Covering Your Ass, Part 3

May 30th, 2008 Chris

So, we’ve talked about NDAs and patents – now let’s explore one of the most important aspects of the patent system to the micro business. The Provisional Patent Application is a way of protecting your invention without having to immediately go through the process and cost of drafting full patent application complete with all it’s archain features.

Drafting a Provisional Patent Application is much simpler – in fact it was specifically introduced by the US Patent and Trade Office in the 90′s to make it easier for inventors to go down the patent road. There are no specific format requirements and no need to draft specific claims (a critical feature of a full patent application). You just really need to describe your invention in detail.

Once you’ve submitted your Provisional Patent Application, your idea is protected, but only for 12 months. You have one year to file your full Patent Application after your provisional application is received. Unless you do so, you will lose your claim to the invention.

Why is this approach beneficial? For the micro business, this is very attractive. You can take your new great idea and protect it without all the cost and time of the full patent process for 12 months. In this time, you can fully explore it’s market potential: building prototypes/betas, talking to potential partners, seeking investors, etc… And you can go around citing your invention as “patent-pending”.

If, at the end of the 12 months, you determine your idea is a winner – then you can submit the full patent application and it’s effective date (the date from which your invention is protected) will be when you submitted the Provisional Patent Application.

And the good news is that you can draft your own Provisioning Patent Application. It is relatively straight forward. In fact, I just mailed off my own earlier this week. Unlike the telephone book size of many full patent applications, my provisioning application was just eight pages…

In the process, I found a couple of great resources to help:

• Patent Pending in 24 Hours. This book provides a great overview of the patent process and a step-by-step guide to drafting your Provisional Patent Application. The book also has other IP-related forms that you can use, like an NDA.
• Patent Wizard. This software walks you through drafting your provisional application. And, as a cheap bastard, you can use it for one application per month for free.
• USPTO. The U.S. Patent and Trade Office doesn’t have the best looking web site but it is packed with information that’s easy to read and doesn’t require you to be a lawyer to understand.

So – go ahead and protect your invention with a Provisional Patent Application. It’s easy and as long as you remember to file you full patent application within a year, you will be protected. Remember, your protection is based on the assumption that your patent will ultimately be granted. If it’s rejected by the patent office then you have no protection. So, someone could steal your idea and, five years later when the patent office rejects your patent, you will have no recourse.

And someone doesn’t have to steal it outright, they could change one part (often called a work around) and cite it as a different invention (read the part about alternative embodiments carefully when drafting your application). That’s one reason why I highly recommend never disclosing your invention, even with the protection of a Provisional Patent Application, unless you need to. And having an NDA is always a good idea.

Here endeth the patent stuff.

C.

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Covering Your Ass, Part 2

May 28th, 2008 Chris

We talked about NDAs in the last post. Now let’s talk about something that can be even more effective at protecting your great ideas but is one of the most intimidating: the patent! It is true that patents are complicated. Remember I’m not a lawyer but here are a few of the things I think about…

Let’s start with what can be patented. Most people think about patenting a thing: a new widget, mouse trap, Wankel rotary engine, whatever. What some don’t realize is that you can patent a process – a sequence of actions performed by some mechanism typically involving inputs and outputs. Sound like software? You betcha! Processes that can typically be embodied in software are, typically patentable. Even manual processes like the Heimlich Manoeuvre can be patented.

Can be patented doesn’t mean can be successfully patented. There is a list of requirements including things like:

• Is it new? Obviously you can’t patent something that is already in existence (although you can improve on existing inventions). It doesn’t matter whether someone else has patented it or not – if the idea already exists then you can’t patent it.
• Do you own it? If you invent something while employed by a company, that company typically owns any invention in the field it operates in.
• Is it in the public domain? Typically, if you tell people about your idea before filing your patent application (especially if you publicize or offer it for sale), then you will have trouble getting a patent granted or at least a patent that will survive a challenge.

Practically speaking, having a patent can be a great way to dissuade competitors. If someone copies you, they run the risk of you suing them. And in most jurisdictions there is a significant penalty to be paid if they did so knowing about your patent. Is it practical in most cases to go around suing people? Usually not. Especially not for a micro business. I’ve been involved in a couple of legal actions around patents and they can get expensive ($1-2M). But usually, a credible patent is enough to brush competitors away from the plate without having to actually bean them with a lawsuit.

