Intellectual property is one of those tasks that are critical to a technology startup but less fun than inventing itself and more like filing your tax returns. As CTO, you have the intimate product know-how to describe it yourself but perhaps not the money to have everything done by outside counsel. And so begins the eternal balance between hiring an expert and doing it yourself.
We’re going to assume the timeline of a typical tech startup, overlaid with some typical patent milestones. This leads to certain inflection points when the balance favors hiring someone to do it properly.
Year zero: garage with two founders
Congratulations you’ve had your first million-dollar-idea BUT you know that you need to patent it before you can talk to investors, customers and suppliers. You have competing demands on your resources of time and money. If push came to shove, we would concede here that the founders could draft a decent Provisional patent application and save money for their prototype. It all depends on your circumstances.
Start up hack: ask a patent agent if they could simply review your draft and write a few claims ($2000); ask a patent agent to file your provisional application($600) to save you learning the intricacies of the patent filing system and its weird formalities.
Year One: prototype is complete, friends and family funding.
This is the time when you need to file a full patent application in each country that you wish to protect and any mistakes made at this stage are fatal. Here I would definitely hire a professional to redraft the description, including all the improvements you’ve made over the year, revise the claims for your current product, and deal with all the formal requirements that make the patent office so fun to deal with ($7000-12000).
Fun fact: you will need to hire a patent agent for each country that you select. Perpetual Motion Patents can file your patent in Canada and the US and our associates will help you in the other popular markets.
Year two to four: investment, employment, and improvements
Hopefully your company is attracting investors and employees to improve your product, while your patents wait in line at the patent office. Luckily there are few patent costs during this period, unless you wish to file additional patents. Another 2-3 patents would be typical for a serious technical company that had many challenges to overcome, especially if investors were providing funds for your research and you wanted to demonstrate that you had protected their investment.
This is when your IP person will crack. Until now the founder responsible for IP management has dealt with the IP challenges as needed and running on less sleep than then need. You may be heading for, be in, or know this situation. Your system needs help. You can’t source the inventions, track them, prioritize, write the descriptions, find all the references, interact with your patent agent, and review their work. Something has got to give.
Start-up hack: a simple spreadsheet is the go-to solution for most CTOs. Try to create a story of how each patent covers a core part of your product.
Year five: the IP hits the fan
If all is going well, you are inundated with product requests, production demands, sales targets, and administrative nightmares. This is also when the patent offices are likely to start examinations and demand that you respond formally by a legal deadline. Yep, you need outside help.
Start-up hack: you can save yourself some costs by reviewing the patent office’s citations and formulating a technical argument for your patent agent to convert to legalese.
Year six to eight: company growth and time for reorganization
If you’ve organized your company correctly, you are not personally responsible for sales, engineering and operations… but somehow you are still the default for responding to monthly patent actions. And lurking below this patent iceberg is the mass of great innovations that you have stuffed into a spreadsheet to be patented later… much later. Cost is no longer the limiting factor – your time is.
Yes, you should be leaning heavily on your outside counsel to deal with all the patent actions but who is going to make those strategic decisions and who is going to deal with that iceberg?
Solution One is to appoint one of your engineers to handle the existing patent portfolio and get inventors to write up their inventions to be sent to outside counsel. You retain all the expertise in-house and use outside counsel simply for legal functions.
Solution two is to hire a full-time in-house patent agent to professionally manage the patent portfolio, draft applications and respond to patent office actions. This is a great solution if you are highly innovative and can afford a full-time patent agent.
Solution three … there is no solution three, or at least this is rare. You could ask your trusted patent firm to provide you with a patent agent one day a week / month to seamlessly integrate into your team and take all your patent headaches away. If you can actually get a firm to do this, your cost would be lower than hiring a full-time employee or paying hourly rates for outside counsel.
These inflection points are the key times that Founders should be considering changing their process and seeking help to get the greatest value from their IP. So, while patents may be worth $millions to a tech company, the key point is to get a valid patent granted, rather than a invalid patent done cheaply. This article is part of a larger conversation on: portfolio management; innovation mining; IP budgeting; and strategic decisions on what to patent and where.
As a CTO at a cost-conscious start-up, you may consider the optimal outcome of that balancing equation in the following table:
|Who should do it?
|Provisional application draft
|Early stage ideation and tracking
|Invention disclosures – patent body
|Late stage IP process
|Formal responses to rejections