Patenting for Start-Ups

Patenting for Start-Ups

A US patent gives the patent holder a right to exclude others from making, using, and importing the patented invention into the US.  Most every other country has similar patent laws and grant patents that are enforceable within their territories.  In order to receive a patent, one must first file a patent application and preserver the examination process until the application is allowed and the final fees are paid, a process that rarely takes less than a year, and more commonly takes 2 to 3 years.  As a start-up with limited resources, even if you owned an issued patent, you’re not likely to devote precious resources to enforcing it.  Rather, the value of patents to many start-ups is that they improve the valuation of the company in successive rounds of funding.  Investors like to see that their investments hold intellectual property assets, it shows that an effort is being made to protect what is being created, and if the company fails those assets may be one of the few items remaining with some kind of tangible value.

The US patent law provides for two types of patent applications, the provisional patent application and the elegantly named non-provisional application.  Non-provisional applications get assigned to patent examiners that eventually review the applications and most commonly reject them, beginning the examination cycle of Office Actions and responses by the applicants.  This hopefully results in a patent after not too many rounds.  The provisional application, on the other hand, is effectively a placeholder.  The Patent Office will accept essentially any written document without review and assign it a provisional patent application number, provided that the nominal fee is paid.  Most start-ups qualify as small entity filers for fee calculation purposes, and for small entities the provisional application filing fee is a mere $140.  Non-provisional applications must meet a set of formal requirements, and also require $785 to file (small entity), and are therefore best left to patent counsel to prepare.  Since the cost for an attorney to prepare a non-provisional application is often beyond the budget of many start-ups, the rest of this article will focus on provisional applications.

While retaining a patent attorney to draft a non-provisional application can be expensive, it can be a fairly low-cost endeavor to have someone with knowledge of the invention, a founder, employee, or contractor, for example, draft a technical document and submit it to the Patent Office as a provisional application.  This is sufficient to receive a provisional application number and the right to legally assert patent pending status.  Patent pending status does not itself confer any right to hinder others, but it does allow you to mark products as patent pending and otherwise advertise that you are seeking patent protection.

A provisional patent application, however, does not ever get examined, and is only securing the right to claim that application’s filing date as the effective filing date of some later filed non-provisional application.  By law, the non-provisional application must be filed no later than one year after the provisional application’s filing date in order to claim the provisional application’s filing date as its own.  The value of the earlier filing date for the later non-provisional application is that when that application eventually enters examination, the examiner is going to compare the non-provisional application to prior art, typically printed publications, to find examples that would invalidate the application.  The examiner is constrained, however, to use only publications that are older than the application’s filing date.  An earlier filing date, as afforded by an earlier provisional application, excludes the most recent publications from the examiner’s consideration.

While it is far less expensive for a start-up to draft its own provisional applications, as compared to retaining competent patent counsel to do so, the danger is that the document that becomes the provisional application will later be the support for the subsequent non-provisional application.  Although the examiner will not usually search for prior art that falls within the period after the provisional application was filed and before the non-provisional was filed, if a patent ever issues and the patent holder tries to license or assert that patent, the opposing side will conduct that search.  If invalidating art is found within that period, the provisional application will be scoured to see if what has been claimed as the invention in the issued patent is sufficiently described in the provisional application.  If the provisional application did not properly support the invention that ultimately was found patentable during the examination process, then the patent, or at least parts of it, can be invalidated.  It’s noted that although this danger lurks, it’s not an immediate danger to the start-up, like not securing the next funding.  Having a decent provisional application on file, even if it is not a patent attorney’s work product, may help secure or improve the next round of funding.

It is common for start-ups to identify multiple inventions in what they are creating.  It is perfectly acceptable, under the US patent laws, to describe all of the inventions in one document and file it under one provisional application number.  This has the advantage of requiring only a single application filing fee.  On the other hand, it does not showcase the multiple inventions being pursued.  Having one provisional application on file is good, but having several on file can be even better, from the perspective of valuation.  Another potential value of assigning each invention to a separate provisional application is that if ever the subsequent non-provisional applications are to be sold.  Most commonly, if a start-up’s portfolio is to be sold, it will be sold as a unit, but if ever the subsequent non-provisional patent applications or patents are to be individually sold, it is cleaner if they have separate lineages.

A good provisional patent application describes the invention such that one of ordinary skill in the relevant field could make and use the invention without undue experimentation.  This neither requires that you’ve actually made the invention, nor does it require the specificity of blueprints or source code.  It is generally not considered sufficient to list all of the potential benefits of an invention, or the features or capabilities of the invention, without describing how those can be achieved.  This can be tricky for inventions that are computer-implemented where a typical coder can take a list of features and readily implement them.  Even in these cases, the proper patent application needs to provide, for each feature or capability, a number of steps that would have to be executed in order to achieve the desired outcome.  Then, for each step, the application should give examples of ways the step can be performed.  A data analysis step, in an innovative method for selecting berries of only a certain ripeness to pick, can be supported by giving examples of analytical tools that can be used to measure degree of ripeness.

It is always a good idea to have a competent patent attorney review a provisional application before filing to verify both that the application includes sufficient disclosure, and also is not making statements about the invention, or about the prior art that came before, that could be problematic during examination or in later litigation.  Engaging a patent attorney to file the application can also be a good idea as the attorney is then responsible for calendaring the deadline for filing a US non-provisional application and any foreign patent applications that would claim the benefit of the provisional application.

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Robert Hayden

Robert Hayden is a patent attorney specializing in medical devices, materials and processes, particularly as they relate to semiconductors, LEDs, and disk drives, as well as clean tech, robotics, agtech, and consumer devices. Robert regularly prepares and prosecutes patent applications for established corporations and start-ups, advises on portfolio development, and prepares opinion letters. Robert holds a B.S. and an M.S., both in Materials Science and Engineering, and worked in start-ups in biomaterials and disk drives before earning a law degree from Santa Clara University. Robert has been a practicing patent attorney since 2000.
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