The first step in the patent process is to draft a patent application and submit it for review by a government patent examiner. It can take years for review which is why you often see “patent-pending”. It specifically refers to the case where the patent is filed but has yet to become a full “granted patent”. Don’t worry though, your claim to your invention will be based on the date that you submitted your application. So even if someone has copied you while your patent is being reviewed, as soon as it is granted, you can go after them for their past indiscretions. So feel free to warn potential infringers even if your submitted patent application has yet to be granted.

If you have ever read the language required for a patent patent application, they are gory (warning: shameless self-promotion). I have a fair bit of experience and I wouldn’t attempt to draft a patent without at least a lawyer’s review.

Ah – there’s the rub. For a micro business, can you really afford to spend thousands to try and patent every new idea you have? If you are like our business or are just cheap like me, you can’t.

But don’t worry – there is an easier option which I think is perfect for the micro business. It’s called the “Provisional Patent Application”. More on that next time…

C.

P. S. I generally am referring to the U.S. Patent system in these posts. It’s the biggest market for most inventions and it’s relatively straight forward to get protection for your invention in other countries thanks to the Patent Cooperation Treaty.

P. S. S. Remember – I’m not a lawyer so please don’t rely on me for legal advice. In other words, don’t even think of suing me.

P. S. S. S. In retrospect, this is a somewhat boring topic and I already regret spending this much time on it. There will be only one more post in this series, I promise. But please read it as it will be the best one ever, I promise.

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Covering Your Ass

May 27th, 2008 Chris

I have a few friends I get together with once and a while to brainstorm ideas for new businesses. We all have some pretty cool ideas, typically for new Internet or web based services. Part of starting down the road with any of these business is getting feedback and soliciting early interest from potential partners, team members, investors, etc…

Of course, one of the things that you always need to worry about is what happens if someone steals the idea. I don’t worry too much about people I know but the reality is that if you go talk with an organization about a potential partnership and you’re not properly protected, nothing stops them from taking the idea and running. And it happens.

There are a couple of key tools in the arsenal that even if you’re not a lawyer you should be familiar with. First is the Non Disclosure Agreement (NDA). The NDA is a great way of protecting yourself with the organization or person you’re speaking with. Once signed, an NDA typically prevents an organization or individual from disclosing or using something you tell them – on pain of damages (i.e. $’s). You can get a NDA template from your lawyer as well as a few on-line resources (more on those later).

The Mutual NDA (MNDA), the NDA’s cousin, is similar but it binds both parties to a conversation to keep it confidential, versus the NDA which is typically one way (i.e. one party keeps the other’s secret). Regardless, the NDA or MNDA will typically specify the subject to be discussed that is confidential.

Using an NDA is always good advice when trying to keep your confidential information, well, confidential. But there are some issues. First, both parties to a conversation have to agree to sign one – the same one. As soon as the lawyers get involve, then you can often encounter a “my gavel is bigger than yours…” situation where someone wants changes and the negotiations begin. In a micro business, this can get expensive fast as going to your lawyer even a couple of times adds up fast. Always try to use the template you got from your lawyer or a trusted source. You won’t be familiar with the other party’s. Also, unless it’s really obvious and risk-free, get any proposed changes reviewed.

The other issue with an NDA is that it’s often tough to stop information from spreading beyond the two parties. I’ve seen a fair bit of confidential information get passed around after a few beers and, like the genie, once it’s out, it’s tough to get back in. If someone ends up with the information third or fourth hand, it becomes very hard to be able to pin the leak on anyone. Especially if you’ve discussed it with a number of people or organizations. So only disclose what you need to move a conversation forward and look to other methods to protect your ideas (see below).

What if someone wants you to sign an NDA to protect their idea? My advice is to start by saying no. First, unless you’re pretty experienced, you’ll want a lawyer to look at it (ca-ching) and then as you’ll be taking on a legal obligation before you even know much about it.

I almost always refuse to sign an NDA for an initial meeting. I want to have a phone call, meeting, etc… to learn as much as I can, before making any legal commitments. More often than not, it turns out to be something I’m not interested in and don’t need to expose myself and the company to any potential legal liability.

So – got a great idea and want pitch it to a partner or investor? Think about getting an NDA in place first. Someone wants to pitch you an idea – get the “non-NDA” version first before worrying about going legal.

Colleen always tells me that I’m still too corporate for the micro business world. Probably true. But when it comes to protecting your idea, ask yourself if you can live with it being out there in the public domain. If you can’t – consider the NDA.

Stay tuned for the second tool in your CYA arsenal – the patent. I doesn’t have to be nearly as scary as it sounds and can be even more effective than an NDA in protecting your valuable ideas.

C.

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