations.
Businesses have several types of “fences” to help protect their intellectual property, including patents, trade secrets, trademarks, trade dress rights, copyrights and contractual obligations. In the textile industry, a significant proportion of products reaching the market can be reverse engineered by the competition or a potential customer. This is a significant factor in protecting innovative products with patents instead of relying on alternative rights, such as trade secrets.
In exchange for disclosing an invention to the public, a patent grants a monopoly for up to 20 years against competitors making, using, selling or importing that invention. Patents, therefore, are often the preferred tool to protect new technology incorporated within new products. Further, trademarks can support a company’s sales and marketing efforts with a first-to-market strategy, but will not prevent the competition from copying the underlying technology. There are important issues to consider when determining if and when to file for patent protection.
Resolve ownership early
A threshold question to obtaining patent rights is ownership. The following scenarios illustrate two ways that ownership questions can stall progress.
Scenario one: After months of joint effort, a yarn supplier and a knitter have arrived at a novel fabric they’d like to protect. Each thinks highly of their contributions as important to the success of the product. The companies agree that intellectual property has been created and patents should be filed, but whose IP is it?
Done right, IP rights would have been discussed and agreed upon before beginning collaborative efforts in discussions that can set the ground work for the needs and desires of each company. The supplier may not want to shoulder the costs of obtaining and enforcing patent rights. As much as such discussions are useful, often the smaller of the two companies may have little choice but to offer IP ownership control to the larger entity. New businesses must often assume the risks associated with the unencumbered disclosure of their idea to even begin the conversation about future collaboration.
Ultimately, care should be taken to avoid divided ownership of IP rights, particularly patent rights. Without 100 percent control, patent rights become much more difficult to monetize and enforce because all of the individual owners must agree to enforce the rights. Therefore, it may be more beneficial to assign ownership rights in exchange for guaranteed revenue instead of being a part owner of a patent. By addressing IP ownership in a collaborative effort as soon as possible, multi-party ownership can often be avoided.
Scenario two: A startup company has just been formed as a spinoff of a university research effort. Who owns the IP? Was the invention conceived while the principals of the startup were employed by the university? What rights does the university have in IP that may result from previously funded research efforts?
Each of these questions is often fact specific and dependent upon contractual obligations between the parties. These questions should be considered with an attorney as early as possible when developing an IP strategy.
Where and when
It is also important to determine where protection is desired to inform when to seek patent protection. Today, businesses are going global. New medical textiles developed in one country are quickly being adopted to save lives around the world. But, there is no such thing as a global patent to protect that new product.
Patent rights are country (or jurisdiction) specific. A U.S. patent will not protect against activity fully conducted in Canada. A patent issued by the European Patent Office will not protect against activity in China. Businesses should consider seeking protection in countries that provide major markets for product sales, as well as countries where manufacturing may occur.
Attempting to set up protections everywhere a product may be put into use is often simply too expensive. For startup companies with a global outlook on a limited initial budget, an application filed under the Patent Cooperation Treaty (PCT) can establish a priority date for the invention and buy the company 30 months to obtain funding or revenue before specific geographic patent protection decisions must be made. A PCT filing, on the other hand, is a glorified placeholder and defensive disclosure, which does not create enforceable patent rights until and unless additional country-specific applications are filed.
Determining where to seek patent protection is an important question that is often asked too late in the game. Startup companies may assume they can seek protection for an invention in the U.S. and decide later whether to seek protection in other counties around the world, once the invention has started to generate revenue, for example. This is true only to an extent. There are international agreements that allow applicants to file for patent protection in additional countries up to one-year after filing for protection in a first country, often the U.S. for domestic companies. However, an invention that remains eligible for a patent in the U.S. may be barred from patent protection in other countries because of a pre-filing disclosure.
The U.S. and others, such as Canada and Australia, allow an applicant to file for patent protection up to one year after the invention was first shared with the public. This one-year grace period gives companies an opportunity to test the market. Other controlling bodies, (the European and Chinese Patent Offices, for example), often require an applicant to file for protection prior to an initial public disclosure. Public disclosures may occur in publications, at trade shows or in customer meetings where confidentiality is not expected. By considering where you would ultimately like to have patent protection from the start, IP protection becomes an important factor to weigh against other business objectives when determining where and when to file for protection in support of a new product launch.
Keep in mind that the one-year grace period protects a company from having their pre-filing publications used against them. The one-year grace period no longer protects a company against the concurrent innovation of other parties if those other parties independently develop a similar invention. Therefore, there is a risk any time a company files for patent protection after an initial public disclosure.
Look before you leap
A patent does not grant the owner the right to make or use the patented product or process. A patent is intended solely to prevent others from making, using or selling products or processes that incorporate the invention. An improved product protected by a patent may very well be covered by an earlier patent claiming a more fundamental technology. Assessing the possible risk of patent infringement caused by the company’s introduction of a new product is one reason to consider a prior “art search,” as it is called, before launch.
Another reason to consider a prior art search is to anticipate the actions of the patent examiner. Before a patent is granted, the U.S. Patent and Trademark Office (USPTO) will perform a thorough review of the application to determine, among other criteria, whether the invention is novel and non-obvious. These determinations are made by comparing the invention to currently available products, as well as all other disclosures of inventions that have been made in the past.
Often, ideas that are not currently commercialized were previously disclosed, most often in earlier patents or patent applications. These existing documents prevent others from obtaining a patent monopoly on the invention, even if the invention is not currently being used in the market. Spending the additional time and money to review these earlier patents prior to filing can help minimize costs down the line and help the inventor appreciate the scope of protection they may expect to obtain.
Optimize “patent pending” status
Companies often fail to fully promote their “patent pending” status. Businesses should use marketing publications, press releases and signage at trade shows to let the competition know that the invention is “patent pending” as a symbol of the company’s innovative brand. Caution should be taken, however, not to misrepresent that a product is “patented” until the application has been granted and issued by the USPTO.
Another aspect of the patent application process that is often overlooked is the publication that results from the application. A young business should particularly consider whether to have their patent application published early, on-time (18 months after filing) or not at all. A published application can act as a sale document when seeking to sell the invention to a partner or customer, and it can support additional damages against an infringer who copies the invention prior to the patent being granted. On the other hand, withholding publication of the application (granted patents are necessarily published) can keep competitors guessing as to which features of the new product are the subject of the desired patent protection.
By considering these issues, and with the help of a qualified patent attorney, your business can leverage your innovation toward a growing bottom line.