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Aligning your IP and business strategies

To maximize their return on investment for professional services related to intellectual property (IP) protection, startups need to plan their IP strategy and align it with their business goals. Consider the following (from this database’s article entitled Intellectual property strategy):

Intellectual property is a company asset and should be managed as such. An IP strategy is simply a plan—consistent with the company’s business goals—to acquire IP assets and leverage the most value from existing IP assets. The definition of value is assessed in the context of the business goals. Even though IP assets may play a central role in the business strategy of a technology or biotechnology company, acquiring and owning IP will not overcome poor business strategy and make a company successful.

A startup should spend initial time and energy on building its brand through defining a marketing and advertising strategy. Once a brand has been established, entrepreneurs need to ask themselves if their business would be materially affected if they lost access to the brand next day. If the answer is yes, then the next question would be whether the loss in business would exceed the cost of applying for and registering a trademark. In almost all cases, the cost to a business of losing access to a brand with significant goodwill is negligible compared to the legal costs. This is a good return on investment.

Remember, common-law rights in a trademark are local and are generally not enforceable across Canada. Another party may register the trademark and prevent you from using it in other markets (in Canada). Be conservative and register the trademark as it is used and then build a family of marks with the ™ symbol. When the time is right, register those marks which have a demonstrated value.

A much more difficult analysis is required when trying to understand what value lies in a patent or patent application, or both.

A main consideration is that if you intend to spend thousands of dollars filing and pursuing (prosecuting) a patent application to the point of being issued the patent, what do you want to gain from it? Note that the return on your investment could be an asset with different kinds of value (e.g., marketing, defensive, offensive, funding purposes, exit strategy).

There is arguably nothing wrong with drafting and filing a patent application with no intention of ever prosecuting it to issuance. As soon as a patent application is filed, then a marketer can claim that the invention is “patent pending.” In Canada, a patent application has up to five years before examination must be requested. (“Examination” is the point when the Canadian Intellectual Property Office is asked to formally review the patent application to determine if it meets the legal requirements for patentability.)

This delay in examination can also help a company manage their cash flow, by allowing for the filing of a patent application with a deferral in the prosecution costs (e.g., paying the fee for requesting examination, and paying professional fees for responding to office actions). Nevertheless, a product-based company may wish to expedite the patent-prosecution process, since the ability to enforce patent rights does not come into existence until the patent is issued. This approach means that the patent application may have to be “laid open” or made publicly available earlier than the normal 18-month deadline, along with possibly a request for accelerated examination. While expediting the process will increase the cash-flow demands, it should significantly shorten the timeline to obtain a patent. Once a patent is issued, a company will be in a much stronger position to protect itself from the importation of infringing products and other types of infringement.

The Patent Cooperation Treaty (PCT) application is an international patent application that simplifies the process of applying for patents in multiple jurisdictions. As of 2011 in Canada, government fees for filing a PCT application were approximately $3,000; this excludes professional services fees that would need to be paid at home and abroad for each country entered, as well as potential translation costs. Very simply put, unless you have a business need to be in multiple jurisdictions, you probably do not need a PCT application. Nevertheless, it is important to know that this option exists.

In short, a startup has many ways to utilize IP to enhance and protect its business interests, and to capture the goodwill that it generates. Ultimately an IP strategy should always be guided by the business strategy and business goals.

Note: The content in this article is for purposes of general information only. It is not legal advice.

 

References

Canadian Intellectual Property Office. (2011, June 23.) Retrieved June 24, 2011, from http://www.cipo.ic.gc.ca.
World Intellectual Property Office.  (2011, May 31.) PCT Resources. Retrieved June 24, 2011, from http://www.wipo.int/pct/en/.

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